The Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (No 2)

[2018] NSWSC 298

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	The Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (No 2) [2018] NSWSC 298
Hearing dates:	9 March 2018
Decision date:	09 March 2018
Jurisdiction:	Equity - Commercial List
Before:	Stevenson J
Decision:	Plaintiff granted leave to rely on evidence served out of time on terms including as to costs
Catchwords:	PRACTICE AND PROCEDURE – where plaintiff in default of directions – where such default caused by default of its legal advisers and not by any fault of the plaintiff - where plaintiff for second time sought leave to rely on evidence served in the face of a guillotine order – whether leave should be granted LEGAL PRACTITIONERS – whether solicitor for plaintiff should pay the costs that the plaintiff must pay the defendants by reason of its default – whether the costs of the solicitor should be disallowed as between her and the plaintiff
Legislation Cited:	Civil Procedure Act 2005 (NSW) Practice Note SC Gen 5
Cases Cited:	The Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (Supreme Court (NSW), Stevenson J, 27 October 2017, unrep)
Category:	Procedural and other rulings
Parties:	The Berry Rural Co Operative Society Ltd (Plaintiff/Applicant) Sepak Industries Pty Ltd (First Defendant/Respondent) Henry Kong (Second Defendant/Respondent)
Representation:	Counsel: G W McGrath SC with D Currie (Plaintiff/Applicant) J C Giles SC (Defendants/Respondents)   Solicitors: Carter & Ferguson (Plaintiff/Applicant) Somerville Legal (Defendants/Respondents)
File Number(s):	SC 2016/281883

Judgment

1. The plaintiff, The Berry Rural Co Operative Society Ltd, is a cooperative society trading as “South Coast Dairy”.

2. By a contract dated 3 February 2014, the defendant, Sepak Industries Pty Ltd, agreed to sell the Co Operative certain milk pasteurisation equipment.

3. The Co Operative alleges that the equipment did not meet statutory health and safety standards and brings these proceedings to recover damages that it alleges it has suffered by reason of the alleged short comings in the equipment.

4. The Co Operative commenced these proceedings by summons filed on 20 September 2016. Shortly before that, on 22 August 2016, Sepak commenced proceedings against the Co Operative in the Local Court of NSW seeking to recover the unpaid balance of the purchase price of the equipment. The Local Court proceedings have since been transferred to this Court.

5. The manner in which the Co Operative’s legal advisors have prosecuted these proceedings in set out in the schedule to these reasons.

6. It is nothing short of disgraceful.

7. The point has now been reached where, by notice of motion filed on 2 January 2018, the Co Operative seeks, for the second time, leave to rely upon evidence served in the face of an order by Hammerschlag J on 27 June 2017, to which the Co Operative consented, that it not be able to rely on any evidence served after 21 July 2017.

8. Mr McGrath SC, who now appears with Mr Currie for the Co Operative, informed me that if the Co Operative is not granted leave to rely upon that evidence, its case must fail.

9. There is no suggestion that the situation in which the Co Operative now finds itself is the result of any fault of the Co Operative itself. The invidious position of the Co Operative is due, entirely, to egregious short comings in the manner in which its legal representatives have conducted these proceedings.

10. The proper management of the Commercial List requires that the parties, and their legal representatives, comply with the Court’s directions. The Court’s directions are not suggestions for the consideration of the parties or their legal advisors. They are orders of the Court. They should be complied with.

11. As Mr Giles SC, who appears for Sepak, submitted, not only has Sepak been vexed by the appalling manner in which the proceedings have progressed, but the Court’s interest in the expeditious and orderly resolution of issues, and the interests of other litigants seeking to avail themselves of the Court’s time, have been disregarded.

12. There is great weight in Mr Giles’s submission that “enough is enough” and that the Co Operative should be denied the leave it seeks, thus bringing these proceedings to an end.

