Error in the exercise of discretion?
48 Mr Bamforth and Mr Morris made in effect joint submissions, which Pyojed adopted.
49 At the heart of their submissions was that the judge erred in law in setting aside the dismissal orders in the absence of explanations (in the sense of excusing explanations) for the Betckes' failures to comply with the directions to provide particulars and for their failures to apply within the twenty-eight day period in Pt 1 r 7A(5). They submitted that the judge had been prepared to dismiss the proceedings on 12 March 2001, and had dismissed them, and that unless the defaults then making it proper to dismiss the proceedings were explained the judge should still have been prepared to dismiss the proceedings; this particularly took up the closing words of the judge's reasons. They submitted that the judge should not have condoned the delay in applying to have the proceedings reinstated without explanation of the delay. Some of the ways in which the submissions were put were, with respect, extravagant. It was said that the Betckes were following a deliberate strategy of silence until they applied, and of declining to give explanations. It was said that they were "in contumelious disregard" of the twenty-eight day period, and that by declining to give explanations they were abusing the court's process.
50 Elements of these submissions were put in different ways. It was said that as the Betckes were seeking indulgences it was incumbent on them to explain their failures, and that on the reasoning found in Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418 and Ho v Powell (2001) 51 NSWLR 572 at [16] it should be inferred that there was nothing they could put forward by way of excuse. It was said that the judge failed to adhere to the guidance found in Micallef v ICI Australia Operations Pty Ltd at [54] as to the need for explanation on affidavit testable by cross-examination. Reference was made to the observations by Cole J in Technical Team Projects Pty Ltd v Noble Dunn Pty Ltd (1990) 20 NSWLR 221 at 227-8 as to the need for reasonable explanation for failure to comply with rules of court. It was said that the judge failed to give sufficient weight to the absence of explanations from the Betckes or to "the cumulation of default through to December 2001", so much so that his discretion had miscarried.
51 When made on 12 March 2001 the dismissal orders were in suspense: by Pt 1 r 7A(3) they did not have effect until a period of twenty-eight days had elapsed and, if an application was made under Pt 1 r 7A(5), unless thereafter confirmed. Applications were not made under Pt 1 r 7A(5), in that the Betckes' applications were not made within the twenty-eight day period, and so the dismissal orders had effect. For the purposes of the appeals the effect must be taken to have been still defeasible, through extensions of the twenty-eight day period pursuant to Pt 3 r 2 and applications to set aside the dismissal orders, since the question of power was excluded from the grants of leave to appeal. Cf FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268.
52 Part 1 r 7A applies to preliminary dismissal orders made in many different circumstances, and what follows is directed only to dismissal orders following a plaintiff's failure to comply with orders or directions.
53 I first assume application under Pt 1 r 7A(5) within the twenty-eight day period. Where a dismissal order was because of the plaintiff's failure to comply with orders or directions, explanation and excuse before the dismissal order can be set aside does not have the same significance as it has in other circumstances. The gravity of the failure may count for or against the plaintiff, and if an explanation excusing the failure is given the plaintiff may enjoy greater prospects of success in the application. But the purpose in giving the dismissal order suspended effect, and making it open to be set aside or confirmed, is not just to give the plaintiff an opportunity to explain the failure. The plaintiff has had that opportunity, and the making of the dismissal order marks that the plaintiff has not provided a satisfactory explanation. Rather, the primary purpose is to enable the plaintiff to put his house in order and persuade the court that, notwithstanding the failure, the proceedings should be permitted to continue. In an application under Pt 1 r 7A(5), the focus is on curing the failure, not explaining it.
54 When there is added failure to apply under Pt 1 r 7A(5) within the twenty-eight day period, and extension of that period is necessary, again what matters is not explanation and excuse for the failure leading to the dismissal order, but explanation and excuse for the delay in making the application. Explanation for the original failure, of course, may colour and be relevant to any explanation for the delay, but the focus is on the latter.
