New South Wales Supreme Court CITATION : Bailey v Bailey [2009] NSWSC 1048 HEARING DATE(S) : 25 September 2009 JURISDICTION : Equity Division JUDGMENT OF : Rein J EX TEMPORE JUDGMENT DATE : 25 September 2009 DECISION : Application to vacate the hearing date refused. CATCHWORDS : PROCEDURE – application to vacate hearing date – whether or not plaintiffs are prejudiced by their decision to change solicitors and counsel – consideration of objects of Civil Procedure Act 2005 and the dictates of justice – application for order for mediation – mediation not opposed by defendants on the condition that it does not result in vacation of the hearing date LEGISLATION CITED : Civil Procedure Act 2005 CATEGORY : Procedural and other rulings Aon Risk Services Australia Pty Ltd v Australian National University [2009] HCA 27 Coric v Grotto [2007] NSWSC 1080 CASES CITED : Deangrove Pty Ltd v Commonwealth Bank of Australia [2002] FCA 1352 Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 Higgins v Higgins [2002] NSWSC 455 Bruce Clyde Bailey (first plaintiff) Janet Beatrice Shafik Bailey (second plaintiff) PARTIES : Arnold Neil Bailey (first defendant) Glenice Margaret Bailey (second defendant) Annette Mavis Bailey (third defendant) FILE NUMBER(S) : SC 2313/02 Mr P King (plaintiffs) COUNSEL : Mr P Castley (first defendant) Mr M Pesman (second and third defendants) Hicksons Lawyers (plaintiffs) SOLICITORS : Mr Castley by direct access (first defendant) Australegal (second and third defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Rein J 25 September 2009 2313/02 Bruce Clyde Bailey and anor v Arnold Neil Bailey and ors JUDGMENT (EX TEMPORE) 1 REIN J: The plaintiffs by notice of motion dated 23 September 2009 seek to vacate a hearing date and obtain an order for mediation. The case has been fixed for hearing (on liability only) commencing on 9 November 2009 with an estimate of 3 weeks. The case was fixed for hearing by Brereton J on 19 May 2009. 2 The defendants resist the application to vacate the hearing date but they do not oppose the mediation subject to two matters. One relates to the question of the length of time for the mediation and, hence, the cost of the mediation, and I shall return to that. 3 The second issue is really linked to their opposition to the vacation of the hearing date; that is, that although amenable to a mediation, the second and third defendants do not agree that any such mediation should be held at the expense of the existing trial date. The first defendant is less amenable to an order for mediation but will not oppose it if the second and third defendants are agreeable and provided it does not involve vacation of the hearing date. 4 This litigation, which has had a very long and sad history, relates originally to partnership arrangements that existed between members of a family following the death of the plaintiffs' and defendants' father. Essentially it seems to have come down to a matter which I described in a judgment given earlier this year on 23 June 2009: see [2009] NSWSC 598 at [1] to [7], and it relates to – paraphrasing it very broadly – how the terms of an agreement reached at a mediation were to be implemented, including how the proceeds of sale of the family property known as Hazeldene were dealt with and the establishment of a contingency fund which the plaintiffs assert was a breach of the mediation agreement. 5 The matter has had many directions hearings before and subsequent to my becoming the judge with responsibility for its case management, and there have been a number of interlocutory applications. In the judgment of June 2009, to which I earlier referred, I refused the second and third defendants' application for leave to file a cross claim out of time, in part, because of the fact that the matters the subject of the cross claim, even if otherwise allowed, would not be heard at the time of the fixture for hearing which had been made. The plaintiffs resisted the application of the defendants for leave, in part, based upon the fact that a hearing date had already been given. Subsequently the second and third defendants have filed and served a statement of claim seeking some of the relief sought in the proposed cross claim ("the 2009 proceedings"). 