Chaina v Presbyterian Church (NSW) Property Trust (No. 25)

[2014] NSWSC 518

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:	Chaina v Presbyterian Church (NSW) Property Trust (No. 25) [2014] NSWSC 518
Decision date:	23 May 2014
Jurisdiction:	Common Law
Before:	Davies J
Decision:	Reasons published
Catchwords:	NEGLIGENCE - damages arising from death - damages for nervous shock - son of two plaintiffs killed on school excursion - whether parents suffered mental harm - pre-existing psychiatric conditions - costs of coronial inquest - whether plaintiff entitled to such costs - two plaintiffs sole directors and shareholders of two plaintiff companies - companies make per quod amisit sevitium claim - whether claim falls within exception in Barclay v Penberthy - failure to mitigate
Legislation Cited:	Civil Liability Act 2002 Civil Procedure Act 2005 Compensation to Relatives Act 1897 (NSW) Evidence Act 1995 Legal Profession Act 2004 (NSW) Supreme Court Act 1981 (UK)
Cases Cited:	AMP General Insurance Ltd v Kull [2005] NSWCA 442 Baghdadi bht Kouri v P & M Quality Smallgoods Pty Ltd [2008] NSWSC 406 Barclay v Penberthy [2012] HCA 40; (2012) 246 CLR 258 BestCare Foods Ltd v Origin Energy LPG Ltd (formerly Boral Gas (NSW) Pty Ltd) [2013] NSWSC 1287 Chaina v The Presbyterian Church (NSW) Property Trust [2008] NSWSC 290 Chaina v The Presbyterian Church (NSW) Property Trust (No 2) [2008] NSWSC 1056 Chaina v The Presbyterian Church (NSW) Property Trust (No 3) [2009] NSWSC 1243 Chaina v Presbyterian Church (NSW) Property Trust (No 6) [2012] NSWSC 1476 Chaina v Presbyterian Church (NSW) Property Trust (No 7) [2013] NSWSC 139 Chaina v Presbyterian Church (NSW) Property Trust (No 8) [2013] NSWSC 187 Chaina v Presbyterian Church (NSW) Property Trust (No. 13) [2013] NSWSC 1057 Chaina v The Presbyterian Church (NSW) Property Trust (No. 15) [2013] 1178 Chaina v Presbyterian Church (NSW) Property Trust (No. 16) [2013] NSWSC 1494 Chaina v Presbyterian Church (NSW) Property Trust (No. 22) [2013] NSWSC 1707 Chaina v Presbyterian Church (NSW) Property Trust (No 23) [2013] NSWSC 1675 Chen v Karandonis [2002] NSWCA 412 Cremona v Roads and Traffic Authority [2000] NSWSC 735 Cremona v Roads and Traffic Authority [2000] NSWSC 556 Dell v Dalton (1991) 23 NSWLR 528 Giorginis v Kastrati (1988) 49 SASR 371 Gould v Vaggelas (1985) 157 CLR 215 Hollier v Sutcliffe [2010] NSWSC 279 McCrohon v Harith [2010] NSWCA 67 Paino v Paino (2008) 40 Fam LR 96 Petrovski v Serco Sodexo Defence Services Pty Ltd [2013] ACTSC 242 Prudential Assurance Co. Ltd v Newman Industries Ltd (No. 2) [1982] Ch 204 Roach v Home Office; Matthews v Home Office [2009] EWHC 312; [2010] QB 256 Roads Traffic Authority v Cremona [2001] NSWCA 338 Roads Traffic Authority v Cremona (No. 2) [2001] NSWCA 459 Saad v Gosford City Council [2007] NSWSC 643 Sydney Attractions Group Pty Ltd v Schulman (No. 2) [2013] 1153 Tame v New South Wales; Annetts v Australian Stations Pty Limited [2002] HCA 35; (2002) 211 CLR 317 Thornton v Wollondilly Mobile Engineering [2012] NSWSC 621
Category:	Principal judgment
Parties:	George Chaina (Second Plaintiff) Rita Chaina (Third Plaintiff) Proton Technology Pty Ltd (Fourth Plaintiff) Deluxe Technology Pty Ltd (Fifth Plaintiff) The Presbyterian Church (New South Wales) Property Trust (Defendant)
Representation:	Counsel: J Maconachie QC & J Sharpe (Plaintiffs) [4 March - 12 April 2013] A Dawson (Plaintiffs) [8, 9, 14, 15 & 16 October 2013] Rita Chaina and George Chaina (Plaintiffs) 15 July 2013 - 20 December 2013 R Stitt QC, G L Turner & H Stitt (Defendant) Solicitors: Berrigan Doube Lawyers (Plaintiffs) [4 March - 12 April 2013] Rita Chaina and George Chaina (Plaintiffs) 15 July 2013 - 20 December 2013 Curwoods Lawyers (Defendant)
File Number(s):	2002/69354

Hearing Dates: 4 - 8 March 2013; 11 - 15 March 2013; 18 - 22 March 2013; 25 - 27 March 2013; 3 - 5 April 2013; 8 - 9 April 2013; 12 April 2013; 15 - 18 July 2013; 22 - 26 July 2013; 1 - 2 August 2013; 5, 6 & 8 August 2013; 19, 21, 22 & 23 August 2013; 26 August 2013; 9 September 2013; 8, 9, 14, 15 & 16 October 2013; 30 - 31 October 2013; 4 - 8 November 2013; 11- 14 November 2013; 16 - 20 December 2013.

Table of Contents

Para No.
Introduction	[1]
Nathan's death on the hike	[6]
The aftermath of Nathan's death	[22]
The pleaded per quod claim	[28]
The course of the proceedings	[30]
The issues	[66]
Deluxe and Proton	[69]
Matters of credit	[101]
(1) Mr Chaina	[101]
(a) His qualifications	[110]
(b) The names he used	[131]
(c) The accident in Ashfield	[140]
(d) The manuals	[146]
(e) Inconsistent answers	[169]
(f) The application to St George Bank	[172]
(g) Other matters	[175]
(2) Mrs Chaina	[180]
(a) Her qualifications	[180]
(b) Her husband's qualifications	[185]
(c) The 2000 R & D Application	[187]
(d) The 2004 tender	[194]
(e) Other matters	[202]
Nervous shock	[212]
(1) Pre-October 1999	[222]
(a) Mrs Chaina	[222]
(b) Mr Chaina	[250]
(2) Post-October 1999	[289]
(a) Dr Wever's assessment	[289]
(b) Dr Skinner	[305]
(i) Mrs Chaina	[305]
(ii) Mr Chaina	[314]
(c) Dr Milton	[329]
(i) Mrs Chaina	[334]
(ii) Mr Chaina	[337]
(d) Dr Phillips	[339]
(i) Mrs Chaina	[344]
(ii) Mr Chaina	[361]
Continuing psychiatric illness?	[377]
(a) Mrs Chaina	[385]
(b) Mr Chaina	[398]
The financial position of the business	[460]
(a) Payments to creditors	[469]
(b) Complaints about the Company	[475]
The proposed launch	[503]
The evidence of Professor Dowling	[521]
Mr Dunbar's evidence	[569]
Superior products	[576]
The Lithgow premises	[581]
The formulae	[590]
The per quod claim	[623]
The existing business	[633]
Damages	[658]
(1) Non-economic loss	[658]
(a) Mr Chaina	[658]
(b) Mrs Chaina	[661]
(2) Economic loss	[662]
(3) Out-of-pocket expenses	[685]
(i) Medical costs of Dr Wever (Particulars para 14 (2))	[697]
(ii) Michelle Rogers' personal training costs (Particulars para 14(4))	[701]
(iii) Out of pocket expenses of Mrs Chaina (Particulars para 19(1)	[704]
(iv) Out of pocket expenses for Mr Chaina (Particulars para 14(1))	[713]
(v) Costs associated with land and building at Glengarry (Particulars
para 27) (two bundles)	[717]
(vi) Funeral and associated costs (Particulars para 22)	[722]
(vii) Medical costs of Dr Wever for Mrs Chaina (particulars para 19(2))	[727]
(viii) Catering at the inquest and the trip to Edinburgh (particulars para 26 - in
part)	[729]
(4) Costs incurred by Proton	[735]
(a) Hiring substitute employees (particulars para [44])	[735]
(i) John Childs	[736]
(ii) Kain Childs	[740]
(iii) David Redfern	[741]
(b) Extra consultancy expenses (Particulars para 45)	[744]
(i) Dr S W Li	[745]
(ii) Dr Ross Griffith	[748]
(iii) Nigel Dique	[755]
(iv) Ray Palmer	[764]
(v) Hugh Grimm	[767]
(vi) Milward Doran	[771]
(5) Costs of coronial inquest (Particulars para [25])	[777]
(6) Other heads of damage	[797]
(a) Sale of properties (Particulars para 21)	[797]
(b) Loss of value of shares (Particulars para 28)	[809]
Conclusion	[813]

JUDGMENT

Introduction

1. On the weekend of 23 and 24 October 1999 Nathan Chaina drowned whilst on a school hike in the Morton National Park. He was a pupil at Scots College and the hike was conducted under the auspices of the Glengarry Campus of that school. Nathan was 15 years of age at the time of his death.

1. Proceedings were commenced by four members of his family being his parents George and Rita (the Second and Third Plaintiffs respectively), his brothers Matthew and Jean-Pierre (the First and Sixth Plaintiffs respectively). Each of them claimed damages for nervous shock. Mr and Mrs Chaina also make claims under the Compensation to Relatives Act 1897 (NSW). The First and Sixth Plaintiffs resolved their claims on 4 April 2008.

1. Two companies owned and operated by the Second and Third Plaintiffs bring per quod servitium amisit claims for the loss of services of George and Rita Chaina. Those companies are Proton Technology Pty Ltd and Deluxe Technology Pty Ltd being the Fourth and Fifth Plaintiffs respectively.

1. The claims were originally made against the Presbyterian Church Property Trust which operates Scots College and other Defendants associated with the School. However, proceedings were discontinued against all Defendants except the First Defendant on 6 October 2011.

1. Although breach of duty has been admitted it is necessary to say something of the circumstances of Nathan's death to put into context the nervous shock alleged by Mr and Mrs Chaina. The following factual matters pleaded in the Amended Statement of Claim were not traversed in the Defence filed by the Defendant.

Nathan's death on the hike

1. The hike was a parent-child hike conducted as part of the outdoor education program at the Glengarry Campus. Matthew Chaina, the First Plaintiff, was a pupil at the Glengarry Campus. The hike for the group of students of which Matthew was a part was due to take place on the weekend of 23 and 24 October 1999. The hike traversed the Yarrunga Creek catchment area which contained Yarrunga Creek and its tributaries. The hike route crossed Yarrunga Creek and its tributaries several times.

1. Mr and Mrs Chaina informed Mr Peter Morgan, the master in charge of the Glengarry Campus, that the weekend of 23 and 24 October 1999 was not a suitable one for Mr Chaina to attend the hike with Matthew. They requested that Matthew be permitted to undertake the hike on another weekend when Mr Chaina was available. However, that request was refused. Mr Morgan requested that either Nathan or Jean-Pierre attend the hike in place of George. Natahn was selected to accompany Matthew. Because Nathan was only 15 years old this was contrary to the College's own guidelines.

1. October 1999 was a wet month in the Yarrunga Creek catchment although that catchment area had a very high annual volume of rainfall and it was prone to flash flooding. The weather reports in advance of the weekend of 23 and 24 October forecast rain for the weekend in that area.

1. Matthew and Nathan were in the company of another pupil, David Andrews and his father David Andrews Snr. They were taken from the Glengarry Campus to the beginning of the hike route at about 9am on 23 October 1999. At 10:48am on that day the Bureau of Meteorology issued a flood alert which warned of a risk of moderate to heavy rainfall and minor to moderate flooding along coastal rivers including creeks which those participating in the hike could be expected to encounter.

