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Representation: Counsel:
Mr D Southwood (first and second plaintiff)
Mr C Ireland (first and second defendant)
Solicitors:
Everingham Solomons (plaintiffs)
Bartier Perry Lawyers (defendants)

File Number(s): 2023/00465839

Publication restriction: Nil

JUDGMENT EX TEMPORE

1. These reasons deal with a contested application for an adjournment of a hearing that is scheduled to commence on 6 July 2026.

An overview of the litigation and application

2. The plaintiffs and defendants are in dispute over water allocation entitlements in a water irrigation scheme in rural NSW – the Marthaguy Irrigation Scheme (‘the scheme’ or ‘the first defendant’).

3. There are two plaintiffs (albeit that they are the same individual): the first plaintiff is a farmer, the owner of rural property near Warren, NSW and a member of the first defendant’s association. He sues both in his personal capacity and in his capacity as the executor of the estate of his late wife – a course that was adopted because some of the water entitlements in issue are still held in her name. For the purposes of this application, it is unnecessary to distinguish between them.

4. The scheme is an unincorporated association established for the purpose of diverting water from the Macquarie River downstream of Warren (using an interconnected network of channels, pipelines and natural watercourses) and conveying the diverted water to properties owned by the scheme’s members. The second defendant is Marthaguy Channel Ltd, who essentially operated the scheme.

5. The relationship between the members of the scheme is governed by a deed of constitution executed by them on or about 29 August 1988 and amended from time to time (‘the scheme deed’). The scheme deed contains terms that each member is to be treated as being an “absolute owner” of their irrigation, stock and domestic water entitlements, and as owning their share of the works and assets comprising the irrigation scheme.

6. The principal claim of the plaintiffs is that the scheme and the second defendant have not, since August 2010, delivered water to their property, despite the first plaintiff’s requests pursuant to the scheme deed.

7. The matter is listed for hearing for two weeks commencing 6 July 2026.

8. The plaintiffs, by notice of motion filed 10 June 2026, apply for an adjournment of that hearing, essentially on the ground that, despite efforts to finalise their evidence, they have been unable to do so: the expert engaged to prepare the report necessary to quantify the volumes of water that were allegedly misused, and their value, has been unable to finalise his report, and will not be in a position to do so before (at least) 26 June 2026.

9. The defendants oppose the vacation of the hearing date and any extension to the orders permitting service of evidence by the plaintiffs. In short, the defendants argue that the plaintiffs should be forced to proceed to trial with no, or at the very least incomplete, evidence in support of key aspects of their case.

10. The plaintiffs relied upon affidavits from their solicitor, George Hoddle, sworn 7 May and 9 June 2026, and an affidavit from Thomas Wild sworn 30 April 2026.

11. The defendants relied upon an affidavit from their solicitor, Sharon Levy, sworn 12 June 2026.

12. None of the deponents were cross-examined.

Background

13. Given the arguments raised, particularly by the defendants, it is necessary to set out, albeit briefly, some further background – which I will do across two parts: first, an outline of the plaintiffs’ claim; and, secondly, the case management of the proceedings.

The plaintiffs’ claim

14. The following sufficiently outlines the broad nature of the plaintiffs’ claim, which is principally drawn from the current version of the pleading – the further amended statement of claim filed 15 December 2025 (‘FASOC’).

15. The plaintiffs allege that the first and second defendants have not, since August 2010, delivered water to their property, despite requests from the first plaintiff in accordance with the scheme deed: FASOC, pars 38(a)-(b).

16. It is also alleged by the plaintiffs that some of their water holdings, in connection with particular water access licenses held by them, have been misused in that the water allocations referable to those licenses were delivered by the second defendant, or alternatively, the first defendant, to members of the scheme other than the plaintiffs: FASOC, pars 43, 44.

17. The plaintiffs seek orders under s 74 of the Water Management Act 2000 (NSW) separating their water entitlements from the water entitlements of other members of the scheme: FASOC, pars 52-58. They also seek damages for conversion and breach of the scheme deed as a result of what they allege was the unauthorised use of their water allocation by the scheme and its members in the way outlined: FASOC, pars 47-48.