6 There have been occasions in the past where the plaintiffs have criticised the lack of compliance by the defendants with various interlocutory orders. There was a long period in which none of the defendants were represented. The first defendant has not been represented for a considerable period but today he is represented by counsel, Mr Castley. The second defendant and the third defendant have been represented for a significant period of time now by Mr Pesman of counsel, and until recently on all the applications that I heard or directions hearings at which I presided Mr Bevan of counsel appeared on behalf of the plaintiffs either by himself or more often with a junior, Mr Young of counsel. At the most recent interlocutory hearing on 2 September 2009 Mr Bevan was led by Mr Grieve QC. 7 In September 2009 I had to consider an application by the plaintiffs for leave to file a fourth further amended statement of claim. The defendants objected to part of that proposed amended claim, or part of a paragraph, and I gave judgment in relation to that matter on 8 September 2009: see [2009] NSWSC 931. As recently as that time it appeared that the matter was on track for hearing and that all evidence relied on by either side had been served on the other. There was also discussion in respect of some orders that had been made for pre-trial directions for the preparation of a bundle of documents. That bundle preparation has, I am informed by Mr Pesman, proceeded in an appropriate way to the extent that agreement had been reached between the solicitors formerly on the record for the plaintiffs and the defendants as to what would be included in the tender bundle. Mr Pesman has prepared a document which identifies the documents in the bundle together with documents which, in accordance with a letter sent by the plaintiffs' former solicitors, were agreed could be removed from the bundle. The document also lists all the affidavits which the plaintiffs' former solicitors advise will be relied on by the plaintiffs in their case. Mr Pesman says and I accept that there are approximately 2 ½ volumes of the tender bundle. That Mr Bevan was involved in the process can be seen from the invoice of Turner Freeman which is annexure D to Mr Luxford's affidavit of 23 September 2009. 8 In support of the application of today the plaintiffs rely on an affidavit of Mr Derek Luxford of 23 September 2009 and an affidavit of Mr Luxford of 25 September 2009. The defendants in opposing the plaintiffs' notice of motion rely on an affidavit of Glenice Margaret Bailey of 25 September 2009 (the second defendant) and an affidavit of Arnold Neil Bailey of 24 September 2009 (the first defendant). It appears from paragraph 3 of Mr Luxford's affidavit of 23 September that the plaintiffs have, as recently as 14 September or close to that date, decided to change solicitors. According to that affidavit, Mr Luxford was informed by Mr Bruce Clyde Bailey, the first-named plaintiff, that he wished to change his solicitors in the proceedings and wanted Mr Luxford to take over the handling of those proceedings and "to obtain an adjournment of the hearing date for the 2002 proceedings". The reference to "the 2002 proceedings" is a reference to this matter 2313/02. Mr Bailey also instructed him that he wished to endeavour to try for a third time to resolve these proceedings by mediation. 9 In his affidavit of 23 September Mr Luxford deposed to his attempts to correspond with the former solicitors, Messrs Turner Freeman, in relation to obtaining the files. It appears from that affidavit that a very substantial bill of $147,000 has only recently been received by the plaintiffs and has not been paid. That bill and its non-payment may be an impediment to the transfer of files by the former solicitors to the plaintiffs although, it is not clear from Mr Luxford's affidavit that that is the position. If retrieval of the files were an obstacle to preparation of the case it is open to the plaintiffs to take steps to solve that problem, but for reasons I shall explain below that is less of a problem here than it might be. 10 Mr King informed me that his clients had been concerned that Turner Freeman had disregarded instructions given by them to Turner Freeman to try to resolve the proceedings in a mediation, a most significant allegation: see T9.16 – T10.25. This is touched upon in paragraph 6 of Mr Luxford's affidavit of 25 September: "Further to paragraph 3 of my 23 September 2009 Affidavit in further discussions with Mr Bailey it has become clear that Mr Bailey's pre-eminent concern is the failure of his former solicitors to press for a mediation of the outstanding issues in the dispute in the 2009 Proceedings [semble 2002 Proceedings], a concern which has been exacerbated by the late commencement of the 2009 Proceedings." 11 Paragraph 6 does not actually assert that Turner Freeman had refused to follow instructions. In any event the defendants pointed out that by a letter of 29 July 2009 (Exhibit A) Turner Freeman in fact wrote to the solicitors for the second and third defendants proposing a mediation and that the solicitors for the first and second defendants had responded indicating that some of the conditions sought to be imposed were unacceptable to their clients. Mr King subsequently withdrew the assertion that Turner Freeman had failed to act in accordance with the plaintiffs' instructions: see T16.24 - .26. 