Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Practice and procedure - Appeal against order setting aside default judgment - Appellant entered judgment in default of defence - Whether when judgment entered year or more had elapsed since last proceeding in the action - Rules of the Supreme Court 1971 (WA), O 3 r 7 - What constitutes 'last proceeding in an action'

ANZ Banking Group Ltd v Computer Plus [1992] VicRp 41; [1992] 1 VR 607

Argo Pty Ltd v Attorney - General (Tas) (No 3) [2004] TASSC 51; (2004) 13 Tas R 69

Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202

Brighton Marine Palace and Pier Ltd v Woodhouse [1893] 2 Ch 486

Burns v Korff [1982] 8 QL 201

Carron Investments Pty Ltd v Lang [2016] VSCA 287

Citicorp Australia Limited v Metropolitan Public Abattoir Board [1992] 1 Qd R 592

IH Dempster Nominees Pty Ltd v Chemgoods Pty Ltd [1993] 2 Qd R 377

Ives & Barker v Willans [1894] 2 Ch 478

Kaats v Caelers [1966] Qd R 482

May v Wooding [1815] EngR 500; (1815) 3 M & S 500; 105 ER 698

Mundy v Butterley Co Ltd [1932] 2 Ch 227

Raabe v Brisbane North Regional Health Authority [2000] QSC 257

RT Co Pty Ltd v Minister of State for the Interior [1957] HCA 39; (1957) 98 CLR 168

Smiley v Watson [2001] QCA 269; [2002] 1 Qd R 560

Spincer v Watts (1889) LR 23 QBD 350

Starrs v Retravision (WA) Ltd [2012] WASCA 67

Thompson v Kirk [1995] 1 Qd R 463

Webster v Myer (1884) 14 QBD 231

Wright v Ansett Transport Industries Limited [1990] 1 Qd R 297

Zalinoff v Hammond [1898] 2 Ch 92

1 REASONS OF THE COURT: This appeal comes before the court on a registrar's notice to attend for the appellant to show cause why the appeal should not be dismissed pursuant to r 43(2)(g)(i) of the Supreme Court (Court of Appeal) Rules 2005 (WA), on the basis that none of the grounds of the appeal has a reasonable prospect of succeeding.

2 On 1 February 2017, we dismissed the appeal and said we would provide reasons for our decision. These are the reasons.

3 On 20 June 2011, the appellant commenced proceedings in the District Court against the respondent by a generally endorsed writ of summons claiming damages for personal injury arising out of an accident that allegedly occurred on 27 June 2005. At that stage, the appellant was represented by solicitors. The writ was not served on the respondent until 14 March 2012.

4 The respondent filed a memorandum of appearance on 14 March 2012. The statement of claim was therefore due to be filed and served by the appellant on or before 28 March 2012. It was actually filed and served on or about 17 May 2012, more than six weeks out of time. From that point, progress in the proceedings petered out.

5 It appears that, on 21 August 2012, the parties attended an informal conference, but whatever was discussed or may have been agreed at that conference did not lead to the action being resolved. On 14 May 2013, no steps having been taken in the action for a period of 12 months, the action was put on the Inactive Cases List by the court and the parties were notified of that by a letter of 15 May 2013. That prompted the appellant to apply to have it removed and that occurred in June 2013.

6 However, in time somnolence again overcame the proceedings and, on 1 July 2014, the action was once again put on the Inactive Cases List and the parties were notified of that by a letter of 3 July 2013. It was resuscitated this time by a consent order of 29 July 2014. But it would seem that the desire to keep the action out of the Inactive Cases List was not matched by any anxiety to see it progress.

7 On 18 November 2014, the solicitors for the appellant obtained an order that they had ceased to act for the appellant in the action. On 17 March 2015, the appellant filed a notice of address for service and sent a copy to the respondent's solicitors, together with another copy of the statement of claim. The appellant says she included the copy of the statement of claim because she did not know whether it had been served by her former solicitors. (The unchallenged affidavit evidence of the respondent, however, is that it had been served on or about 17 May 2012.)