55 The judge's reasons do not particularly distinguish between extension of the twenty-eight day period and confirming or setting aside the dismissal orders, and some of his reasoning is not entirely clear. He did, however, consider competing prejudice to the Betckes and the other parties, such explanations as there were (in his view not much), and other matters he thought relevant. There was no error in this approach. He concluded that, although the Betckes' prosecution of the proceedings had been wanting, in all the circumstances the end result that their proceedings stand dismissed was not warranted. This was an exercise of discretion, as to extension of time and setting aside the dismissal orders, attracting the usual restraints in appellate intervention.
56 It is convenient to consider extension of time before setting aside the dismissal orders.
57 The judge considered that the defendants (in which he presumably included Mr Morris) were prejudiced by the delay, apparently having in mind extension of time. He noted some unspecified prejudice plus prejudice "in that from the expiry of twenty-eight days from the preliminary dismissal order the defendants were entitled to feel that the matter was not proceeding and to make arrangements for their businesses accordingly".
58 The letters of 5 April 2001 told Pyojed and Mr Bamforth that the Betckes proposed to apply to have the dismissal orders set aside. The letters were sent only four days before the expiry of the twenty-eight day period, and they could not reasonably have been read as referring to applications within that period. There was no evidence of a similar letter to Mr Morris, but it is unlikely that Underwriters fashioned their conduct according to the pendency of the Betckes' claims. No doubt a time would have come when it could reasonably have been thought that the foreshadowed applications would not be made, but I do not think that, prior to October 2001, Pyojed and Mr Bamforth would have been entitled to order their affairs, without further enquiry, on the basis that the applications would not be made. In my view the judge's finding of prejudice was rather harsh to the Betckes. In the result, however, the prejudice to which he referred did not cause the scales to weigh against the Betckes.
59 The judge said that no evidence was called by the Betckes "as to why the time should be extended". Whether or not it was satisfactory, the Betckes' position was fairly clear. They had been unable to provide the particulars as at 12 March 2001. They had provided the particulars and the accountant's and expert's report, in April 2001, October 2001 and December 2001. As their counsel submitted on 7 December 2001, there would have been little point in applying under Pt 1 r 7A(5) within the twenty-eight day period, other than by formal applications which could not then not be supported, because they had not then got or advanced in getting their houses in order. They applied when they had got (or were getting) their houses in order. That was their explanation for the delay, and the question was whether or not it was satisfactory. The absence of evidence went to its satisfactoriness, whatever difficulties they had in getting the particulars prepared and obtaining the reports.
60 The Betckes' position now has some support from National Parks and Wildlife Service v Pierson (2002) 55 NSWLR 315, decided in August 2002. The plaintiff failed to comply with directions. An order was made striking the proceedings out of the list. The plaintiff applied to have the proceedings restored to the list, without rectifying his failures, and his application was dismissed. He rectified his failures and applied again, this time successfully. Palmer AJA, with whom Mason P and Santow JA agreed, observed at [18] -
"18 Where a plaintiff has made default in complying with an order or direction of the Court as to the conduct of proceedings, an application to restore the matter after it has been struck out under Part 18 r.3 of the District Court Rules or stayed under Part 33 r.6 of the Supreme Court Rules (1970) (NSW) should only be made when the plaintiff's default which led to the proceedings being struck out or stayed has been cured. If an application is made but is dismissed because the plaintiff's default has not been cured, a second application made prior to the default being cured will usually be dismissed out of hand as an abuse of process because there will have been no relevant change of circumstance since the first application. On the other hand, a second application made after the default has been cured cannot, per se , be regarded as an abuse of process because there will have been a change in the circumstance which led to the refusal of the first application."
61 The judge was not impressed, but did acknowledge the submission that any application made within the twenty-eight day period "would have been doomed to failure". He thought that, despite the explanation or lack of it, in all the circumstances it was appropriate to extend time, because he did extend time.