12 I received written submissions from Mr King to which he has also spoken orally and to which I have had regard. Mr King submits that the plaintiffs are prejudiced by the inability of the new solicitors to prepare the case in time for the hearing on 9 November, which he describes as procedural unfairness. Secondly, he submits that the matter is one which is appropriate for mediation having regard to the nature of the proceedings, particularly emphasising the fact that it is a fight between siblings of a long-standing nature, and that at an earlier mediation the claims by the plaintiffs against their former solicitors, who were the fourth, fifth and sixth defendants, were resolved (although apparently no notice of discontinuance has in fact yet been filed: see T5.1). 13 I should also mention that at the outset of the hearing of the motion today Mr King drew my attention to a matter of which I was unaware and that is that as a District Court judge I heard a matter involving the plaintiffs in these proceedings against a firm of engineering consultants and the expert consultant whom they had engaged in relation to some other proceedings and that I had given a judgment on a pleading issue that was raised as to whether or not, on the application of the defendant to those proceedings, the proceedings should be struck out as not revealing a cause of action. He informed me that in an ex tempore judgment I did find for the plaintiffs in that matter in rejecting the defendant's pleading point (no issue of credit being involved) and that the matter subsequently did proceed in the District Court and has recently been settled. Mr King does not assert that it is a matter that would lead to my disqualifying myself in this matter, and I agree with that view. Counsel for the defendants have indicated that their clients have no objection to me hearing the matter. 14 The point of mentioning this matter is only that it was asserted by Mr King that his clients had previously raised the matter with the former solicitors and that the former solicitors had not raised it with the Court. It is, however, not mentioned in the affidavits of Mr Luxford. Mr Luxford's firm, Mr King informed me, instructed him in those District Court proceedings. 15 There was also raised by Mr King a matter that Mr Pesman had raised with him, namely that he, Mr King, has apparently for some short period acted in an estate matter for the second and third defendants. Mr Pesman indicated that his clients probably would have no objection to Mr King continuing to act in this matter, and they had no objection to him doing so on the motion. 16 Mr King has suggested, together with those instructing him, that an appropriate mediator for this matter would be Mr Michael McHugh, a former Justice of the High Court and indeed, prior to that a Justice of Appeal of this Court, and that Mr McHugh is available on dates in the second half of November to act as a mediator. The problem, however, with those dates is that they are after the date on which the matter has been currently fixed and the defendants, as I have indicated, do not consent to the vacation of the hearing date. There is no reason why a suitably qualified and experienced mediator who is available before the hearing date could not be appointed if that otherwise were appropriate. The defendants indicated that they could not afford to contribute to the costs of more than one day's mediation. Some way through submissions (see T17.25 - .28) Mr King indicated that he had instructions that his clients would pay Mr McHugh's fees. 17 Given that the defendants' attitude is not adverse to mediation, I do not think it is necessary to dwell too long on the question of whether a mediation would be appropriate, and there are cases which Mr King has drawn to my attention; two decisions of this Court in Higgins v Higgins [2002] NSWSC 455 and Coric v Grotto [2007] NSWSC 1080, and Deangrove Pty Ltd v Commonwealth Bank of Australia [2002] FCA 1352 of the Federal Court, all of which point to the Court being not adverse to ordering mediation even when one of the parties is not prepared to go to mediation and all dealing with the type of issues that should be considered in relation to the appropriateness of mediation. Reference was also made to Dimento v Dimento [2007] NSWSC 420 in which Brereton J accepted that it was appropriate for a party to want pleadings and evidence to be completed as a precondition to mediation. Mr King indicated a desire to have the 2009 proceedings also dealt with at mediation – Mr Pesman thought that this was a possibility and agreed to provide submissions relating to that case (which is quite limited in scope) to Mr King. As I have noted it is the plaintiffs who previously opposed the inclusion in the current proceedings of the subject matter of the 2009 proceedings. 18 Mr Arnold Neil Bailey, the first defendant, has in his affidavit indicated a lack of confidence in the mediation process, the second defendant deposed to her and her sister's unpleasant experiences at previous mediations, and, as I have indicated before, the proceedings that are now before the Court relate to the effect or implementation of previous mediation agreements. 