New South Wales Supreme Court CITATION : Lidoframe Pty Ltd as Trustee for Logan Cypress & Framing Trust v State of New South Wales [2006] NSWSC 1262 HEARING DATE(S) : 22 November 2006 JUDGMENT DATE : 22 November 2006 JURISDICTION : Equity JUDGMENT OF : Campbell J EX TEMPORE JUDGMENT DATE : 11/22/2006 DECISION : Order for mediation made. CATCHWORDS : PROCEDURE – Supreme Court procedure – order for compulsory mediation – circumstances in which appropriate LEGISLATION CITED : Civil Procedure Act 2005 Supreme Court Act 1970 Higgins v Higgins [2002] NSWSC 455 CASES CITED : Remuneration Planning Corporation Pty Limited v Fitton; Fritton v Costello [2001] NSWSC 1208 Singh v Singh [2002] NSWSC 852 Unconventional Conventions Pty Ltd v Accent Oz Pty Ltd [2004] NSWSC 1050 Lidoframe Pty Ltd as Trustee for Logan Cypress & Framing Trust and trading as Logan Cypress and Framing Centre - Narrabri - First Plaintiff PARTIES : Kaputar Timbers Pty Ltd trading as Logan Cypress Australia - Second Plaintiff State of New South Wales - Defendant FILE NUMBER(S) : SC 4027/06 COUNSEL : A W Street SC; A J Abadee - Plaintiffs R Beech-Jones SC - Defendant SOLICITORS : North & Badgery - Plaintiffs Crown Solicitor - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST CAMPBELL J WEDNESDAY 22 NOVEMBER 2006 4027/06 LIDOFRAME PTY LTD AS TRUSTEE FOR LOGAN CYPRESS & ANOR v STATE OF NEW SOUTH WALES JUDGMENT – Ex Tempore 1 HIS HONOUR: This is a Notice of Motion brought in proceedings that seek relief relating to the scheme set up by the State Government to wind back parts of the industry of getting timber from Brigalow country. The government set up a Brigalow Timber Industry Exit Assistance Fund, with guidelines that were published in June 2005, to assist people whose businesses or employment were affected by the creation of a community conservation area in the Brigalow country. Those guidelines set out a procedure by which applications for financial assistance could be made. 2 The plaintiff is a company that operated a sawmill which, it seems, sourced at least some of its timber from the Brigalow country. It made a successful application for assistance. That application resulted in a deed being entered into between the plaintiff and the Crown, that set out the basis on which certain payments might be made. The structure of those payments was that some interim assistance was available, in an amount that was quantified by the deed itself, so far as "interim exit assistance" was concerned, and that had a maximum amount placed on it by the deed so far as "interim site rectification expenses" were concerned. There was then a procedure whereby amounts beyond the interim payments might in some circumstances become payable. 3 The plaintiff by its Notice of Motion seeks an order under section 26 Civil Procedure Act, referring the proceedings to mediation. 4 There are three significant areas of dispute between the parties. One of those disputes relates to the construction of a clause of the guidelines, which indicated the basis upon which assistance would be provided. The plaintiff submits that, by force of the deed, those guidelines have become contractually binding between the plaintiff and the Crown. The second problem relates to whether under the deed there are legal obligations for the State to make any payments at all beyond the interim payments, and if so, what those obligations are. The third area of dispute arises from the fact that the first instalment of 80% of the quantified amount of interim exit assistance has been paid, but the second instalment, 20% of that quantified amount, has not. There seems to be a dispute - or at least there was at one stage a dispute - about whether a pre-condition for paying that second instalment has been met. 5 There have been some attempts at negotiation. After an initial indication from the Crown of willingness to negotiate, there were some proposals, the details of which are not before me, that passed between the parties, and that resulted in the negotiations ceasing. 6 Mr Beech-Jones SC, for the Crown, submits that the parties are too far apart for mediation to be likely to be any use - a conclusion he asks me to draw from the way that negotiations broke down almost immediately they began - and that the nature of the issues are unsuitable for mediation. The aspects of the issues that he points to are that they are quite confined, and they are the sort of matters that, as to the first two, are essentially matters of construction of the deed, and, as to the third, involves fairly brief factual consideration. This is not the sort of case, he submits, where a successful mediation would avoid a massive trial. Mr Beech-Jones also submits that when there is a dispute between the parties about whether the deed creates any legal obligations beyond the application of a specified process to decide whether any extra payment should be made and if so how much, the matter is not a topic that is suitable for submission to mediation. 7 I do not agree. The experience of the Court with section 110K Supreme Court Act 1970, and now with section 26 Civil Procedure Act 2005, has been that compulsory mediation can be a useful tool for the resolution of disputes, even disputes that at first sight look intractable. Thus, there have been orders for mediation even when one of the parties is opposed to mediation: Remuneration Planning Corporation Pty Limited v Fitton; Fitton v Costello [2001] NSWSC 1208; Higgins v Higgins [2002] NSWSC 455; Singh v Singh [2002] NSWSC 852. There have also been orders for a second mediation, when a first mediation has failed, but there has been a material change in the circumstances: Unconventional Conventions Pty Ltd v Accent Oz Pty Ltd [2004] NSWSC 1050. Even if parties have genuinely tried to resolve a dispute by negotiation between solicitors, and failed, that does not mean that the different dispute-resolution process involved in mediation is unlikely to succeed. 8 While there is a special factor in favour of ordering mediation if it may avoid a massive trial, the usefulness of mediation is not confined to large disputes. 9 I do not see that the nature of the issues between the parties is such as to make them unsuitable for mediation. While it is not a usual mediation, where one of the issues is whether one party has any legal obligation at all to the other under an executed document, it is not fundamentally different to a mediation of a dispute concerning a tort claim in which there is a dispute as to liability. 10 The mediation is unlikely to take long, and unlikely to impose significant expense on the parties. It is the sort of mediation that I would expect would be over inside a day. For those reasons, I shall make an order for mediation. 11 I should make clear also that one of the bases on which mediation was sought was that there has been a departure from the Attorney General's Model Litigant Policy of September 2004. In its terms that policy applies only to litigation engaged in by the Attorney General's Department. It requires the Department to act honestly and fairly in handling claims in litigation by, amongst other things: "(b) Paying legitimate claims without litigation, including making partial settlements of claims or interim payments, where it is clear that liability is at least as much as the amount to be paid; … (d) Endeavouring to avoid litigation, wherever possible. In particular regard should be had to Premier's Memorandum 94-25 Use of Alternative Dispute Resolution Services By Government Agencies and Premier's Memorandum 97-26 Litigation Involving Government Authorities." 12 Even on the assumption that the present litigation is governed by the terms of that policy - a matter which I expressly do not decide - I am not satisfied that there has been any breach of it demonstrated. 13 I order that the matters in dispute between the parties be referred to mediation by the Honourable Trevor Morling QC. I grant liberty to any party to apply to me on one day's notice. 14 I order the costs of this motion be the plaintiff's costs in the cause. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.