8 There the matter rested until, on 24 February 2016, the appellant entered judgment in default of defence.

9 It appears there was then an email exchange between the parties about the possibility of further negotiations, but nothing came of that and, on 6 May 2016, the respondent applied to have the default judgment set aside. The application was supported by two affidavits of Mr Raithel, the solicitor having the conduct of the matter on behalf of the respondent. Mr Raithel annexed to one of the affidavits, among other things, a minute of proposed defence and medical reports from two specialist medical practitioners who had examined the appellant in relation to her alleged injuries and incapacity for work. In the proposed defence, the respondent denied that it was negligent and denied that the appellant had suffered the alleged injuries. It also pleaded that the claim was statute-barred by reason of s 14(1) of the Limitation Act 2005 (WA), having been commenced more than three years after the alleged cause of action accrued.

10 The application was heard by a deputy registrar who, on 4 July 2016, extended the time within which the statement of claim was required to be filed and set aside the default judgment. A defence was filed by the respondent on 11 July 2016.

11 The appellant appealed from the deputy registrar's decision to a judge of the District Court. On 24 October 2016, Braddock DCJ dismissed the appeal.

12 The primary judge found that, more than 12 months having elapsed since the last proceeding in the action, the appellant was required under O 3 r 7 of the Rules of the Supreme Court 1971 (WA) to give one month's notice to the respondent of her intention to proceed before taking any further step in the action. That had not been done and the entry of judgment was therefore irregular.

13 The primary judge then turned to discretionary issues. Her Honour found that the respondent had an arguable defence to the appellant's claim. The appellant's contention that she would be prejudiced if the judgment were set aside because of the long time that had passed since the accident had occurred, was rejected. Her Honour observed that such prejudice had come about because of the delay by the appellant in the commencement and prosecution of the action. On the other hand, if the judgment was not set aside, the respondent would be precluded from defending the claim on the merits.

14 The primary judge ordered that the judgment be set aside and made orders for a mediation conference before a registrar.

15 The appellant relies on three grounds of appeal which can be sufficiently summarised as follows:

1. The primary judge erred in law in taking into account that the statement of claim was filed out of time;
2. The primary judge erred in fact and law in finding that more than 12 months had elapsed since the last proceeding in the action; and
3. The primary judge erred in law in failing to take into account that the defence was four years out of time.

The disposition of the notice to attend to show cause Ground 2

16 It is convenient to start with this ground because if it has no reasonable prospect of succeeding the other grounds fall away.

Where a year or more has elapsed since the last proceeding in an action, the party who desires to proceed must give to every other party not less than one month's notice of his intention to proceed. A summons on which no order was made is not a proceeding for the purposes of this rule.

18 The appellant submitted, in effect, that the 'last proceeding' in the action was the service of a copy of the statement of claim on the respondent on 17 March 2015. As less than a year had elapsed from that date until default judgment was entered on 24 February 2016, notice under O 3 r 7 of an intention to proceed was not required.

19 We do not, however, accept that the service of the copy of the statement of claim constituted a 'proceeding' within the meaning of O 3 r 7.

20 The question of what constitutes a 'proceeding' in an action within the meaning of O 3 r 7 does not appear to have been considered in this jurisdiction, but the rule has counterparts in other Australian jurisdictions and in England, in similar, and in some cases, identical terms, and the authorities dealing with those rules provide some assistance. Some such rules refer, as O 3 r 7 does, to the 'last proceeding' in an action and others to the 'last step' in a proceeding. There is no relevant distinction between those expressions in this context: Mundy v Butterley Co Ltd [1932] 2 Ch 227, 233; Artahs Pty Ltd v Gall Standfield & Smith (A Firm) [2012] QCA 272; [2013] 2 Qd R 202 [45].

