New South Wales Supreme Court CITATION : Arthur Eady v Owners Strata Plan 20530 [2007] NSWSC 236 HEARING DATE(S) : 9/03/07 JURISDICTION : Equity Division JUDGMENT OF : Einstein J EX TEMPORE JUDGMENT DATE : 9 March 2007 DECISION : Conditional leave to rely upon late experts reports CATCHWORDS : Case management - failure of defendant to comply with directions LEGISLATION CITED : Uniform Civil Procedure Act 2005 (NSW) PARTIES : Arthur Eady (Plaintiff) Owners Strata Plan 20530 (Defendant) FILE NUMBER(S) : SC 4499/05 COUNSEL : Mr M Young (Plaintiff) Mr M McGrath (Defendant) SOLICITORS : Andreonos Pty Ltd (Plaintiff) Henry Davis York (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Einstein J Tuesday 9 March 2007 ex tempore Revised 19 March 2007 4499/2005 Arthur Eady v Owners Strata Plan 20530 JUDGMENT The motion 1 In proceedings no. 4499 of 2005 the formal position is that a notice of motion filed on 1 March 2007 is before the Court for hearing on the second occasion this week. The background 2 The background to the pursuit of the motion is somewhat complex, but generally the submissions of the parties today and on an earlier occasion this week have been transcribed. It will be important for the purposes of the judgment now being delivered to make clear that the essential critical issue which separates the parties today is whether or not the defendant should be granted leave to file certain evidence outside of the times stipulated by directions given from time to time, specifically being three experts' reports. The contention of the plaintiff is that the history of the proceedings as disclosed by the court file and in various affidavits, makes clear that the defendants should be given no such leave, the conduct of the defendant being contended to have been so dilatory in the failure to comply with previous directions, as to mandate the principled exercise of the Court's discretion being to out-of-hand refuse leave to the defendants to rely upon these reports. 3 The defendant's contradictor contention has been that for a number of reasons the defendant should be allowed to have its day in court notwithstanding its failure to comply with these directions and that the principled exercise of the Court's discretion should be to permit use of those materials, albeit as I have generally understood it, the defendant at least accepts that there may be some conditions appropriate to attach to its entitlement to rely upon the new materials. 4 The short history of the proceedings is that they commenced in August 2005. The plaintiff claims against the Owners of Strata Plan 20530 for alleged breaches of statutory or common law duties by it to repair and renew the common property, as a result of which the plaintiff asserts that the external walls of lots 1 and 2 in the industrial premises which the plaintiff had purchased partially collapsed occasioning him loss and damage. The Owners of Strata Plan 20530, who are the defendants, contend inter alia that the collapse of the walls was not causally connected to the alleged defects or want of renewal of the common property but was a result of storm damage. The Owners of Strata Plan 20530 further contend that the plaintiff knew or ought to have known of the condition of the lots at the time of the purchase and that the plaintiff himself carried, out but did not complete, interior building works to lots 1 and 2, which had precluded him from renting them out and, in essence, had failed to mitigate any loss and damage. 5 It is unnecessary to repeat the record and the current state of the pleadings may be clearly gleaned from the amended statement of claim filed on 21 July 2006 and from the amended defence filed on either 12 or 14 December 2006. The directions history 6 In terms of the directions history of the proceedings, the position is that on 30 March 2006 directions were given for the plaintiff to serve its evidence, including its expert evidence, by 12 May 2006 and for the defendant to serve its evidence, including its expert evidence, by 9 June 2006. In fact the plaintiff served its evidence on liability by 17 May 2006 and served its expert evidence on liability by 31 May 2006, but the defendant did not serve its evidence, including its expert evidence, by 9 June 2006 as ordered. 7 On 29 June 2006 further directions were given. This time the plaintiff was to serve an amended statement of claim by 21 June 2006 and in fact did so by 1 August. The plaintiff was ordered to file its evidence in reply, including its expert evidence, by 15 September 2006. The defendant obtained an extension of the time in which it was to file its evidence, including its expert evidence, to 1 September 2006, but it did not comply by that date with that direction. On 8 August 2006 the plaintiff served its valuer's evidence. 8 On 1 August 2006 the plaintiff served its amended statement of claim, which amended statement of claim simply added a cause of action in negligence relying on the same facts as the existing claim for breach of statutory duty. On 1 August 2006 the plaintiff had further served a short affidavit relating to recent water ingress into his property. 