1. At about 1:15pm on 23 October the group left a lunch spot (on the southern side of Yarrunga Creek) to walk to a designated overnight camp site on the northern side. They crossed to the north side of Yarrunga Creek but could not find the camp.

1. At about 4:12pm on 23 October the Bureau of Meteorology issued a severe weather advice for the region including Yarrunga Creek warning that heavy rainfall and possible flash flooding were expected in the area overnight and that people should keep away from creeks as they might be swept away.

1. The group in which Matthew and Nathan were walking did not arrive at the campsite by 7:00pm on 23 October 1999 and that became known to Mr Morgan and others.

1. At 10.11pm on 23 October 1999 the Bureau of Meteorology issued a severe weather advice for the region including Yarrunga Creek warning that heavy rainfall and possible flash flooding was expected in the area overnight and that people should keep away from creeks as they might be swept away.

1. A similar warning was issued by the Bureau of Meteorology at about 4am on 24 October 1999.

1. In the evening of 23 October and the morning of 24 October Yarrunga Creek catchment received over 300 millimetres of rain. The creek and its tributaries flooded. At about 5am on 24 October the camp began to flood and Mr Morgan instructed those present to pack and be ready to move. By 7:30am they had abandoned the camp leaving no message for Matthew's group. At about the same time Mr Morgan asked one of his subordinates to conduct a search for Matthew's group. Up to that time there had been no notification to any of the authorities including the police, National Parks and Wildlife and emergency services.

1. At 8:00am Matthew's group arrived at the camp but, finding no one or no word there, they left to try to find Mr Morgan and the main group of hikers, or to head towards Griffith's farm.

1. At about 11:30am the group approached a flooded tributary at Yarrunga Creek which was split into two forks. Each fork had a log crossing. All members of the group successfully crossed the first log crossing but as Nathan was attempting to traverse the second log crossing he was swept away by a wave of floodwater and drowned. Matthew observed all of this happen and heard Nathan call out to him before he finally disappeared.

1. Matthew's group was eventually found at about 1:00pm on 24 October. It was only at 2:40pm when another of Mr Morgan's subordinates was informed that Nathan had been lost in the water that triple 0 was dialled.

1. Mr Garrett first informed Mr Chaina that Nathan was missing at 3:56pm. He was, at that time, working at the laundry of Wangaratta Hospital. At about 4:23pm, in response to a telephone enquiry by George Chaina, Mr Garrett informed him that Nathan had been separated by water but that he did not know if Nathan had been washed away.

1. Mr Chaina said that he was unable to obtain any more information from the School. Accordingly, he flew back to Sydney by chartered aircraft and drove to Glengarry. He arrived at the Glengarry Campus at about 6:00pm and Mrs Chaina arrived at about 8:00pm.

1. Nathan's body was found at about 10:55am on 25 October by the Illawarra Rescue Squad.

The aftermath of Nathan's death

1. A large funeral was held at St Mary's Cathedral, Sydney on 29 October 1999.

1. An organisation called Solution Focussed Counselling was engaged to assist the Chaina family with their loss and grief. However, that firm ceased their involvement with the family because Mr Chaina's nephew, Danny Arraj who was a lawyer, wrote to them on 11 November 1999 requiring them to sign a confidentiality agreement. The letter (Exhibit 196) acquired some significance in the case as part of the Defendant's claim that the present proceedings have been pursued by the Plaintiffs for motives of vengeance, retribution and punishment of the School.

1. The letter relevantly says:

We confirm that we re quest your services for the purpose of assisting generally with the investigation into the claim against Scots College beginning at the Moreton National Park on Friday, 12 November 1999. ...

We further confirm that all observations, reports, notes, memoranda or any other documentation produced or reported by you in relation to this matter is subject to legal professional privilege.

The letter went on to require Solution Focussed Counselling to sign a Deed of Confidentiality which made confidentially and other matters a condition of the provision of their services to the Chainas. The Confidentiality Agreement defined its "Purpose" as being "the investigation of the claim against Scots College". Not unnaturally, Solution Focussed Counselling ceased to be involved.

1. The investigation at Moreton National Park was a retracing of what were thought to be the route taken by Nathan, Matthew and the Andrews. Mr Chaina arranged for the walk to be filmed by Arrow Films. This was said to be for Mrs Chaina's benefit because she could not attend.

1. An autopsy was conducted in either late October or early November 1999 (so much is evident from Barker Gosling's account - part of Exhibit MMM). The report was not in evidence but there was sufficient other evidence in the present proceedings to conclude that the cause of death was found to be drowning. Mr Chaina did not accept that finding. He said that he obtained an order for Nathan's body to be exhumed (although the body was never buried but kept in a vault) so that a further autopsy could be conducted by a forensic pathologist Mr Chaina had brought over from Cyprus, a Dr Matsakis. Mr Chaina considered that Nathan did not die from drowning but from hypothermia.

1. The inquest appears to have commenced in about April 2000 and concluded in about September 2001. There was scant evidence about the course of the hearing by the Coroner but it is clear that an issue at the inquest was the cause of Nathan's death because of Mr Chaina's own view about that matter. Mr and Mrs Chaina had retained Barker Gosling and Mr Garling SC (as his Honour then was) in November 1999. Subsequently, Mr and Mrs Chaina retained Mallesons to act for them at the inquest. The report of the Coroner was not in evidence.

The pleaded per quod claim

1. The per quod claim brought by the Fourth and Fifth Plaintiffs is pleaded in this way:

[82] Proton supplies chemical specialty products and systems to the industrial laundry, food processing, food service, health care, hospitality and general industry sectors. Deluxe is a company which holds and develops property and provides finance to the companies owned by the second and third plaintiffs including Proton.

[83] The second and third plaintiffs are, and at all times since 28 June 1993 have been, the sole directors and shareholders of Proton.

[84] The second and third plaintiffs are, and at all times since 2 December 1986 have been, the sole directors of Deluxe. The third plaintiff is the owner of all but two shares in Deluxe, the remaining shares being held by the second plaintiff and by Joseph Chaina.

[85] At all times from 28 June 1993 to date, the second and third plaintiffs have been key employees of Proton and Deluxe, with their personal skills and services being essential to the companies' business success.

Particulars

The second plaintiff was the production and marketing manager of Proton and Deluxe, and was responsible for research and development, production, and sales.

The third plaintiff was the finance and administration manager of Proton and Deluxe and was responsible for all of its accounts, paperwork and payments, budgets and forecasts.

[86] By reason of the injuries to the second and third plaintiffs, Proton and Deluxe have lost the benefit of their services as principals, directors and managers of their businesses and have suffered loss per quod servitium amisit.

Particulars of Loss

Proton has suffered a general decline in business and profits and a reduction in future projected income, as a result of the inability of the second and third plaintiffs to devote their time and personal skills to the business, causing the loss of several customers.

Deluxe has suffered a decline in income as a result of the inability of the second and third plaintiff's to devote their time and personal skills to the business, and has had to sell assets as a result.

At the time of the injury, Proton had plans to launch several new liquid and powder variants of detergent concentrates with active enzyme. Because of the injuries to the second plaintiff, Proton has been unable to further develop or market the products.

Because of the injury to the second plaintiff, Proton has not expanded sales of its "Victory" detergent, launched in early 1999.

Prior to October 1999, Proton had completed the development of micro-enzymes technology products, to enhance laundry performance and reduce environmental impacts. Proton and Deluxe have been unable to further research and market this product due to the ill-health of the second plaintiff.

In 1999, Proton had developed a guest amenities range (shampoo, conditioner, gel) for hotels, intending to market it through its subsidiary, Jean-Pierre Cosmetics Pty Ltd. The products have never been marketed, because of the second plaintiff's inability to focus on marketing.

Prior to the injuries, Proton purchased premises at Lithgow to establish a research and development and training centre, and to lease out part for redevelopment. The site has not been used or redeveloped due to the inability of the second and third plaintiffs to oversee the project.

By reason of the third plaintiff's ill-health, Proton has incurred extra bookkeeping expenses.

1. The matter was expanded upon in the Statement of Particulars filed on 24 September 2012 where the following appeared:

[36] Many of the responsibilities performed by the Second Plaintiff were only able to be performed by the Second Plaintiff.

Particulars

In his position as the Production and Marketing Manager of Proton and Deluxe, the Second Plaintiff was responsible for research and development, formulating new products, as well as the on-site maintenance of products and equipment formulated and designed by the Second Plaintiff.

The Second Plaintiff was also responsible for sales and had direct contact with Proton's clients to help problem-solve technical issues and design tailored products to suit clients' general and specific needs.

The Second Plaintiff's intimate knowledge of the products and equipment, as well as his scientific expertise and experience, was a key reason that clients provided their business to Proton.

[37] In or around June 1993, a fire destroyed Deluxe's manufacturing plant at Enfield ("the Fire"). The damage caused by the Fire resulted in a reduction in Deluxe's business.

Particulars

The fire destroyed the plant and manufacturing equipment, the research facility, trading stock, business records (including client lists and financial documentation, and intellectual property including documentation), formulations and specifications of the raw materials used at that time.

As a result of the damage caused by the Fire, Deluxe was not able to maintain some contracts and as a result these customers took their business elsewhere.

[38] Following the Fire, the Second and Third Plaintiffs proposed to relaunch their business in order to recapture and then improve on the market share that Deluxe had held prior to the Fire.

Particulars

The existing industrial products were reformulated in preparation for a re-launch into the industrial market ("the Industrial Re-launch") and a number of new product formulas were created by the Plaintiffs in preparation for a launch into the domestic market ("the Domestic Launch").

Proton was created as an entity to facilitate the Industrial Re-launch and the Domestic Launch, with Deluxe moving to its current role as a holding company and finance provider.

The following product lines were already being sold by Proton as at October 1999:

1. Challenger Range - targeting industrial laundry clients;

2. Classic Range - targeting commercial housekeeping and kitchen clients; and

3. Quantum Range - targeting food processing clients.

The following product lines were to be incorporated into Proton's Industrial Re-launch:

1. Vision Range - targeting housekeeping departments of hotels, hospitals, nursing homes and similar institutions;

2. Spectrum Range - a range of kitchen products targeting hotels, hospitals, restaurants and function centre kitchens;

3. Quantum Range - which was separated into six further categories; Quantum Food Processing, Quantum Dairy, Quantum Abattoir, Quantum Poultry, Quantum Brewery and Quantum Metal Treatment;

4. Orbital Range - floor care products;

5. Challenger Range - targeting large industrial and commercial laundry operations;

6. Challenger Plus Range - which incorporated enzyme technology and targeted large industrial and commercial laundry operations;

7. Victory One Shot - targeting motels and small industrial and commercial laundries; and

8. A guest amenities range for hotels.

The following product lines were to be incorporated by Proton in the Domestic Launch:

1. Powder Laundry Detergents;

2. Liquid Laundry Detergents;

3. Automatic Dishwashing;

4. Hand Dishwashing;

5. General Household Cleaners;

6 Toiletries, cosmetic and personal products; and

7. Shampoos and Conditioners.

Copies of the formulas developed by the Second Plaintiff have been provided to the Defendants.

[39] By reason of the injuries sustained by the Second and Third Plaintiffs resulting from the death of Nathan Chaina, Proton and Deluxe have been deprived of the services of the Second and Third Plaintiffs resulting in Proton and Deluxe suffering loss and damage per quod servitium amisit.

Particulars

Following the death of Nathan Chaina, the Second Plaintiff has suffered from, and continues to suffer from the injuries and disabilities as outlined in paragraph 4.

