Supreme Court New South Wales

• Medium Neutral Citation: Walsh v Walgett Shire Council [2013] NSWSC 1434
• Hearing dates: 25 September 2013
• Decision date: 27 September 2013
• Jurisdiction: Common Law
• Before: Adamson J

Decision

(1) Dismiss the defendant's notice of motion.

(2) Subject to an application for a different order being made in writing within seven days, order

(a) the defendant to pay the plaintiff's

costs of the motion; and

(b) the cross-defendant to pay its own

costs of the motion.

(3) Grant liberty to the parties to approach my Associate within seven days for a date for further directions, or, if short minutes of order are agreed, for the purposes of having consent directions made in chambers.

• Catchwords: PRACTICE AND PROCEDURE - application for separate hearing of liability - prejudice to plaintiff - no benefit of court interest on judgment if assessment of damages deferred- decreased prospects of settlement if liability and damages heard separately
• Legislation Cited: - Civil Liability Act 2002, s 5K, s 5L, s 5S s 50(2); - Civil Procedure Act 2005, s 56, s 57, s 57(1)(b), s 57(1)(c), s 57(1)d), s 58, s 58(2)(b), s 58(2)(b)(i), s 82; - Uniform Civil Procedure Rules 2005, r 28.2
• Cases Cited: - Fallas v Mourlas [2006] NSWCA 32; 65 NSWLR 418; - Idoport Pty Ltd v National Australia; Bank Ltd & ors [2000] NSWSC 1215; - Roads and Traffic Authority of New South Wales v Dederer [2007] HCA 42; 234 CLR 330; - Wolfenden v International Theme Park Pty Ltd (Trading As Wonderland) and Anor [2008] NSWCA 78
• Category: Interlocutory applications
• Parties: Daniel Peter Walsh (Plaintiff); Walgett Shire Council (Defendant); Rotary International District 9650 Incorporated (Cross-Defendant)
• Representation: Counsel: DR Campbell SC and IJ McGillicuddy (Plaintiff); G Donnellan (Defendant); DW King (Solicitor) (Cross-defendant); Solicitors: Beston Macken McManis (Plaintiff); DLA Piper Australia (Defendant); Gillis Delaney (Cross-defendant)
• File Number(s): 2012/380694
• Publication restriction: Nil

Judgment

Introduction

1 The defendant, Walgett Shire Council (the Council), applies by notice of motion filed on 6 June 2013 for a separate hearing on liability in advance of any hearing in damages. The plaintiff, Daniel Walsh, opposes the application for separate hearing. The cross-defendant, Rotary International District 9650 Incorporated (Rotary), supports the Council's application.

2 Mr Walsh, who is now 32 years old, claims damages for alleged negligence by the Council arising from injuries he sustained when he entered an artesian pool after dark on 29 August 2011, struck his head on the bottom of the pool and suffered catastrophic injuries. He is now a tetraplegic and requires 24-hour care. At the time of the incident, the plaintiff was living with his partner and their four children and working as a miner in Lightning Ridge. The artesian pools were generally open 24 hours a day, seven days a week. They were used by the local population of Lightning Ridge, including the plaintiff and his family, not only for recreation but also for bathing and showering. Several dwellings in the area, including the plaintiff's, were not connected to mains water supply.

3 The plaintiff's case is, in substance, that the Council was negligent in failing to indicate with adequate signs that the pool was empty; failing to illuminate the area sufficiently to alert the plaintiff to the lack of water in the pool; and failing to fence the area to prevent persons such as the plaintiff entering the area when the pool was empty. The plaintiff has served a detailed expert's report of Tia Orton dated 14 September 2012. Ms Orton, a senior forensic engineer, concluded:

"The current state of the subject pool/spa, particularly the lack of fence barrier, is reprehensible and poses great safety risk to employees and visitors, particularly children, on a daily basis."

4 As is apparent from the amended defence filed on 5 June 2013 and the oral submissions made before me, the Council defends the proceedings on several bases, including the following:

(1) The plaintiff dived into the empty pool in circumstances where he was intoxicated and had made no inquiry as to the depth of water, if any, in the pool in disregard of the signs prohibiting diving and also signs that indicated that the pool was closed.

