Bibah Formwork v Radray Constructions [2003] NSWSC 599 | Case summary

The Local Court proceedings 7 The plaintiff is involved the building industry and carries out cement works, formworks and steeling. In January 1999, the plaintiff entered into a contract with the defendant to undertake various works on residential dwellings at Fairfield. In July 1999, the plaintiff completed his works and received payments totalling $242,547.00. The plaintiff alleged that the defendant still owed him an amount of $9,650.00. 8 On 28 June 2001, the plaintiff issued a statement of liquidated claim for the sum of $9,650.00 from Burwood Local Court. On 17 August 2001, the defendant issued a notice of grounds of defence and a cross-claim. The defence was based on the quantity of concrete to which the plaintiff was entitled to claim, and defective work by the plaintiff. On 28 November 2001, the plaintiff issued a defence to the cross-claim. On 6 February 2002, standard case management directions were given. These directions included the allocated hearing date on 25 July 2002, ordered the plaintiff to supply particulars by 27 February 2002, and file a Scott schedule by 3 April 2002. The matter was listed for review on 22 May 2002, with liberty to apply with 7 days to re-list if no particulars were provided, and witness statements were to be filed and exchanged. These directions were not complied with. 9 The plaintiff did not provide the particulars as directed. The defendant had the matter re-listed before the court on 13 March 2002 to have the claim struck out. On 13 March 2002, the plaintiff was ordered to provide particulars within 14 days failing which the plaintiff's claim would be struck out. The plaintiff provided particulars on 20 March 2002. After the plaintiff defaulted in complying with the first timetable set, the court stated that if it failed to comply again, its claim would be struck out. Hence the plaintiff was given warning that if he failed to comply with a further timetable his matter would be struck out. 10 On 22 March 2002, the matter came before the court as previously directed for review. By consent, the matter was adjourned to 26 June 2002, and the defendant was ordered to file and serve a Scott schedule by 5 June 2002, parties were to exchange witness statements by 19 June 2002, and the plaintiff's reply to Scott schedule was to be served by 26 June 2002. The defendant was late in filing its Scott schedule, a draft was filed on 21 June 2002 and a further Scott schedule which merely incorporated the expert's comments (that report having previously been served) was served on 12 July 2002. By 22 March 2003, the plaintiff had defaulted in complying with the timetable and the parties had agreed to an amended timetable. 11 On 26 June 2002, the matter came before the court and orders were made that the witness statements were to be exchanged and filed by 11 July 2002. The hearing date of 25 July 2002 was confirmed. 12 On 5 July 2002, the defendant served sealed copies of an amended notice of grounds to defence and cross-claim upon the plaintiff. On 11 July 2002, the defendant requested that the matter be re-listed as it was unable to exchange witness statements at that stage. On 12 July 2002, the defendant served its amended Scott schedule. On 12 July 2002, the court telephoned the plaintiff's solicitor informing him that the matter was to be listed before the Magistrate on Monday, 15 July 2002. 13 At the hearing before Magistrate Price, the solicitor appearing for the plaintiff stated that as of Friday he regarded that he had no instructions to act because he had not been given any. However, over the intervening weekend the plaintiff had faxed some instructions to the solicitor's office (t 5.5). 14 On 15 July 2002, Magistrate Price in his reasons stated: "So far as the application before the Court is concerned, the Court is informed that as far back as nearly six months ago, 6 February of this year, directions were made by the Court for the exchange of statements. That order was revisited on 22 May and the time for exchange was extended, there apparently being non-compliance with the Court's directive in that regard. The matter yet again came before the Court on 26 June with directions for the exchange of those statements on or before 11 July of this year. It's not disputed that the compliance, so far as those consistent orders of the Court, have not been accommodated by the defendant, for whatever reason or reasons - by the plaintiff. Quite candidly the plaintiff's solicitor had informed the client as recently as last week, the dilemma that he was placed in so far as the want of instructions are concerned and more particularly, instructions such as would enable the statements to be prepared and those statements to be served. Whatever may have transpired over this weekend so far as notes or statements are concerned, they are certainly not in a form where they could properly be served and form the basis of the hearing which, for a substantial period of time now has been scheduled for 25 July. It has been the consistent argument, if not plea of the defendant, that substantial time and costs have already gone into the hearing of this matter, not only in the preparation of the various schedules but also the necessity to engage two persons who are described as expert witnesses, attendances upon counsels, all preparatory to the hearing in less than a fortnight's time. Notwithstanding the personal difficulty that the plaintiff's legal representative finds himself in, and the Court would suggest that is at the making of the plaintiff himself, and on the application of the defendant, the Court makes the following orders; As a result of the consistent non-compliance by the plaintiff with a succession of court directives so far as preparation and exchange of statements are concerned, that the court simply enters a verdict for the defendant on the plaintiff's statement of claim. I reserve the hearing of 25 July 2002 to hear the cross-claim as filed on behalf of the defendant and that cross-claim will be confined to the material that has been prepared and is either exchanged or in a position to be exchanged as at today, 15 July 2002. The associated question of costs will be visited by the court on the hearing day of 25 July 2002." 