Brakatselos v ABL Nominees Pty Ltd & Ors; Clancy v ABL Nominees Pty Ltd & Ors; Meyer v Primary Yield Finance Pty Ltd & Ors [2012] VSCA 231

Court of Appeal (Vic)|2012-09-14|Before: Vincent J, Pagone J, Nettle JA, Redlich JA

PRACTICE AND PROCEDURE - Self-executing order - Defence struck out for non-compliance - Application to set aside or vary self-executing order refused by Associate Justice - Appeal - Applicants seek special leave to rely on new material - Supreme Court (General Civil Procedure) Rules 2005 r 77.06 - Meaning of 'special leave' - Failure to provide satisfactory explanation for non-compliance - - - (Unreported, 22 October 1992, Supreme Court of Victoria, Vincent J) - Application for leave to appeal against refusal to set aside self-executing order - Circumstances in which a self-executing order should be set aside -Leave to appeal refused.

1 I invite my brother Redlich to deliver the first judgment.

2 By summonses filed 12 July 2012, the three applicants seek leave to appeal against the orders of Pagone J in the Supreme Court of Victoria made on 4 July 2012, dismissing the applicant's appeal from self-executing orders made by Mukhtar AsJ on 10 May 2012.

3 According to the written submissions, the primary issue before the trial judge was whether His Honour erred in refusing the applicants 'special leave' to file and rely upon additional affidavits pursuant to r 77.06(7)(b) of the Supreme Court (General Civil Procedure) Rules 2005. The applicants submitted that by refusing to grant 'special leave', his Honour wrongly excluded evidence that ought to have been taken into account in determining the principal question of whether the self-executing order of Mukhtar AsJ should be set aside.

4 This dispute arises out of investments made by the applicants in an agricultural managed investment scheme called the Environinvest Eucalypt Project 1999 and 2000. The trial date for this proceeding was set down for 16 July 2012. On 10 May 2012, Mukhtar AsJ made sets of orders in each of the applicant's proceedings requiring the applicants' solicitors:

to serve on the respondents' solicitors by 17th May a list of the documents which the applicants intended to tender in evidence and file and serve witness statements in which he intended to rely by 4th June; or
notify the respondents' solicitors that the applicants did not intend to tender any documents in evidence.

5 Mukhtar AsJ ordered that if the applicant in each proceeding did not intend to tender any documents or rely on any witness statements, they were to notify the respondents accordingly. His Honour further ordered that if any of the applicants failed to comply with these orders, their defence would be struck out and their matter would proceed to trial as an undefended proceeding ('the self-executing order'). Under 'Other Matters' in the orders AsJ Mukhtar stated that the Court had made these orders because of:

a history of procedural default by the [applicants];
non-responsiveness by the [applicants] or [their] lawyers to requests or urgings of the [respondents]; and
the proximity of the trial date (for a proceeding that is about 3 years old).

6 The applicants did not serve the respondents' solicitors with a list of documents upon which they intended to rely at trial nor did they notify them that they did not intend to tender any documents in evidence by the date stipulated in the orders of Mukhtar AsJ.

7 By summons dated 12 June 2012, each applicant sought to set aside or vary the self-executing order and the orders to which it related, and sought leave to file and serve an amended defence. On 18 June 2012, Mukhtar AsJ dismissed their summons with costs.

8 The applicants appealed from his Honour's orders of 18 June 2012 to the Supreme Court of Victoria. Pursuant to r 77.06(7), the appeal proceeded as a re-hearing de novo. Rule 77.06(7) provides that an appeal from the orders of an Associate Judge:

shall be by re-hearing de novo of the application to the Associate Judge but each person may, subject to any proper objections to admissibility -

(a) rely upon any affidavit used before the Associate Judge and upon any evidence given orally before the Associate Judge;

(b) by special leave of the Judge of the Court, rely upon the affidavit or oral evidence not used or given before the Associate Judge.

