O'Keefe v Integral Corporate Property Pty Ltd

[2022] NSWSC 839

Supreme Court

New South Wales

Medium Neutral Citation:

O'Keefe v Integral Corporate Property Pty Ltd [2022] NSWSC 839

Hearing dates:

23 June 2022

Date of orders:

23 June 2022

Decision date:

24 June 2022

Jurisdiction:

Equity

Before:

Meek J

Decision:

Hearing dates vacated. Plaintiffs to pay defendants’ costs thrown away.

Catchwords:

CIVIL PROCEDURE — Hearings — Adjournment — Applicable principles — Vacation of hearing dates — Illness of counsel — Defendants’ counsel contracted COVID 19 — COSTS — Principles where adjournment not arising by fault of the applicant

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 56, 57, 58, 66, 98

Cases Cited:

O’Keefe v Integral Corporate Property Pty Ltd [2021] NSWSC 1219

Rowe v Stoltze (2013) 45 WAR 116; [2013] WASCA 92

Sinclair v Creenaune [2022] NSWSC 230

Tuggeranong Town Centre Pty Ltd v Brenda Hungerford Pty Ltd (No 3) [2017] ACTSC 301; (2017) 325 FLR 436

Category:

Procedural rulings

Parties:

Proceedings 2021/6272

Graham Colin O'Keefe (First Plaintiff)
Graham Colin O'Keefe as assignee of the Trustee in Bankruptcy, Graham Colin (Second Plaintiff)
Integral Corporate Property Pty Ltd (First Defendant)
James George Petersen (also known as George Kekatos) (Second Defendant)
K & T Services Pty Ltd (Third Defendant)
Cheryl Joanne Thrush (Fourth Defendant)
Perpetual Business Services Pty Ltd (Fifth Defendant)

Proceedings 2021/54306

Graham O'Keefe (Plaintiff)
Integral Corporate Property Pty Ltd (First Defendant)
K&T Services Pty Ltd (Second Defendant)

Representation:

Counsel:
E A Cohen (Plaintiffs)
D A Allen (Defendants)

Solicitors:
Litigation Specialists (Plaintiffs)
Kekatos Lawyers (Defendants)

File Number(s):

2021/6272; 2021/54306

Judgment

1. HIS HONOUR: The application before the Court is an application by the defendants to vacate the hearing dates of these proceedings. The hearing is listed to commence this coming Monday 27 June 2022 for five days.

2. The application to vacate the hearing dates was opposed.

3. I have determined to vacate the hearing dates.

4. It is appropriate to set out briefly some of the background leading to the adjournment application, the principles relating to adjournment applications and my consideration of those principles leading to the decision that I have made.

Background

5. These proceedings were commenced on or about 8 January 2021 by the plaintiffs and relate to claims by the plaintiffs in relation to a property at Glebe that is alleged to be held by the first defendant on trust for the first plaintiff.

6. There are related proceedings between the parties (21/54306) in which relief was sought in respect of the operation of caveats on the title to the Glebe property and a property at the Entrance (both held by the first defendant).

7. These proceedings, which are essentially the main proceedings between the parties, have had a lengthy procedural history, including initially, applications for freezing and restraining orders and applications for security for costs.

8. It appears initially after the application was commenced, consequent upon an application for injunctive relief, the defendants were subjected to restraining orders in dealing with the Glebe property.

9. On 12 February 2021 Sackar J ordered expedition of the proceedings.

10. I was informed by the counsel who appeared on the application to the proceedings (Ms Cohen behalf of the plaintiff and Mr Allen on behalf of the defendants) that it was the imposing of the injunctive relief that led to the application for expedition.

11. On that occasion (12 February 2021) and subsequently, various orders and directions have been made in the matter as it has progressed in the Expedition List, though from time to time there have been applications it seems before a duty judge for specific interlocutory relief.

12. By judgment delivered on 27 September 2021, namely O’Keefe v Integral Corporate Property Pty Ltd [2021] NSWSC 1219, Slattery J made orders in respect of an application for security for costs, freezing orders and it appears injunctive relief against certain of the defendants restraining them from dealing with various interests in property.

