Al Mousawy bht Khamis v JA Byatt Pty Limited and Others

[2008] NSWSC 264

CITATION:	Al Mousawy bht Khamis v JA Byatt Pty Limited and Others [2008] NSWSC 264
HEARING DATE(S):	17/03/2008
JUDGMENT DATE :	31 March 2008
JUDGMENT OF:	Hoeben J
DECISION:	Stonewall is to pay the costs of the plaintiffs, of Byatt and of Presdate lost or thrown away as a result of the vacation of the mediation on 18 October 2007, such costs to be as agreed or assessed. Stonewall is to pay the costs of this application.
CATCHWORDS:	Application for costs - vacation of mediation date - application of s 30(4) Civil Procedure Act 2005 - whether facsimile advising intention to cancel mediation admissible.
LEGISLATION CITED:	Civil Procedure Act 2005
CATEGORY:	Procedural and other rulings
CASES CITED:	Gain & Anor v Commonwealth Bank of Australia & Anor (1997) 42 NSWLR 252
PARTIES:	Thakee Khdeyer Al Mousawy by his tutor Ghassan Khamis - Plaintiff JA Byatt Pty Limited - Third Defendant Stonewall Hotel Pty Ltd - Fourth Defendant Presdate Pty Ltd - Fifth Defendant
FILE NUMBER(S):	SC 20244/2004
COUNSEL:	Mr G Wilson - Plaintiff Mr R Cheney - Third Defendant Mr M Windsor - Fourth Defendant Mr F Doak - Fifth Defendant
SOLICITORS:	Keddies Litigation Lawyers - Plaintiff Kennedys - Third Defendant Ferguson Bolton Lawyers - Fourth Defendant Guild Legal Limited - Fifth Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HOEBEN J

Monday, 31 March 2008

20244/2004 – Thakee Khadeyer AL MOUSAWY v HOWITT-STEVENS CONSTRUCTIONS PTY LIMITED & Ors

JUDGMENT

1 HIS HONOUR:

Nature of Claim
As of 24 November 2002 Presdate Pty Limited (hereafter called “Presdate”) was the owner of the Stonewall Hotel at 173-175 Oxford Street, Darlinghurst. The lessee of the hotel was Stonewall Hotel Pty Limited (hereafter called “Stonewall”). It is alleged that Presdate and/or Stonewall engaged Australian Town Planning Consultants Pty Limited (the consultant) to assist with planning advice in relation to the hotel. It is alleged that Stonewall and the consultant retained JA Byatt Pty Limited (hereafter called “Byatt”), as structural and civil engineers to inspect the hotel including the top dance floor.

2 The top floor of the hotel was used as a dance floor. On 24 November 2002 the top dance floor collapsed onto the floor below causing injury to a number of persons including the plaintiff.

3 Proceedings have been brought by the plaintiff and other injured persons alleging that Presdate and Stonewall were in occupation of the hotel and had the care and control of it. The plaintiff alleges that Byatt made a faulty assessment of the top dance floor and provided incorrect advice in relation to it and that the consultant did not properly instruct Byatt and failed to advise Byatt about the complaints made by patrons concerning the top dance floor.

4 On 30 May 2007 I made an order referring all issues in this matter for mediation pursuant to s 26 of the Civil Procedure Act 2005 (the Act).

5 The following statement of facts relies upon evidence to which objection has been taken. It is not possible, however, to deal with this application without referring to that evidence.

6 The parties agreed on the appointment of the Honourable John Clarke QC as mediator and on 23 August 2007 the mediator conducted a preliminary conference. The mediation was fixed for 18 October 2007.

7 At approximately 3.10 pm on the afternoon of 17 October 2007 a facsimile was received by the parties to the mediation from the solicitors acting for Stonewall, Messrs Ferguson Bolton Lawyers.

