King v Griffiths

[2013] NSWSC 808

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Brendan King v Stephen Noel Griffiths [2013] NSWSC 808

Hearing dates:

4 June 2013

Decision date:

04 June 2013

Jurisdiction:

Common Law

Before:

Slattery J

Decision:

Dismiss the plaintiffs' motion to separate trial of issues of liability from the assessment of damages.

Plaintiffs to pay the defendants' costs of this application.

Catchwords:

PROCEDURE - application under UCPR r 28.2 to separate trial of issues of liability from the assessment of damages - alternative application to separate the question of advocate's defence of immunity from suit - defendants acted as plaintiffs' solicitors in proceedings with a neighbour in the Land and Environment Court - plaintiffs allege that the defendants negligently advised in relation to those proceedings - credit issues overlap between the proposed liability and damages hearings - facts on which the liability question to be determined not agreed - principles governing separate question application discussed - whether those principles changed after the introduction of the Civil Procedure Act 2005 - HELD: motion dismissed.

Legislation Cited:

Civil Procedure Act 2005 s 56
Consumer Credit (NSW) Code s 80
Uniform Civil Procedure Rules 2005 r 28.2

Cases Cited:

Bass v Permanent Trustee Co Limited (1999) 198 CLR 334
Commonwealth Bank of Australia v Clune & Anor [2008] NSWSC 1125
Donnellan v Woodland [2012] NSWCA 433
D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1, [2005] HCA 12
Downey v Acting District Court Judge Boulton (No 4) [2010] NSWCA 114
Integral Home Loans Pty Limited v Interstar Wholesale Finance Pty Limited [2006] NSWSC 1464
O'Sullivan v Challenger Managed Investments Limited [2008] NSWSC 602
Tepko Pty Limited v The Water Board (2001) 206 CLR 1
The Owners of Corporation and Strata Plan 61390 v Multiplex Corporate Agency Pty Ltd & Ors (No. 2) [2012] NSWSC 322
Thiering v Daly [2011] NSWSC 1345
Vero Insurance Ltd v Minh Ai Tran [2008] NSWSC 166
Young v King (No 3) [2012] NSWLEC 42
Young v King [2011] NSWSC 793

Category:

Interlocutory applications

Parties:

Brendan King (First Plaintiff)
Christina King (Second Plaintiff)
Stephen Noel Griffiths (Defendant)
David Patrick Baxter (Second Defendant)
Peter Millard Jackson (Fourth Defendant)
Colleen Anne Schofield (Fifth Defendant)
Gary Andrew Green (Third Defendant)
Michael James Hewitt (Sixth Defendant)
Julie Anne Walsh (Seventh Defendant)

Representation:

Counsel:
J. Anderson (Plaintiffs)
G. Craddock (Defendants)
Solicitors:

File Number(s):

2010/38916

EX TEMPORE Judgment

1. The first and second plaintiffs in these proceedings, Brendan and Christina King, are neighbours with one Margot Young in the Sydney suburb of Forestville. The distressing underlying theme of the proceedings is an ongoing dispute between these two neighbours, which has resulted in litigation between them, and then litigation between the Kings and their former solicitors. This litigation has been active for 10 years.

1. By Notice of Motion today Mr and Mrs King seek the separate trial of issues of liability apart from the assessment of damages in the action they have brought against their former solicitors, the partners of the firm Pike Pike & Fenwick. Mr Anderson of counsel appears for Mr and Mrs King. Mr Craddock of Senior Counsel appears for Pike Pike & Fenwick, resisting this Motion.

1. It is necessary to go into the history of the litigation between the Kings and Ms Young to understand the merits of the application before the Court. This history starts in April 2003 and goes through until December 2012, but it can be shortly summarised. Once I deal with the background to litigation I will consider the motion.

Two neighbours and their dispute

1. The genesis of the dispute between these two neighbours was that Mr and Mrs King did some building works on their land. This building work involved laying a slab of concrete, erecting fencing, and constructing certain drainage works. Ms Young took exception to the Kings' building works and commenced proceedings in the Land and Environment Court in April 2003. She sought restraining orders in that Court's jurisdiction for the prevention of these alleged unlawful works and for the restoration of the King's land.

1. The Kings allege in the present proceedings ("the negligence proceedings") that Pike Pike & Fenwick held themselves out as experts in litigious matters in the Land and Environment Court and gave advice that the work done by the Kings was lawful and that the proceedings were defensible. The Land and Environment Court proceedings were heard between 16 and 19 February 2004. After expert evidence was given in those proceedings, it emerged that some of the Kings' defences were not readily maintainable. The Kings had difficulty arguing that their works were exemptd from council ordinances and planning regulations. The Land and Environment Court proceedings were settled on 19 February by the making of consent orders dismissing the proceedings. The Kings also gave undertakings to alter their land. The Kings agreed to pay the costs of Ms Young. Those costs were taxed and assessed in October 2004 in the sum of $157,213.

