Valuestream Investment Management Ltd as Trustee for the Tip Tofs Trust v Drenside Pty Ltd as Trustee for the Nosivad Investment Trust [2022] NSWSC 1099

Supreme Court New South Wales

Medium Neutral Citation: Valuestream Investment Management Ltd as Trustee for the Tip Tofs Trust v Drenside Pty Ltd as Trustee for the Nosivad Investment Trust [2022] NSWSC 1099 Hearing dates: 10 and 15 August 2022 Date of orders: 15 August 2022 Decision date: 15 August 2022 Jurisdiction: Equity Before: Henry J Decision: Hearing date vacated see [28]. Catchwords: CIVIL PROCEDURE – application to vacate hearing date – medical grounds – previous delay – no issue of principle Legislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Forster v Harvey [2006] NSWSC 1112 Hamod v State of New South Wales [2011] NSWCA 375 Uy v Ng [2021] NSWSC 429 von Reisner v Chepurin [2012] NSWCA 418 Category: Procedural rulings Parties: Valuestream Investment Management Ltd as Trustee for the Tip Tofs Trust (Plaintiff) Drenside Pty Ltd as Trustee for the Nosivad Investment Trust (First Defendant) Craig Davison (Second Defendant) Representation: Counsel: Mr B Hancock (Plaintiff)

Solicitors: J Stephens & Associates (Plaintiff)

Self-represented: Craig Davison (Second Defendant, also representing the First Defendant) File Number(s): 2017/00180287 Publication restriction: Nil