13. On 7 October 2021 Slattery J declined to make an order for referral of the matter to mediation.

14. On 15 October 2021 Sackar J listed both matters for hearing with an estimate for three days commencing on 5 April 2022.

15. His Honour made an order that evidence in the proceedings be evidence in the related proceedings and also made the usual order for hearing.

16. On 25 March 2022, approximately two weeks before the hearing of these proceedings was listed to commence, the matter was listed before Sackar J.

17. I was informed by Ms Cohen that she had formed the view at that time that the matter would not be completed within the allotted three days and she considered it appropriate to bring that matter to the attention of the Court.

18. Ms Cohen denies that she sought vacation of the hearing date but states that Sackar J vacated the hearing in the context described on the basis that it would not be completed within the time allotted.

19. On 28 March 2022, Sackar J set the matter down for hearing for five days to commence, as I have mentioned, next Monday.

20. The claims in the proceedings have been amended by the plaintiffs from time to time.

21. It is evident from the pleadings that the issues in the proceedings involve a degree of complexity.

22. The current state of the pleadings is that there is a third further amended statement of claim which was filed on 27 April 2022, pursuant to leave given by Sackar J on 22 April 2022.

23. The allegations in the proceedings include allegations relating to breach of fiduciary duty, alleged damage to the Glebe property, fraudulent misrepresentation, constructive trust and equitable estoppel.

24. It is claimed, at least in part, that there was an assignment by the first plaintiff to a Mr Adam Stone of the first plaintiff's interest in the land. There has been a subsequent transfer of the property to the first defendant.

25. The defence filed on 26 May 2022 to the current claim raises issues in relation to the effectiveness of the assignment and in respect of indefeasibility of title amongst other matters.

26. On 25 May 2022 my associate corresponded with the parties by email indicating that the matter would be listed for pre-trial directions on 31 May 2022.

27. On 30 May 2022 the defendants by email provided to my associate and copied to the plaintiffs provided a list of objections to the plaintiffs’ evidence in the proceedings.

28. On 31 May 2022 the listing before me for pre-trial directions proceeded and directions were made for final preparation of the matter for hearing, including directions in respect of lists of affidavits, objections to affidavits, the preparation of a court book, the provision of written submissions and lists of authorities.

29. Compliance with the directions is currently, at least in part, in default.

30. There was some slight delay on the part of the plaintiffs in providing a list of affidavits, which was done on 16 June 2022.

31. On Monday 20 June 2022 my associate emailed the legal representatives to the parties drawing attention to the orders made on 31 May 2022 and noting that I had yet to receive a list of affidavits intended to be relied upon by the defendants and the plaintiffs’ objections to affidavits with the defendants’ responses.

32. On 21 June 2022 the solicitor for the defendants responded by email to my associate apologising for the delay, and noting that the email, though copied to the other legal representatives, was not sent with the plaintiffs’ consent.

33. The email identified the affidavits on which the defendants sought to rely but more particularly alerted the Court to the fact that the defendants’ counsel, Mr Allen, had recently caught COVID 19 and was currently unwell.

34. In those circumstances, a request was made by the defendants to extend time until midday Friday (24 June 2022) in order for the defendants to respond to the plaintiffs’ objections to evidence and provide written submissions and authorities.

35. The email further indicated that the defendants’ solicitors were in the process of finalising the court books and that it was anticipated that this would be provided by midday on Thursday 23 June 2022.

36. Following receipt of the email, my associate, at my request sent an email to the parties’ legal representatives requesting the parties to work cooperatively to ensure that the directions made would be complied with as soon as reasonably practicable, but in any event no later than noon on 23 June 2022.

37. A further email was sent to the parties clarifying that the court book should be provided by 12 noon on Thursday 23 June 2022 and the other compliance documents be provided by midday on Friday 24 June 2022.

38. On 22 June 2022, shortly after noon, Mr Allen sent an email to my associate copied to the other legal practitioners, noting that on Monday 20 June 2022 he returned a positive rapid antigen test for COVID 19 and was currently in self isolation and would not be released until the earliest on Monday 27 June 2022, the date for the commencement of the hearing.