13. However, the conclusion to which I have come is that the prejudice that would be thereby visited on the Co Operative, without any fault on its part, is such that the justice of the case does not warrant shutting it out from pursuing such rights as it has in the proceedings.

14. Accordingly, and reluctantly, I have concluded that I should give the Co- Operative the leave it seeks.

15. But I am only prepared to grant any such leave on terms.

16. The first is that I order that the Co Operative pay an appropriate portion (I will invite submissions as to what that proportion should be) of Sepak’s costs of these proceedings to date on an indemnity basis.

17. The second is that I specify those costs as a gross sum under s 98(4) of the Civil Procedure Act 2005 (NSW) and direct that those costs be paid forthwith.

18. The third is that I order that, unless the Court otherwise orders, if the Co Operative makes default in the compliance with any future order or direction, the proceedings be dismissed.

19. Pursuant to s 99 of the Civil Procedure Act, and Practice Note SC Gen 5, I direct that by 5pm on 13 March 2018, the solicitor on the record for the Co Operative, Ms Deborah Langton, show cause in writing to my Associate why:

1. she should not pay to the Co Operative the whole of the costs the Co Operative must pay Sepak; and

2. the costs thrown away by the Co Operative’s failure to comply with the directions made in these proceedings should not be disallowed as between Ms Langton and the Co Operative.

20. I direct that Ms Langton forthwith cause a copy of these reasons to be given to all members of the board of the Co Operative and that Ms Langton file, and provide by email to my Associate an affidavit confirming that this has been done.

Schedule

21. The proceedings commenced on 20 September 2016.

22. On 30 September 2016 the matter was listed for directions before Bergin CJ in Eq. Her Honour directed the Co Operative to reply to any request for further and better particulars from Sepak by 28 October 2016.

23. The Co Operative did not comply with that order (although it did comply with a later order that the particulars be provided by 29 November 2016).

24. On 14 March 2017, Hammerschlag J ordered that the Co Operative serve all lay and expert evidence by 24 April 2017.

25. The Co Operative did not comply with that order.

26. Instead it served lay evidence by 23 May 2017.

27. On 5 June 2017, its solicitor, Ms Janine Bennett, an employee of Ms Langton, stated:

“We can confirm other than expert evidence addressing both liability and quantum we do not intend to serve any further evidence”.

28. On 9 June 2017 the matter was listed for directions. Mr O’Sullivan of counsel informed the Court that the Co Operative had found an expert and were proposing use of a single expert.

29. The matter was adjourned for further directions on 16 June 2017 on which date, by consent, Hammerschlag J ordered the Co Operative to provide Sepak with a copy of the resume of the proposed joint expert and a draft letter of engagement to the proposed joint expert setting out the questions the Co Operative proposed the joint expert should answer.

30. The Co Operative did not comply with that order.

31. On 23 June 2017 Hammerschlag J, by consent, ordered the Co Operative serve all lay and expert evidence upon which it relied by 21 July 2017 and ordered that, should the Co Operative fail to comply with that order, it not be able to rely upon any evidence.

32. The Co Operative did not serve any evidence by 21 July 2017.

33. On 11 August the matter was again before Hammerschlag J for directions.

34. As the Co Operative had not served evidence in compliance with the order of 23 June 2017, Hammerschlag J listed the matter for final hearing at 2pm that day.

35. Mr Wyner of counsel appeared for the Co Operative at 2pm and read an affidavit sworn by Ms Bennett.

36. Ms Bennett’s affidavit revealed that, despite Hammerschlag J’s order of 14 March 2017 that the Co Operative serve all lay and expert evidence by 24 April 2017, she had only contacted Unisearch, to enquire as to the availability of a suitable expert, on 9 May 2017.

37. Ms Bennett gave no explanation for that delay.

38. Ms Bennett stated that the Co Operative had retained through Unisearch, Mr Dennis Forte to provide an expert report. Ms Bennett said that she had received Mr Forte’s Curriculum Vitae on 7 June 2017, but she had only sent a letter of instruction to Mr Forte on 8 August 2017.