18. In the course of judicial case management, I was advised by counsel for the plaintiffs that the damages claim is (at a minimum) based upon what, historically, were the plaintiffs’ water entitlements from time to time, and at what price they could have traded them if they had been able to do so – with a value of around $3 million (Tcpt, 8 May 2026, pp 2(28)-(30), 7(40)).

The case management of the proceedings

19. It is necessary to summarise aspects of the case management of the proceedings – largely because the defendants argue that the plaintiffs’ failure to comply with orders relating to the preparation and service of their evidence, with other matters, entitles them to the orders they seek.

20. The relevant case management and procedural history is as follows.

21. When the matter was listed for directions on 27 August 2025, it was fixed for hearing for 10 days commencing 6 July 2026. It should be emphasised that, at that time, there was some concern expressed by the parties about fixing it for hearing since the evidence had not been served and because the defendants had indicated that they had difficulties accepting a hearing date in the second half of this year. I indicated to the parties that I was minded to fix the matter for hearing and, if difficulties emerged, I would consider adjusting the date on the next, or a subsequent, listing of the matter.

22. An issue arose between the parties about a proposed amendment to the statement of claim, and orders were made dealing with this on 28 November 2025. Again, at that time, no orders were made for the service of evidence: to be clear, none were sought – I infer because of the amended pleading. Be that as it may, I indicated to the parties, at that listing, that my expectation was that orders for the service of evidence would be made at the further listing on 12 December 2025.

23. On 12 December 2025 orders were made for the plaintiffs to serve all evidentiary statements and expert evidence by 27 February 2026 (order 7), and for the defendants, in reply, to serve all evidentiary statements and expert evidence by 1 May 2026 (order 8). The matter was given a final directions date of 8 May 2026 (order 9), and the parties were granted liberty to apply (order 10).

24. As it happens, the plaintiffs did not comply with the order for the service of their evidence. Notwithstanding that non-compliance, no steps were taken by the defendants until 9 April 2026 (a Thursday) to have the matter relisted. The matter was relisted for directions on 13 April 2026 (the following Monday).

25. At that listing, the parties had a joint position – they agreed to the vacation of the hearing date. I was advised that the defendants’ position was reached because the defendants were themselves “farmers and they have difficulties at certain times of the year in preparing their evidence. March was a period of availability” but, due to the plaintiffs’ delay, they had “lost the opportunity [to obtain] evidence” as the defendants themselves were no longer available, given their stated commitments (Tcpt, 13 April 2026, p 3(18)-(20), (32)-(32)). In short, counsel for the defendants advised me that “the window for getting their lay evidence together [was] lost” (Tcpt, 13 April 2026, p 4(18)).

26. Despite the parties’ agreed position, I indicated that I wanted the plaintiffs to serve their evidence so that I could better assess the further conduct of the matter – including whether the hearing should be adjourned (Tcpt, 13 April 2026, p 4(43)-(45)). In foreshadowing the orders that I proposed to make, the defendants’ counsel reiterated that, independently of the loss of the “window” for securing their evidence, the time period for the defendants to respond was “a real concern” (Tcpt, 13 April 2025, pp 4(50)-5(10)). I reiterated to the parties that the intent of the orders was simply to have the plaintiffs serve the evidence required to support their case and, having done so, for the defendants to make an informed decision about whether they were in a position to respond to the evidence given the circumstances outlined. It was made clear that the defendants’ position in relation to the need for the hearing to be adjourned was fully protected.

27. Orders were made, including a guillotine order, for the service of the plaintiffs’ evidence – lay and expert (order 1). I also made the following order (order 2):

“List the matter for further directions on 8 May 2026 in particular to consider whether, given the service of evidence in accordance with the above order, the hearing should be vacated.”

28. By the relisting on 8 May 2026, it became known that, despite the orders for the service of the plaintiffs’ evidence, their expert evidence was yet to be finalised. I was advised, and I accept, that this arose because there was a need to engage an alternative expert.

