Supreme Court New South Wales Medium Neutral Citation: Warragamba Winery Pty Ltd v State of New South Wales [2015] NSWSC 1804 Hearing dates: 19 November 2015 Date of orders: 19 November 2015 Decision date: 19 November 2015 Jurisdiction: Common Law Before: McCallum J Decision: (1) That the proceedings be referred for further mediation in accordance with the orders of Harrison J, preferably to be conducted by Ms Mary Walker, the mediator who conducted the earlier mediation. (2) That failing the availability of Ms Walker, the parties endeavour to agree upon an alternative mediator or else have the proceedings relisted before me within twenty-eight days of today. (3) That any plaintiff wishing to rely upon additional financial information beyond that already provided to the defendant serve that material within twenty-eight days before the next date appointed for the continuation of the mediation. (4) That the defendant notify the remaining respondents to the motion of these orders. (5) That the parties endeavour to conclude the mediation by mid-February 2016. (6) That the proceedings be relisted before me on 4 March 2016. Catchwords: COSTS – where costs order already made – lengthy litigation – application for gross sum costs orders – where costs previously referred for mediation – whether mediation has run its course Legislation Cited: Civil Procedure Act 2005 (NSW), ss 27; 98; 101 Cases Cited: Hamod v State of New South Wales (No 13) [2009] NSWSC 756 Warragamba Winery Pty Ltd v State of NSW (No 9) [2012] NSWSC 701 Warragamba Winery v State of New South Wales (No 10) (Supreme Court (NSW), Walmsley AJ, 28 June 2012, unrep) Category: Procedural and other rulings Parties: 2005/269145 – Passlow v State of NSW 2005/269511 – Quigley v State of NSW 2005/269477 – Darryl Nix v State of NSW 2005/269465 – Richard Sheppard v State of NSW 2005/269475 – Vitomir Kuzmanovic v State of NSW 2005/269501 – Alexander Lynch v State of NSW 2005/269568 – Michelle Larden v State of NSW Representation: Counsel: Plaintiffs in proceeding 2005/269511 and first plaintiff in proceeding 2005/269145 appeared in person No appearance by other plaintiffs C Webster SC (defendant) Solicitors: Plaintiffs in all proceedings unrepresented File Number(s): 2005/269145 – Passlow v State of New South Wales2005/269511 – Quigley v State of New South Wales2005/269477 – Nix v State of New South Wales2005/269465 – Sheppard v State of New South Wales2005/269475 – Kuzmanovic v State of New South Wales2005/269501 – Lynch v State of New South Wales2005/269568 – Larden v State of New South Wales Publication restriction: None Judgment – Ex Tempore 1. HER HONOUR: These proceedings arise out of a bushfire which began on Christmas Eve in 2001 in the Blue Mountains National Park. A number of people had properties and businesses destroyed as a result of the fire. They commenced proceedings against the State of New South Wales. The proceedings were heard by Walmsley AJ. His Honour entered judgment in favour of the defendant in all proceedings: see Warragamba Winery Pty Ltd v State of NSW (No 9) [2012] NSWSC 701. In a separate judgment, his Honour ordered each plaintiff to pay the defendant's costs as agreed or assessed on an indemnity basis: see Warragamba Winery v State of New South Wales (No 10) (Supreme Court (NSW), Walmsley AJ, 28 June 2012, unrep). 2. The proceedings before Walmsley AJ were heard over eighty-four days and involved a measure of complexity (as is apparent from the length of his Honour's judgment, which runs to some 735 pages). By notice of motion filed 12 August 2014, the State seeks, rather than proceeding to an assessment of the costs ordered against each plaintiff, specification of a gross sum as allowed under s 98(4)(c) the Civil Procedure Act 2005 (NSW). The State also seeks interest under s 101(4) of the Civil Procedure Act. 3. It should be acknowledged at the outset that, on the strength of the material relied upon by the State in support of the application for specification of a gross sum, there would appear to be a respectable basis for the exercise of the power to make such an order in the present case. In particular, it is clear that the case is one in which the process of proceeding to an assessment would only add further costs to the already substantial costs of the proceedings and would delay the determination of that issue. It may equally be observed that the case is one in which the detriment suffered by the plaintiffs as a result of the natural disaster of the bushfire has been compounded by disaster of a different kind in the pursuit of their unsuccessful claim against the State. The amount now sought against each of the relevant plaintiffs is in the order of around $400,000 in each case. 4. The defendant's notice of motion came before me for hearing this morning in the following circumstances. The notice of motion was first returnable on 29 August 2014. On that date and afterwards, there were a number of adjournments in circumstances where the notice of motion and supporting affidavit had not yet been served on all plaintiffs. Ultimately, in February of this year, the matter came before Harrison J. His Honour made an order referring the proceedings for mediation. There was no evidence before me as to the circumstances of the mediation but information was provided from the Bar table both by those plaintiffs who appeared this morning and by senior counsel appearing for the State of New South Wales. Neither party objected to the Court's receiving information in that form. 5. I was told that the mediation proceeded over some two days, resulting in settlement of the costs claimed by the State against some plaintiffs. The terms of those settlements are in each case confidential and I was not informed of the quantum of costs payable by any individual plaintiff. 