1. This in ordinary circumstances would be the conclusion of the Land and Environment Court litigation. But that was not to be the fate of these proceedings. For whatever reason the neighbour, Ms Young, commenced three subsequent sets of proceedings against the Kings. The first she commenced in the District Court in July 2007. The second she brought by motion in May 2008 in the Land and Environment Court to set aside the consent orders made in February 2004. Finally, Ms Young commenced proceedings in December last year in this Court for mandamus and certiorari, to quash the dismissal of the Land and Environment Court proceedings in February 2004. The genesis of these subsequent proceedings is not clear. But it is self-evident, rightly or wrongly, that Ms Young was unhappy with a number of matters, including the King's compliance with the orders made and undertakings given in February 2004.

Ms Young's three proceedings after February 2004

1. I will now briefly explain the course of each of these three proceedings subsequent to the February 2004 settlement. First, the District Court proceedings were an action for damages for removal of the drainage system and the wall. In October 2008 the Kings sought summary dismissal of those proceedings before Curtis DCJ in the District Court. His Honour reserved judgment in March 2009. When the second set of proceedings were commenced in the Land and Environment Court, to which I will shortly come, a consent stay was entered in the District Court proceedings, which are still unresolved. There is one footnote to those District Court proceedings. In July 2011 an attempt was made to transfer them to the Supreme Court. McDougall J declined the transfer (Young v King [2011] NSWSC 793) on the basis this Court did not have jurisdiction to deal with the planning issues pleaded in the District Court. He found that the Land and Environment Court had exclusive jurisdiction over those issues.

1. The second set of proceedings after February 2004 was a Land and Environment Court motion to set aside the February 2004 consent orders. This was Ms Young's first direct attempt to challenge those orders. She also alleged contempts of those orders and she said the Kings' undertakings to the Land and Environment Court were not fulfilled. These proceedings had a similarly complicated fate to the District Court proceedings. Firstly, Ms Young's contempt motion was withdrawn in May 2011. The Kings' moved for summary dismissal of Ms Young's motion to set aside the consent orders and succeeded before Sheahan J in the Land and Environment Court in October last year (Young v King (No 3) [2012] NSWLEC 42).

1. Ms Young commenced a third set of proceedings in this Court in December last year. These are mandamus proceedings in which she seeks to challenge the February 2004 consent judgment. Those proceedings are also unresolved.

The Kings and their solicitors - the negligence proceedings

1. The Kings commenced the present negligence proceedings against their former solicitors by Statement of Claim in 2010. Parts of the pleadings are of relevance to the current application. The negligence proceedings plead that in the principal Land and Environment Court proceedings the Kings retained Pike Pike & Fenwick as solicitors expert in land and environment law to represent the Kings in the principal proceedings. They plead the general facts that have been described and the duty of care owed by solicitors in the circumstances. The centre piece of the pleading is paragraph 24, the allegation of breach of retainer: that Pike Pike & Fenwick ("Pikes") failed to exercise reasonable skill and care.

1. The headline paragraph 24 allegations are that: (1) Pikes failed to advise about the likely costs of the proceedings and of all Pikes' fees; (2) Pikes incorrectly advised the Kings that Ms Young would have to pay her own costs rather than being able to recover costs, and failed to warn the Kings they might be liable for an adverse order for costs; (3) Pikes failed to advise the Kings that their defences, that their work could be properly characterised as exempt development under the Waringah Environmental Plan 2000, was unlikely to succeed; (4) Pikes failed to advise of the possibility of a cross-claim against Ms Young; (5) Pikes failed to advise the Kings about the content and meaning of the undertaking they gave; and (6) Pikes failed to advise the Kings about entering into a deed of mutual release and indemnity in addition to the terms on which the Land and Environment Court Proceedings were dismissed in February 2004

1. These extensive allegations of breach are denied by Pikes, although many of the basic allegations in the proceedings are, not surprisingly, admitted. With this background, the Court is now asked to consider the separate trial of liability issues. Mr Anderson has, with his usual skill, put an alternative proposition, that if he does not succeed on the first of these contentions, that in the alternative he seeks to have separately tried one question raised by the Pikes' defence: the question of the solicitor's immunity from suit under D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1, [2005] HCA 12 principles.