19 The willingness in the case of the second and third defendants to attend a mediation and, in the case of the first defendant, not to vigorously oppose a mediation, provided it is held at a suitable time, is a positive indication that notwithstanding their doubts as to the utility of attending another mediation, they would like to see this matter resolved – if it can be – by the parties reaching an agreement rather than having one imposed upon them by the Court. 20 Nevertheless, the defendants have indicated by their affidavits the effect that the proceedings have had upon them, their absolute desire to have the hearing proceed in November, their limited funds and in the case of Mr Arnold Bailey, his desire to leave for Western Australia once the proceedings were heard in November. They deposed to the emotional and financial stress which the proceedings have placed them under. The first defendant deposes to arrangements with his barrister for capping fees and Mr Pesman who, as I have indicated, has had an extensive involvement in the case also informed me that he had an arrangement for capping of his costs and has indicated he would not be able to maintain his commitment to deal with the case if it were adjourned. 21 I turn to the question of the plaintiffs' position, first on the question of "procedural unfairness" as Mr King described it. I should point out that Mr Pesman very helpfully made an important offer to the plaintiffs which is this: he informed the Court that his solicitor has all of the documents filed in the case including the affidavits and pleadings in electronic form. He made an offer to provide that on a disc to the plaintiffs' solicitors and to do so effectively forthwith. So far as the bundle of documents which has been prepared, he has offered to provide that to the plaintiffs' solicitors as soon as they have agreed upon an appropriate a photocopying fee, and he has produced a copy of the index of all the documents contained in the proposed tender bundle with documents agreed to be removed shown as deleted. 22 Mr King spoke about the need to marshal documents and to examine all of the subpoenaed documents. There are apparently many documents which have been subpoenaed (50 boxes were mentioned) and the Court is aware that on previous occasions there was considerable dispute about what should be produced on subpoena and inspected. 23 I think there is a firm basis for confidence that the plaintiffs' previously retained solicitors and barristers have examined all of the documents which have been produced, given the fact that when there were problems in the production and inspection of them they approached the Court, and given the lack of any indication that there remained any work to be done in relation to that aspect which would delay the hearing and, more importantly, the fact that there has been agreement about what is to go into the bundle of documents. 24 Mr Pesman makes the point that the proceedings are really not all that complicated. He has described the case as involving, firstly, construction of the mediation agreement and, secondly, a consideration of events of within about two weeks following the sale of Hazeldene, and to examining what was done and the correspondence passing between the parties' solicitors (both sides being represented by legal practitioners) in that period. He made the point that when he came into the matter in February this year it took him about six days to get on top of the material with his solicitor. 25 Mr Castley has only just come into the case for the first defendant. He has indicated that he is in much the same position as the plaintiffs and he has makes no application for any adjournment based on any difficulty that might occur by reason of his late involvement. 26 It is always difficult to estimate how long preparation of a case might take but this case has the huge advantage that one rarely sees where there is a change of solicitors, namely, that the matter is very much on track with a great deal of the work necessary for the hearing done, including the exchange of all affidavits and a compilation of the tender bundle. A defence to the recently amended fourth further amended statement of claim needs to be filed but it can be done, I am informed, by next Friday. In his affidavit of 25 September Mr Luxford estimated a period of at least six weeks would be needed to obtain and consider all of the documents and advise his clients. He also indicated at paragraph 13 of his 23 September affidavit a problem of his own time due to some other commitments, although he appears to have accepted instructions notwithstanding that problem. His expressions of opinion as to how long he would need do not really reflect what is the experience of Mr Pesman and the expectation of Mr Castley and are made without full knowledge of the case and its current state of preparation, which he will soon have when those documents which Mr Pesman has offered to provide are provided to him. His estimate seems to me an excessive estimate, but based on a lack of information. The offer that Mr Pesman has made and the solicitors have made, if acted upon, I think will very speedily bring about a full understanding on the part of the new solicitors and new counsel. I do not accept that it is necessary for the new solicitors and counsel to re-inspect all of the subpoenaed material. Mr Pesman also offered on behalf of himself and his solicitors to provide all reasonable assistance that was sought of them to assist the plaintiffs' new legal representatives to be ready for the trial in 9 November. 