62 The judge's reasoning is less than explicit, but I do not think it can be said that he misdirected himself as to the usual need for an explanation excusing the failure to comply with the time limits in rules of court. Such a need underlay his quite strong observations about lack of explanation. The judge considered the competing prejudices if an extension of time were or were not granted, and the explanation for the delay such as it was, as was appropriate when considering extension of time. He plainly enough then asked himself whether in all the circumstances it was just that an extension of time should be granted, doing so in a wrapped-up fashion together with setting aside the dismissal orders, and concluded that it was.
63 In my opinion, the judge's conclusion did not give so little weight to the explanation or lack of it as to be unreasonable in the House v The King (1936) 55 CLR 499 at 504-5 sense. Nor do I accept the appellants' more extravagant submissions as to contumelious conduct and abuse of process.
64 I go then to setting aside the dismissal orders. Again it seems to me that the judge was a little harsh in saying that, apart from the assertion that they were now ready, there was no evidence whatsoever from the Betckes, and that the affidavit of Mr Fegent was "little more than a chronology". Mr Fegent's affidavits of 12 March 2001 had been read in the December 2001 applications, and they provided some evidence of what Mr Fegent had done in order to meet the requests for particulars and of the difficulties he encountered. Mr Fegent's affidavits of 4 December 2001 provided some further evidence of what had been done, and of the provision of the particulars and the accountant's and expert's report. It is not clear what affidavit or affidavits the judge was describing as "little more than a chronology", but the description really did not do justice to the affidavits.
65 I have explained why the focus, in my opinion, should have been on curing the Betcke's failures, not explaining them. The question for the judge was whether, notwithstanding the failures which brought the dismissal orders, in the circumstances as they presented themselves in December 2001 the dismissal orders should be confirmed or should be set aside.
66 The judge said that he took Micallef v ICI Australia Operations Pty Ltd as the guiding authority "in matters such as this", although not explaining what guidance he found in it. In that case the plaintiff had failed to provide particulars despite directions or orders repeatedly given or made over a period of nearly four years. A dismissal order was made pursuant to Pt 18 r 3 of the District Court Rules. An application under Pt 31 r 12A to set aside the dismissal order was refused. Pt 31 r 12A is the general power to set aside orders if made "irregularly, illegally or against good faith", and on appeal the plaintiff accepted that she could not successfully challenge the refusal to set aside the dismissal order if the dismissal order had been properly made. The issue was whether the dismissal order had been properly made. Micallef v ICI Australia Operations Pty Ltd was not a Pt 1 r 7A(5) case. It was a Pt 18 r 3 case.
67 On one view, the judge took Micallef v ICI Australia Operations Pty Ltd as the guiding authority only in relation to the Betckes' failures leading to the dismissal orders, for the relevance that had when considering whether to confirm the dismissal orders or set them aside. However, his Honour qualified his reference to Micallef v ICI Australia Operations Pty Ltd by the words "although … there was no need for the plaintiff to seek an extension of time as the application had been properly made", from which it would appear that he regarded Micallef v ICI Australia Operations Pty Ltd as the guiding authority on a Pt 1 r 7A(5) application. Just what guidance his Honour found is further obscured by the immediately following references to matters material to the Betckes' original failures, but also to "the time that has elapsed is not of the order of Micallef for instance", apparently meaning the time to December 2001.
68 In the end the judge did go to how things stood as at December 2001. Notwithstanding that he was unimpressed by the conduct of the proceedings on behalf of the Betckes, he accepted that they were ready to take a hearing date. He imposed the directions whereby they were confined to the existing particulars and reports. The judge had well in mind the gravity of Betckes' failures leading to the dismissal orders, and he knew more of them than comfortably appears from the appeal papers. In the light of the overall time that had elapsed and the fact that the Betckes had made themselves ready, the judge considered that his discretion should be exercised by setting aside the dismissal orders rather than confirming them. This was against the background of his consideration of prejudice and explanation or lack of it, and at this point he acknowledged a degree of explanation. I do not think that error has been shown in that exercise of discretion.