As outlined in paragraphs 35 and 36, the Second Plaintiff was responsible for a number of key roles within Proton and Deluxe and due to the injuries sustained by the Second Plaintiff following the death of Nathan Chaina, the Second Plaintiff has been unable to work in these roles.

Following the death of Nathan Chaina, the Third Plaintiff has suffered from, and continues to suffer from the injuries and disabilities as outlined in paragraph 9.

As outlined in paragraph 35, the Third Plaintiff was responsible for a number of key roles within Proton and Deluxe and, due to the difficulties sustained by the Third Plaintiff following the death of Nathan Chaina, the Third Plaintiff has been unable to work in these roles.

[40] By reason of the Defendants' breach of the duty of care owed to the Second and Third Plaintiffs, Proton was unable to proceed with the Industrial Re-launch or the Domestic Launch.

Particulars

As particularised in paragraphs 35 and 36, the Second and Third Plaintiffs had key roles in Proton that they were unable to maintain as a result of the injuries they have sustained.

The product lines particularised at paragraph 38 contained a variety of new technologies which had been formulated personally by the Second Plaintiff and was previously known only to him. Proton was therefore not able to proceed with the further development of the product lines identified at paragraph 38 without the input of the Second Plaintiff.

By reason of the injuries sustained by the Second Plaintiff outlined at paragraph 4, Proton has not been able to expand sales of its established "Victory" detergent line, launched in early 1999.

In 1999, Proton had developed a guest amenities range for hotels, which were intended to be marketed through its subsidiary, Jean-Pierre Cosmetics Pty Ltd. The products have never been launched because of the injuries suffered by the Second Plaintiff.

Particulars of Damages owed to the Fourth Plaintiff

Loss of Profits

[41] By reason of the Defendants' breach of the duly of care owed to the Second and Third Plaintiffs, Proton has suffered from loss of profits.

Particulars

As particularised in paragraphs 35 and 36, the Second and Third Plaintiffs had key roles in Proton that they were unable to maintain as a result of the injuries they have sustained.

The loss of the Second and Third Plaintiffs' services has resulted in a substantial decline in Proton's existing business that was in operation as of 1999.

Accordingly, Proton claims loss of profits relating to the existing business from 1999 to 30 June 2011 as calculated by the expert report of Pitcher Partners, Chartered Accountants, dated 31 August 2012, and totalling not less than $3,180,484.

Furthermore, Proton claims interest on the loss of profits in the amount of $3,725,087 as calculated in the expert report of Pitcher Partners, Chartered Accountants, dated 31 August 2012.

Loss of Chance for the Industrial Re-launch

[42] By reason of the Defendants' breach of the duty of care owed to the Second and Third Plaintiffs, Proton has suffered from loss of chance in relation to the inability to proceed with the Industrial Re-launch.

Particulars

As particularised at paragraph 40, Proton was unable to proceed with the Industrial Re-launch.

Accordingly, Proton claims the loss of chance as calculated by the expert report of Pitcher Partners, Chartered Accountants, dated 31 August 2012, totalling not less than $19,639,031 for the Industrial Re-launch.

Furthermore, Proton claims interest on the loss of chance in the amount of $23,001,879 as calculated in the expert report of Pitcher Partners, Chartered Accountants, dated 31 August 2012. Loss of Chance for the Domestic Launch.

[43] By reason of the Defendants' breach of the duty of care owed to the Second and Third Plaintiffs, Proton has suffered from loss of chance in respect of its inability to proceed with the Domestic Launch.

Particulars

As particularised at paragraph 40, Proton was unable to proceed with the Domestic Launch.

Accordingly, Proton claims the loss of chance as calculated by the expert report of Pitcher Partners, Chartered Accountants, dated 31 August 2012, totalling not less than $30,882,873 for the Domestic Launch.

Furthermore, Proton claims interest on the loss of chance in the amount of $36,171,037 as calculated in the expert report of Pitcher Partners, Chartered Accountants, dated 31 August 2012.

Costs of hiring substitute employees

[44] By reason of the Defendants' breach of the duty of care owed to the Second and Third Plaintiffs, Proton has suffered loss resulting from hiring substitute employees in an attempt to mitigate damage to Proton.

Particulars

By reason of the Second Plaintiffs injuries, Proton has incurred the following extra expenses in attempting to retain employees of a similar level of skill and expertise to the Second Plaintiff:

1. John Childs $11,736.15

2. David Redfern $22,303.88

3. Kane Childs $3,384.45 Total $37,424.48

Costs of book-keeping and consultancy expenses

[45] By reason of the Defendants' breach of the duty of care owed to the Second and Third Plaintiffs, Proton has suffered costs associated with additional book keeping and consultancy services in an attempt to mitigate damage to Proton.

Particulars

By reason of the Third Plaintiffs injuries, Proton has incurred extra consultancy expenses from the following consultants:

1. Dr S W Li $6,732

2. Dr Arpad Phillips $4,140

3. Ross Griffith $170,277.90

4. Media Focus Global (Nigel Dique) $60,937.10

5. Ray Palmer $205,760

6. Hugh Grimm $5,253.50

7. Milward Doran $147,453.84

8. Alex Roudenko $243,700

Total $844,254.34

By reason of the Third Plaintiffs injuries, Proton has incurred extra book-keeping expenses from Ms Lilly Sukkar, totalling not less than $503,118.01.

Particulars of Damage to the Fifth Plaintiff

[46] By reason of the Defendants' breach of the duty of care owed to the Second and Third Plaintiffs, Deluxe has suffered from loss of profits.

Particulars

As particularised in paragraphs 35 and 36 of this Statement, the Second and Third Plaintiffs had key roles in Proton and Deluxe that they were unable to maintain as a result of the injuries they have sustained.

The loss of the Second and Third Plaintiffs' services to Proton and Deluxe has resulted in the property located at 19 Broadhurst Rd Ingleburn, which was held by Deluxe, having to be sold. The premature sale of this property has resulted in a loss of profits to Deluxe.

Accordingly, Deluxe claims loss of profits as calculated by the expert report of Pitcher Partners, Chartered Accountants, dated 31 August 2012, and totalling not less than $350,000.

The course of the proceedings

1. It is necessary to say something about the long history of the proceedings and the way the hearing unfolded. This is chiefly because the Plaintiffs commenced to act for themselves in the middle of the hearing. Thereafter, the Plaintiffs made numerous complaints on many occasions about the way the proceedings had been conducted both before and since the hearing commenced, especially in relation to evidence which was not led or had been rejected. The Plaintiffs also complained that the Defendant had deliberately delayed the proceedings.

1. Since the proceedings commenced in 2002 the Plaintiffs have been represented by six or more firms of solicitors and many more barristers, both senior and juniour counsel. Ultimately, the Plaintiffs ceased to have any lawyers acting for them and conducted the proceedings themselves. It was never explained why this was so (and probably did not need to be explained) but it gave rise to some considerable problems for the conduct of the case.

1. I was informed on a number of occasions that one or more of the firms who had acted retained some of the Plaintiffs' documents, including original statements and/or reports. No application was made to me pursuant to s 728 Legal Profession Act 2004 (NSW) or otherwise in relation to such documents although such an application was foreshadowed though not pursued after the first tranche of the hearing concluded.

1. Decisions that had been taken by one or more of the lawyers who acted appeared on some occasions to have been taken without regard to earlier decisions made by other lawyers. Lawyers, especially counsel, who were engaged during 2013 appeared not to be fully briefed, including about prior decisions made in the proceedings. The Plaintiffs, when acting for themselves, did not want to be bound by decisions taken by their previous legal representatives.

1. There was, of course, the difficulty arising from the fact that the Plaintiffs were required to present their case with little knowledge or understanding of court procedure and practice, or the rules of evidence. Even if this had been a confined and straightforward case it would have required the Court to provide some assistance to the Plaintiffs. For a case of this size and complexity it made the hearing of the case at times very difficult. It was necessary for me to endeavour to explain procedures and rules of evidence to the Plaintiffs on many occasions, and often the same point over and over again.

1. The assistance that the Court and the Plaintiffs received from the lawyers acting for the Defendant, both solicitors and counsel, in that regard must be acknowledged. Copies of documents were willingly provided to the Plaintiffs on numerous occasions when they did not have them available. No complaint was made about the allowances I made for the Plaintiffs being unrepresented and unfamiliar with the legal process. On many occasions the Plaintiffs' requested adjournments for short periods or days to consider and/or prepare matters, and these were never resisted by those acting for the Defendant despite frequent personal abuse being directed to them and their client, and their motives impugned by Mr Chaina.

1. Up until August 2009 the Plaintiffs put their case forward on the basis that Mr Chaina was a qualified scientist with a degree in Science and a tertiary qualification in Business. In that regard his evidence was the basis for the assertions in the Plaintiffs' case that he had developed a number of product ranges which were superior to anything else on the market at the time in 1999.

1. After being pressed for some time by the Defendant's lawyers for proof of Mr Chaina's qualifications Mr Chaina finally admitted in August 2009 that he did not have the qualifications that he had claimed. This led to a complete re-shaping of the Plaintiffs' case. The detail of this is contained in the judgment of Hoeben J (as his Honour then was), the judge then case-managing the proceedings, in Chaina v The Presbyterian Church (NSW) Property Trust (No 3) [2009] NSWSC 1243. I set out the relevant passages in Chaina v The Presbyterian Church (NSW) Property Trust (No 16) [2013] NSWSC 1494 at [136].

1. In short, this admission resulted in the Plaintiffs retaining five chemical experts to attest to the quality of the products Mr Chaina claimed to have developed. Other experts, particularly in the marketing and financial area, had previously provided reports on the market share that the product ranges might achieve and the consequential level of sales that would be made based upon the assumption of the superiority of the products. That assumption was made by reason of Mr Chaina's evidence to that effect in the Statements he had provided. The subsequently obtained reports from the chemical experts in turn resulted in a significant development in the case in a manner that will be explained a little later.

1. The admission by Mr Chaina also brought about another change in the way the case was presented. As Hoeben J noted Chaina (No 3) at [26], the Plaintiffs, instead of relying simply on Mr Chaina's evidence, wanted to rely on the observations of approximately 40 laypersons regarding the products. It was suggested that the Plaintiffs would be calling up to 140 witnesses in total. Both by reason of the extra lay evidence and the expert chemical evidence the scope of the case was considerably expanded.

1. On 6 June 2012 Hoeben J made two significant directions:

9. Plaintiffs are to identify with precision the witness statements which are to be tendered by them at the hearing commencing 4 March 2013 on or before 4pm 27 July 2012.

10. Plaintiffs are to make any further concession in accordance

with the Defendants' Schedules of Objections as to admissibility in relation to the witness statements of George and Rita Chaina and the lay witnesses on or before 4pm 27 July 2012.

1. On 27 July 2012 Berrigan Doube (then the solicitors for the Plaintiffs) wrote to Curwoods (the Defendant's solicitors) listing the statements to be tendered at the hearing. The list identified 38 lay witnesses apart from Mr and Mrs Chaina. Hoeben J had also directed that by 19 October 2012 the Plaintiffs were to notify the Defendant of the order of lay witnesses. This was done by a letter of Berrigan Doube to Curwoods of 26 October 2012. Apart from Mr and Mrs Chaina 35 of those witnesses were identified.

1. At some time, pursuant to order 10 made by Hoeben J, the Plaintiffs indicated portions of the lay statements, including those of Mr and Mrs Chaina, that were not to be read.

1. At the time I commenced to case-manage the proceedings in November 2012 the Plaintiffs' counsel briefed by Berrigan Doube were David Baran and Luke Fermanis. An application was made by the Defendant under s 192A Evidence Act 1995 (NSW) to rule on the objections to evidence of the lay witnesses that had not been conceded by the Plaintiffs. I delivered judgment on that application on 7 December 2012: Chaina v The Presbyterian Church (NSW) Property Trust (No 6) [2012] NSWSC 1476. A significant aspect of that judgment was my ruling that the evidence by laypersons of their opinion of one or more of the products was not admissible.