8 The facsimile read as follows:

“The Stonewall Hotel Pty Limited
We make reference to the mediation to take place in the above matter on Thursday 18 October 2007.
Regrettably, we advise that we will not be in a position to proceed to mediation tomorrow. We will not be in a position to engage in any meaningful negotiations as our client is revisiting its position in relation to all eight claims, further complicated by there being two underwriters involved both located in London and one in “run off”. We anticipate that we will be in a position to attend and participate in the mediation in good faith within 21 days of this letter.
We appreciate costs will have been incurred by all parties in preparation for tomorrow’s mediation. At this stage we propose costs be reserved pending a conclusion of the mediation at a later date.
We request that you advise of your counsel’s availability any time from 20 days of this letter. We would be happy to rearrange both the mediator and mediation rooms so that the mediation can take place in the not too distant future.
We apologise for any inconvenience caused and advise that we only received notice from our client last night and at the conclusion of further discussions this morning it became evident that we would not have instructions in time to participate in the mediation tomorrow.
We advise that we will cancel the rooms booked at the IAMA’s Dispute Resolution Centre and we will also advise John Clarke, Mediator, of our position.”

9 Byatt responded to that facsimile by way of email at 3.41pm. That email read:

“We refer to your facsimile received this afternoon at 3.10pm and note your client’s intention not to participate in the mediation tomorrow.
This is court ordered mediation pursuant to s 26(1) of the Civil Procedure Act (Act) and we are conscious of our obligations, including those imposed by s 27 of the Act.
Accordingly, our client intends to be represented at the mediation. We ask that you refrain from cancelling the rooms booked at the Institute. Further, we respectfully suggest that somebody from your office attend tomorrow.
If it transpires that the mediation cannot proceed tomorrow without your client’s participation, we put you on notice of our expected instructions to make an application that your client pay our client’s costs thrown away on an indemnity basis.”

10 The mediation did not proceed on 18 October 2007. The mediation ultimately proceeded on 12 December 2007. The mediation was unsuccessful in resolving the matter.

11 Before me the plaintiffs were represented, as were Stonewall, Presdate and Byatt. There was no appearance by the consultant. All parties had filed motions seeking orders that Stonewall pay the costs thrown away because the mediation did not proceed on 18 October 2007. It was those motions which were before the court for hearing.

12 The parties agreed that the motion brought by Byatt against Stonewall should be representative of the other motions. The orders sought by Byatt were:

“1. Respondent (Stonewall) pay the applicant’s costs of the vacated mediation on 18 October 2007.
2. The respondent pay the applicant’s costs of this notice of motion.
3. Such further orders as the Court sees fit.”

13 Byatt relied upon the affidavit of Rebekah Rivkin of 23 October 2007.

14 The motion for costs was opposed by Stonewall. Stonewall objected to paragraphs 4-11 of the affidavit of Ms Rivkin. It did so in reliance on s30(4) of the Act.

Submissions

15 The Act relevantly provides:

“26(1) If it considers the circumstances appropriate, the Court may, by order, refer any proceedings before it, or part of any such proceedings, for mediation by a mediator, and may do so either with or without the consent of the parties to the proceedings concerned.
…
28 The costs of mediation, including the costs payable to the mediator, are payable:
(a) if the court makes an order as to the payment of those costs, by one or more of the parties in such manner as the order may specify, or
(b) in any other case, by the parties in such proportions as they may agree among themselves.
29(1) The court may make orders to give effect to any agreement or arrangement arising out of the mediation session.
(2) On any application for an order under this section, any party may call evidence, including evidence from the mediator and any other person engaged in the mediation, as to the fact that an agreement or arrangement has been reached and as to the substance of the agreement or arrangement.
(3) This Part does not affect the enforceability of any other agreement or arrangement that may be made, whether or not arising out of the mediation session, in relation to the matters the subject of a mediation session.
…
30(1) In this section mediation session includes any steps taken in the course of making arrangements for the session or in the course of the follow up of a session.
…
(4) Subject to section 29(2):
(a) evidence of anything said or of any admission made in a mediation session is not admissible in any proceedings before any court or any other body, and
(b) a document prepared for the purposes of, or in the course of, or as a result of, a mediation session, or any copy of such a document is not admissible in evidence in any proceedings before any court or other body.”

16 Stonewall relied upon the definition of “mediation session” which included “any steps taken in the course of making arrangements for the session”. It then relied upon s 30(4)(a) to render inadmissible anything said or any admission made which formed part of any steps taken in the course of making arrangements for the session. It relied upon s 30(4)(b) to render inadmissible the facsimile and email of 17 October 2007 since they were documents prepared “for the purposes of a mediation session” in that they related to making arrangements for the session.