39. The email attached a form of medical clearance certificate and noted that his symptoms had not abated.

40. The email alerted the Court to the fact that Mr Allen held a concern that he would not be well enough to properly present his client's case.

41. The email also noted that Ms Cohen, counsel for the plaintiffs, had been understanding of Mr Allen's predicament and consented to the email being sent to my associate.

42. Prior to 2 PM on 20 June 2022 my associate at my request sent an email to the parties noting that I had considered the terms of Mr Allen's email.

43. I enquired as to whether the plaintiffs and/or the defendants were seeking to vacate the hearing dates, and if so, whether the application was consented to, opposed or not opposed. I indicated that if the parties had proposed orders the orders should be provided to me to consider.

44. I noted that if there was no agreed position the matter would be listed for mention at 10:30 AM on Thursday 23 June 2022.

45. Shortly after 2:30 PM Mr Allen sent an email to my associate requesting that the matter be listed at 10:30 AM indicating that he would seek vacation of the hearing dates.

46. The email provided proposed short minutes of order, as follows:

1. the hearing beginning 27 June 2022 is vacated;

2. the matter is listed before the expedition judge on 1 July 2022 in order to obtain a new hearing date;

3. liberty to apply on 24 hours’ notice.

47. Just prior to 5 PM on 22 June 2022, Ms Cohen sent an email to my associate copied to the other parties noting that there was no agreement by the plaintiffs to the hearing dates being vacated.

Principles regarding adjournment

48. The Court has power to adjourn the hearing of proceedings in appropriate circumstances.

49. There is a statutory power pursuant to s 66 Civil Procedure Act 2005 (NSW) (CPA) and the Court has an inherent power to adjourn or vacate proceedings.

50. The statutory power to adjourn is to be exercised in accordance with the overriding purpose of the civil procedure legislation and rules to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

51. The Court in deciding whether to make any order for the management of the proceedings, including an order considering the granting of an adjournment of proceedings, must seek to act in accordance with the dictates of justice: s 58(1)(a)(ii) CPA.

52. For the purposes of determining what the dictates of justice are in a particular case, the Court must have regard to the provisions in ss 56 and 57 CPA, and may have regard to the matters set out in s 58(2)(b) CPA to the extent which the Court considers them relevant.

53. The provisions of s 58(2)(b) CPA are as follows:

“(2)    For the purpose of determining what are the dictates of justice in a particular case, the court—

…

(b)    may have regard to the following matters to the extent to which it considers them relevant—

(i)    the degree of difficulty or complexity to which the issues in the proceedings give rise,

(ii)    the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii)    the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv) the degree to which the respective parties have fulfilled their duties under section 56 (3),

(v)    the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi)    the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii)    such other matters as the court considers relevant in the circumstances of the case.”

54. There is extensive case law dealing with the principles in respect of an adjournment.

55. Recently in Sinclair v Creenaune [2022] NSWSC 230 Hallen J in delivering reasons for judgment in respect of a family provision application in which an adjournment was sought, helpfully referred to a degree of this case law at [84]–[93].

56. In particular, Hallen J referred to the decision of the Western Australian Court of Appeal in Rowe v Stoltze (2013) 45 WAR 116; [2013] WASCA 92, in which the Court of Appeal emphasised that the rules of procedural fairness are not fixed or immutable, and noted that procedural fairness is directed to avoiding practical injustice and observed that what is necessary to avoid practical injustice will depend upon the circumstances of any given case: at [51].

The adjournment application

57. The listing to deal with the defendants’ application for adjournment proceeded by means of audio visual facility, with Mr Allen appearing by that means and Ms Cohen connecting by telephone.

58. Ms Cohen initially indicated that the application to vacate was not consented to as she could not get instructions. Upon further discussion she indicated the application was opposed. Ms Cohen asserted that the matter was not ready in any event, and that she had not received a court book but had received an index to the proposed court book running to 83 pages.

59. I asked Mr Allen about this. He indicated that the actual volume of material in the court book was in the order of 300 to 400 pages and that the issue with the index, if any, was that there was over particularisation of information rather than any substantive issue.