1. The Defendant thereafter made a further application under s 192A with regard to the Statements of Mr and Mrs Chaina. I delivered two judgments in that regard: Chaina v The Presbyterian Church (NSW) Property Trust (No. 7) [2013] NSWSC 139 and Chaina v The Presbyterian Church (NSW) Property Trust (No 8)[2012] NSWSC 187. A significant aspect of those two judgments was my determination that it had not been demonstrated that George Chaina was an expert. Evidence that I regarded as expert opinion by him was rejected but with leave for its reinstatement if it was later shown that he had sufficient experience to be regarded as an expert despite a lack of formal qualifications.

1. During 2012 the matter had been fixed for hearing on 4 March 2013 for what was regarded as the first tranche of the hearing. It was thought that a period of six weeks would be sufficient to deal with the lay evidence including the evidence of Mr and Mrs Chaina. Shortly before the commencement of the hearing Mr Maconachie QC and Mr Sharpe of Counsel were briefed in place of Messrs Baran and Fermanis.

1. The first tranche of the case was taken up entirely with the evidence, principally cross-examination, of Mr and Mrs Chaina. Some significant things happened during that tranche of the hearing where Mr Maconachie QC and Mr Sharpe appeared. First, what was tendered as the evidence in chief of Mr and Mrs Chaina was only the text of the various Statements signed by them between 2005 and 2012. The annexures to these statements were never tendered as the transcript makes clear. In the case of Mr Chaina's Statement of 8 February 2010 (Exhibit C1) the annexures, in any event, bore no relationship to what appeared in the text of the Statement. The Plaintiffs' solicitors subsequently provided a schedule cross-referencing paragraphs of the Statement to the documents that were annexed, in case reference to them was needed.

1. Secondly, despite my rulings that rejected expert opinion evidence from Mr Chaina in his Statements no attempt was made by counsel representing the Plaintiffs to have that evidence re-admitted nor to have Mr Chaina accepted as an expert witness. Significantly, on the second day of the hearing, and after the various Statements of Mr Chaina were tendered subject to the rulings I had made, Mr Maconachie tendered a new Statement of Mr Chaina which became Exhibit E. No attempt was made in that Statement to advance Mr Chaina's case as an expert witness. Nor was any attempt made in re-examination to do so, notwithstanding a concerted attack on Mr Chaina in cross-examination in relation to his claimed qualifications, experience and his credit generally.

1. On 8 April 2013 (the 3rd last day of the first tranche) Mr Maconachie said this (T 1440):

Neither Mr Sharpe nor I will be in the case after Friday lunchtime for reasons that are of no concern to anybody except myself, Mr Sharpe, our instructing solicitors and Mr and Mrs Chaina.

...

There is another and very important aspect of the case on which some work has been done, and I might say not only by myself and Mr Sharpe but by the second and third plaintiffs, and that is revisiting an application to revisit some of the evidence in statements that has been ruled inadmissible by your Honour. It's a bigger task than I thought it would be. It will require an examination of not only that evidence and the manner in which the second and third plaintiffs have been cross-examined, but also your Honour's reasons, the submissions that were put forward in support of evidence, and the like, and also some of the interlocutory steps that were had before, amongst others and principally, Hoeben J. It's highly unlikely, though I hoped that I would be able to deal with it by today, that it would be able to be dealt with even by Friday. And the second and third plaintiffs see it as a very important aspect of the case; and I agree with them.

Accordingly, even though, in the best of all possible worlds, it would be preferable to have that dealt with before the end of this week, first, the job is larger than I hoped it would be and, secondly, and I think more importantly, someone else, some other people, some other barristers, will have the obligation of putting the case forward after Friday. They should have the opportunity, and the second and third plaintiffs and the corporate plaintiffs should have the opportunity, of those people putting their stamp, as it were, upon that lay evidence and any application to revisit your Honour's rulings, having regard to the way in which Mr Stitt - and I make no criticism, of course - has cross-examined the second and third plaintiffs.

No specific reference was made then or thereafter to the matter of Mr Chaina's expertise.

1. Between the end of the first tranche of hearing and the commencement of the second tranche on 15 July 2013 the Plaintiffs' counsel ceased their involvement. Thereafter, their solicitors also ceased to act, although I had earlier been told that they would continue to act notwithstanding the end of Mr Maconachie's and Mr Sharpe's involvement. Between the two tranches two firms of solicitors came onto and went off the record. (It was at this time that an application under s 728 LPA was foreshadowed but not pursued.) The first firm was Blackstone Waterhouse. The second was Champion Legal. Each firm retained counsel.

1. On 6 May 2013 I made the following directions by consent:

i. That the Plaintiffs are to file and serve a schedule by witness name, statement date and paragraph number of the evidence in relation to any advance rulings made by the Court on 7 December 2012 which they now seek to be reversed, such schedule to be filed and served on or before 31 May 2013.

ii. That the Plaintiffs are to notify the Defendant of any witness listed in the Plaintiffs' proposed order of witnesses contained in the letter dated 26 October 2012 from Berrigan Doube to Curwoods Lawyers upon whom they no longer rely upon on or before 31 May 2013,

iii. That the Plaintiffs provide to the Defendant a list of the order of call of their proposed expert witnesses on or before 31 May 2013.

1. These directions were not complied with. At a Directions Hearing on 7 June 2013 I was informed that Blackstone Waterhouse were ceasing to act. I made the following directions (inter alia):

4. Plaintiffs to file and serve a Schedule detailing particular parts of the evidence which was rejected in accordance with Davies J's judgment of 7 December 2012 and to state the legal basis for its reinstatement - such Schedule to be filed and served by 21 June 2013.

5. Defendant to provide the Court with response to that Schedule by 5 July 2013.

6. Plaintiffs to file and serve a Second Schedule re all lay witnesses that they wish to call, identifying what factual matters each of those witnesses is being called to prove - such Schedule to be filed and served by 28 June 2013.

1. At a Directions Hearing on 21 June 2013 Mr Glissan QC and Mr G B Evans of Counsel announced their appearance. They were briefed by Champion Legal. The Schedule, due by 21 June, had not been served. I made the following directions (inter alia):

3. The plaintiffs file and serve a schedule by 28 June 2013 of

those parts of the evidence rejected by Justice Davies in his judgment of 7 December 2012 which they seek to have restored and in each case set out the legal basis on which they seek to do so.

4. The plaintiff are to file and serve a schedule, by 5 July 2013 of the lay witnesses they intend to call, identifying all factual matters which are sought to be proven by such witnesses.

5. The defendant is to respond to the schedule in order 2 by 12 July 2013, identifying which factual matters are in issue.

1. The Schedule of lay witnesses whom the Plaintiffs intended to call was served on 5 July 2013. It consisted of 20 witnesses. The last two on the list were Michael Jerogin and Paul Robinson. These persons were not on the lists provided by Berrigan Doube referred to at [41] above. I considered that it was inappropriate to allow new legal representatives to re-visit decisions which had been taken earlier and upon which the Defendant had relied. Their inclusion was, in any event, inconsistent with the second order I made on 6 May 2013 ([50] above). Accordingly, I disallowed their evidence.

1. Overall, this Schedule did not comply with the order made on 21 June 2013 in that it did not "identify all factual matters which are sought to be proven by such witnesses". On 10 July 2013 Hoeben J released the Defendant from the obligation to respond to the Schedule and noted that junior counsel for the Plaintiffs would attempt to provide an amended Schedule that complied with the order.

1. No Schedule in accordance with order 3 made on 21 June 2013 ([52] above) was ever served.

1. The second tranche resumed on 15 July. On that day Mr Glissan QC appeared as a matter of courtesy to say that his and Mr Evans' instructions had been withdrawn. In addition, I was informed that the solicitors retained had been terminated. The Plaintiffs thereafter (except for one discrete period that I will mention) conducted the proceedings themselves. They asked for, and were granted permission for, four different McKenzie friends from time to time. One of these persons was their son Jean-Pierre, the Fourth Plaintiff, who was on the roll as an Australian lawyer but who had ceased to hold a practising certificate.

1. At the conclusion of the lay evidence and the evidence of the psychiatrists (except Dr Phillips who was then unavailable) an application was made by the Defendant for a hearing pursuant to s 192A Evidence Act in respect of the Plaintiffs' expert evidence (not including the psychiatric evidence). I heard that application and gave judgment where I determined that some but not all of the Plaintiffs' expert evidence should be rejected: Chaina v The Presbyterian Church (NSW) Property Trust (No. 13) [2013] NSWSC 1057.

1. Thereafter, Mr Humphreys, an accountant retained by the Plaintiffs, was cross-examined, followed by evidence in reply from four witnesses. Matters leading up to the evidence in reply are set out in my judgment in Chaina v The Presbyterian Church (NSW) Property Trust & Ors (No. 15) [2013] 1178.

1. Mr Chaina then commenced to give evidence in reply but the first question put to him by Mrs Chaina concerning Exhibit 47 was objected to and rejected on the basis that Mr Maconachie had re-examined Mr Chaina on that document. Mrs Chaina then asked for, and was granted, time overnight to consider what other evidence in reply she would lead from Mr Chaina. In the events which happened, no evidence in reply was given by either Mr or Mrs Chaina.

1. On 26 August I asked the parties to give consideration to the future conduct of the case in the light of my judgment in Chaina (No 13). The consideration arose particularly because, as I noted in that judgment, argument had not been addressed to a number of reports from experts other than those whose reports I had rejected. It was necessary to determine at some point what reports, or parts of the reports, survived the determinations in Chaina (No 13).

1. On Tuesday 3 September the Defendant filed in court a Notice of Motion which was ultimately dealt with in my judgment in Chaina v The Presbyterian Church (NSW) Property Trust (No. 16) [2013] 1494. The Defendant asked that this motion be heard before the second tranche concluded so that the parties would know what experts would be giving evidence in the third tranche, by then fixed for five to six weeks commencing 8 October 2013. The Plaintiffs said that they might wish to file their own motion to enable their experts to recast their reports. I indicated a desire to hear the Defendant's motion at the end of the following week.

1. On 9 September 2013, just before Dr Phillips was due to give evidence, Mr Dawson of counsel appeared for the Plaintiffs. He said he had been briefed to provide a "roadmap as to what their options might be from this point forward". He asked for a period of "four to eight weeks" for the Plaintiffs to consider the Defendant's motion. In the circumstances I determined that the Defendant's motion would be heard on the first day of the third tranche, 8 October. Any motion by the Plaintiffs arising from Chaina (No 13) was to be filed and served by 2 October and would also be heard on that date.

1. On 8 October and thereafter Mr Dawson appeared for the Plaintiffs to argue both motions. That took place on 8, 9, 14, 15 and 16 October. I gave judgment on 25 October: Chaina (No 16). Apart from appearing to argue the costs of the motions on 30 October 2013 Mr Dawson then ceased to appear for the Plaintiffs and they continued to conduct the case themselves.

1. In Chaina (No 16) I determined in substance that the claim in respect to the re-launch of the industrial products should go forward but I re-affirmed my determination in Chaina (No 13) that the claim in respect of the launch of the domestic products should not. However, that did not mean that matters concerning the domestic launch were necessarily irrelevant to a consideration of the likelihood of the industrial products re-launch being successful. My determination was not that the domestic launch would not have proceeded in any event but only that the Plaintiffs could not make a claim in respect of their inability to proceed with it, if that was otherwise established.