9 On 21 September 2006 orders were made for the plaintiff's evidence in reply, including expert evidence, to be filed and served by 17 November 2006 and for the defendant to, for the third time, serve its evidence including its experts' evidence on or before 3 November 2006, which direction was not complied with. 10 At some time on or about 6 November 2006 the defendant's then solicitors communicated to the plaintiff's solicitors that they no longer had instructions and on or about 23 November 2006 the defendant's solicitors became Henry Davis York. 11 When the proceedings were listed for directions before Deputy Registrar Musgrave on 23 November 2006, no evidence having been served by the defendant, the plaintiff sought that the matter go into a call-over for a hearing date. The defendant applied for an adjournment of the proceedings to enable the defendant's new solicitors to obtain instructions from its client and the proceedings were adjourned to 5 December 2006. 12 On 5 December 2006 the plaintiff again sought that the matter go into a call-over again citing the defendant's continued failure to serve its evidence. The registrar advised the defendants that he would give them one last chance to serve any further evidence and that he intended that the matter would be placed into the March call-over at the next directions hearing on 6 March 2007. On that day the orders which were made by the registrar were that the defendant file and serve an amended defence on or before 12 December 2006 and that direction was generally complied with. A further order made was that the defendant serve its evidence, including any expert evidence, by 2 February 2007, and that no evidence served after that date was to be relied upon except by leave of the Court. A further order was that the plaintiff serve any evidence in reply, including expert evidence, by 2 March 2007. Finally, the proceedings were listed for further directions on 6 March 2007. 13 At the directions hearing on 6 March 2007 Mr Young for the plaintiff, advised the Court that the defendant had once again failed to serve its evidence despite the special terms of the order made on 5 December 2006. Mr Young requested that the matter be placed in the March call-over despite that call-over apparently having been closed in the interim since December. The defendant's solicitor indicated to the Court that the defendant had no objection to the matter being placed in the March call-over, however, it had filed a notice of motion seeking leave to serve further evidence and orders relating to discovery. The registrar indicated that whilst he was disposed to refer the matter to the duty judge that day, so as to have the matter placed in the March call-over, given that the defendant's motion was returnable on 8 March, he proposed to refer the matter to the duty judge on that day to deal with the March call-over and other motion issues. The registrar indicated that it may be possible that the matter could be placed into the March call-over and his directions noted that the Court would try to get the matter into the 14 March call-over, stood the matter over to 8 March and noted that it was appropriate that the matter be referred to the duty judge that day. 14 That was the state of these proceedings on the occasion when the matter was referred to myself by the Equity duty judge. Concern as to the state of the matter 15 The state of the matter does cause the Court concern. The longevity of the matter does cause the Court concern. The repeated failures by the defendant to comply with the timetable extended again and again and again, and even to comply with the one last chance order, does give the Court room for real concern. 16 When the matter first came before me the parties apparently had in mind an assumption, which proved to be misconceived. They had in mind, following what they had been informed by the registrar in terms of the March call-over, that there was still an opportunity, should the duty judge so direct, for these proceedings to be placed into the March call-over. As the parties are aware, I consulted with the Chief Judge in Equity as soon as I understood this to be the parties' understanding and the Chief Judge in Equity made quite plain that it was impossible for these proceedings to be placed into that call-over at this late stage, bearing in mind his Honour's personal knowledge of the content of the call-over, the number of matters which were to be called over and the difficulties with that call-over. 17 Hence when the matter was resumed before me I made that fact plain to the parties and from that point in time a number of the original submissions by both parties have fallen away to cope with the new world, as it were. 18 Following the interchanges between the Court and the Bar table earlier this week, the parties went away to give close consideration to the question of whether or not this was a matter that could be referred out as the plaintiff in particular had very strongly pressed upon the Court the importance of the matter going to a final hearing for reasons given in the affidavits that are before the Court. 