Aversa v Transport for New South Wales (No 2)

The plaintiffs, Rosario and Antonia Aversa, commenced these proceedings against the first defendant, then known as Roads & Maritime Services but now called Transport for New South Wales (TfNSW), by summons filed on 9 October 2019. At that stage, TfNSW was the only defendant.

The plaintiffs are the owners of a number of properties at Haberfield. The proceedings arise out of the construction by TfNSW of the WestConnex project. As part of that project, TfNSW caused a vertical subdivision of the plaintiffs’ properties to be created by the registration of plans by the Registrar General, so that TfNSW could compulsorily acquire substratum lots that were formerly part of the vertically undivided properties owned by the plaintiffs, for the purpose of constructing a tunnel needed for the completion of the project. The essential underlying issue in the proceedings is whether TfNSW has avoided paying compensation for the resumption of the substratum lots that it created under the plaintiffs’ properties, because it classified the road to be constructed through the tunnel as a public road, which would not have given rise to a right to compensation in the plaintiffs, when it was always intended by TfNSW to be a tollway, which had the effect of excluding it from the definition of a public road. The plaintiffs’ claims for relief in the context of the applicable legislation raise complex issues that need not be addressed in these reasons.

The plaintiffs have filed a second amended summons in which they claimed the following primary relief (there may be some errors in the wording of the prayers as the amended summons that has been provided to the Court is not entirely clear):

The plaintiffs have joined as a second defendant the Registrar General of New South Wales. It is not necessary to refer further to the position of the Registrar General in these reasons, as the Registrar General was joined in order to be bound by the determination by the Court of the dispute between the other parties, and has taken a passive stance in relation to the application by the plaintiffs that is the subject of these reasons.

The plaintiffs filed a statement of claim on 30 March 2020. The relevant current pleadings are now the plaintiffs’ amended statement of claim filed on 5 June 2020 and TfNSW’s defence filed on 19 June 2020.

On 16 March 2022, Parker J delivered judgment on a dispute in these proceedings in which TfNSW resisted the production of certain documents following the service upon it of a notice to produce by the plaintiffs: see Aversa v Transport for New South Wales [2022] NSWSC 277. His Honour set out by way of background to his reasons the following summary of the issues in these proceedings.

This Court does not know the circumstances that caused Parker J in [26] to record that TfNSW accepted that the statement made in the application to the Registrar General was wrong in fact, although it was claimed to be a mistake.

It will help an understanding of the position taken by TfNSW on the notice of motion to set out aspects of the Lindsay J’s summary of the issues in these proceedings in Aversa v Roads and Maritime Services [2021] NSWSC 1047, that was referred to by Parker J at [20]. Of the 18 questions into which Lindsay J distilled the issues, the following are the most significant for present purposes:

As will be seen, one of the grounds upon which TfNSW resisted the Court referring the proceedings to mediation was its stated wish to be cleared of the allegation that it had fraudulently misled the Registrar General by the circumstances in which it obtained registration of a vertical subdivision of the plaintiffs’ land.

The proceedings have been listed for hearing on 9 October 2023 before me with an estimate of three days. The Court was informed that the parties’ evidence is complete.

By notice of motion filed on 15 November 2022, the plaintiffs sought an order under s 26 of the Civil Procedure Act 2005 (NSW) that the proceedings be referred to mediation.

TfNSW has strongly opposed that order being made by the Court.

By some mischance, the proceedings were listed for hearing without provision having been made for the determination of the plaintiffs’ notice of motion. This matter was brought to my attention as the trial judge, and on 17 April 2023 I listed the plaintiffs’ notice of motion before me on 13 July 2023, when it was heard. Given the considerable amount of time that has elapsed since the notice of motion was filed, I will have to address the possibility that there may now be insufficient time for any mediation that may be ordered to take place to be a court-annexed mediation. I will return to this issue below.

