Schmuelly v Elrob Construction Group Pty Ltd (No 2) (vacate trial)

[2025] NSWSC 26

Supreme Court

New South Wales

Medium Neutral Citation:

Schmuelly v Elrob Construction Group Pty Ltd (No 2) (vacate trial) [2025] NSWSC 26

Hearing dates:

3 February 2025

Date of orders:

3 February 2025

Decision date:

03 February 2025

Jurisdiction:

Equity - Technology and Construction List

Before:

Rees J

Decision:

Dismiss application.

Catchwords:

VACATE TRIAL – defendant seeks to vacate 5-day trial – blames former solicitor for failing to file lay and expert evidence and not informing defendant that he had ceased to act – principles at [23]-[25] – in fact, defendant had terminated solicitor’s retainer six-months earlier – inadequate explanation – application refused.

LEAVE TO ADDUCE FURTHER EVIDENCE – defendant serves 3,000 pages of lay and expert the day before trial – plaintiff cannot meet evidence without vacating trial – principles at [22] – application refused.

Legislation Cited:

Civil Procedure Act 2005 (NSW) ss 56, 57, 58, 62(1), 66

Cases Cited:

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27

Australia and New Zealand Banking Group Ltd v Mio Amico Pty Ltd [2013] NSWSC 716

Forster v Harvey [2006] NSWSC 1112

Goodman Fielder Consumer Foods Pty Ltd v Graincorp Foods Australia Pty Ltd [2020] NSWSC 706

Hamod v New South Wales [2011] NSWCA 375

In the matter of Wise & Young Pty Ltd [2019] NSWSC 1092

Kerr v American Express Australia Ltd [2009] FCA 1219

Lennox v Amcor Ltd trading as Amcor Cartonboard (No 2) [2009] FCA 962

Magjarraj v Asteron Life Ltd [2009] NSWSC 1433

Menzies v Paccar Financial Pty Ltd (No 4) [2014] NSWCA 210; (2014) 101 ACSR 25

Singh v Deputy Commissioner of Taxation [2011] FCA 889

Thornberry v The Queen (1995) 69 ALJR 777

Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471

Von Reisner v Chepurin [2012] NSWCA 418

Category:

Procedural rulings

Parties:

Dror Schmuelly (Plaintiff)
Elrob Construction Group Pty Ltd (First Defendant)
Elia Boujaoude (Second Defendant)

Representation:

Counsel:
M Pesman SC (Plaintiff)

Solicitors:
Collins Biggers & Paisley (Plaintiff)

Elia Boujaoude (Second Defendant in Person, also appearing with leave for the First Defendant)

File Number(s):

2022/254588

ex tempore JUDGMENT

1. HER HONOUR: This is an application by the defendants to vacate a five-day trial listed to commence today. The defendants also seek leave to rely on late-served lay and expert evidence. In addition, the defendants seek to join an additional defendant and time to amend their defence and cross-claim. The defendants also ask that the costs of this application be reserved.

2. In support of the application, the defendants rely on the affidavit of second defendant, Elia Boujaoude. The plaintiff, Dror Schmuelly, relied on his affidavit and that of his solicitor, Joo (Jon) Na. In addition, the plaintiff tendered documents produced by the defendants' former solicitor in answer to subpoena. (The defendants objected to the tender on the basis of client legal privilege; I gave an ex tempore judgment on this matter earlier today.) The defendants also tendered two further communications with the former solicitor.

Facts

3. These proceedings commenced in August 2022 and concern alleged building defects. The Court made a series of directions for the defendants to put on their lay and expert evidence. In May 2023, Ball J ordered the defendants to serve their evidence by 28 July 2023. This did not occur. Rather, the defendants’ then solicitors filed a notice of ceasing to act. In August 2023, Ball J extended the time for the defendants to file their evidence to 25 October 2023; this did not happen. In November 2023, Stevenson J further extended the time for the defendants to put on their evidence by 23 February 2024.

4. Tragically, the second defendant's wife passed away on 11 March 2024, leaving Mr Boujaoude with the care of their two young children, then aged eight years and five years. In light of that sad event, the defendants requested an extension of time to comply with the orders made by the Court. On 12 April 2024, Ball J stood the matter over.

5. On 21 May 2024, the defendants sought to inspect the building site, but does appear to have been unable to obtain access at that time. Later that month, the plaintiff served their quantity surveyors’ report, which was extensive.

6. I reviewed the court file before the hearing today. On 30 May 2024, the defendants made a written submission to this Court, seeking an extension of time to put on their evidence. Mr Boujaoude raised many of the matters relied on today, in particular, the tragic loss of his wife, the failed site inspection and receipt of the plaintiff’s extensive expert report.

7. On 31 May 2024, Ball J extended the time for the defendants to put on their evidence until 5 July 2024. His Honour also made a guillotine order, such that any evidence served outside that time could not be relied upon without the leave of the Court. In so doing, Ball J may be taken to have had regard to each of the matters raised by the defendants on 30 May 2024 when granting the defendants a further extension of time. As such, I do not consider it appropriate to grant a further extension of time in light of the same matters again today, when an extension has already been given in respect of those matters by a judge of this court.