6. There remain seven plaintiffs against whom costs are sought and as to whom there is no agreement. In referring to seven plaintiffs, I am referring to the plaintiffs in seven separate sets of proceedings. In a number of instances, there is more than one plaintiff. The remaining plaintiffs are: * 2005/269145: Michael Passlow and Jayne Elizabeth Passlow; * 2005/269511: Paul Quigley and Josephine Mary Quigley; * 2005/269477: Darryl Nix and Darryl Nix Transport Pty Ltd; * 2005/269508: Russell Sheppard and Joanne Sheppard; * 2005/269475: Vitomir Kuzmanovic; * 2005/269501: Alexander Lynch and Suzanne Lynch; and * 2005/269568: Mark Larden and Michelle Larden. 1. Of those, only three individual plaintiffs (being the plaintiffs in two of the seven sets of proceedings to which I have referred) appeared this morning. They were Mr Michael Passlow, the first-named plaintiff in proceedings 2005/269145, and Mr Paul Quigley and Ms Josephine Quigley, the plaintiffs in proceedings 2005/269511. None of the other plaintiffs against whom the State pursues a quantification of costs appeared. Ms Webster SC, who appears for the State, informed me (and I accept) that each has been served with the notice of motion and supporting affidavit. In the event, it did not become necessary for the State to read its evidence of service. 2. After the evidence relied upon by the State in support of the application was tendered and the affidavit of Mr Timothy Hackett sworn 4 July 2014 read, I called on those plaintiffs present at the hearing to address the Court as to their attitude to the application. Each represented himself or herself. The response I received from two of the plaintiffs revealed their immense dissatisfaction with the legal process and their firm disagreement with the judgment of Walmsley AJ. That is of course irrelevant to the present application, but the double jeopardy suffered by the plaintiffs in the two disasters to which I have referred informs the context in which the court has been asked to exercise its discretion under s 98(4). 3. In Hamod v State of New South Wales (No 13) [2009] NSWSC 756, Harrison J had occasion to consider the relevance of the impecuniosity of a party to the determination of an application for gross sum costs. In remarks which have some resonance in the present context, his Honour said at [27] and [28]: It will be apparent, as I have in essence already mentioned, that to some extent the present debate is being conducted in an air of unreality. Put simply, the first plaintiff says that he has no money and the defendants accept that statement as true. Indeed, the defendants each point to evidence that supports it. There are therefore no funds or assets in the possession or within the control of the plaintiffs or either of them that could satisfy the defendants' conceded entitlement to costs as the successful litigants in the proceedings. In that sense the award of costs in favour of the defendants appears to be no more than a completely theoretical exercise. The same is not true of the costs that might be incurred if the ordinary assessment process were to proceed for the obvious reason that those costs have not yet been incurred and could still actually be saved. In these circumstances one feels inclined to ask what utility there can be in the defendants pursuing the plaintiffs for costs, howsoever they might be calculated or assessed, or in any way at all for that matter, if the whole exercise is inevitably going to be fruitless. To that extent the costs that have yet to be incurred and which might be saved by the making of a specified gross sum costs order could equally be saved by the defendants choosing to take no steps at all to assess or to recover their costs because it is likely, if not certainly, going to be a complete waste of time. The defendants are in that sense as much in control of the saving of those costs as anybody. I must assume however that there is some matter of fundamental importance that impels the defendants to want to finalise this issue by the making of a specified gross sum costs order that has not so far been revealed. The apparently important prospect of having an entitlement to costs against which to set off the plaintiffs' own entitlement to costs may be that imperative for all I know. 1. Of particular poignancy in the present case is his Honour's observation that, to the extent that costs that had yet to be incurred might be saved by the making of a specified gross sum costs order, those costs could equally be saved by the defendants choosing to take no steps at all to assess or to recover their costs if, as was contended here, there is no capacity in the remaining plaintiffs to pay the costs sought. Certainly, without pretending to judge a book by its cover, the three plaintiffs who appeared today did not have the appearance of carrying the kind of wealth that could comfortably meet an order in the sum of $400,000. 