39. Ms Bennett concluded:

“I accept my role in causing the delays in the Co Operative being able to serve its expert evidence. I humbly apologise to the Court and the other parties for my role in causing the Co Operative to not comply with the Court’s orders as to the service of expert evidence”.

40. Hammerschlag J stood the matter over to 14 August 2017 and ordered that Ms Bennett, and her supervising partner, appear.

41. On that occasion Mr O’Sullivan appeared for the Co Operative and Mr Hemsworth, solicitor, appeared for Sepak.

42. After some debate, Hammerschlag J concluded:

“HIS HONOUR: Let’s deal with first things first. Mr Hemsworth I don’t think that there is any option but for me to grant the vacation of this hearing only for the simple reason that despite the neglect of those persons who are conducting these proceedings on behalf of the plaintiff I don’t think justice would be served by shutting their client out, who is apparently completely blameless in this exercise.

In those circumstances I think I have no option but to accede to Mr O’Sullivan’s application to vacate the hearing date. That of course is on the basis that the costs thrown away will be borne by the plaintiffs on the indemnity basis, will be assessable forthwith and payable immediately on assessment. Anything to say about that Mr O’Sullivan?”

43. His Honour vacated the hearing date, and ordered that the costs thrown away by reason of the vacation of the hearing date be paid by the Co Operative on an indemnity basis and that Ms Langton “shall be liable directly for the payment by the [Co Operative] of those costs”.

44. His Honour stood the matter over for directions on 8 September 2017 and directed that any application by the Co Operative to rely upon evidence not yet served be returnable that day and be made by notice of motion filed and served by 1 September 2017.

45. On 1 September 2017 the Co Operative filed a notice of motion, returnable on 8 September 2017, seeking leave to rely on the evidence of four expert witnesses (Mr Ian Froude, Mr Adam Knight, Mr Peter Little and Mr Robert Woods) all sworn on 30 August 2017 and a lay witness (Mr Paul Timbs) (who had sworn an affidavit served on 23 May 2017) sworn on 31 August 2017.

46. When the matter was called on for directions on 8 September 2017, there was no appearance for the Co Operative.

47. On Sepak’s application, the matter was stood over for directions on 20 October 2017.

48. On that occasion, I heard Sepak’s application for an order for security for costs and published my reasons on 27 October 2017: The Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (Supreme Court (NSW), Stevenson J, 27 October 2017, unrep).

49. I stood the matter over for further directions on 3 November 2017. The matter was then stood over for further directions on 24 November 2017.

50. On 24 November 2017 the Co Operative did not appear. Its notice of motion of 1 September 2017 seeking leave to rely upon the further evidence to which I have referred was dismissed with costs.

51. On 2 January 2018, the Co Operative filed the notice of motion now before me, seeking leave to rely upon the evidence of the same witnesses referred to in its notice of motion of 1 September 2017.

52. Mr O’Sullivan has sworn a lengthy affidavit explaining why he did not appear for the Co Operative on 8 September 2017 and 24 November 2017.

53. Mr O’Sullivan said that he did not appear on 8 September 2017 because, for reasons he was not able to explain, he had not diarised the matter.

54. Mr O’Sullivan said he did not appear on 24 November 2017 because of various domestic exigencies, not necessary to detail and none relevant to the proceedings, and that “I slept through my alarm”.

55. In his affidavit Mr O’Sullivan said:

“I am deeply embarrassed by my non-appearance on 24 November 2017. I sincerely regret any inconvenience caused to the Court and to the parties. I accept that it is appropriate that an order be made that I personally pay any costs thrown away by reason of my non-appearance on 24 November 2017.”

56. Mr O’Sullivan made no similar offer in relation to the costs of 8 September 2017.

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Amendments

14 November 2018 - Case title amended to include "(No 2)"

[18] - typographical error corrected

Decision last updated: 14 November 2018