(2) The Council did not owe a duty to a person such as the plaintiff who was not exercising reasonable care for his own safety and was, in any event, not in breach in those circumstances: Roads and Traffic Authority of New South Wales v Dederer [2007] HCA 42; 234 CLR 330 (Dederer).

(3) The plaintiff engaged in a "dangerous recreational activity" within the meaning of s 5K of the Civil Liability Act 2002 (the Act) when he, while intoxicated, dived into an empty pool in darkness or poor light without having made any investigation as to the depth of water, if any, in the pool and therefore, even if the Council was negligent, it is not liable to the plaintiff: s 5L of the Act as interpreted in Fallas v Mourlas [2006] NSWCA 32; 65 NSWLR 418 at [50] per Ipp JA, Tobias JA agreeing at [91]-[96].

(4) Even if the Council was negligent, the plaintiff's contributory negligence was of such a high order that there was at least a prospect that damages would be reduced by 100%: s 5S of the Act.

(5) Even if the Council was negligent, the plaintiff was intoxicated at the time of the accident and therefore the court is not to award damages in respect of liability unless satisfied that the plaintiff's injuries was likely to have occurred even if he had not been intoxicated: s 50(2) of the Act.

Relevant legislation and principles

5 UCPR 28.2 permits the Court to make orders for the decision of any question separately from any other question. In exercising the power under UCPR 28.2 I am bound to seek to give effect to the overriding purpose of the Civil Procedure Act 2005 (the CP Act), namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56 of the CP Act. I must also seek to act in accordance with the dictates of justice and may take into account the matters referred to in s 58(2)(b) of the CP Act, including the degree of difficulty or complexity to which the issues in the proceedings give rise (s 58(2)(b)(i)) and the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction (s 58(2)(b)(vi)).

6 I am also obliged by s 57(1) of the CP Act to manage the proceedings having regard to the following principles:

(a) the just determination of the proceedings,

(b) the efficient disposal of the business of the court,

(c) the efficient use of available judicial and administrative resources,

(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

7 The starting point is that all issues between the parties are to be determined in the one proceedings. Nonetheless there are occasions when it is desirable in the interests of justice to separate liability from quantum, including where the investigation of quantum is likely to be lengthy and expensive and the prospects of the plaintiff succeeding on liability are not clear.

8 The parties have referred me to several authorities where the issue of a separate question arose. I do not propose to summarise them since each case depends on its own facts and circumstances and the attitude of the parties to the application. Furthermore, many of the cases pre-date the CP Act and therefore the statements of principles articulated in them need to be reviewed in light of s 56, s 57 and s 58 of the Act.

9 For present purposes it is sufficient to say that the separate determination of an issue may prove to be appropriate where:

(1) The resolution of the separate issue will narrow the field of litigious controversies;

(2) The resolution of that separate issue carries with it the strong possibility that the parties will be able thereafter to resolve their dispute themselves and thus avoid further litigation;

(3) Where there is a clear demarcation between that issue and all other issues including credibility of witnesses.

Idoport Pty Ltd v National Australia Bank Ltd & ors [2000] NSWSC 1215 at [7] per Einstein J.

Summary of parties' submissions

10 Mr Walsh and the Council relied on affidavit evidence to support their respective submissions. The Council also tendered the police COPS report concerning the incident which recorded that the plaintiff was excited that there was no one in the pool and he ran from the shower block towards the diving pool and dived into it head first. It also recorded that a witness informed hospital staff that the plaintiff had consumed two glasses of port before attending the artesian pool. In particulars provided on 11 September 2013, the plaintiff admitted that he had consumed Stanley Premium port between 5.00 pm and 7.00 pm on the evening of the incident, which occurred at about 7.30 pm.

11 The Council submitted that it is appropriate to order that liability be determined in advance of any assessment of damages. It contended that substantial issues of liability arise which may give rise to an appeal, or appeals. It argued that it is undesirable to require the Council to expend money on investigating the quantum of damages since that matter might be moot and the cost of such investigations will not, in the event that the plaintiff fails, be recoverable from him because of his lack of means.

12 Mr Down, the Council's solicitor, deposed that in his experience of catastrophic claims, the assessment of quantum of damages is expensive and would require, in the present case, expert reports in the areas of neurology, urology, orthopaedics, occupational therapy, life expectancy, rehabilitation and funds management. However, in cases where the Council's liability is clear or has been determined in the plaintiff's favour, Mr Down's experience is that quantum is usually agreed. He estimated that any dispute about quantum is likely to add in the order of three to five days to the trial and that the costs of preparing for that aspect of the dispute is likely to be significantly larger than the costs of defending the case on liability.