2. Further, echoing the remarks of Harrison J in Hamod, this is a case in which if there is some matter of fundamental importance that impels the State to want to finalise this issue by the making of a specified gross sum costs order, that matter has so far not been revealed in the present case. Certainly, it does not appear to be question of obtaining a precedent by reference to which the State may discourage other litigants from bring unsuccessful claims against it. So much is reflected in the fact that, as to those plaintiffs with whom the State has reached agreement, the terms of the agreement are confidential. 3. In any event, the principal contention put in opposition to the making of a gross sum costs order at this point related to the circumstances of the mediation. Mr Passlow stated from the Bar table that he was told at the mediation that those representing the State did not have authority to decide whether to accept an amount he offered in order to compromise the State's claim. He said he "gave them a ream of paper" and that all that had happened was that they asked for more. Mr Quigley stated that he had not been able to understand what was going on at the mediation and that he had been "left to feel like a goose". Mrs Quigley had been unable to attend the mediation in person. 4. Without accepting in terms that description of events at the mediation, Ms Webster SC, who appears for the State, confirmed that as events unfolded some of the plaintiffs had provided additional information as to their financial circumstances on the day of the mediation and that those representing the State of New South Wales had not had the authority to reach final agreement by reference to the additional information provided. 5. That the mediation was likely to take into account the individual capacity of each plaintiff to meet any order or agreement as to costs was reflected in the fact that Harrison J had, upon referring the proceedings for mediation, ordered the plaintiffs to provide evidence if they wished as to their individual financial circumstances. Without attributing blame one way or the other for the circumstance that was reached by the conclusion of the mediation, it is enough for present purposes to observe that I am not persuaded the mediation has spent its course. 6. The position appears to be, as I understand to have been confirmed by Ms Webster, that offers to compromise the State's claim as to costs were made by individual plaintiffs and sought to be justified by reference to financial information provided only on the day of the mediation and that those representing the State did not have the authority to consider those offers in those circumstances. Accordingly, there is, in my view, a real prospect that further attempts could be made to continue the mediation and resolve the proceedings by agreement rather than have those remaining plaintiffs suffer the full impact of a gross sum costs order in an amount it seems unlikely any of them is able to pay, such order being enforceable immediately as a judgment of the Court. 7. For those reasons, I determined that, rather than determining the State's application today, the fairer and more appropriate course would be to ensure first that the prospect of successful mediation is exhausted. I would observe in that context that s 27 of the Civil Procedure Act confers a duty on each party to proceedings that have been referred for mediation to participate in good faith in the mediation. The circumstances of this mediation were complex and were complicated no doubt by the provision on the day of the mediation of additional financial information beyond that ordered to be provided by Harrison J. Nonetheless, in the ordinary course I would apprehend it to be comprehended within that duty that a party to proceedings referred for mediation be in a position to participate in the mediation with authority (or access to authority) to accept or reject any offer that might be put. I make those remarks, as I say, without intending any criticism of the conduct of those representing the State on this occasion but merely to observe or explain my reasons for concluding that the mediation process in the present case cannot be described as having been exhausted. I would regard that as an appropriate precursor to the determination of the present notice of motion; indeed, I would understand that to be the course contemplated in the orders of Harrison J of February this year. 8. For those reasons I make the following orders: 1. That the proceedings be referred for further mediation in accordance with the orders of Harrison J, preferably to be conducted by Ms Mary Walker, the mediator who conducted the earlier mediation. 2. That failing the availability of Ms Walker, the parties endeavour to agree upon an alternative mediator or else have the proceedings relisted before me within twenty-eight days of today. 3. That any plaintiff wishing to rely upon additional financial information beyond that already provided to the defendant serve that material within twenty-eight days before the next date appointed for the continuation of the mediation. 4. That the defendant notify the remaining respondents to the motion of these orders. 5. That the parties endeavour to conclude the mediation by mid-February 2016. 6. That the proceedings be relisted before me on 4 March 2016. ********** 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. Decision last updated: 10 December 2015