21 The evident purpose of O 3 r 7 and comparable rules is to avoid a party being taken by surprise by another party taking an interlocutory step in an action which has lain dormant for a lengthy period: see May v Wooding [1815] EngR 500; (1815) 3 M & S 500; 105 ER 698; Webster v Myer (1884) 14 QBD 231, 234. It is not, however, necessary that the 'last proceeding' be taken by the party intending to proceed; it is sufficient that there has been a 'proceeding' by any party within the year: ANZ Banking Group Ltd v Computer Plus [1992] VicRp 41; [1992] 1 VR 607; Thompson v Kirk [1995] 1 Qd R 463.

22 What constitutes the 'last proceeding in an action' (or cognate expressions) within the meaning of comparable rules in other jurisdictions has been the subject of a large number of decisions. Some of the old English decisions were helpfully collected by Stable J in Kaats v Caelers [1966] Qd R 482 and also by McPherson SPJ in Citicorp Australia Limited v Metropolitan Public Abattoir Board [1992] 1 Qd R 592. In Kaats, Stable J referred (at 489), with evident approval, to Webster v Myer, where a 'proceeding' was described as 'some step taken toward judgment or relief sought in the action'; and to Mundy, to the observation by Maugham J that, not as a definition but a kind of approximation, 'last proceeding' in the rule 'suggests something in the nature of a formal step, at least a step taken by the litigant in the prosecution of the case, being a step required by the rules'. In Artahs, Peter Lyons J (with whom Margaret McMurdo P and Fraser JA agreed) considered (at [42]) that the suggestion by Maugham J in Mundy that 'proceeding' involved 'a step required by the rules' was too narrow, and that, for example, the filing and service of a reply may not be required by the rules but it would amount to a 'proceeding' under the rule [48].

23 In Citicorp, McPherson SPJ (with whom Ryan and Dowsett JJ agreed), in considering an equivalent Queensland rule, said (at 594) that it 'must have the characteristic of carrying the cause or action forward'; that it must be 'something in the nature of a formal step in the prosecution of an action'. His Honour distinguished such an act or activity from 'acts done in the recesses of a solicitor's office', such as inspecting documents, preparing an affidavit of discovery or preparing proofs of witnesses, which, although necessary to bring the action to trial, 'cannot be fairly described as a 'proceeding' in the cause' within the meaning of the rule.

24 In Argo Pty Ltd v Attorney - General (Tas) (No 3) [2004] TASSC 51; (2004) 13 Tas R 69, Underwood J, having canvassed a number of authorities, concluded that 'proceeding' in the Tasmanian equivalent to O 3 r 7, means some step in the action required by the rules of procedure, but not necessarily carried out in accordance with those rules, to carry the action forward to a final judgment [27].

25 In Burns v Korff [1982] 8 QL 201, 208, it was said in respect of the then Queensland equivalent to O 3 r 7, that the common feature of a 'proceeding' is that 'in a general way, the activity is recognised by the Rules as an activity which positively advances the cause and its conduct towards ultimate judgment, whether in favour of a plaintiff or a defendant.'

26 In general terms then, a 'proceeding' in O 3 r 7 is something in the nature of a formal step which a party is required or permitted by the rules of court, or an order of the court, to take for the purpose of advancing the case towards final judgment.