1. Finally, it should be noted that I was informed by the Plaintiffs at the time of final addresses that they had been assisted by three persons, apparently law students, with the preparation of the Plaintiffs' written submissions. Those written submissions were helpful in enabling me to understand more clearly the way the Plaintiffs put their case. I was also considerably assisted by the Defendant's written and oral submissions.

The issues

1. The issues in dispute were finally agreed by Senior Counsel for both sides on the last day of the first tranche of the hearing, 12 April 2013. They appear in a document entitled "Defendant's Statement of Issues in Dispute" although Mr Maconachie's agreement to them appears at T1552.

1. That document discloses the issues as these:

The Natural Plaintiffs' claims for mental or nervous shock causes of action

1. The Plaintiffs, George and Rita Chaina (the Second and Third Plaintiffs respectively) sue the Defendant for negligence at common law subject to Part 3 of the Civil Liability Act 2002 (NSW) ("CLA") for mental or nervous shock suffered by reason of the death of their son on 24 October 1999.

2. Duty of care and breach are not in issue.

3. The issue in dispute is whether George and Rita Chaina suffer from the existence of a recognised psychiatric illness caused by the negligence of the Defendant (see s 31 CLA).

4. In particular:

(a) The cause, nature and extent of George and Rita Chaina's alleged injuries and disabilities, if any.

(b) Whether the death:

(i) caused the alleged injuries and disabilities;

(ii) accelerated pre-existing conditions;

(iii) exacerbated pre-existing conditions.

(c) What was the mental and physical state of George and Rita Chaina pre-death? In particular, whether their existing condition if any would have occurred in any event, despite the death.

(d) What is the current and future mental and physical states of George and Rita Chaina?

(e) The recoverability and reasonableness of the special damages claimed by George and Rita Chaina.

(f) Whether George and Rita Chaina are entitled to damages for the alleged early sale of properties or whether those claims are too remote.

(g) Quantum generally.

The per quod amisit servitium causes of action

5. The Plaintiffs Proton and Deluxe (the Fourth and Fifth Plaintiffs respectively) sue the Defendant per quod amisit servitium in relation to the injuries and disabilities of George and Rita Chaina (the Second and Third Plaintiffs).

6. The Defendant's Further Amended Defence to the Amended Statement of Claim filed in 2006 puts in issue the causes of action including their availability as a matter of fact and as a matter of law and quantum.

7. As provided by Tame v NSW (2002) 211 CLR 137 at [193], Proton and Deluxe must at least establish that George and Rita Chaina suffer from a recognisable psychiatric injury caused by the conduct of the Defendant. Further, depending upon the applicability of the CLA, Proton and Deluxe may in fact have to establish George and Rita Chaina suffer from a recognised psychiatric injury.

8. In particular the issues are:

(a) Whether George Chaina and Rita Chaina were "servants" of Proton for the purposes of the causes of action.

(b) Whether George and Rita Chaina were "servants" of Deluxe for the purposes of the cause of action.

(c) The cause, nature and extent of George Chaina's and Rita Chaina's alleged injuries and disabilities, if any.

(d) Whether the death:

(i) caused the alleged injuries and/or disabilities;

(ii) accelerated pre-existing conditions;

(iii) exacerbated pre-existing conditions.

(e) What was the mental and physical state of George and Rita Chaina pre-death? In particular, whether their existing condition if any would have occurred in any event despite the death.

(f) What is the current and future mental and physical states of George and Rita Chaina?

(g) Whether Proton has suffered a recoverable loss of the kinds alleged, namely:

(i) loss of profits from Proton's existing business,

(ii) a loss of opportunity to relaunch Proton's industrial business with new products and

(iii) a loss of opportunity to launch a new domestic business with new products

or is it limited to claims for additional wages and expenses (and if so in what amount) paid out by reason of the injuries and disabilities, if any, of George and Rita Chaina.

(h) Whether Deluxe has suffered a recoverable loss of the kind alleged, namely:

(i) Deluxe's damages for the alleged early sale of a property (which the Defendant says is too remote)

or is it limited its claims (sic), if any, for additional wages and expenses (and if so in what amount) paid out by reason of the injuries and disabilities, if any, of George and Rita Chaina.

9. In particular, in regard to the claims of losses of profits and

loss of a chance the issues include, inter alia:

(a) The expertise and skills of George Chaina including

his alleged professional qualifications and work history and, in particular, whether he was a skilled chemist/chemical engineer. Similarly Rita Chaina's expertise and skills are in issue.

(b) Whether at the relevant time the Plaintiffs had the alleged formulae of the products which constitute the basis of the claim for damages.

(c) Whether at the relevant time the Plaintiffs had the alleged products which constitute the basis of the claim for damages.

(d) Whether the alleged products had the asserted qualities and performance characteristics.

(e) What would have been the costs of manufacture of the subject products in the quantities alleged by the Plaintiffs?

(f) Whether the Plaintiffs had adequate plant and equipment or could have obtained adequate plant and equipment to test, manufacture, package and distribute all of the alleged products including whether Lithgow was a suitable site for such activities.

(g) Whether the Plaintiffs had or would have had sufficient employees to conduct the necessary manufacturing and distributing processes.

(h) Whether the alleged markets existed including the willingness of retail outlets including Coles and Woolworths and other retailers or users of domestic and industrial products to purchase the products in question in the volumes alleged.

(i) Whether the Plaintiffs would have achieved the market shares as alleged in both the relevant industrial and domestic markets.

(j) The extent of the distribution and marketing costs which would have been necessary in order to achieve such market shares.

(k) The time periods over which such alleged market shares would or could have been achieved.

(I) The availability and necessity for finance sufficient to facilitate and permit the launch, manufacture and distribution of the relevant industrial and domestic products to achieve such market shares.

(m) The reaction of competitors in order to protect their existing market shares against the intrusion of the Plaintiffs' products.

(n) The impact of government regulation particularly in

regard to the domestic products but also in relation to the sites, plant and equipment and whether such regulation would have prevented the launch or sale of all or any of such alleged products.

10. Further, the Defendant alleges that Proton and Deluxe have failed to mitigate their losses, if any.

11. Whether it was reasonably foreseeable by the Defendant that the Second and Third Plaintiffs were irreplaceable by the Corporate Plaintiffs (Barclay v Penberthy).

12. Quantum generally, particularly whether the claimed losses fall within the principles of Barclay v Penberthy [2012] HCA 40.

13. Whether the claim for loss of value of the shares in the Corporate Plaintiff by either of the Second and Third Plaintiffs is recoverable (see Gould v Vaggelas).

1. Quite clearly, some of the sub-paragraphs of paragraph 9 have fallen away as a result of my decisions in Chaina (No. 13) and Chaina (No. 16).

Deluxe and Proton

1. This section outlines an historical summary of the corporate Plaintiffs which was provided by Mr Chaina in his statement of 2 September 2005 (exhibit A1) supplemented by some other material. This Statement of 2 September 2005 was made before Mr Chaina's acknowledgement that he had no qualifications as he had asserted. Because there are very serious concerns about Mr Chaina's credit (discussed in the next section of this judgment), I am not making findings of fact in relation to this summary. It is provided to give a general background to the position of the Plaintiffs at the time of Nathan's death. The detail of it may not be accurate but any such inaccuracy does not significantly impinge on the outcome of the case.

1. Deluxe was founded in 1982 to develop products for a number of markets including the industrial cleaning market with particular emphasis on laundry and hospitality, and the food processing, dairy, abattoir and poultry markets. Sales commenced in approximately 1984. (In a document entitled "Deluxe Chemicals Pty Ltd, A Company Profile of 1993, it was said that the company had been founded by Mr and Mrs Chaina in 1978. In Mr Chaina's Statement dated 8 February 2012 he said that he set up the company in 1984. He also said that he met Mrs Chaina in the early 1980s.

1. In about 1985 Deluxe purchased a three storey factory at Enfield to produce products which at that time included detergents and disinfectants. Mr Chaina set up a research and control laboratory, a liquid manufacturing plant and a powder plant.

1. In the late 1980s or early 1990s he developed a manufacturing procedure and safety procedure, as well as procedures for quality control, testing of raw materials and finished product.

1. In about late 1992 Mr Chaina redesigned the plant at the Enfield factory to meet increased customer demands. The redesign incorporated apparatus specifically designed for manufacturing cleaning products containing enzymes.

1. In 1987 Deluxe bought a vacant block of land at 19 Broadhurst Road, Ingleburn.

1. In the late 1980s Mr Chaina, with the assistance of his wife, wrote a number of manuals for both internal and client training use including a manual for the training of laundry personnel, a manual describing procedures for determining laundry performance and productivity, a house keeping training manual for the training of hotel personnel and a manual to train food processing personnel.

1. In June 1993 a fire destroyed Deluxe's manufacturing plant in Enfield. It destroyed plant and equipment, the trading stock, business records including most of the financial records and intellectual property including documentation formulations and specifications to each raw material. It should be noted that in his Statement of 8 February 2010 Mr Chaina said that prior to the fire there was a burglary at the plant at Enfield where all of the computers and financial records were stolen.

1. An insurance dispute arose in relation to the fire and proceedings were commenced in this Court with allegations of fraud and arson being made against the insured. These proceedings ultimately settled. The fire and the proceedings took a toll on both Mr and Mrs Chaina's health but the business continued and expanded somewhat in the years following the fire.

1. Within a couple of months of the fire Deluxe leased a factory in the same street at Enfield. It was from these premises that the manufacture of products and their distribution were undertaken. Approximately 12 months after the fire Deluxe leased a factory at Payten Avenue, Roselands where production continued until about September 1999 when Deluxe moved to a larger rented factory at Broadhurst Street, Ingleburn. Its relationship to the property Deluxe had purchased at 19 Broadhurst Road nor what this latter property was used for were not explained.

1. Between 1993 and 1995 Mr Chaina was able to reconstruct some of the product formulations and procedures.

1. The financial records show that the busioness traded under Deluxe until the fire. From 1994 to 1998 it traded under another of the Chainas' companies, Jean Pierre Cosmetics Pty Ltd, and from 1998 it traded under the name Proton Technology. There was no explanation for the change to Jean Pierre but the change to Proton was a contentious issue in the case to which I will return later.

1. The Plaintiffs claim that Deluxe had a number of significant clients with substantial laundries. These included a number of leading hotels, laundries, hospitals and the Northern Territory Linen Service. Total Care entered into a contract with Proton in 1996 to 1997 and renewed that contract in 1999 for a further six years.

1. In 1998 Deluxe brought the former TAFE college at Lithgow located on the corner of Mort and Cook Streets. Mr Chaina intended to set up a research laboratory there as well as a facility where Deluxe could conduct training for industrial laundry, food and beverage, hospitality and food processing personnel.

1. Also in 1998 Mr Chaina located a property at 18-20 Donald Street, Lithgow as a site for a large manufacturing plant. The property was said to be particularly suitable as it had a spray tower with a large amount of auxiliary equipment as well as a rail link connected to the premises.

1. Between 1984 and 1993 Mr Chaina claims to have developed, and Deluxe launched, several new product ranges for the industrial laundry, kitchen, housekeeping and food processing markets, including:

(a) Challenger System for the industrial laundry market;

(b) Challenger Plus System (the Enzyme System) also for the industrial laundry market;

(c) Classic range of products for commercial housekeeping;

(d) Quantum range of products for food processing;

(e) Jean Pierre Cosmetics range of guest amenities; and

(f) Nappiwash.

1. After the fire from 1993 to October 1999 Deluxe continued to supply Challenger System and Challenger Plus System products. Commercial housekeeping products were also supplied in this period but, progressively, under the name 'Vision' rather than 'Classic'. Food processing products were supplied under 'Quantum'. The 'Jean-Pierre' products were not supplied after about 1996. The Nappiwash product did not continue after the fire. From about mid 1999 Proton commenced supplying floor cleaning products under the name 'Orbital' and car cleaning products under the name 'Classic'. In about 1998 Proton commenced supplying food and beverage cleaning products under the 'Spectrum' name.