60. Ms Cohen indicated that if the hearing were vacated her client would be involved in extra costs, including costs associated with conduct money. She said subpoenas had been issued to witnesses and at least one witness had arranged to take the whole week off work in order to attend.

61. Mr Allen indicated, it seems to me correctly, that the witnesses could be released from their subpoenas and new subpoenas issued, or, alternatively, the time on the subpoenas (for attendance) could be amended.

62. Mr Allen further indicated that the conduct money is not money to allow Mr Stone to take an entire week off work, but for him to attend court only, and, as he understood it, Mr Stone is the only witness of substance that really needs to be subpoenaed.

Consideration of the application

63. I have had regard to the overriding purpose of the CPA and rules as they apply to the determination of the real issues in the proceedings (s 56) and the objects of case management (s 57) including the just determination of the proceedings, the efficient disposal of the business of the Court, the efficient use of available judicial and administrative resources, and the timely disposal of the proceedings at a cost affordable by the respective parties.

64. Having regard to the considerations of the dictates of justice, as listed in s 58(2)(b) it is evident that:

1. the issues in the proceedings are relatively complex, when one has regard to the current state of the detailed pleadings;

2. at an early stage after the commencement of the proceedings expedition was sought and granted in the context that I have described above;

3. although expedition of the proceedings was granted approximately 15 months ago, since that time there have been interlocutory applications that I have noted above, but also extensive orders for directions for the proceedings to be readied for hearing;

4. whilst a more lengthy period of time than perhaps might be considered usual has elapsed since expedition was granted, there does not appear to be any specific suggestion that the parties have not otherwise been timely in attending to the preparation of the matter for hearing and in dealing with interlocutory applications;

5. in considering whether the parties have fulfilled their duties under s 56(3) CPA, whilst there exists currently some default in compliance with the directions made by me on 31 May 2022, in light of what is indicated to the Court regarding Mr Allen's illness, I do not regard the more recent delay as counting against an adjournment;

6. I am not persuaded that the comments that have been made by Ms Cohen in relation to the court book demonstrate any lack of readiness on the part of the defendants for hearing, as distinct from simply an unavoidable degree of delay occasioned by Mr Allen's illness and consequent predicament;

7. it is evident from the Court file that both Mr Allen and Ms Cohen have been representing the respective parties for at least most and perhaps all of the time that the proceedings have been on foot, and accordingly it seems that there is no other counsel retained on the defendants’ side familiar with the matter who could, by reason of such familiarity, readily step into the hearing of the matter.

65. In the above context, having regard to the explanation for the adjournment application and the reasons advanced to oppose it, I consider it appropriate to order that the hearing dates be vacated.

66. I consider that it would be unfair in the above circumstances to force the defendants to proceed to trial within a few working days in the circumstances of Mr Allen's illness that currently prevail.

67. It seems to me that it would be difficult at this late stage for the defendants to engage separate legal representation to sufficiently come to grips with the nature of the case and the issues involved and readily prepare for the hearing which will require a degree of cross-examination.

68. In particular, I bear in mind that if Mr Allen is not available for the hearing and alternative counsel had to be engaged, the defendants’ counsel would ordinarily be required to cross examine first in the proceedings, and accordingly potentially be required to be ready to do that as early as Monday morning or Tuesday.

69. Further, I am mindful that under the orders proposed on the part of the defendants it is not suggested that there are any further procedural directions that are likely to delay the hearing of the matter, but rather what is proposed is that the hearing dates be vacated and that the matter be listed before the expedition judge on 1 July 2022 in order to obtain a new hearing date.

Costs

70. In relation to the costs of the proceedings, costs are in the discretion of the Court: s 98 CPA.

71. As with the case law in relation to adjournments, there is case law which bears upon the consideration of the determination of an appropriate costs order in proceedings which are vacated through the illness of counsel, occurring without the fault of any party.

72. In Tuggeranong Town Centre Pty Ltd v Brenda Hungerford Pty Ltd (No 3) [2017] ACTSC 301; (2017) 325 FLR 436 Refshauge J delivered judgment in relation to issues of costs, in particular dealing with reserved costs of proceedings occasioned by the illness of senior counsel.