29. An order was made, based upon the advice received from the plaintiffs’ expert that he could finalise his report by 14 May 2026, that the time for the service of the plaintiffs’ expert evidence be extended to 14 May 2026 and that, absent leave granted by a judge of the Court, the plaintiffs were not to be permitted to rely upon any expert evidence served after that time (order 2).

30. As it turns out, the plaintiffs’ expert was unable to complete his report by 14 May 2026 and has further advised the plaintiffs’ legal representatives that he will not be placed to do so until 26 June 2026 (at the earliest).

Legal principles: the power to adjourn proceedings

31. Section 66 of the Civil Procedure Act 2005 (NSW) (‘CPA’) is a source of the Court’s power to adjourn the hearing. The exercise of that power is conditioned on the observance of the overriding purpose of the CPA and the dictates of justice: ss 56-58 of the CPA.

32. The relevant principles that inform the exercise of the power are not in doubt. They were conveniently summarised in Xu v Cao & Du Management Pty Ltd (No. 3) [2025] NSWSC 979 at [51]-[60], to which the parties each referred.

33. Given the organising principles are well-established, the parties focused upon various matters which were said to support where the dictates of justice lay. It is to these arguments that I now turn.

Discussion and consideration

34. The plaintiffs’ position was essentially that, whilst acknowledging that the procedural history is a matter to be taken into account (including their past defaults), the interests of justice strongly favoured vacating the hearing – emphasising three matters.

35. First, the most recent default (and the default jeopardising the hearing date) is a consequence of their expert’s initial optimism about when he would complete his report, and not the result of any personal default on the part of the plaintiffs or those that represent them. Further, once alerted about the problems with the finalisation of their expert evidence, the plaintiffs promptly notified the Court and the defendants’ legal representatives. Importantly, it was argued, they took steps to ameliorate the problems that the delayed report would create by providing their expert’s briefing material to the defendants’ legal representatives – thereby facilitating the defendants’ development of their expert evidence. I accept this submission and, to be clear, the explanation provided for the non-compliance.

36. Secondly, the plaintiffs have moved promptly in applying to vacate the hearing – not waiting for additional prejudice to materialise – in order to maximise the prospect that the Court’s resources will be redeployed to other litigants. I accept this submission.

37. Thirdly, refusing the plaintiffs leave to rely upon the expert report would likely cause a grave injustice to them – particularly given many of the integers necessary to succeed on liability were argued to be uncontroversial, and without the expert report they may be unable to prove their losses. This matter requires consideration of the defendants’ arguments.

38. The defendants, as earlier noted, submitted that the application to vacate the hearing should be refused, and no extension of time should be granted for the plaintiffs to serve any further expert evidence. They argued that very real prejudice would be occasioned to them if the hearing date is not maintained on the terms argued, and that the dictates of justice favour the orders they seek.

39. At the forefront of the defendants’ argument is the need for the Court to hold the plaintiffs to the guillotine order made on 8 May 2026 in relation to the expert evidence.

40. Whilst it may be accepted that, ordinarily, guillotine orders should mean what they say (see Marium v Darley [2026] NSWCA 75 at [27]), two things give context to the order made in this case: first, the order clearly envisaged that leave could be sought to vary it; and, secondly, the procedural history earlier referred to is particularly important in contextualizing what occurred. I will expand upon this.

41. As is apparent from what I have earlier set out, the inability of the case to proceed to hearing on the allocated date was patently clear when the matter was relisted on 13 April 2026. At that time, I acted on the defendants’ representation that their “window” for preparing their evidence, possibly with the exception of their expert evidence, was lost by that time: see [25], above. That is, no doubt, why the defendants consented to the hearing date being vacated.

42. Although I declined, at that point, to adjourn the hearing, I made it clear that I was endeavouring to have the plaintiffs finalise service of their evidence, and that I would fully accommodate any disadvantage to the defendants that arose – including by adjourning the hearing at a later date. Order 2 made on 13 April 2026 reflected this. I adopted that approach for a multitude of reasons, including because – sometimes – evidence that is apprehended to cause disadvantage by reason of its late service does not do so, and can be met in time for a trial. The defendants’ submissions on the application tended to ignore this reality, and the key aspects of the procedural history more generally.