8. On 11 June 2024, the defendants were provided with access to the building site. On 20 June 2024, the defendants retained solicitors, being Mark Smith of Brander Smith McKnight. Mr Smith sought $20,000 on account of costs, which was paid on 24 June 2024. Also on 24 June 2024, the defendants were again provided with access to the building site.

9. The defendants' evidence was due on 5 July 2024 but not filed. By then, the defendants had to hand three lay affidavits which had been sworn on 1, 2 and 3 July 2024, but not filed or served. Otherwise, the defendants’ solicitors were in the process of preparing an affidavit for Mr Boujaoude and retaining experts. On 10 July 2024, Mr Smith filed a notice of appointment. On 12 July 2024, Ball J listed this matter for hearing for five days commencing today.

10. On 19 July 2024, Mr Smith provided the defendants with draft amended pleadings for review and comment. On 27 July 2024, the defendants obtained an (apparently draft) expert building report comprising some 200 pages. The report was not served. On 29 July 2024, Mr Smith provided the defendants with a draft affidavit by Mr Boujaoude for input.

11. On 2 August 2024, Mr Boujaoude sent a lengthy email to Mr Smith, complaining about a number of matters. Mr Boujaoude said he expected the solicitor to complete various services "as promised", including amending the pleadings, completing his affidavit and seeking leave from the Court to rely on the late evidence. Mr Boujaoude added, "I intend to file the documents with the court myself and reconsider our working relationship thereafter".

12. On 14 August 2024, Mr Smith sent a lengthy email to Mr Boujaoude, setting out in chronological form all of the steps taken by his firm and the reason why matters had not been advanced. In particular, Mr Smith stated that Mr Boujaoude had not provided comments or instructions in respect of the proposed amended pleadings, draft expert reports or his affidavit. Where Mr Boujaoude had made “concerning and serious remarks and unfounded allegations” concerning the solicitor’s conduct of the matter, the firm could no longer continue to act for the defendants and gave seven days’ notice of an intention to terminate the retainer.

13. On 15 August 2024, Mr Boujaoude replied, noting that he disagreed with the assertions made in Mr Smith's email, and the chronology, which was said to further diminish Mr Boujaoude’s confidence in the firm's ability to handle his case effectively. Mr Boujaoude added that, given the gravity of the situation, he immediately terminated the services of Mr Smith by the close of business on 16 August 2024. Mr Boujaoude asked for the file to be handed over.

14. On 22 August 2024, Mr Smith's firm filed a notice of intention of ceasing to act. Mr Smith served the notice on Mr Boujaoude the next day. On 29 August 2024, Mr Boujaoude collected his file from Mr Smith. Further correspondence ensued as to whether Mr Smith had provided the client with everything. Mr Boujaoude wrote to Mr Smith on 30 August 2024 and 3 September 2024, variously threatening to make a complaint to the Legal Services Commissioner and imploring Mr Smith “to honour our original agreement and assist me in filing my evidence.” Mr Boujaoude advised Mr Smith that he had spoken to another solicitor who was willing to take over the matter as soon as his evidence was filed, “I simply need you to follow through on what was promised, so I can move forward with competent legal representation.”

15. Also on 3 September 2024, an expert report was provided to the defendants by Alexander Kameas, comprising some 600 pages. The report was not served. That is where matters lay for some time.

16. On 19 December 2024, my Tipstaff sent an email to the parties, setting out the necessary steps to be taken before the hearing. This appears to have prompted Mr Smith to file a notice of ceasing to act on 9 January 2025.

17. On 20 January 2025, the plaintiff’s solicitor sent a draft court book index to Mr Boujaoude, who requested further time to review the index given that he was now self‑represented. Mr Boujaoude did not then mention that the first he had heard of the fact that Mr Smith had ceased to act for him was the plaintiff's email of 20 January 2025. Mr Boujaoude now says that that was the case.

18. On 22 January 2025, Mr Boujaoude completed a substantive affidavit which, together with its exhibit, comprised over 2,000 pages of material. Mr Boujaoude also swore an affidavit in support of the application to vacate the trial. Neither affidavit was served.

19. On 29 January 2025, the plaintiff filed its written outline of submissions and accompanying chronology.

20. On 30 January 2025, the defendants filed a motion to vacate, supported by Mr Boujaoude’s (shorter) affidavit made on 22 January 2025. On 31 January 2025, the plaintiff filed his affidavits in reply. The plaintiff described the preparations which had been made for the trial. He arranged to fly an expert from Western Australia to give evidence. The plaintiff's wife had taken annual leave so that she could attend the hearing and give evidence. The plaintiff also described the significant financial hardship and personal stress caused by this litigation.

21. On Sunday, 2 February 2025, the defendants filed and served the lay and expert evidence which had been assembled since 1 July 2024, but not served at the time, as already described. The late-served evidence comprised six lay affidavits and two expert reports. Together, this material comprises some 3,000 pages. I am informed by the plaintiff’s senior counsel, Mr Pesman SC, that the plaintiff is not in a position to meet that material without the hearing being vacated. The defendants did not suggest otherwise.