13 Mr Down opined that there is a genuine dispute whether the Council is liable to the plaintiff. Mr Donnellan, who appeared for the Council, addressed me on the matters raised by the pleadings which are summarised in the passage above.

14 The Council submitted that although there are issues of credibility that arise with respect to liability, there are no such issues on quantum since the plaintiff's injuries are self-evidently severe and incontrovertibly a consequence of the incident. It contended that, even if the judge who determined the issue of liability expressed views about the credibility of the plaintiff, his partner and his children and could not, accordingly, be assigned to hear the balance of the proceedings, there would be neither waste of time nor cost in assigning the assessment of damages to another judge.

15 Mr Campbell SC, who appeared for the plaintiff, identified the following factors as militating against a separate hearing on liability:

(1) The prospects of settlement would be diminished if there was a separate hearing;

(2) The plaintiff would inevitably be prejudiced by delay since he would not be entitled to interest on damages until his right to damages has merged into a judgment.

(3) The plaintiff would be required to incur substantial additional costs in the assessment of damages if the hearing on damages was deferred for any considerable period since the material already obtained at considerable cost, which had been served, would be rendered stale.

(4) There are substantial issues relating to the credibility of the plaintiff, his partner and his eldest child that affect the determination of the relevance and location of signs, the quantity of alcohol consumed by the plaintiff prior to the incident and the plaintiff's method of entry into the pool.

(5) It is not clear the extent to which the cross-claim will delay the hearing of the proceedings.

(6) The plaintiff's wellbeing is substantially compromised by the lack of funds to provide him with appropriate and adequate care and to meet the current living expenses of himself and those of his family, for which he was, prior to the incident, the sole provider. He ought not be put to the additional expense and anxiety of having to travel twice to Sydney for two separate hearings.

(7) The plaintiff's case on liability was strong as evidenced by the reports already served, to which there has not yet been a response.

(8) The defendant has been guilty of delay, including in the provision of particulars and other matters germane to the defence.

16 The Council submitted in reply that:

(1) the damages hearing could be conducted by a different judge if credibility of material witnesses had been determined at the hearing on liability;

(2) there was a prospect that the plaintiff's evidence could be taken in Adelaide to save him the cost of travelling to Sydney;

(3) the prospects of settlement would not necessarily be enhanced by having the matter dealt with in a single hearing since the matters of principle relating to liability were such that the Council may consider that they require judicial determination;

(4) although there had been some delay occasioned by the defendant changing solicitors, it had endeavoured to provide responses to particulars as soon as practicable. Furthermore no directions requiring it to serve evidence had yet been made.

Reasons

17 The Council has established that the determination of issues of liability in its favour would render the assessment of damages moot. It has also persuaded me that if it is found to be liable it is likely that damages will be agreed. I accept its contention that any issues of credibility are likely to be confined to the determination of liability.

18 Although Mr Campbell endeavoured to persuade me that the plaintiff's case on liability is strong, I do not consider that it is appropriate for me to assess the relative merits of the parties' cases at this stage. I assume that there is a proper basis for the allegations made in the defence and on this basis I consider there to be some prospect that the plaintiff will fail on liability. I am, however, in no position to assess the plaintiff's prospects of success and it would not be appropriate for me to do so. The defendant has not yet been required to file evidence in the proceedings. It foreshadowed the present application on 19 March 2013. The directions since that time have largely concerned the motion and the cross-claim.

19 If the order for separate determination is not made and the defendant succeeds in defeating the plaintiff's claim it will suffer the prejudice of being unable to recover its costs of investigating quantum. I accept those costs will be considerable.

20 If liability is determined in advance of damages and the plaintiff is successful, he will have a judgment in his favour which will permit him to apply under s 82 of the CP Act for an interim payment. If liability and damages are determined together he will have a judgment for a quantified sum. In the event of an appeal, he will face the same prospect of the defendant opposing either an interim payment or a stay of whole of the judgment on the basis that any monies paid to him will be likely to be irrecoverable if the judgment is set aside on appeal because of his lack of means.