JUDGMENT (ex tempore revised) 1. This is an application by the first and second defendants to vacate the hearing of these proceedings that are fixed to commence before me on 29 August 2022. The application is made by a notice of motion which was filed by the defendants on 14 July 2022. 2. The defendants seek to vacate the hearing on medical grounds, the details of which are set out in the affidavits of the second defendant, Mr Craig Davison, affirmed on 14 July 2022 and 10 August 2022, and for the case to be relisted for hearing in February or March 2023. 3. Mr Davison is the sole director of the first defendant. Since May 2019, he and the first defendant have not had legal representation and Mr Davison has been acting for himself and for the first defendant. 4. The plaintiff, who opposes the application, relies on the affidavit of its solicitor, Mr Alistair McKeough, sworn 5 August 2022 as well as written submissions served in advance of the hearing. Mr McKeough's affidavit sets out the procedural history of the proceedings. The following is a summary based on that affidavit and the plaintiff's written submissions. 5. The proceedings, which were commenced by the plaintiff on 16 June 2017, concern a claim for damages arising out of the plaintiff's purchase from the first defendant of 55% of a franchise business known as the Outdoor Furniture Specialists, pursuant to a share purchase agreement executed on or about 18 June 2014. There is also a cross-claim filed by the first defendant concerning an alleged loan deed entered into by it and the plaintiff. 6. There were two other defendants to the proceedings. On 9 October 2018, the proceedings as against those parties were dismissed by consent. 7. The pleadings were closed by 11 June 2019 when the plaintiff filed its reply to the first defendant's defence. 8. Between 12 May 2019 and 23 November 2021, there were numerous requests by the defendants for extensions of time to serve their evidence and to adjourn the matter generally. The reasons for those requests related to the defendants no longer being legally represented, financial issues and Mr Davison's physical health, having had three unsuccessful back operations involving 21 hours of surgery that led to chronic neck and back pain and lengthy recovery periods. Some of the requests by the defendants included a general request for an adjournment for eight months which, although refused by the plaintiff in that form, led the plaintiff to accept a longer timetable to accommodate Mr Davison's injury and rehabilitation. 9. On 5 November 2021, the plaintiff, with the consent of the defendants, made a request via the Online Court for the matter to be set down for hearing. 10. On 23 November 2021, Ward CJ in Eq (as her Honour then was), set the matter down for hearing before me commencing on 29 August 2022 with an estimate of nine days. According to the transcript on that occasion, Mr Davison informed the Court that he had already had four operations in the previous two years, had another procedure scheduled in a few weeks and there was another operation scheduled in early 2022. This led to her Honour suggesting that the hearing be listed in August, rather than in July 2022, to which Mr Davison replied and indicated that the dates "probably would be fine". 11. On 14 July 2022, my Associate contacted the parties to arrange a pre-trial directions hearing in advance of the final hearing in August. In response, Mr Davison sent a notice of motion seeking to vacate the hearing date and his first affidavit, which he subsequently filed that day. 12. The hearing of the defendant's notice of motion was listed before me on 10 August 2022 with directions made for the parties to file evidence in support. 13. According to Mr Davison's first affidavit and his oral submissions on 10 August 2022, he is suffering from chronic pain in his neck and upper back and had further surgery scheduled for August/September 2022. His evidence is that he undertakes daily rehabilitation for some hours and weekly treatments with various medical and allied health providers in relation to his neck and back issues, he has limited movement in his neck, is unable to sit at the computer for more than 15 to 30 minutes at a time and is unable to undertake basic daily tasks. 14. In oral submissions on 10 August 2022, he indicated that his surgery had initially been scheduled for 15 August 2022 but may not go ahead and that other surgery was to be scheduled on a later date. 15. On 10 August 2022, I indicated to Mr Davison that the material before the Court was not satisfactory to justify vacating the hearing as there was no medical evidence from his treating doctor or specialist that identified the nature of his condition and upcoming surgery, the date of that surgery and his prognosis. However, I indicated that I would give him until 3:00pm on 12 August 2022 to obtain further evidence and adjourned the hearing of his application to today. 16. The further evidence relied upon by the defendants is annexed to Mr Davison, second affidavit, to which no objection was taken to by the plaintiff. There is a letter from Mr Davison's neurosurgeon and spinal surgeon dated 12 August 2022, a letter from his chiropractor, a letter from his massage therapist and rehabilitation specialist, and a letter from his friend and colleague. Pausing here, as it is not evidence from a doctor or allied health provider, I do not consider the letter from his friend and colleague to be persuasive or of significance to the defendants' application. 17. The plaintiff's opposition to vacating the hearing is not based on the submission that Mr Davison's evidence as to his neck and back should not be accepted. Rather, the plaintiff opposes the application on the basis that the Court should not be satisfied that the position in relation to Mr Davison's health will be any different in March 2023 (or any other time). The plaintiff also points to the numerous past requests for extensions of time and submits that Mr Davison's evidence fails to demonstrate any material change in his condition since the matter was set down for hearing last year. It is submitted that a vacation at this late stage, in circumstances where the evidence does not disclose any prospect of material improvement in Mr Davison's condition by the time of the next allocated hearing date, would not be consistent with the just, quick and cheap resolution of the issues in the proceedings. 