At the hearing, the plaintiffs relied upon affidavits by David John Thomson made 15 November 2022 and Mark Shumsky made 8 February 2022 and written submissions by their counsel, Mr Shane Prince SC and Dr Simon Blount. TfNSW relied upon an affidavit of Ryan Andrew John McGowen made on 27 February 2023 and the written submissions of its counsel Mr G Sirtes SC and Ms LM Johnston.

The Court’s power to refer these proceedings to mediation, notwithstanding the opposition of TfNSW, is found in s 26 of the Civil Procedure Act 2005 (NSW), which relevantly provides:

The obligation imposed upon parties to a mediation to participate in good faith is relevant to the exercise of the Court’s power to refer proceedings to mediation without the consent of a party, as the Court is entitled to weigh in the exercise of its discretion to make the referral the likelihood that the dissenting party will nonetheless act in good faith, so that the mediation may be successful notwithstanding its opposition. Section 27 of the Civil Procedure Act provides:

As is generally the case, in deciding whether to exercise its power in s 26 of the Civil Procedure Act, the Court must implement the overriding purpose of that Act, as relevantly set out in s 56, as follows:

In determining how to exercise its power conferred by s 26 of the Civil Procedure Act, it will be useful for the Court to bear in mind the following observation by Austin J in ASIC v Rich [2005] NSWSC 489 about a material extra-curial statement by Spigelman CJ (s 110K of the Supreme Court Act 1970 (NSW) being a precursor of s 26 of the Civil Procedure Act):

Authority does not provide particularly clear guidelines as to when it will be appropriate for the Court to refer proceedings to mediation notwithstanding the absence of consent by a party. It appears that the Court has a discretion that must be exercised judicially that will depend upon the specific circumstances of each case, and an exercise of judgment by the Court as to the likelihood that the overriding purpose will be served by the referral such that the risk of the additional costs imposed by the parties of being forced to participate in the mediation are justified. This is a judgment that must be based on experience, as the Court will rarely have objective evidence that is sufficient to enable it to make a truly educated forecast as to the prospects of success of the mediation. Furthermore, experience has now demonstrated that the process of mediation is worthwhile on an overall basis although its prospects of success in a particular case are usually unpredictable.

The initial approach of the courts to the prospect of a party being compelled to take part in a mediation without its consent was as stated by Barrett J (as his Honour then was) in Morrow v Chinadotcom Corp [2001] NSWSC 209; [2001] ANZ ConvR 341, where he said:

However, judicial sentiment on the issue soon began to evolve. In Idoport v National Australia Bank Ltd [2001] NSWSC 427, Einstein J said:

This evolution in judicial attitude was advanced by Hamilton J in Singh v Singh [2002] NSWSC 852, where his Honour said:

In Daya v CAN Reinsurance Co Ltd [2004] NSWSC 795, Einstein J added:

In Southern Waste Resource Co Pty Ltd v Adelaide Hills Region Waste Management Authority [No 2] (2019) 135 SASR 150; [2019] SASC 191 Hinton J said in relation to this “significant shift in judicial attitudes regarding compulsory mediation” (footnotes omitted):

More recently, Ward CJ in Eq (as her Honour then was) said in Mehcur v Mehcur [2021] NSWSC 1252:

The plaintiffs ask the Court to exercise its power in s 26 of the Civil Procedure Act to refer the proceedings to mediation because they are ordinary landowners with a young family who find themselves to be plaintiffs in proceedings that have been on foot for many years and have involved a number of interlocutory hearings. The plaintiffs wish to invoke the process of mediation in order to avail themselves of the possibility of achieving a satisfactory compromise with TfNSW.

The plaintiffs referred to aspects of the “Model Litigant Policy for Civil Litigation” to which TfNSW is required to adhere. In particular:

The plaintiffs also relied upon a document called “Mediation” published on the website of the Department of Communities and Justice, which included the observation that mediation may be unsuitable if the party dealing with the State does not feel safe when communicating with the other participants, or where there is a power imbalance that means one or more of the participants is not able to participate equally in the process and negotiate on their own behalf effectively. The plaintiffs submitted that there was no reason in this case that was consistent with the policies adopted by the State as to why a mediation of these proceedings should not take place.