21 However, if damages are determined in a single hearing on all issues the plaintiff, if successful, will be protected by having a judgment in a particular amount which, if it is not set aside on appeal, will carry interest at court rates. Even if the plaintiff is unsuccessful on liability at first instance, he will have a quantified amount which can form the basis of a judgment, if he is successful on liability on appeal since a Court at first instance is generally obliged to assess damages irrespective of its findings on liability: Wolfenden v International Theme Park Pty Ltd (Trading As Wonderland) and Anor [2008] NSWCA 78 at [6] per Giles JA.

22 If the assessment of damages is deferred until all avenues of appeal on liability are exhausted, the plaintiff will suffer an inevitable prejudice by being deprived of a period of judgment interest if he is ultimately successful. This sum is likely to be relatively substantial since it is reasonable to assume that a substantial part of any damages award will be referable to future care. Once this head of damages has merged in a judgment it will carry interest at court rates which reflect a margin to incline judgment debtors to pay. In the instant case, the defendant may have good grounds for a stay of all or part of the judgment but the value of the judgment will be, in that event, safeguarded, if not enhanced, by the interest that will run on the sum until payment. If there is no quantification, the plaintiff has no such protection.

23 If the date of the quantified judgment is deferred, it can be expected that the amount of such judgment will be higher than were it to be ordered at an earlier date, since in the former case more of the damages will be referable to the known past rather than the discounted future. However the marginal increase will necessarily be less than the interest on a judgment entered earlier. In other words a quantified judgment ordered on 30 June 2014 will, all other things being equal, be less than a quantified judgment ordered on 30 June 2015 but the value of the judgment ordered on 30 June 2014 will, if stayed, be greater as at 30 June 2015 because the plaintiff is entitled to interest at court rates.

24 The degree of injustice that would be suffered by the respective parties as a consequence of any order to separate liability from damages is a consideration relevant to determining the dictates of justice: s 58(2)(b)(vi) of the CP Act. I consider that there would be a degree of injustice that would be suffered by the plaintiff were I to separate liability from damages, that is more significant that any prejudice which the defendant might suffer were the proceedings to be determined in a single hearing.

25 Although it may be that the Council will not be prepared to resolve these proceedings in light of the issues as to liability, irrespective of whether damages are assessed, their assessment (whether on an informal basis following investigation, or in Court) may well incline the Council to evaluate its exposure by reference to a monetary sum and its prospects of success. There is much force in Mr Campbell's submission that a defendant which does not have to consider the assessment of damages unless and until liability is finally determined is less likely to determine an amount to be offered to resolve the claim. I consider this to be a relevant matter which tends to reduce the attraction of separating liability from damages.

26 The determination of damages issues is, on Mr Down's estimate, likely to take in the order of three to five days in addition to the time required to determine liability. It is, in my view, more efficient that this be done as part of the single hearing by a single judge, than at a later date even though I accept that there is some prospect that it will not have to be done at all.

27 That another judge could determine the quantum of damages, if credibility questions prevent the judge who determines liability from doing so, is not sufficient, in my view, to outweigh the undoubted benefits to the Court and to the parties of having a single hearing rather than two hearings. It is likely that a single hearing will be a more efficient use of court resources. This is a relevant consideration: s 57(1)((b), (c) and (d) of the CP Act.

28 It will be both disruptive and expensive for the plaintiff, his partner and children to come to Sydney for the hearing since they live at Goolwa and the plaintiff has significant difficulties with mobility because of the incident. It would not necessarily be consistent with the dictates of justice to require him to make such an arduous journey twice.

29 Although I accept that the separation of liability from damages, particularly in claims for catastrophic injuries where liability is seriously in issue, is sometimes appropriate, I am not satisfied, for the reasons given above, that it is appropriate in the present case.

Orders

30 I make the following orders:

(1) Dismiss the defendant's notice of motion.

(2) Subject to an application for a different order being made in writing within seven days, order

(a) the defendant to pay the plaintiff's costs of the motion; and

(b) the cross-defendant to pay its own costs of the motion.

(3) Grant liberty to the parties to approach my Associate within seven days for a date for further directions, or, if short minutes of order are agreed, for the purposes of having consent directions made in chambers.

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Decision last updated: 27 September 2013