15 The plaintiff submitted that the Magistrate made orders on 15 July 2002 which denied him a reasonable opportunity to appear and present his case. The plaintiff submitted that there was no warning that judgment may be given in favour of the defendant on that day, nor was time allowed to respond to the amended Scott schedule, which was served on the plaintiff on 12 July 2002, sufficient for the plaintiff to properly defend the cross- claim of the defendant. While the plaintiff submitted that the amendments to the Scott schedule were substantial, they merely incorporated excerpts from the expert's report. 16 The effect of the Magistrate's orders was that summary judgment was entered against the plaintiff 10 days prior to the hearing date, and the evidence that the plaintiff could rely upon in support of his cross-claim was confined to the evidence that he had served by the end of that day. 17 In essence, the second judgment by Barkell LCM follows on from the orders made by Price LCM in 15 July 2002. On 25 July 2002, the Magistrate determined a notice of motion filed by the plaintiff seeking firstly, that judgment given for the defendant on 15 July 2002 be set aside; secondly, that the order made by the court on 15 July 2002, whereby the cross-claim for the defendant proceed only on the basis of materials the parties were in a position to exchange that day, be set aside; and thirdly, that the hearing be heard on its merits as originally set down for 25 July 2002, before Barkell LCM. The Magistrate also determined the hearing of the cross claim. 18 At the hearing before Barkell LCM, Mr Habib, the director of the plaintiff, relied upon his affidavit, gave evidence and was cross-examined. Mr Habib admitted that he had been somewhat tardy in supplying his documents but his own trade documents were very small in number, being only the one invoice and a diary and the court's original return date of 25 July 2002 was an appropriate return date. As to his witness statements, he said that he had a business to run and he was out on the field most days. He also had other court cases running concurrently and had difficulty in obtaining the invoices from the concrete supplier to support his figures. In relation to the expert reports, he stated that he needed reasonable time from the service of the Scott schedule so that he could know what the complaint was. When asked if he had any explanation why on 15 July 2002 his solicitor was unable to exchange any witness statements on his behalf he answered "That's probably my solicitor and the other solicitor. If the other solicitor has written to him or tell him something it's between them." 19 Barkell LCM stated: "Certainly the affidavit it doesn't give me any basis for deciding that the judgment, or the verdict has been irregularly or illegally or against good faith in the manner in which it was obtained and I'm satisfied that part 26, rule 3 does apply. I must say that I am still somewhat doubtful as to the power of the Court to enter a verdict in the circumstances but that's a doubt that doesn't concern me. It can't concern me because it's there and I must find a means to set it aside and looking at the examples that are given for part 26, rule 3 it's the manner in which it was obtained that enables such a judgment to be set aside, that is the manner in which it was obtained was illegal, irregular or against good faith." 20 The Magistrate concluded that she was not in a position to be satisfied that she had the power to grant either of the first two orders that were sought in the notice of motion. She stated that she was quite clearly not happy about it but it seemed to her that she must refuse both of those orders because she was not satisfied that she had the power to grant them. 21 The plaintiff's counsel relied upon the authorities of Cameron v Cole (1944) 68 CLR 571 and Hoskins v Van Den-Braak (1998) 43 NSWLR 290 as authority for the proposition that Barkell LCM had the power to set aside the earlier orders of Price LCM. In Hoskins, a solicitor mistakenly named Mr Hoskins as a plaintiff on a Local Court statement of claim, but in reality he was merely a witness. The first Mr Hoskins knew of his status as cross-defendant and a joint judgment debtor was when the Sheriff's officer turned up at his home to levy execution. The New South Wales Court of Appeal (Mason P) at 294 quoted a passage from Cole where Rich J, at 589, stated: "It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae , to have any determination which affects him set aside; and a court which finds that it has been led to purport to determine a matter in which there has been a failure to observe the principle has inherent jurisdiction to set its determination aside ( Craig v Kanssen (1943) 1 KB at 262) . In such a case there has been no valid trial at all. The setting aside of the invalid determination lays the ghost of the simulacrum of a trial, and leave the field open for a real trial ( Crane v Director of Public Prosecutions (1921) 2 AC at 323, 333 ). In principle, therefore, there is no objection to the course taken by the learned judge in proceeding to rehear the petition when the invalid order has been set aside." 22 This passage has also been cited with approval by Gibbs J in Taylor v Taylor (1979) 43 CLR 1 at 6 and 7. Gibbs J added (at 8): "It is clear that the majority of the Court in Cameron v Cole accepted a court, whether superior or inferior, has inherent power to set aside an order against a person who did not have a reasonable opportunity to appeal and present his case." 23 Mason P, at 298, held that the Local Court has the power to relieve against the type of injustice suffered by Mr Hoskins as an incident of its function as a court of justice, that the duty to set aside and or relieve against the consequences of a default order or judgment exists ex debito justitiae (that is, not as a matter of discretion or subject to terms). 