27 The second important consideration is that it seems to me that the plaintiffs have, in effect, brought about the present situation in that they have decided to change solicitors and counsel. In paragraph 3 of Mr Luxford's affidavit of 23 September 2009 it is stated that they wanted an adjournment of the hearing date even before any advice was given to them that the matter could not be prepared for hearing within time. The affidavits do not adequately explain why the plaintiffs could not maintain the solicitors or counsel that they previously had in the case and it does not seem to me that it would be an appropriate burden to place on the defendants vacate the hearing because the plaintiffs, by their own choice, have decided to dispense with the services of their former solicitors and counsel. 28 The defendants (like the plaintiffs) are, subject to some compelling countervailing consideration, entitled to have their case heard on the date fixed for hearing. There are six reasons why this is of particular significance in this case: (1) These proceedings are a further round in proceedings that have been on foot for a very long time. (2) There have been a considerable number of interlocutory disputes and changes of pleadings by the plaintiffs even in these proceedings, who have at all times been represented by solicitors and counsel. (3) The plaintiffs objected to a cross claim being permitted in part on the basis that the hearing had already been fixed for November. (4) The parties are all individuals and the proceedings relate to a dispute following a mediated resolution. (5) The defendants have limited financial means and their legal representatives have agreed to make special arrangements in respect of their fees. (6) The proceedings were fixed for a lengthy period of 3 weeks a long time ago. 29 The Court is required to have regard to ss 56 and 57 of the Civil Procedure Act 2005 in making any order or directions for the management of proceedings, and this requires regard to be paid to the objects set out in s 57(a) – (d) and the dictates of justice in the particular case: see s 58(9). Section 57 specifically refers to the object of "the efficient use of available judicial and administrative resources" and "the timely disposal of proceedings". Recent cases reinforce this approach as they demonstrate that the Court needs to have regard not only to the interests of the parties, but also to the interest of other litigants and the allocation of judicial resources when considering whether an adjournment should be allowed (or amendments allowed which will lead to an adjournment): see Aon Risk Services Australia Pty Ltd v Australian National University [2009] HCA 27 at [96] – [102] per Gummow, Hayne, Creenan, Kiefel and Bell JJ at [133] – [134], per Heydon J, and see also Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 per Spigelman CJ at [28] – [29] with whom Basten and Campbell JJA concurred at [34] and [35], which deals with the new statutory provisions. 30 I am not satisfied that there is any real prejudice to the plaintiffs so far as preparation is concerned because previous solicitors and counsel have prepared the case to the stage it is now at, but even if there were some prejudice, it is prejudice that the plaintiffs must accept as the consequence of their decision to change solicitors and counsel and I am of the view that it would work considerable injustice to the defendants to permit that decision of the plaintiffs to result in vacation of the hearing date. Further the vacation of the hearing date would not be consistent with the other objects of the Civil Procedure Act. 31 In the circumstances, I refuse to vacate the hearing date. It will stay fixed for 9 November for three weeks and I will now hear the parties on whether or not I should order a mediation prior to that at a date convenient to the parties. 32 I formally order the defendants to file a defence to the fourth amended further statement of claim by Friday next week, 2 October by 4.00 pm. 33 The plaintiffs should pay the costs of the motion. 34 I stand the matter over to 9.30 am next Thursday, 1 October 2009. ********* 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. 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