9 At the hearing of the appeal on 4 July 2012, the applicant sought 'special leave' to rely on affidavits that were not before Mukhtar AsJ. The respondents indicated relatively early in the hearing that they did not object to those parts of the applicants' affidavits being admitted into evidence that disclosed that the applicants now had funds available to enable them to continue with the proceedings and that they had available at court all of the documents, including witness statements which they would seek to tender at trial. Pagone J refused the applicants special leave to introduce the additional affidavits into evidence and the supplementary index to the Court Book but was prepared to accept the assurances of the applicants' counsel from the Bar table that they were now funded so that they could maintain their defences of the proceedings and that documents were available at court which would satisfy the order of Mukhtar AsJ.

10 His Honour dismissed the appeal from the judgment of Mukhtar AsJ. In refusing to set aside the self-executing orders his Honour found that on the material before him, it being the same as that before Mukhtar AsJ on 10 May, there was 'little to provide excusable reasons for the non-compliance.'[1]

11 The applicants now seek leave to appeal against his Honour's refusal to grant special leave to receive the affidavits and his dismissal of the appeal.

12 Before Pagone J the applicants' had sought special leave under r 77.06(7) to file the affidavits of the three applicants, an affidavit of Mr John Atkinson (the applicants' accountant), and an affidavit of Mr Mark Adamson (the applicants' solicitor), all sworn 3 July 2012. The documents were intended to serve as witness statements in the trial if the matter proceeded to trial, in conformity with the directions made by Mukhtar AsJ.

13 The affidavits also set out some reasons why the applicants had failed to comply with the self-executing orders. The very general content of the affidavits makes it difficult to summarise those reasons but they appear to be as follows:

one or more of the applicants at some time failed to pay monies requested to be paid to Clamenz Evans Ellis Lawyers ('CEEL', solicitors for the applicants) on account of fees to be incurred in progressing the case;
as a consequence of those monies not being paid, CEEL at some point of time were not in a position to undertake further work in this matter or instruct counsel;

a fourth defendant, also a client of CEEL resolved his matters with the plaintiff;

on 31 May 2012, the retainer Mr Adamson had with the applicants was terminated; and
Mr Adamson suffered a series of medical difficulties at about the time that compliance with the orders of Mukhtar AsJ was required.

14 Mr Adamson stated in his affidavit that the combination of the termination of his retainer, the non-payment of monies by the applicants and his personal health issues 'had a cascading effect with noncompliance with earlier orders and directions' made by the Court. He stated that by virtue of counsel now being engaged and the provision of affidavits from the applicants and the provision of a supplementary index to the Court Book, the applicants' failure to comply with the self-executing orders had now been rectified. The affidavits of Mr Atkinson and the three applicants dealt primarily with the substantive claims in the proceeding. Each of the applicants' affidavits, in identical terms, also discussed the 'circumstances since the making of the self-executing order by Mukhtar AsJ', in which they set out in non-specific terms the steps that were taken to ensure compliance with the self-executing orders. Each applicant said:

It is conceded that in this matter there is a history of noncompliance with the orders of this honourable Court. Previously I have set out reasons for this occurring. Whilst there has been issues with payment of monies to my solicitors in the past, I submit to this Court that I have now taken steps to arrange for monies required to prosecute my defence to be paid.

15 The applicants also sought leave to rely on a list of the documents on which they intended to rely at trial. That material had not been filed prior to the hearing on 4 July nor provided to the respondents.

16 In refusing special leave to file the additional documents during the course of the appeal Pagone J said:

HIS HONOUR: Right. I then don't strictly need to say anything about whether the word 'special' required anything more, but for the benefit of what may happen hereafter let me say that I don't accept your argument about the word 'special' being reference to procedure. The court should not be assumed to have made rules having adopted the word 'special' in its description of the leave required as if it weren't conscious, intended and meaning something significant. For a party to rely upon something that was not before the Associate Justice does require leave of a kind capable of being described as 'special'. Ordinarily, that will need to be judged by reference to the subject matter of what is sought to be identified. That is to say, sought to be relied upon. The special leave required must be linked to the affidavit or oral evidence that was not used. It must be possible for the judge to form a view that the additional material warrants the grant of special leave. In this particular proceeding I do not regard any of the material that's relied upon for the granting of special leave to justify that conclusion.