18. The principles applicable to the exercise of my discretion whether to vacate the hearing date are well established. In determining the defendant's motion, I am required to give effect to the overriding purpose of the Civil Procedure Act 2005 (NSW) (CPA) which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: CPA, s 56(1). I also need to manage the proceedings having regard to the matters listed in s 57(1) of the CPA and take account of s 58 of the CPA, which requires the Court to seek to act in accordance with the dictates of justice having regard to the matters listed in s 58(2)(b) of the CPA and the provisions of ss 56 and 57 of the CPA. 19. The dictates of justice are paramount as Beazley JA (as her Excellency then was), observed in Hamod v State of New South Wales [2011] NSWCA 375 (Hamod), at [141]. Her Honour noted that what constitutes a 'just resolution' is to be understood in light of the purposes and objectives stated in the statutory provisions. The minimisation of delay and expense are seen as essential to a just resolution of proceedings. However, those terms are relative and the parties should be given an appropriate opportunity to plead and argue their case. Nonetheless, there are limits to the extent that a party will be accommodated in the conduct of the litigation: Hamod at [141]. 20. In the context of an adjournment based on medical grounds, it has also been observed that, generally speaking, if a person is genuinely ill or unable to take part in proceedings, the Court should vacate or adjourn the matter until the appropriate time. However, there are situations where the Court will take another course. One is where a party is so ill that it is unlikely that even if the case is adjourned, he or she will be in any better position on the next occasion. Another is where the relevant party does not attend either with or without a medical certificate in circumstances where there have previously been delays due to their alleged illness and where the court had made it clear that if there is to be an application for an adjournment it must be made by a motion supported by appropriate evidence: Forster v Harvey [2006] NSWSC 1112 at [7]-[8], (Young CJ in Eq (as his Honour then was)), cited in von Reisner v Chepurin [2012] NSWCA 418 at [4], (Ward JA (as her Honour then was)). 21. In an application to adjourn or vacate a trial on medical grounds, there must also be medical evidence of sufficient specificity to enable the Court to be satisfied that the party making the application is, in fact, unable to attend Court: Uy v Ng [2021] NSWSC 429 at [20]. 22. Thus, the determination of the question is whether the Court should vacate the hearing as sought by the defendants must be assessed in light of the evidence, the potential prejudice to the plaintiff, the lengthy delays to date and the potential impact on other litigants in this Court. Weighing up those matters, and while finely balanced, the conclusion I have come to is that the hearing should be vacated. 23. I am satisfied from the evidence that Mr Davison's physical condition means that it is very unlikely that he would be physically capable of attending Court (either in person or via video link) and participating in the proceedings over the course of a nine day hearing commencing on 29 August 2022, noting that he is acting on his own behalf and on behalf of the first defendant. The evidence indicates that Mr Davison is currently being treated for chronic pain and spinal pathologies and will undergo surgery on 21 October 2022 (postponed from 15 August 2022) for a Halo vest trial, for craniocervical instability, and will be in hospital for seven days and in a brace for a further two months. Pending outcomes, there may be fusion surgery (for a T3 crush fracture and potential fusion to C2 and C3) and his post-surgery rehabilitation will be ongoing, with regular reviews and physiotherapy for a further three to four months. The letters attest to Mr Davison being in a constant state of pain and discomfort which impacts his abilities to sit, stand or lie for any length of time, that his cognitive and emotional state is also impacted, and that his health has deteriorated in the last six months. 24. I cannot be certain that Mr Davison's physical health will have improved by February or March next year, such that he will then be able to conduct the defence of these proceedings. However, the evidence from his neurosurgeon and spine specialist indicates that surgery with Halo trials have reported good results, such that I am satisfied there is some prospect of improvement. Mr Davison also emphasised that he is very hopeful that the surgery will lead to improvement to both his physical and mental health by next year. Relevantly, he informed the Court today that even if he does not get better after surgery, the case may proceed next year. He acknowledged that fact, stating that "no matter what happens, we go to Court – late February/March… no matter how [he is]… feeling". 25. A significant matter in my consideration is the prejudice that would be occasioned to the plaintiff by the vacation of the hearing. It is inevitable that there will be some attendant expense and, as already observed, there have been other occasions where Mr Davison's health had led to delays. While not determinative, I consider it to be a relevant factor that some of the past delay in the proceedings, between 13 December 2019 and 12 May 2020, was due to the plaintiff being the subject of external administration, which meant that the proceedings were not advanced by the plaintiff at all during that period. The prejudice to the plaintiff can also be cured, to some extent, by an order that the defendants pay the plaintiff's costs thrown away by reason of the vacation on a forthwith basis. This is in addition to the plaintiff's costs of this application, which I consider should be paid by the defendants in circumstances where they have sought and been granted an indulgence by the Court. 26. I accept that the vacation of the hearing date will affect the position of other litigants in this court. However, that needs to be weighed against the risk of injustice if the defendants are unable to present their defence due to the current medical condition of Mr Davison. 27. The Court can accommodate the relisting of the proceedings for hearing before me commencing on 27 February 2023 and I will make such an order, with an estimate of ten days. Finally, I should record that, having been granted the relief sought for the reasons that I have outlined, Mr Davison should expect and be prepared that the Court will proceed with the hearing on that occasion. 28. For these reasons I make the following orders: 1. Vacate the hearing date of these proceedings on 29 August 2022. 2. List the proceedings for hearing before Henry J on 27 February 2023 with an estimate of ten days. 3. Make the following directions in anticipation of the hearing: 1. the plaintiff to serve the defendants with a draft index to the Court Book by 8 February 2023; 2. the defendants to notify the plaintiff of any requested additions or amendments to the Court Book by 15 February 2023; 3. the parties are to file and exchange an outline of written submissions, together with any list of objections and list of authorities by 22 February 2023; and 4. the plaintiff to deliver a copy of the Court Book to the Chambers of Henry J (with a copy to the defendants) by 4.00pm on 23 February 2023. 1. The defendants to pay the plaintiff's costs of the defendants' notice of motion filed 14 July 2022 and any costs thrown away by the vacation of the hearing date on an ordinary basis, with costs to be payable forthwith.