19 The defendant's approach had been a far more cautious approach, the defendant submitting that the defendant's additional reports should be permitted and the appropriate procedure before any reference out should be for the experts to go into conclave following the plaintiff's reply to these very late reports. First decision 20 I have reached the very firm view that, firstly, subject to such conditions as it may be appropriate to impose, the defendant should now be entitled to rely upon the late reports: these I should indicate, being reports of a company called BEM, a company called Gettex and T R Howes, two of which reports were served on 7 March, the Howes report having been served by today. 21 It is certainly true, as Mr Young has pointed out, that the evidence before the Court makes clear that instructions were only given to those experts in each case on 19 January 2007 and that there is no real explanation before the Court as to how it came about that once Henry Davis York took over the file, those instructions took that long to come forward, particularly in the light of the 'one last chance' direction which I have already referred to. These are further matters for concern. 22 The position with respect to the conditions to be attached to this grant of leave is quite simple. The Court requires additional evidence from both parties in order to be able to work through, in the interests of the proper exercise of the discretion, what if any order should be made. I have in mind, for example, that it may not be the defendant which should bear the burden of any costs order which may have to be made. Close questions may arise as between the defendant and its first solicitors as to what were the reasons why these directions were not complied with for such a long period. Henry Davis York may itself have a position in terms of material evidence to be placed before the Court. The Uniform Civil Procedure Act permits orders to be made, not only against the litigants but also against legal advisers, including solicitors or counsel. 23 To my mind the obvious principled exercise of the present discretion in terms of what conditions should be imposed is to permit the parties to litigate that very matter properly and the Court will be in a position to give the parties time to do just that next week. However, for present purposes, the Court's decision will be - and it will provide the conditions in due course - that the defendant is to be entitled to rely upon these materials, although out of time. Obviously the further conditions must include an entitlement in the plaintiff to respond to these reports. That is the first of the decisions warranted on the materials to which I have adverted. Second decision 24 The second of the decisions warranted on the same materials is that this is indeed a matter appropriate to be referred out on all issues. The parties have already begun consulting between each other and with those who are available as referees in relation to an endeavour to see if they can come to an agreement as to which person should be appointed a referee. If the parties cannot so agree, the Court will simply determine the matter of the identity of the referee. 25 As the transcript taken today makes plain, it is my own very strong view that whomever is to be the referee, the Court would commend to that referee the notion of very early in the piece endeavouring to see whether a conclave of experts can be arranged for the simple reason that, as is obvious in many cases, a conclave can sometimes succeed in a fairly dramatic reduction of the real issues which are to be litigated. 26 Bearing in mind the very late service of these reports, which are now to be allowed out of time, it may be some little time before these experts can participate in a conclave, but notwithstanding all of that, the conduct of the reference is a matter for the referee and all the Court is doing is commending to the referee the notion of having a very careful look at whether conclaves can be achieved, if so when. It is very important it seems to me for the order giving the reference to be made shortly so that the parties can get before a referee fairly shortly in order to move on with these further directions and in particular when the reference hearing is actually due to commence. 27 There are some other matters which the parties do need to attend to in terms of questions which were raised by the motion concerning matters such as discovery and the like. In the first instance however the purpose of the Court in handing down these reasons is to permit the parties to know the lie of the land so that they can endeavour to see whether an accommodation can be reached with respect to some of the matters which on the motion still separate the parties and for the purpose of the parties coming forward with short minutes of order fixing the question of the determination of what are the conditions which are to attach to the defendant's grant of leave to rely upon these materials, which matter the Court will permit to be litigated next week on an appropriate occasion when counsel are free. 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.