43. The defendants submitted that the plaintiffs, in effect, had engaged in “serial flouting” of the Court’s orders, and that acceding their application would reward them for their conduct. That submission overstates the position: the difficulty is because the expert qualified advised the plaintiffs’ legal representatives that he could complete his report by 14 May 2026, but he subsequently determined that he could not do so – which I accept is beyond their control.

44. The defendant made a strong submission that, by the proposed expert report, the plaintiffs are attempting to expand their case – said to involve a considerable expansion of the factual inquiries necessary to determine water use over an extended period of time. Mr Southwood contested this, submitting that the evidence was within the pleaded case. He nevertheless accepted that if, through further and better particulars provided in February 2026, there had been inconsistent positions adopted, then that particularisation was in error.

45. In my view, this matter is very much a secondary consideration to the overall question as to whether the hearing should be vacated. Quite apart from that, as I have earlier explained, the case was presented to me in April 2026 as being one where, from the defendants’ perspective, the development of the evidence could not be progressed due to the unavailability of their witnesses. Thus, even if there is a somewhat different case that is to be advanced by the plaintiffs through this expert evidence, it is not a situation where, by way of example, the defendants must redo – or undo – evidence already prepared. At most, it will require a further investigation into, and a possible evidential response about, that alleged misuse of the plaintiffs’ water entitlements.

46. The matter has an unfortunate procedural history, and I have taken into account the degree to which the plaintiffs have been timely in their interlocutory activities (s 58(2)(b)(ii)). I have also noted that no attempt was made by either party to have the matter relisted, despite the procedural non-compliance and the consequences that were said to result, until shortly prior to 13 April 2026 (s 58(2)(b)(v)).

47. The defendants submitted that, if the time is extended for the plaintiffs to serve their expert evidence, any extension should only be until 21 June 2026. That submission is unpersuasive: any such an order would be an exercise in futility given the plaintiffs’ expert is unable to prepare a report before 26 June 2026 and, even then, the legal representatives of the plaintiffs hold some concern about whether he will be able to prepare a report by this date.

48. The defendants also submitted that requiring the plaintiffs to go to trial without any expert evidence would not, in fact, lead to any hardship or disadvantage because, so they argued, the expert evidence is merely quantifying the plaintiffs’ claim by assigning a market price to quantities of water based upon historical information – something that the defendants’ expert is, apparently, undertaking at the present time. I regard that argument to be unrealistic: the plaintiffs, who are represented by senior and junior counsel, consider that they require expert evidence to prove their case, and I am unwilling to cut across that considered position merely on the say-so of the defendants. On the contrary, I accept, as was submitted by the plaintiffs, that shutting them out from adducing expert evidence would likely lead to grave consequences and, therefore, considerable injustice to them – particularly given the potential quantum, as I have earlier noted. This is a highly material consideration.

49. The defendants next submitted that they “are being placed under great stress in their everyday lives by this claim and seek to have it resolved”. I do not doubt that, generally speaking, litigation is stressful for all involved, and that the timely disposition of the litigation is in the interests of all parties. This is an important consideration. But I am unpersuaded, particularly given the form of the evidence relied upon, to act on the assertions of actual prejudice contained in the defendants’ solicitor’s affidavit.

50. I recognise the importance of case management considerations and efficiency in the conduct and dispatch of proceedings. Nevertheless, given the stage the matter is now at, these matters, whilst important, are, in the circumstances of this case, of confined significance. The dictates of justice favour the vacation of the hearing that the plaintiffs seek.

Orders

51. For the above reasons I make the following orders:

52. Vacate the hearing commencing 6 July 2026.

53. Order the plaintiffs to pay the defendants’ costs of the notice of motion to vacate the hearing and thrown away by reason of the vacation of the hearing.

54. Vacate orders 4, 5, 8, 9, 10 and 11 made on 8 May 2026.

55. Direct that, subject to the availability of the Honourable James Stevenson SC, the parties engage in a mediation with him by 18 July 2026.

56. Order that the parties notify the Honourable James Stevenson SC of the making of these orders forthwith and, in any event, by no later than 17 June 2026, 4pm.

57. Grant liberty to apply on 48 hours’ notice.

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