Applicable Legal Principles

1. The principles in respect of the exercise of the Court's discretion under Uniform Civil Procedure Rules 2005 ("UCPR") r 28.2 to order a separate trial are well established. Considerations favouring the determination of a separate question are that: (1) the decision of the question in one way will bring the proceedings to an end, where that would obviate unnecessary and expensive determination of other questions; or (2) where there is a strong prospect that parties would agree upon the result if the core of their dispute is decided: Bass v Permanent Trustee Co Limited (1999) 198 CLR 334. But the saving in time and expense in determining a separate question is often illusory because the fragmentation of proceedings: may generate more appeals; may delay their final resolution; and, may be undesirable when there is an overlap in the factual issues to be determined in each of the two separate hearings; Tepko Pty Limited v The Water Board (2001) 206 CLR 1 at [168]-[170] ("Tepko") per Kirby and Callinan JJ.

1. There has been a shift in judicial emphasis in the exercise of the UCPR 28.2 discretion recent years. The High Court in Tepko at [170] made clear that "single issue trials should, in our opinion, only be embarked upon when their utility, economy and fairness to the parties are beyond question". But Tepko was decided before the passing of the Civil Procedure Act 2005 ("CPA"). Since then judges have expressed the view that "the Court should take a more interventionist role in identifying and separating important issues which can resolve significant parts of the litigation expeditiously": Integral Home Loans Pty Limited v Interstar Wholesale Finance Pty Limited [2006] NSWSC 1464 (Brereton J).

1. The cases decided since the passing of the Civil Procedure Act certainly suggest that Courts are giving special emphasis to the requirements of CPA s 56 in deciding whether to order separate questions. But the fundamental considerations that are in play in the exercise of discretion are still much the same. Counsel for the parties took me through a number of these decisions decided since 2005. Mr Anderson for the Kings contends these decisions show that Courts are being "interventionist" in seeking to isolate the determination of separate issues.

1. But a consideration of the cases to which I was referred tends to show that traditional considerations are still very much in play and that any new pattern of "interventionist" decision making is difficult to discern. Separate questions have been ordered in class actions, but that has often been the case: O'Sullivan v Challenger Managed Investments Limited [2008] NSWSC 602 (Einstein J). Courts have declined to have separate questions determined as to whether or not notices have been served under Consumer Credit (NSW) Code s 80: Commonwealth Bank of Australia v Clune & Anor [2008] NSWSC 1125 (Johnson J). Separate questions have been ordered in respect of the defence of frustration in a contract case where parties had eliminated the possibility of overlapping factual issues: Vero Insurance Ltd v Minh Ai Tran [2008] NSWSC 166. Separate questions have been ordered in respect issues of statutory interpretation, but not involving any disputed issues of fact, but that has long been a classic area for the ordering of separate questions: Thiering v Daly [2011] NSWSC 1345 (Garling J). Separate questions have not been ordered in respect of the construction of the deed of release, where the balance of the proceedings would involve considerable disputes about the state of mind of the parties when the deed was entered into: The Owners of Corporation and Strata Plan 61390 v Multiplex Corporate Agency Pty Ltd & Ors (No. 2) [2012] NSWSC 322 (Pembroke J).

1. Whether Courts are now to be described as "interventionist" or just as having to bear in mind the statutory objective of achieving the just, quick and cheap resolution of the real issues in dispute, there is no doubt the Court must grapple with more considerations than it did before 2005. But whether it is appropriate to order a separate question is still ultimately a matter for the judgment and the experience of the judge, having regard to the circumstances of each case.

The parties' arguments

1. Without disrespect to either party, the parties have taken positions on this motion that I might describe as the "usual" positions in a case such as this. Mr Anderson says that the resolution of the separate issue will have the effect of resolving either the entire litigious controversy or substantially narrowing the field of the controversy or that the resolution of that separate issue carries with it the strong prospect the parties will be able to resolve their dispute. He says further and with some force, that a supplementary consideration favouring a separate trial on damages is that there will be an extensive debate about mitigation of damage here, which will make the damages case an extensive and lengthy one. I will explain that submission shortly.

1. Mr Anderson also says that the other special feature of this case is that the Supreme Court mandamus proceedings, and for that matter the District Court proceedings, are not resolved. He emphasises that the determination of liability issues will allow these other proceedings to be resolved before damages issues are resolved at a separate and later hearing. As Basten J explained in Downey v Acting District Court Judge Boulton (No 4) [2010] NSWCA 114, it is important to focus on the discretionary consideration, that the separated question must have a reasonable likelihood of determining the outcome of the proceedings and that there is significant quantifiable additional expense involved in preparing for and determining the remaining questions.