17 The purpose of such provisions is clear. As Gleeson CJ said in Gain & Anor v Commonwealth Bank of Australia & Anor (1997) 42 NSWLR 252 at 256 in relation to the same wording:

“The reason for such legislative provision is obvious. It is the policy of the legislation that parties should be encouraged to discuss their differences without the risk that things they say might later be used against them, in court, if the mediation does not result in settlement.”

18 Even giving s 30(4)(a) a wide interpretation, it seems to me that the statements by Ms Rivkin that a mediation had been fixed for 18 October 2007, that documents were received and sent on 17 October, that the mediation did not proceed on 18 October and that it did proceed on 12 December 2007, albeit unsuccessfully, are admissible. I agree that those paragraphs of her affidavit which relate to what happened at the preliminary conference and what happened on 18 October and 12 December are inadmissible. That latter material constitutes evidence of what was said in a mediation session.

19 The important question for the motion is whether the facsimile and email of 17 October are admissible. On behalf of Stonewall it was submitted that even though those documents related to the cancellation of a mediation session, they had been prepared for the purposes of a session in that they involved a step taken in the course of making arrangements for the session. In this case the arrangement was to cancel the session. In other words any document which can be linked to a step taken in the course of making arrangements for a mediation session is picked up by the exclusion and is therefore inadmissible in court proceedings.

20 I do not read s 30(4)(b) so widely. It seems to me that the use of the words “prepared for the purposes of” describe a document specifically prepared for use in the mediation session. This would include a document specifically prepared to be used as part of any step taken in the course of making arrangements for the session. For example, a document setting out the directions made by the mediator at a preliminary conference before the mediation itself, would be within the section and therefore inadmissible.

21 The facsimile and email, however, were not prepared for use in the mediation or in any preparatory stage leading up to the mediation. The documents are the very antithesis of the sort of documents which the section is designed to protect from disclosure and which were described in Gain. These documents relate to the cancellation of a mediation session. They are at most collateral or incidental to it but do not gain the protection afforded by s 30(4).

22 I am also mindful of s 28 of the Act which gives the court wide powers to order the costs of a mediation. That section has to be read with s 30. It is difficult to see how s 28 could be effective if collateral or incidental matters such as the facsimile and email could not be placed before the court.

23 It follows that I admit the facsimile and email of 17 October 2007.

24 Relying upon both documents and the fact that the mediation did not proceed on 18 October 2007, I infer that the reason the mediation did not proceed was because Stonewall was unable or unwilling to participate. No evidence was called by Stonewall nor were any submissions made to explain why it was that Stonewall was still seeking instructions from its underwriters as late as 36 hours before the date fixed for the mediation. I infer from the absence of evidence and submissions that there is no satisfactory explanation and that Stonewall had left it too late to obtain appropriate instructions.

25 Absent other considerations for the reasons set out in the email of 17 October, I am of the opinion that Stonewall should pay the costs thrown away by the vacation of the mediation date of 18 October 2007.

26 Stonewall submitted that such an order should not be made because it was clear from paragraph 95 in an affidavit of Melinda Griffiths, sworn 30 January 2008, that other parties besides Stonewall were not ready to proceed with the mediation on that date. The affidavit of Ms Griffiths, however, was not read in the application either by Stonewall or by Byatt. Consequently it is not in evidence before me and Stonewall cannot rely upon it.

27 Stonewall also submitted that in due course it might wish to lead evidence about what transpired at the mediation on the question of costs. For the court to make a costs order in respect of 18 October 2007 would be draconian in that it would pre-empt any subsequent application for costs by Stonewall.

28 I find that last submission difficult to understand. Stonewall at present has made no application to the court. The precise nature of the foreshadowed application was not made clear except that it would relate to costs. No indication was given to the court as to how Stonewall in any subsequent application would be able to overcome the provisions of s 30(4) of the Act so as to adduce evidence of what happened at the mediation. In those circumstances I do not see how my exercise of discretion as to costs can be influenced by such a consideration.

29 Although the email of 17 October referred to a claim that Stonewall pay costs on an indemnity basis, no submissions to that effect were made.

30 Since it was agreed by the parties that the application by Byatt would be representative of the other parties, I make the following orders:

(1) Stonewall is to pay the costs of the plaintiffs, of Byatt and of Presdate lost or thrown away as a result of the vacation of the mediation on 18 October 2007, such costs to be as agreed or assessed.

(2) Stonewall is to pay the costs of this application.

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