24 In Cole, a petition in bankruptcy was presented against the appellant Cameron on the ground that he had failed to comply with an earlier bankruptcy notice. On the day appointed for the hearing of the petition, Cameron did not appear, and the judge in bankruptcy made a sequestration order against him in his absence. This sequestration order was subsequently annulled and directions were given that the petition be reheard as it became apparent the appellant had not had proper notice of the day fixed for the hearing of the petition. Upon the rehearing, a sequestration order was again made, and there was an appeal from that order to the High Court on several grounds, including the claim that, when annulling the first sequestration order, the court had no authority to direct a rehearing of the petition. This claim failed. But this case, the subject of the appeal, is factually very different from Cole and Hopkins. 25 Cole and Hopkins are cases where a party did not appear to present his case. 26 The plaintiff was represented by a solicitor before both Price LCM and Barkell LCM. He was given an opportunity to present his evidence and submissions. Barkell LCM was correct. She did not have the power to set aside the orders made by Price LCM. However, the issue still remains, did the approach adopted by Price LCM constitute an error of law? 27 In Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, the appellants had been refused leave to amend their defence in a long running commercial dispute concerning a lease to develop certain land. The estimated length of the trial was four months. After a number of interlocutory hearings and several amendments to the defence, the appellants applied again to amend their defence. The judge, Keifel J, refused leave to add a defence which, though arguable, was likely to result in the vacation of the date which had been fixed for the trial six months ahead. Keifel J considered that maintaining that date was a more pressing consideration than a party's right to present a further defence. 28 The Full Court of the Federal Court upheld the primary Judge's decision, adding that procedure and efficient case management outweighed the potential injustice that might arise from a refusal to allow the appellants to amend their defence. However, on appeal to the High Court this finding was reversed unanimously. In their judgment Dawson Gaudron and McHugh JJ, at 154, stated that case management, while a important consideration, was not "an end in itself" and that: "[I]t ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim." After considering that neither party would be placed under an undue strain if the amendment were allowed, their Honours concluded, at 155, that costs were an adequate remedy for any prejudice caused by it. 29 In his separate judgment, Kirby J reiterated these findings and, at 169-70, set out a number of factors which might be relevant when determining whether to allow an amendment. Such factors included: that the oversight which occurred is adequately explained as, for example, that it arose out of sudden and unexpected events; that the proposed amendment is of considerable importance to the rights of a party, particularly where it provides a complete answer to a claim; that any fault is that of the party's legal representatives; that the oversight was wholly accidental; that it was simply the product of unavoidable human error or even the outcome of the application to the case of fresh legal minds who perceived an important new point; that costs orders or the imposition of other conditions could adequately rebalance the competing claims to justice; and that the hearing date is sufficiently in the future to permit a party to meet the amendment, taking into account any consequences for the gathering of fresh evidence, the conduct of discovery or like pre-trial procedures and the loss of assigned hearing dates. 30 Practice Note 2/2001 entitled "Case Management of Civil Actions" at paragraph 7.5 provides: "At the call-over, the Registrar or Magistrate shall adjourn the matter for Review to a date at least 28 days prior to the hearing in order to make inquiry and ensure that the court's directions at the call-over have been complied with, and that the matter is ready for hearing. The Review shall be dealt with by a Magistrate. If the court's directions have not been complied with, the usual sanctions will apply. These may include the striking out of any action, defence, cross-claim or third or subsequent party notice filed in the action. If a Review is adjourned, costs may be awarded against the defaulting party." 31 By the time of review, the plaintiff had already defaulted with the court timetable and had been specifically warned that a failure to comply with the timetable may result in his matter being struck out. At the relisted hearing on 17 July 2002 the plaintiff had not provided timely instructions to his solicitor with the hearing only eight days away. The failure to be ready was solely attributable to the plaintiff, not his solicitor.

32 It is appropriate at this point that I remind myself of he principles according to which this court is to decide the Member's discretionary decision. They are stated definitively in a short passage in the joint judgment of Dixon, Evatt and McTiernan JJ in House v The King (1936) 55 CLR 499 at 504-505. It is, I think, useful to re-state them as follows: "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." 33 It is my view that there has not been an error made in the exercise of Price LCM's discretion. The plaintiff was the author of his own misfortune. In the circumstances it was open to the Magistrate to make those orders. There was no error made by Barkell LCM in the exercise of her discretion. The appeals are dismissed. 34 Costs are discretionary. Costs normally follow the event. The plaintiff is to pay the defendant's costs. 35 The orders I make are:

Bibah Formwork v Radray Constructions

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