1. Mr Craddock on behalf of Pikes takes the "usual" position on the other side. He points to intertwined issues of fact and of law in each of the proposed sets of separate questions. He submits that even if the separate question is ordered and the immunity issue is not resolved against him, there is still a lengthy liability trial to take place. The result he says is that the order for separate determination will not result in a quicker and cheaper resolution of proceedings, but may have the opposite effect, adding delay and expense to the resolution of litigation by appeals from the separate question.

No Separate Question should be ordered

1. For the following reasons I am of the view that a separate question should not be ordered in this case. Firstly, in a way that not even the able argument put on both sides has really anticipated, I strongly suspect that there will be an immense range of overlapping credit issues between the liability and damages hearings. One of the stark features of this case is Ms Young's persistent return to the courts on the three occasions mentioned. She has done so to seek to set aside the February 2004 orders and to charge the Kings with contempt. I have more than a faint suspicion from what I have seen so far, that one of the ways that the case is going to unfold if it goes to final hearing is that Pikes may allege that Ms Young and the Kings mutual disagreements expressed through their litigation are explained by the Kings' failure at least in the eyes of Ms Young, to fulfil their undertaking in February 2004. If that is right, questions of causation of loss and the extent of the loss associated with the subsequent proceedings will be mixed up with questions about whether or not the Kings did actually fulfil their February 2004 undertakings to the Land and Environment Court. Whether the Kings' honoured undertakings or not, will not be only be relevant to damages. It will be relevant to credit. I suspect that there will be a high degree of overlap of credit issues between the damages hearing and the liability hearing of this case which makes the separation of the two inherently inapt.

1. The other question is will there be significant savings by separating out the liability and damages hearings? If there are, in my view those savings could be achieved in other ways. Mr Anderson has pointed out that there were some aspects of legal uncertainty about the financial and legal position of the Kings that may take some time to resolve. They have obligations to mitigate their loss in relation to the damages they claim in the Supreme Court proceedings. The Kings seek costs from Pikes, not only of the principal proceedings, but of each of the subsequent proceedings.

1. So far as the costs of the principal proceedings are concerned, the Kings have paid them not only to Pikes but also to Ms Young. They are all clearly ascertainable amounts. But in respect of the other proceedings, to the extent they have been successful, the Kings will have to establish that they have made attempts to recover those costs. But those issues of costs recovery may well be able to be hived off from the proceedings as separate questions, later on. They may not involve any questions of credit of the Kings. But they will really just be questions as to costs assessment and prospects of recovery. So to the extent that their damages hearing is burdened by those matters, they may be eliminated, reduced or separated in some way.

1. The other thing raised, about the burden of the damages hearing, is the uncertainty associated with the resolution of the Supreme Court mandamus proceedings. I do not regard that as a particularly great problem. It is within the power of the Kings, as they are parties, to seek to bring those mandamus proceedings on for rapid hearing, and to have them expedited. That is a matter to a degree within their control. Moreover, it is not clear that that cannot be done even before any final hearing of these negligence proceedings is resolved, let alone a separated hearing.

1. Finally, it is not obvious to me that the prospect of settlement is likely to be significantly promoted by the separation of this trial in this way. So, for these reasons, in my view, this is not an appropriate case for the ordering of a separate hearing of these issues.

1. But what of the alternative case that Mr Anderson puts on the advocate's immunity issue? He takes the court to the statements made by Basten JA at paragraph [259] and [262] of Donnellan v Woodland [2012] NSWCA 433 ("Donnellan"). There is no doubt that in those paragraphs Basten JA makes clear that a preferable course, where such a defence is pleaded, is for a summary judgment application to take place, or for there to be an initial hearing on the immunity defence. But it is clear, from the structure of the reasons in Donnellan, Barrett JA, Hoeben JA and Sackville AJA all agreed with Beazley JA (at [280]-[285]). And the effect of her Honour's judgment was somewhat less definite in this respect. Her Honour indicated that the question of whether or not the immunity claim should be dealt with by strike out or on the pleadings can be approached more flexibly and sometimes the negligence issues may have to be decided after a full contest (at [10]).

1. But even if the question of the immunity claim were sought to be determined first the usual preconditions for that have not yet been put in place here. Either the parties should agree upon the facts on which the advocate's immunity defence would be determined, or the defendants' solicitors would bring an application for summary judgment and would assume in doing so the correctness of all of the allegations in the Statement of Claim. That would provide the kind of framework that Donnellan generally sees as appropriate for such a preliminary point. I have, in course of argument, suggested the parties consider one of those courses. They have not had time to do that. And this may be something to which they will direct their attention in the future. But for the present, I should dismiss this Motion.

1. I order that the plaintiffs pay the defendants' costs of this application.

Amendments

19 June 2013 - all names of parties added

Amended paragraphs: Parties

Decision last updated: 19 June 2013