1. The Plaintiffs claim that in order to recapture Deluxe's market share lost after the fire and to acquire an increased market share, Mr Chaina proposed a major relaunch of the industrial business. He said that by October 1999 he was almost ready to relaunch the industrial business.

1. Additonally, after the fire Mr Chaina decided to take steps to supply the domestic market with a full range of laundry and other household cleaning products. In the period 1995 to 1999 he formulated a number of cleaning products for use in the domestic market.

1. He said that by October 1999 he had purchased a number of items of equipment necessary to produce domestic products. That equipment was located at the Ingleburn site.

1. In about October 1995 Deluxe engaged Creative Campaigns Pty Ltd to assist with the marketing strategy for the relaunch of the industrial business. In about mid 1999 Danny Arraj was engaged to assist in the domestic product launch.

1. In about October 1998 Proton retained Mr Rodger Morton of Morton Design to design a new corporate identity and branding for Proton as well as labelling and packaging. The Plaintiffs say that by mid 1999 the corporate and product image had been developed.

1. In about August 1999 Proton hired Professor Ross Griffith, an expert in textiles, to assess and endorse the domestic products and to help with launching the products by being part of the advertising campaign.

1. In about September 1999 Mr and Mrs Chaina consulted Mr Derick Frere, a former director of Saatchi & Saatchi, who was responsible for marketing Sanatorium products, to help in launching Proton's products. Mr Chaina's proposal was to advertise with a comprehensive full national launch with significant levels of television advertising.

1. Mr Chaina appointed Mr Arraj to assist him in capital fundraising. In about August or September 1999 Mr and Mrs Chaina prepared a document called "Investment Opportunity" which was a document about the company and its range of products, and how the Plaintiffs planned to launch them, for the purpose of capital raising.

1. To help source the funds contact was made with Arthur Andersen. However, that firm was not prepared to sign a confidentiality agreement so those discussions went no further.

1. Thereafter, Mr Chaina instructed Mr Arraj to contact Price Waterhouse Coopers and the John Hewson Group. Price Waterhouse Coopers first identified the Pratt Group as a potential investor but Mr Chaina said that the Pratt Group was unacceptable to him because he was aware of the government's concerns about environmental problems caused by cardboard and plastic waste disposal, a matter related to the Pratt Group's core business. Mr Chaina said that Price Waterhouse Coopers were continuing to identify sources of funding in October 1999.

1. In about September 1999 Mr Arraj contacted the John Hewson Group and requested a meeting. However, the Plaintiffs' presentation to them never eventuated because of Nathan's death.

1. A further difficulty ensued in about 2001 because there was said to be a break-in at the Lithgow premises. It was said that certain things were stolen during the break-in, including records and papers of Mr Chaina that would otherwise have been used to support the present claims.

1. Because the main claims of Deluxe and Proton were based on the proposed launch of the industrial and domestic products the outcome of the per quod claims relied to a significant extent on acceptance of the evidence of Mr Chaina. It is necessary, therefore, to form a view about his honesty and reliability.

1. However, before doing so it is necessary to mention a few other matters. The case was opened on the basis that Mr Chaina had between 1989 and 1992 developed a laundry detergent formulation that enabled two types of enzymes to be stabilised in liquid form for extended periods. That seemed to be the basis of the development of the business by Deluxe in that period. There was a redesign of Deluxe's plant at Enfield with some $200,000 being spent on it. The business was expanding, staff increasing and its business opportunities increased.

1. Mr Chaina claimed that in the period 1995 to 1999 he developed a number of formulae which were to be used to create new products that were to form the basis of the new launch of the company intended for early 2000 had there not been the intervention of the tragedy involving Nathan.

Matters of credit

(1) Mr Chaina

1. For the reasons which follow I found the evidence of Mr Chaina to be very unreliable. I cannot and do not accept him as a witness of truth and even where I consider he was trying to tell the truth, his evidence cannot be relied upon unless corroborated by objective evidence.

1. There is great deal of material to be considered in this regard. Mr Chaina was cross-examined over a three week period. He found it difficult to answer questions either by agreeing, disagreeing or saying that he could not remember or did not know (most of the cross-examiner's questions would have allowed for those answers). He frequently insisted on providing explanations or justifications for his actions or inactions. On many occasions he would at first deny what was put to him or suggest that his wife should be asked about it but, when pressed, would ultimately agree with what was being put.

1. Almost every day he needed to have extra breaks out of the witness box, some of which appeared to be genuine, although on a few occasions the need seemed to arise because of difficulties he was under being required to answer particular questions. He frequently asked for questions to be repeated, saying that he was having difficulties concentrating. However, on many occasions the lack of concentration appeared to arise from the fact that he was trying to think ahead in respect of the cross-examiner's questions or because he was trying to think of how something might be explained when it was inevitably put to him.

1. He had a fixed and almost delusional view about himself, his own abilities and expertise and about the success and reputation of his companies in the face of strong evidence to the contrary. As it transpired some of this was consistent with psychiatric diagnoses made by all of the psychiatrists who assessed him.

1. This impression was re-affirmed throughout the time that the Plaintiffs were unrepresented. Once Mr Chaina had a belief about some matter it was almost impossible to shift, alter or modify that belief. For example, he seemed to think that if a document was "in discovery" (as he called it) it was in evidence. My repeated statements made to him to the contrary never altered that belief. He did not accept that Hoeben J made the costs order against him in 2009 because the whole basis of the Plaintiffs' case changed as a result of his acknowledgement that he had no qualifications.

1. During the course of the Plaintiffs' submissions Mrs Chaina said this about Mr Chaina's false assertions of his qualifications (T 4225):

And sometimes when you say to yourself, I - you know, if I say to myself I've got blond hair, blond hair, maybe after 20 years you start to believe you have got blond hair. You know. And maybe that's - that - I'm not trying to - but I just feel that sometimes when you say something you start to believe it if you say it often enough and everybody else around you starts to believe it.

To the extent that Mr Chaina was not being deliberately dishonest in his evidence, that statement of Mrs Chaina's seems to provide an explanation for most of the remainder of his evidence. Indeed, the statement seems to explain a good deal of Mrs Chaina's evidence also.

1. I regret to say, however, that generally I found Mr Chaina to be dishonest. He said whatever he believed would help him to win this case and obtain very substantial damages. This was at least partly motivated by his desire for vengeance against the Defendant. I accept that in some respects he has come to believe that certain things are true when that is not the case. This is particularly so in relation to his health history and his abilities as a chemist. Whatever the explanation, his evidence was entirely unreliable.

1. It should also be noted that on a large number of occasions during the first tranche of the hearing Senior Counsel for the Plaintiffs requested the granting of certificates under s 128 Evidence Act to both Mr and Mrs Chaina in respect to aspects of their evidence. I agreed to those requests.

1. I now turn to consider individual matters regarding Mr Chaina.

(a) His qualifications

1. These proceedings commenced in 2002. Mr Chaina's first statement was dated 2 September 2005. In it he claimed to have a Bachelor of Science from the University of New South Wales completed in 1972. He also claimed to have completed a Business and Marketing Course at the Institute of Technology in 1975. Both of these matters were entirely false as Mr Chaina admitted. They were lies that he had perpetuated, as he said, for about 40 years.

1. Mr Chaina also claimed to have worked as a scientific analyst at the University of New South Wales at its Schools of Organic Chemistry, Textiles, Ceramics, Food and Technology and Metallurgy. When it was put to him that this was false he answered in a way that became familiar during his cross-examination: "yes and no". The reason he wished to maintain that it was not entirely untrue was, he said, because he was doing some consulting for a client with or at the University of New South Wales. He claimed to have worked at the University in that consulting capacity.

1. He also said in his statement of 2 September 2005:

During 1969 and 1970 while I was studying for my Bachelor of Science, I was a research chemist assisting the chief chemist for Vegetable Oils Pty Ltd which was a manufacturer of margarine and other food products.

He admitted that that was a lie in two respects. First, he was not studying for a Bachelor of Science. Secondly, he was not a research chemist assisting the chief chemist for Vegetable Oils. His explanation for saying these things was that it was part of a marketing tool. In truth, he was simply a laboratory assistant assisting the chief chemist.

1. These lies concerning his qualifications and experience were part of his sworn evidence in proceedings before this Court when he made a claim on the insurance policy in respect of the 1993 fire.

1. In addition, Mr Chaina put forward a Curriculum Vitae which contained other statements that he admitted were false. First, the Curriculum Vitae said under the heading "Professional Experience" that he worked at Proctor & Gamble between 1974 and 1981. He admitted that that was false. Secondly, it asserted that he was a member of the Chemical Institution from 1970 to 1980. He admitted that that was false. Thirdly, it asserted that he was the laboratory manager at Burroughs Wellcome Ltd between 1973 and 1974. That statement was false. Fourthly, it asserted that he was the laboratory manager at Nabalco Ltd between 1971 and 1973. That statement was false.

1. He claimed that Proctor & Gamble had cherry-picked him to go to work for them in New York. He admitted that this was also a lie but said that he lied because he was trying to market himself. He said that when he came back from New York he was engaged lecturing at the University. That, he admitted, was also false.

1. Although he said that the purpose of the lies he told about his qualifications and experience was for marketing, not only were some of these lies contained in affidavits in court proceedings but were told to psychiatrists who examined him for the purposes of these proceedings. Accordingly, he compounded the lies by giving false motivations for them.

1. He admitted telling a number of lies to Dr Waters, a psychiatrist who had been retained by the Plaintiffs. (Dr Waters was ultimately not relied upon by the Plaintiffs.) These were largely the lies mentioned above concerning his qualifications and work history. It was put to Mr Chaina that he told lies to Dr Waters for the purposes of trying to improve the claim for damages. He denied that proposition and said he was too traumatised for that even to enter his mind. I do not believe him when he says that. On many occasions he resorted to the statement that he was too traumatised after the death of his son to be able to do things, or remember things, or think clearly about things. There is no doubt that he was traumatised but it is also clear that Mr Chaina's conduct demonstrated clearly that he was not too traumatised to be able to do many things, including conduct large amounts of litigation and conduct his own business.

1. He claimed in the witness box that he had come to the view that telling lies was not to his advantage,. He had come to that view as a result of being questioned about the lies he had told on the first day that he was in the witness box. Nothing in his evidence gave me any justification for thinking that he had come to a realisation that telling lies was not to his advantage. In fact, the impression I gained was that he would say anything to improve the claim he was making.

1. The statements about his qualifications had been relied upon and put forward by him on many occasions over the years including in other Court proceedings. For example, in proceedings the Plaintiffs brought against their former solicitors, Mallesons Stephen Jaques, Mr Chaina claimed not only to have the two qualifications mentioned from UNSW and the Institute of Technology but also another "Formal Qualification" being "CSIRO training, Atomic Absorbtion Technology, University of Melbourne. He admitted that that was false.

1. In proceedings involving Central Coast Area Health Service Mr Chaina swore an affidavit for Deluxe where he again said that he had a Bachelor of Science (Applied Chemistry) degree. He said this was to market himself (T625-626). He told the lie because he thought it would be to his advantage (T627).

1. It seems apparent that by reason of the false qualifications he obtained employment with various companies, employment that clearly would not have been obtained had the true position been disclosed. Nevertheless, the fact that he worked in some positions enabled him to acquire knowledge and a measure of expertise in relation to chemical products.

1. The qualifications lie was further perpetuated because when the Defendant's solicitors requested proof of his qualifications he instructed his then solicitors, McLachlan Thorpe, to write to the Defendant's solicitors saying that the qualifications had been burnt in the factory fire in 1993.