Principles

22. So far as the application to adduce further evidence is concerned, s 62(1) of the Civil Procedure Act 2005 (NSW) provides that the Court may give directions as to the conduct of any hearing, including directions as to the order in which evidence is to be given: see also Uniform Civil Procedure Rules, rule 29.5. The power to make such directions includes a power to grant leave for a party to adduce further evidence at trial: see for example, Goodman Fielder Consumer Foods Pty Ltd v Graincorp Foods Australia Pty Ltd [2020] NSWSC 706 at [48] (per Henry J). In deciding whether to grant leave, the Court will consider whether allowing the application is in the interests of justice, having regard to prejudice that may be suffered by the party resisting the application, and the reason why the evidence was not led in the first place: Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471 at 478 (per Clarke JA, Mahoney and Meagher JJA agreeing).

23. So far as the application to vacate the trial is concerned, s 66(1) of the Civil Procedure Act 2005 (NSW) provides that the court may adjourn proceedings. While this power is cast in broad terms, its exercise is governed by s 58 of the Act, which requires that, when deciding whether to grant an adjournment, “the court must seek to act in accordance with the dictates of justice,” in respect of which the court must have regard to ss 56 and 57 of the Civil Procedure Act. The exercise of s 66 is subject to the principles of case management set out by the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27: Hamod v New South Wales [2011] NSWCA 375 at [139] ff, (Beazley JA, Giles and Whealy JJA agreeing); Menzies v Paccar Financial Pty Ltd (No 4) [2014] NSWCA 210; (2014) 101 ACSR 25 at [48]–[64].

24. In Thornberry v The Queen (1995) 69 ALJR 777, the High Court held per curiam (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ) that the refusal of an adjournment which resulted in a party being unable to adequately present their case was a miscarriage of the Court’s discretion. There, the accused sought an adjournment from lunch time until the following morning to call two alibi witnesses critical to his defence. This decision has been followed in civil matters: Singh v Deputy Commissioner of Taxation [2011] FCA 889; Kerr v American Express Australia Ltd [2009] FCA 1219; Lennox v Amcor Ltd trading as Amcor Cartonboard (No 2) [2009] FCA 962; Cohen v McWilliam (1995) 38 NSWLR 478 (Court of Appeal) although, obviously enough, much turns on the facts of each case.

25. Returning to the principles in Aon which are applied analogously to applications for adjournment, it is not only the interests of the party to the instant proceedings which ought to be considered; an adjournment necessitates a further appointment of a hearing date which will inevitably delay other parties from obtaining a hearing: Australia and New Zealand Banking Group Ltd v Mio Amico Pty Ltd [2013] NSWSC 716 at [58] per Davies J. Thus, the notion that adjournments can simply be met by an appropriate costs order is no longer an acceptable approach: ANZ v Mio Amico at [59], citing Aon at [99]-[101].

Consideration

26. As to the circumstances relied upon to vacate the hearing, Mr Boujaoude points to the circumstances considered by Ball J on 31 May 2024, as earlier described. As for subsequent events, Mr Boujaoude says that Mr Smith failed to file lay and expert evidence or seek leave to file that material out of time, despite the solicitor's assurances. Mr Boujaoude also says that he only discovered that Mr Smith had filed a notice of ceasing to act from the email from the plaintiff's solicitors on 20 January 2025. As a result of this late notification, Mr Boujaoude says that he was left without legal representation just two weeks before this hearing, which was said to have significantly impaired his ability to prepare for the hearing and secure new counsel.

27. The explanation proffered by Mr Boujaoude does not bear close scrutiny. According to the documents produced on subpoena by the defendants’ former solicitor, Mr Smith endeavoured to prepare lay and expert evidence for the defendants. Three (short) lay affidavits were to hand before the 5 July 2024 deadline (although it would appear that these affidavits had been prepared by the witnesses; the defendants’ solicitor recommended that they review and draft these affidavits.) Other material was still being prepared after that deadline. It appears that the solicitor was unable to finalise this material given the non‑provision of instructions by Mr Boujaoude.

28. Having terminated Mr Smith's retainer on 15 August 2024, it must have been obvious to Mr Boujaoude that the solicitor was in no position to continue to attend to the performance of this task, and certainly would not be appearing for the defendants at the trial today. That was almost six months ago. Mr Boujaoude must have appreciated that any further preparation for trial would need to be undertaken, either by a new firm of solicitors or by himself. It appears that nothing further was done in preparing for trial until very recently.

29. I accept that the plaintiffs cannot meet the 3,000 pages of lay and evidence served yesterday and that it would be necessary for this hearing to be vacated if the defendants were given leave to rely on that material. Given the number of opportunities the defendants have had to put on their evidence and the inadequate explanation offered, I am not satisfied that it is in the interests of justice to vacate the hearing today. I refuse leave to adduce further lay and expert evidence, join a further defendant or vacate the hearing.

30. For these reasons I make the following orders:

1. Dismiss the defendants' notice of motion filed on 30 January 2025.

2. Order the defendants to pay the plaintiff's costs of the motion.

**********

Decision last updated: 07 February 2025