73. His Honour helpfully and conveniently gathered the relevant authorities and set out the principles that [322]–[336] as follows:

“322 As a starting point, some principles can be divined from the approach courts take to the costs of an aborted trial. Thus, in Electrolytic Zinc Co of A/asia Ltd v Cieslak [1969] Tas SR 50 at 55, the Full Court said:

If a trial proves abortive for a reason beyond the control of the parties and not due to the fault of either of them, that in our view is (unfortunately) an accident of litigation of which both parties run the risk until the litigation is decided. When it is decided, we think the ordinary rule should apply - the loser should pay, in the absence of circumstances indicating some other result.

323 To a similar effect was what fell from Keane JA in Queensland v Brooks [2006] QCA 523 at [5], where a hearing had to be vacated because of the illness of one of the judges on the Court of Appeal:

It is true that neither party was responsible for the circumstances which led to the vacation of the first hearing. But that is no reason to deny the successful party costs necessarily incurred by it in relation to the determination of the appeal in its favour. There is no principle of law that a successful party should recover only those costs which it has incurred by reason of the default of the other party.

324 Some older authorities take a rather different approach. Thus, in Pell v Linnell (1868) LR 3 CP 441 at 443, the Court of Common Pleas held that, where a trial was suspended by “act of God”, that is by no fault of a party, then there should be no order as to costs. That approach was followed in Earp Woodcock Beveridge & Co Ltd v Gordon (1927) 44 WN (NSW) 123.

325 Nevertheless, costs orders have been made against parties who have secured adjournments, even where they did not act unreasonably. In Business in Focus (Aust) Pty Ltd v Begun Property Pty Ltd [2006] FCA 264, an adjournment was sought because the applicants had to change their solicitors as a result of “inactivity by their former solicitors”, resulting in “associated complications” which would result in “a very real prejudice to them” if they were forced to proceed. The adjournment was granted but they were ordered to pay the costs. This is, perhaps, an unremarkable example of the payments of costs where an indulgence is granted to a party.

326 The Court relied heavily on what was said by the High Court in Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146. That reliance would now be moderated following the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, though this would probably not affect the order for costs if the adjournment were still granted.

327 In R & R Industries (Australia) Pty Ltd v Marbletrend Pty Ltd [2010] FCA 1311, a trial had to be vacated because the applicant’s solicitor had been rendered quite seriously ill and his treatment prevented him from properly preparing for trial. The solicitor was a sole practitioner with only a single employee. Again, the trial was adjourned but the applicant was ordered to pay the costs thrown away by reason of the adjournment.

328 On the other hand, in Alstom Power Ltd v Yokogawa Australia Pty Ltd (No 4) [2010] SASC 109, senior counsel for the defendants was, on medical advice, unable to continue with the proceedings. The trial had to be adjourned for at least eight weeks. The Court (at [11]), considered that there was no default by the defendants, and that the adjournment was “caused by one of the many exigencies which may affect the smooth running of a trial”. It was expressly found that the complexity meant that it would be “unreasonable … to continue with one counsel unassisted by a second counsel”.

329 The Court referred to the principle that “a party who seeks a dispensation, indulgence or favour of the court is, as a general rule, ordered to pay the other party’s costs of the application” and then continued (at [13]-[14]):

[13] … I do not consider that I was granting an indulgence to the defendants. I was merely endeavouring to ensure that, in the unfortunate circumstances which had happened, the defendants would not be unduly prejudiced in the conduct of their case. If the indulgence granted to the defendants were a result of the defendants’ default then the case might well be different.

[14] In all the circumstances I refuse the plaintiff’s application [for its costs thrown away to be paid by the defendant]. The costs of the adjournment incurred by both sides, unfortunate as that may be, are a regrettable but necessary incident of this trial.

330 A modification of that approach was adopted in Sandvik Mining and Construction Australia Pty Ltd v Dempsey Australia Pty Ltd [2012] QSC 102, where an adjournment of a six week trial was also granted five days before it was listed to commence because senior counsel became ill. It was considered “unreasonable to expect junior counsel for the defendants to run the matter alone”.

331 In that case, the plaintiff vigorously opposed the adjournment but then submitted that no order be made as to costs, while the defendant sought an order that the costs thrown away by the adjournment be costs in the cause.