1. Although Mr Chaina denied that he told these lies about his qualifications and experience for financial advantage I do not believe him. He gave various explanations for falsifying his qualifications, the chief of which was that it was a marketing tool, that they were white lies from which no one was hurt, and because he considers that he is as well, or better, qualified than a person with those formal qualifications.

1. I do not accept that financial advantage was not part of his motivation for telling these lies because he included the lies in two particular documents that were put forward specifically for the purpose of obtaining a financial advantage. The first of these was a document called "Investment Opportunity Proton Technology" (Ex 2). Its purpose, as he agreed, was for inviting potential investors to invest in Proton Technology Pty Ltd. It was not dated but its reference to an intention to market domestic products means that its provenance is in the 1995 - 1999 period.

1. The relevant invoices appear to be dated 31 January, 31 March, 30 April, 31 May, 30 June, 31 July, 31 August, 30 November all in 2000 and 31 January 2001. They total $11,965 but it is apparent from some that they contain charges for media matters. A generous allowance to the Plaintiffs, which I make, is $9,000.

(iv) Ray Palmer

1. Ray Palmer is a chef and a hotel manager. In 1996 he managed the Heritage Hotel in Canberra. He met Mr Chaina through John Childs who was then at Totalcare. Mr Palmer came to use Deluxe's products when managing the Heritage Hotel and subsequently at Parklands Apartments. He also had a business called Ray Palmer Consulting Services from about 2003 whilst still working as the manager of various hotels. He commenced offering day to day management of operations services to Proton. The charges claimed of $205,760 relate to those services.

1. It is not necessary to look more closely at the services Mr Palmer performed for Proton, nor to consider issues relating to his credibility (he failed to mention in his Statements that he consulted to Proton and rendered substantial fees whilst at the same time lauding Mr Chaina's products and services) because Mr Palmer's services were rendered from 2003 onwards. On my findings concerning Mr and Mrs Chaina's disabilities resulting from Nathan's death this period of time is irrelevant.

1. I disallow this claim.

(v) Hugh Grimm

1. The evidence about Mr Grimm and his involvement with Proton was slight. Mr Chaina merely mentioned him in passing as a part-time employee or consultant (T 834). Most of the information came from the Statement and evidence of Jim Warren (Exhibit U1). Mr Warren said in his Statement:

52. Shortly after this meeting [just after Nathan's death], George engaged the services of Hugh Grimm ("Hugh"), an industrial chemist who is very well regarded and well known throughout the laundry services industry as an expert in laundry technologies. Hugh had been employed by WJ Smith in the past as (sic) in order to monitor the competency and efficiency of the chemical suppliers. Historically, similar to George's company, Hugh used to be chemical supplier and service contracts with linen supply businesses. After a time, he ceased being a chemical supplier, and worked in the industry as an independent contractor, monitoring the performance of chemical supplier's products for various linen supply organisations in order to keep the chemical suppliers honest. It therefore suited me quite well when George hired Hugh as his agent to monitor the performance of George's chemicals and service George's company's contract.

1. In his oral evidence Mr Warren said that Mr Grimm worked at Textile Hygiene. He said that when Mr Grimm was fixing problems he reverted to conventional chemistry and did not have George's knowledge or formulations.

1. The Plaintiffs claim $3,546.80 in respect of Mr Grimm. The only documentary evidence comes from references in Proton's General Ledger of amounts paid to Textile Hygiene. It is not said what the money was paid for. If Mr Grimm was an essential consultant who needed to be retained as a result of Nathan's death I would have expected Mr and Mrs Chaina to give evidence about the matter. They did not do so.

1. I disallow this claim.

(vi) Milward Doran

1. There is no evidence about Milward Doran. Their name was first mentioned during the course of submissions in the last week of the case. Mrs Chaina handed up a folder of invoices including some from Milward Doran. The folder became MFI 105.

1. The description of work on the invoices is singularly unenlightening as to the work they performed. They are described as business development specialists. Each invoice describes their work for Proton in this way:

Fees and charges pertaining to general advice and assistance as per our agreement, inclusive of all conferences, telephone calls with you, your accountants and your solicitors.

The agreement referred to, if in writing, was not in evidence. Nor was there any oral evidence about it.

1. When I enquired of Mrs Chaina who Milward Doran were she said (T 4111):

It is one of the consultants that helped us...

They helped us with - with the sale of the - Michael Milward helped with financing and the sale of the pharmacy, with liaising with solicitors. I - I went through that yesterday, your Honour. And you said to me that you hadn't - you didn't have any - they are the people that were brought in to try and help us to mitigate our losses, you know, so that we can keep the company going and try and minimise our losses and the same as Professor Griffiths.

1. She also said (T 4090):

...Norwood Doran and Mr Millwood was to deal with the local council planning administration requirements and as I said negotiate the sale on the preparation for sale of my pharmacy with the estate agents and liaise with lawyers and financial providers.

1. Why the Defendant should pay for consultants who acted on the sale of the pharmacy was never explained. It is not necessary to consider this firm further. Their invoices all relate to 2009. Mr and Mrs Chaina were not under any incapacity from Nathan's death in 2009.

1. I disallow the claim.

(5) Costs of coronial inquest (Particulars para [25])

1. The claim is for the sum of $531,820.41. That sum includes the costs of solicitor and counsel, transcript, the fees of Professor Griffith and an airfare for a Mr G Davidson to and from New Zealand.

1. There is scant authority in relation to whether persons entitled to make a claim in respect of someone's death are entitled to costs incurred in relation to a coronial inquest.

1. In Cremona v Roads and Traffic Authority [2000] NSWSC 735 the deceased was a doctor who was killed in a motor vehicle accident. His widow bought a claim under the Compensation to Relatives Act for damages arising from his death.

1. The principal judgment of Dowd J was given on 20 June 2000 (Cremona v Roads and Traffic Authority [2000] NSWSC 556. His Honour stood over certain matters relating to damages for further submissions. The judgment on 25 July 2000 was the judgment in relation to the further submissions on particular heads of damage. A number of issues relating to costs were also raised. One of those was in relation to the Plaintiff's costs of the coronial inquest into the death of the deceased. The Plaintiff sought an order that they be paid by the Defendant.

1. It was in that context that Dowd J said this:

[43] In the nature of these proceedings, there being two potential defendants many of the issues relating to the question of liability which at that stage was still in issue and examined in the Coroners Inquest.

[44] The plaintiff incurred costs in the qualifying and obtaining a report from a pharmacologist and a pharmacokineticist. There are, in my view, particular facts and circumstances demonstrating special and unusual features justifying exercise of the courts discretion to award costs

[45] The court has exercised a power to allow representation, indeed the defendant concedes that it is proper in certain circumstances that costs be awarded. In my view the circumstances here clearly warranted representation and was properly incurred.

[46] I consider it was proper in the circumstances for the plaintiff to be represented in those proceedings. It would be quite extraordinary if she were not to have been represented. In the event I consider that the plaintiff should have her costs of being represented in the coroners inquest. The evidence obtained was used in the summary judgment.

1. Although the RTA appealed against certain heads of damage found by Dowd J it does not appear that there was any appeal against the order that the Defendant should pay the costs incurred by the Plaintiff in being represented at the inquest - see Roads and Traffic Authority v Cremona [2001] NSWCA 338 and Raods andTraffic Authority v Cremona (No. 2) [2001] NSWCA 459. The absence of any appeal in relation to those costs was surprising because it does not appear that there was any prior authority on the point and, with all due respect to Dowd J, his reasons for ordering the Defendant to pay the costs of the Plaintiff at the inquest were sparse indeed. The amount of the costs was not identified but the inquest took place over at least four, and possibly more, days so they would have been reasonably considerable.

1. The matter was considered in Roach v Home Office; Matthews v Home Office [2009] EWHC 312; [2010] QB 256. The decision in the two matters under appeal in that decision involved a construction of s 51 Supreme Court Act 1981 (UK) which provided:

Subject to the provisions of this or any other enactment and to Rules of Court, the costs of and incidental to all proceedings in:

(a) the civil division of the Court of Appeal;

(b) the High Court;

(c) any county court,

shall be in the discretion of the Court.

1. It is to be noted that s 51 of the UK Supreme Court Act gave the Court wide power in relation to "costs of and incidental to all proceedings". The judgment in Roach shows the importance of the word "incidental" that led Davis J to say at [48]:

Costs of attendance at an inquest are not incapable of being recoverable as costs incidental to subsequent civil proceedings.

1. The power to order costs in this Court is governed by s 98 Civil Procedure Act which relevantly provides:

98 Courts powers as to costs

(1) Subject to rules of court and to this or any other Act:

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

1. Although that section does not use the expression "of and incidental to all proceedings" the power to determine "to what extent costs are to be paid" seems to me to give as wide a power as that which is contained in the UK Act.

1. In Roach the Home Office argued that the costs of one set of proceedings (the coronial inquest) are never recoverable as costs of and incidental to another set of proceedings (i.e. later civil proceedings). Davis J first rejected such a proposition because of the width of the wording of s 51 of the UK Act. He then went on to say this:

[42] Mr Morgan's asserted rule gives rise to yet further difficulties. He accepted that, where a solicitor did not attend the inquest, such solicitor, on behalf of his client, might well be able to claim as costs incidental to civil proceedings - and at all events was not precluded in principle from claiming-the costs of the solicitor prior to commencement of proceedings of interviewing and obtaining relevant proofs of evidence from witnesses who had given evidence at the inquest. But if that is so, then - as Deputy Costs Judge Rowley noted - there seems no reason in sense or in logic why the costs of instead attending the inquest to note the evidence (and, it may be, also to assess the witnesses) should be incapable of being allowed as incidental costs. Indeed one can readily envisage that in many cases such a course may be cheaper, and more useful, than the cost of proofing such witnesses afterwards. To assert, therefore, as Mr Morgan did, that the inquest had "nothing to do" with the civil claim cannot, as a general proposition, be correct. It may be that can in some respects be said of the purpose of an inquest ("who? when? where? how?") taken on its own. No doubt too it can be said that an inquest would have occurred even if civil liability had been admitted prior to the inquest. But that tells one nothing conclusive where civil proceedings follow after an inquest and tells one nothing of the purpose or relevance of attendance at the inquest to the subsequent civil proceedings. The purpose of an inquest is not to be equated with the purpose (or relevance) of attendance at an inquest.

1. A matter of some significance in Roach was the issue of the potential liability of a party arising out of an inquest. The relationship between costs incurred in the later civil proceedings and admissions of liability before or following the inquest were relevant considerations - see at [48] and [56].

1. Although Davis J found that purpose in attending the inquest cannot be the decisive factor in a decision about whether costs should be awarded of the inquest, it is nevertheless a consideration.

1. As in Roach, I am of the opinion that costs of attendance at an inquest are not incapable of being recoverable as costs in subsequent civil proceedings.

1. Two factors of significance in the present case that justify the awarding to the Plaintiffs some of their costs of attending the inquest are (1) a clear intention from the outset of bringing proceedings against the school arising out of Nathan's death and (2) the admission by the Defendant after the civil proceedings were commenced of a breach of duty on the part of the Defendant. Although the transcript of the inquest is not in evidence, and I declined to receive the reasons of the Coroner and his findings, it is a reasonable inference that the evidence which emerged at the inquest was of some relevance to the present proceedings and to the decision on the part of the Defendant to admit breach of duty.

1. No basis has been shown for the Plaintiffs to recover fees charged by Professor Griffiths. Although the Plaintiffs say that Professor Griffiths was of assistance to them and in some respects was a go between, the fact is that the Plaintiffs had competent solicitors and both junior and senior counsel briefed by them to look after their interests at the inquest. There is no basis shown for fees the Plaintiffs chose to pay to Professor Griffiths to be recoverable from the Defendant.