27 It is apparent that much that parties do in the course of litigation will not constitute a 'proceeding' for the purpose of O 3 r 7. Thus, for example, it has been held that a letter requesting delivery of a statement of claim was not a step in the proceedings: Ives & Barker v Willans [1894] 2 Ch 478, 483 - 484; an agreement to extend the time for delivering a defence was not a step in the action, although an application to the court for an extension of time to do so would have been a step: Brighton Marine Palace and Pier Ltd v Woodhouse [1893] 2 Ch 486, 488 - 489; making an application to set aside judgment was not a step in the action: ANZ Banking Group Ltd; the filing of affidavits in opposition to an application for the appointment of a receiver, in an action for the dissolution of a partnership, was not a step in the proceedings: Zalinoff v Hammond [1898] 2 Ch 92; a letter calling for compliance with an order for delivery of an affidavit of documents was not a proceeding in the action: Mundy; the inspection of copies of discovered documents in the solicitor's office was not itself a step in the action: Citicorp (albeit, it was accepted that the provision of copies of discovered documents was a step in the action: Wright v Ansett Transport Industries Limited [1990] 1 Qd R 297); delivery of a draft list of documents and unexecuted affidavit, accompanied by a letter confirming the provisional or interim basis of those documents, is not a step in a proceeding: Raabe v Brisbane North Regional Health Authority [2000] QSC 257; interviewing a potential witness is not a step in the action: Smiley v Watson [2001] QCA 269; [2002] 1 Qd R 560; an order for the transfer of an action from one court to another was not a step in the action: IH Dempster Nominees Pty Ltd v Chemgoods Pty Ltd [1993] 2 Qd R 377, 378; notice of a change of solicitors was not a step in the action and nor was an notice of intention to proceed: Kaats v Caelers; and, the taking out by a plaintiff of money paid into court, and payment into court for a cross-claim are not steps in a proceeding: Spincer v Watts (1889) LR 23 QBD 350.

28 In the present case, the statement of claim was originally served on the respondent on or about 17 May 2012. Service of another copy of it on 17 March 2015 did not advance the action or, indeed, serve any purpose. It was clearly not the last 'proceeding' in the action within the meaning of O 3 r 7. Nor were the steps that were taken to remove the action from the Inactive Cases List. They did not advance the action but simply saved it from statutory dismissal by the effluxion of time. Similarly, the application by the appellant's solicitors for an order that they had ceased to act for the appellant did not advance the action. In any event, the steps taken to remove the action from the Inactive Cases List and the application by the appellant's solicitors were all made in 2014, well over a year before the default judgment was entered.

29 The last 'proceeding' in the action prior to the entry of default judgment was therefore the service of the statement of claim on 17 May 2012. To enter judgment in default of defence was clearly to proceed in the action: Webster v Myer, 233, 234. Accordingly, notice under O 3 r 7 was required before judgment could be entered in default of defence. It follows that the primary judge correctly found that the judgment was irregularly entered.

30 The primary judge then went on to consider the circumstances in which the judgment was entered on the basis that those circumstances were relevant to the exercise of a discretion to set the judgment aside. In our view, however, it was unnecessary to do so. The question of discretion did not arise.

31 Once it was found that the judgment had been entered contrary to O 3 r 7, the respondent was entitled to have it set aside as of right. This was not a case where the irregularity was of a nature that the court could cure by an appropriate order. The appellant had entered judgment in circumstances where she was not entitled to do so, so that the judgment 'ought not be on the records of the court': RT Co Pty Ltd v Minister of State for the Interior [1957] HCA 39; (1957) 98 CLR 168, 170**;** Starrs v Retravision (WA) Ltd [2012] WASCA 67 [36]; Carron Investments Pty Ltd v Lang [ 2016] VSCA 287 [51].

32 In light of our finding that the respondent was entitled to have the judgment set aside as of right, these grounds do not arise. However, if there was a discretion in the primary judge to set aside the judgment, the fact that the statement of claim was filed out of time was, contrary to the appellant's submission, a relevant consideration. It is also apparent from her Honour's reasons for decision that she took into account that the defence was four years out of time (ts 22 - 23).

33 We should note, too, that on the material before the primary judge it was evident that, as her Honour found, the respondent had a reasonably arguable defence to the claim and it was open to her Honour to find that responsibility for the delay in the prosecution of the proceedings lay with the appellant.

35 None of the grounds of appeal had a reasonable prospect of succeeding and accordingly we dismissed the appeal.