TfNSW resisted the Court making an order referring the proceedings to mediation primarily on the ground that the plaintiffs had alleged fraud against TfNSW which extended to the State of New South Wales, through TfNSW, having engaged in a widespread fraud in the process of constructing the WestConnex project. It submitted that this is not a private dispute that is amenable to being settled behind the closed doors of a confidential mediation process. TfNSW is entitled to vindicate itself and defend the claim against it in an open forum of justice. TfNSW submitted that any compromise of these proceedings by TfNSW will necessarily carry with it an implication that the claims had some merit, or at a minimum that TfNSW desired to keep them out of court and beyond the gaze of the public that funds TfNSW.

TfNSW also submitted that, on the advice that it had received, it had formed the view that the plaintiffs’ case was entirely devoid of merit on the facts and the proper interpretation of the relevant statutory provisions. That had the effect of engaging clause 3.2(b) of the Model Litigant Policy, which has been set out above. In the application of that policy, TfNSW submitted that it could not make any offer at a mediation to compromise the plaintiffs’ claim that involved paying any money to the plaintiffs, because that would involve making a partial settlement that was inconsistent with the requirement that “it is clear that liability is at least as much as the amount to be paid”. That is because it is TfNSW’s advice and opinion that the plaintiffs’ case has no prospects of success so that TfNSW has no liability at all to the plaintiffs.

The plaintiffs responded to this submission by relying, first, upon the observation of Barrett J in Hillig v Darkinjung [2008] NSWSC 409, where his Honour said:

Secondly, they cited the following extract from the judgment of Campbell J (as his Honour then was) in Lidoframe Pty Ltd (as Trustee for Logan Cypress & Framing Trust) v New South Wales [2006] NSWSC 1262:

The final word from senior counsel for the plaintiffs in oral submissions was to highlight the plaintiffs’ position that the responsible course of action is to permit the parties to sit around a table and see whether the claim can be resolved, having regard to the risk to the plaintiffs of losing their family home and their children’s patrimony.

Although the Court’s decision whether or not to order that a mediation take place over the opposition of one of the parties should not depend upon the Court’s assessment of the level of uncertainty in the outcome of the proceedings and each party’s prospects of success, it would in many cases be unrealistic for the Court to ignore the benefit of its experience in making an assessment of whether a mediator may be able to facilitate a resolution of the dispute. In this case, however, I have no sense at all of the likely outcome of the proceedings, or whether there is any chink in TfNSW’s self-perceived armour that might be brought to bear at a mediation. It seems to be implicit in TfNSW’s adamantine opposition to a mediation taking place that it assumes that the only outcome that could be palatable to the plaintiffs would be a substantial payment of compensation by TfNSW. The Court should not assume that that is the plaintiffs’ position. It is a matter of long experience that parties to litigation can lose their enthusiasm and resolve and seek a way out that limits ongoing risks rather than produces substantial victory. The Court does not know what the position of the plaintiffs will be at a mediation and it makes no assumptions in that regard.

Although there is no general rule, I think that the Court should be favourably disposed towards facilitating the possibility of a mediated solution in proceedings between ordinary citizens and the State. That is what I will do in this case.

It will be necessary for the plaintiffs’ legal advisers to correspond with the Registry to determine whether it is feasible and convenient for a court annexed mediation to be arranged in this case. Ordinarily, the Court will hesitate to order a reluctant party to incur the costs of a private mediation. In the circumstances I will defer dealing with this issue until I am advised whether or not a court annexed mediation can take place. If that cannot be arranged, I will entertain an application for an order for a private mediation upon terms to be determined. The parties should submit appropriate short minutes of order to my Associate.