1. Nor is there any evidence concerning the account for air travel for Mr G Davidson.

1. In coming to a view about what is an appropriate sum it is necessary for me to err on the conservative side. This is for a number of reasons. First, the material was produced at such a late stage in the proceedings (as I have indicated) that the Defendant has had no chance to consider it, make enquiries about it and cross-examine on it. Secondly, the Plaintiffs led no evidence to demonstrate how many hearing days were involved and what took place on those days. There was evidence that Mr Chaina did not accept the obvious explanation for Nathan's death and arranged for his own pathologist to be brought from overseas to conduct a further autopsy and (I assume) to give evidence. This, doubtless, prolonged the inquest. It is not appropriate that costs incurred by the Plaintiffs from those matters should be allowed. Thirdly, an issue may have arisen about the justification for having junior and senior counsel involved for the whole or a greater part of the inquest. Fourthly, costs should only be payable on the usual party-party basis and not on an indemnity basis. The claim is made on the latter basis with the whole of the costs appearing in the invoices tendered.

1. In my opinion, it is appropriate to make an allowance for the costs of the inquest of $75,000.

1. In the light of the above consideration MFI 107 should now be marked as Exhibit MMM in the proceedings.

(6) Other heads of damage

(a) Sale of properties (Particulars para 21)

1. Paragraph 21 of the Particulars reads as follows:

[21] By reason of the Defendants' breach of the duty of care owed to the Third Plaintiff she has suffered loss due to the forced sale of properties leading to unfulfilled property investments.

Particulars

The loss of the Second and Third Plaintiffs' services to Proton and Deluxe has resulted in the property located at 77 Nicholson Street Strathfield, which was held by the Third Plaintiff, having to be sold. The premature sale of this property has resulted in damage to the Third Plaintiff.

The Third Plaintiff claims a loss due to unfulfilled property investments/forced sale of the property as calculated by the expert report of Pitcher Partners, Chartered Accountants, dated 31 August 2012, and totalling not less than $1,230,000.

1. In section 6.1 of the Pitchers Partners report of 31 August 2012 Deborah Cartwright said this:

243. During the period since the Accident the Plaintiffs have sold two real estate properties in order to fund the various costs associated with the Accident and the Death of Nathan. I am instructed that but for the Accident they would not have sold these properties. As such the Plaintiffs have suffered a further loss in the difference between what they sold the properties for in earlier years and what the properties would be worth now.

244. Details of the losses suffered are as follows:

Mrs Rita Chaina

245. Mrs Rita Chaina sold the property at 77 Nicholson Street Strathfield in November 2001 for a sales price of $1,235,000.1 have been provided with a copy of a report by Property Logic which values this property at $2,465,000 as at August 2012. I am instructed that this property was acquired before the introduction of capital gains tax by Mrs Rita Chaina and as such there is no capital gains tax payable on its disposal. The loss Mrs Rita Chaina has suffered as a result of being forced to sell the property in November 2001 as a result of the Accident is the difference between the current value of $2,465,000 and the price she sold it for of $1,235,000.

246. The loss is therefore $1,230,000.

Deluxe Chemicals Pty Limited

247. Deluxe sold the property at 19 Boradhurst (sic) Road, Ingelburn in April 2000. for a saes price of $950,000. I have been provided with a copy of a report by Property Logic which values this property at $1,450,000 as at August 2012. This property was acquired after the introduction of capital gains tax by Deluxe and as such there is capital gains tax payable on its disposal. The loss Deluxe has suffered as a result of being forced to sell the property in April 2000 as a result of the Accident is the difference between the current value of $1,450,000 and the price the company sold it for of $950,000 net of CGT @ 30%.

248. The loss is therefore $500,000 before tax and $350,000 after tax. This loss is included in the calculation of the devaluation of the shares in Deluxe.

1. When the Plaintiffs applied to reinstate the expert evidence which I rejected in Chaina (No. 13) the Defendant in its cross-application made submissions concerning the sale of these properties. The Defendant submitted that the loss claimed in relation to these properties was not recoverable as a matter of law because it was too remote, there was no evidence from the Plaintiffs as to why it was necessary to sell the property and in particular why Nathan's death necessitated the sale, and thirdly that there was no evidence of relevant values of the properties to justify the amounts claimed.

1. In Chaina (No. 16) I said at [266] that whilst there was force in those submissions the question of whether the losses claimed had been made out should be determined when all of the evidence was complete and submissions had been made. In other words, I did not consider that it was appropriate to reject those claims on a summary basis when there might be factual matters outstanding, or the Plaintiffs had not had the opportunity to show the causal connection between those sales and Nathan's death.

1. At the hearing of that Motion the Plaintiffs had sought to rely on a further report from Ms Cartwright which annexed valuations of the two properties. The valuations had not been carried out by Ms Cartwright (who was in any event not a valuer) but there was no evidence by way of affidavit or otherwise from the valuers concerned. My judgment in Chaina (No. 16) refused the Plaintiffs the right to rely on that supplementary report of Ms Cartwright.

1. The only evidence given by the Plaintiffs in relation to the sale of these properties is found in paragraph 32 of Mrs Chaina's statement of 29 January 2010 (Exhibit L1) and paragraphs 346-347 of Mr Chaina's Statement of 8 February 2010 (Exhibit C1). Mr Chaina says in paragraph 32:

We sold the Strathfield property in late 2001 and therefore could no longer use it as an office. We therefore transferred the documents from there to Mort Street.

1. No reason was given for the sale, nor was any evidence given in relation to the value of the property. No evidence at all was given concerning the sale of the property in Broadhurst Road, Ingleburn. The only evidence about the Ingleburn property was in paragraph 38 of the same statement which disclosed that when in late 1998 the factory site in Gould Street, Enfield was sold the equipment stored on that site was transported to Broadhurst Road, Ingleburn.

1. Mr Chaina said this in his Statement about the property in Nicholson Street, Strathfield:

346. In the years after the fire in 1993 all of the documents recording the research and development and testing undertaken by me was stored at our family home in Nicholson Street, Strathfield. That was a very large property and incorporated a number of storage areas and offices. When I moved the family to Vaucluse, Strathfield was used solely as an office for conferences, storage and meetings. The premises were heavily secured with back to base intruder and fire alarms. As I have indicated above, I had cause to obtain from Strathfield copies of certain of my test results relating to laundry and dishwashing products in 1999 in order to discuss those results with Professor Ross Griffith. The balance of the documents evidencing the testing and development work that I had undertaken in the preceding five years remained at Strathfield.

347. Following the death of Nathan in October 1999, I did not return to the Street, Strathfield property. When the property was subsequently sold, the sale was dealt with by Rita's brother, and I have little recollection of this, although I have no doubt that I was consulted in relation to the sale at the time. Lilly Sukkar was responsible for cleaning out all of the company records from Nicholson Street. She boxed all of the documents up and arranged for them to be transported for storage to the Mort Street, Lithgow premises. Also transported to Mort Street were a number of items of furniture such as the large boardroom table, wardrobes and a number of antique chandeliers and other antiques. I am not aware of what happened to the rest of the furniture.

1. As with Mrs Chaina, Mr Chaina gave no evidence about the property in Broadhurst Road, Ingleburn.

1. Neither Mr nor Mrs Chaina gave any oral evidence about the sale of those properties.

1. What is contained in Ms Cartwright's report about the sale prices and the values of the properties can only be assumptions on which she has based her calculations. In the absence of factual evidence establishing those assumptions the whole of Ms Cartwright's evidence in paragraphs 243 to 248 falls away.

1. These claims are disallowed.

(b) Loss of value of shares (Particulars para 28)

1. The Plaintiffs claim the loss of value of their shares in Proton as well as a devaluation of the value of the shares in Deluxe, the latter being said to be as a result of having to sell the property in 19 Broadhurst Road, Ingleburn. This latter claim can be ignored because I have disallowed any damages from the sale of that property because there was no evidence about it.

1. The claim in respect of the loss of value of shares in Proton is said to be worth $55,987,029. The Plaintiffs now accept that this claim is not available to them in law. The Plaintiffs' concession in this regard was correctly made: Gould v Vaggelas (1985) 157 CLR 215 at 219-220; Prudential Assurance Co. Ltd v Newman Industries Ltd (No. 2) [1982] Ch 204; Chen v Karandonis [2002] NSWCA 412.

1. Nor in this case was the claim maintainable because the value of the shares said to have been lost was based entirely on the acceptance of Ms Cartwright's calculations of what the business would have been worth if both the industrial and domestic product launches had gone ahead. I have ruled that the Plaintiffs may not claim with respect to the domestic launch. I have rejected as a matter of fact the assertions that the industrial launch would have gone ahead and that it would have been been successful.

1. In the Plaintiffs' written submissions, but not in the pleadings nor the Particulars, a claim is made for the first time for what is said to be the lost value of the "plaintiff's share portfolio in other companies due to her disposal of the portfolio". I infer, therefore, that the submissions were referring to Mrs Chaina. There was no evidence about any such share portfolio whether as to its make up, the date of its disposal or otherwise. It is not clear, as a matter of law, how any loss associated with its disposal would be recoverable. This claim is disallowed.

Conclusion

1. The result, in summary, is that both Mr and Mrs Chaina prove that they suffered mental harm by reason of the negligence of the Defendant. That mental harm had largely dissipated by about June 2001. Certainly, both of them were not prevented from working in their business after that time by reason of mental harm from Nathan's death.

1. Any inability of Proton to engage in a relaunch of its industrial products was not caused by the Defendant's negligence. Proton, was for a relatively short period of time deprived of Mr and Mrs Chaina's services on a fulltime basis in operating the existing business. It is entitled to be compensated on the basis of the per quod principle for expenses thereby incurred.

1. Deluxe establishes no claim.

1. The damages to which Mr Chaina is entitled are as follows:

(1)   Non-economic loss $77,000

(2)   Past economic loss $104,591

(3)   Lost superannuation $7,852

(4)   Out-of-pocket expenses $13,043

1. The damages to which Mrs Chaina is entitled are as follows:

(1)   Non-economic loss $77,000

(2)   Past economic loss $48,927

(3)   Lost superannuation $3,998

(4)   Out-of-pocket expenses $8,962

1. The damages to which Mr and Mrs Chaina are jointly entitled, no evidence showing precisely who was liable for these expenses, are as follows:

(1)   Funeral and associated costs $20,000

(2)   Coronial inquest $75,000

1. The damages to which Proton is entitled are as follows:

(1)   Payments to Mr Dique $9,000

(2)   Payments to Dr Griffith $35,000

(3)   Payments to Mr Redfern $12,000

1. The Plaintiffs claim interest on past economic loss, out-of-pocket expenses and other payments made in the past. I understood the Defendant to submit that if any award of damages was to be made it wished to address further on the recoverability of interest given the way the proceedings have been conducted, particularly the delays for which the Defendant says the Plaintiffs are responsible.

1. In those circumstances I will not enter any judgments at the present time. I can indicate, however, in the light of my determinations summarised in the immediately preceding paragraphs the judgments I propose to enter, subject to any additions for interest are as follows:

(1) Judgment for the Second Plaintiff for $202,486.

(2) Judgment for the Third Plaintiff for $138,887.

(3) Judgment for the Second and Third Plaintiffs jointly of $95,000.

(4) Judgment for the Fourth Plaintiff of $56,000.

(5) Judgment for the Defendant against the Fifth Plaintiff.

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Amendments

28 May 2014 - The list of parties on the coversheet corrected to read: Proton Technology Pty Ltd (Fourth Plaintiff);Deluxe Technology Pty Ltd (Fifth Plaintiff)

Amended paragraphs: COVERSHEET

Decision last updated: 28 May 2014