332 The Court said (at [21]):

While the defendants themselves were in no way to blame for the need for an adjournment, the necessity for an adjournment does come from their side of the record. Costs thrown away on a six week trial are potentially very significant. The need for the adjournment in no way comes from the plaintiff. Even if the plaintiff is not successful at the end of the trial, there is no good reason why it should pay the costs thrown away because of this adjournment … The plaintiff however has not asked for its costs, it has asked that there be no order as to costs of the adjournment. In effect that will mean the parties bear their own costs thrown away by the adjournment. In the circumstances it seems to me that it is a more just order than that sought by the defendants.

333 In Zuecker v Bruggmann (No 2) [2016] QSC 115, an elderly litigant in person was the defendant and became ill resulting in the adjournment of the trial. While there were suggestions that the illness was a convenience which impacted when it suited, that suggestion was rejected by the trial judge who, however, followed what Keane JA had said in Queensland v Brooks & McCabe, quoted above (at [323]) and ordered that the costs of the plaintiff thrown away by the adjournment be the plaintiff’s costs in the proceedings.

334 Finally, in Meadows v Vance [2016] FCCA 1814, the trial had to be adjourned when counsel for the applicant had to attend for urgent medical tests. The case, listed for resumption of an adjourned hearing for 1 and 2 December 2015, had to be adjourned to 15 December 2015. The Court considered (at [144]) that the parties knew on 1 December 2015 that the proceedings would not proceed on 2 December 2015 at that time. Accordingly, the Court ordered that the costs thrown away on 1 December 2015 should be paid by the applicant but not for 2 December 2015.

335 There is, on these authorities, no clear line of principle, save that it is not necessary for there to be a default or misconduct on the part of a party before that party should bear the costs thrown away occasioned by an adjournment it or its lawyers have caused.

336 In this case, senior counsel was supported by junior counsel who did take an active part in the proceedings and conducted a significant part of the cross-examination. It seems to me that there was no real reason why the proceedings could not have continued on 29 January 2015 with junior counsel, though I do not consider that would have been reasonable on 28 January 2015.”

74. The considerations bearing upon the dictates of justice as they apply to the question of adjournment of the proceedings also clearly inform the question of what, if any, costs order ought to be made in relation to the vacation of the hearing dates.

75. Ms Cohen sought an order that the defendants pay the plaintiffs’ costs thrown away in the event that the hearing dates were vacated.

76. Ms Cohen indicated that she would not be charging any cancellation fee.

77. Ms Cohen further indicated that any preparation work done now would be preparation for the next hearing in any event. I accept that and consider that the preparation work done now, or at least a significant part of it, will be not be wasted work in relation to the hearing of the matter when it finally takes place.

78. Ms Cohen mentioned issues in relation to costs for conduct money and the issue of subpoenas. However, it seems to me that in light of the matters that Mr Allen has referred to, which I accept, any such costs will be relatively minor.

79. Mr Allen when I asked him to address on costs, with frankness accepted that the costs, which are expected to be minimal in the context that I have outlined above, ought to be paid by his clients.

80. Apart from the comments of counsel, it is not obvious to me that there will be any significant wasted costs associated with the vacation of the hearing. As I have noted the orders sought in the matter are that the matter be relisted promptly on 1 July 2022 before the expedition judge in order to obtain a new hearing date.

81. In the above context I have ordered that the costs of and incidental to the vacation of the hearing dates be paid by the defendants.

82. The orders of the Court are as follows:

1. Order the listing of the hearing of these proceedings due to commence Monday 27 June 2022 be vacated.

2. Order the matter be listed before the Expedition Judge on Friday, 1 July 2022 in order to obtain a new hearing date.

3. Grant liberty to the parties, should the need arise, to restore the matter before the Expedition Judge with 24 hours’ notice.

4. Order that the Defendants pay the Plaintiffs’ costs thrown away occasioned by the vacation of the hearing dates.

5. Note the costs order is made in the context in which the Plaintiffs’ counsel has indicated she will not be charging any cancellation fees in respect of the vacated hearing dates.

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Decision last updated: 24 June 2022