The fact that there was not money available and now is money available is not a circumstance in this case that would justify the grant of special leave. That was a matter that could easily have been remedied, if at all, at the time of the application before Associate Justice Mukhtar. It is simply not a circumstance that a proceeding before the Associate Justice can proceed on the basis of a litigant not having put the solicitors in funds. It would require much more compelling evidence about a lack of funds and the subsequent availability of funds for a factor of that kind to qualify as it being special.

Similarly, in relation to compliance, they were matters that could have been dealt with below and if they were going to be dealt with they ought to have been dealt with. The amplifications of the health of Mr Adamson that have been shown to me are not amplifications of a kind that would justify the grant of special leave. There is nothing in them that in any way bear upon the outcome that would have been different had the Associate Justice had them in mind. Shall we press on?

17 Although special leave was refused his Honour gave the applicants' counsel leave to make the 'narrow assertions' from the bar table to which I have already referred.

18 His Honour also referred briefly to the special leave application in his reasons for judgment:

Witness statements had also been ordered to be filed. Documents and affidavits had been prepared for use primarily in another aspect of the appeal which I am told would stand as the witness statements in the trial of the proceeding. Again, the matter comes very late. More significantly, however, I am told by counsel for the plaintiffs that the contents of that material (which the plaintiff was given) would cause the hearing date to be vacated because the period of time between when they have been made available and the hearing date is insufficient for the plaintiffs to be ready to conduct the trial on 16 July 2012 which, I repeat, had been set down as the date for trial on 29 November 2011.[2]

19 The applicant now submits that his Honour erred in denying the applicants' special leave under r 77.06 of the Rules as a result of his misconstruction of the term 'special leave'. The applicants submit that, contrary to his Honour's ruling, the term 'special leave' is only of procedural significance and does not connote a requirement for evidence of extraordinary or special circumstances. Moreover, special leave was appropriate having regard to the following circumstances:

the evidence contained in the additional affidavits could not be characterised as controversial or contested;
no identifiable prejudice could be caused to the respondents by the granting of special leave to the applicant to rely on it; and
there is no evidence to suggest that the applicants were using the hearing before Mukhtar AsJ as a dry run.

20 The respondents submit that the evidence adduced in the further affidavits relating to funding and the reasons for non-compliance with the self-executing orders were matters that should have been raised at the time of the application before Mukhtar AsJ. As to the information that funding had been secured to proceed with the litigation, the respondents state that none of the evidence in the additional affidavits demonstrated that funds available after non-compliance with the self-executing orders was not available before the order was breached, and that therefore these affidavits cannot be said to provide an adequate explanation for non-compliance with the orders made on 10 May 2010.

21 The respondents contend that the origin of the expression 'special leave' lies in r 52 of the Rules of Procedure included in the Schedule to the Supreme Court of Judicature Act 1873 (UK), which relevantly provided:

The Court of Appeal shall have all the powers and duties as to amendment and otherwise of the Court of First Instance, together with full discretionary power to receive further evidence upon questions of fact, such evidence to be either by oral examination in court, by affidavit, or by deposition taken before an examiner or commissioner. Such further evidence may be given without special leave upon interlocutory applications, or in any case as to matters which have occurred after the date of the decision from which the appeal is brought. Upon appeals from a decree or judgment upon the merits, at the trial or hearing of any action or matter, such further evidence (save as aforesaid) shall be admitted on special grounds only, and not without special leave of the Court.

22 The respondents also cited as germane, authority that has construed other statutory provisions governing the Court's discretion to adduce further evidence on special grounds, such as s 75A of the Supreme Court Act 1970 (NSW). In Harrison v Schipp, Giles JA said:[3]

The jurisprudence collected concerning special grounds generally calls for three conditions to be satisfied, that the evidence could not have been obtained by reasonable diligence for use at the trial; that the evidence is credible; and that the evidence is such that there is a high degree of probability that there would be a different result (for example, Akins v National Australia Bank (at 160)). The conditions are, however, only guides, and special grounds can be made out in other circumstances (Commonwealth Bank of Australia v Quade; CDJ v VAJ). Where special grounds need not be shown the guidance is less, but the public interest in the finality of litigation is of significance (Doherty v Liverpool District Hospital (1991) 22 NSWLR 284).

23 In CDJ v VAJ,[4] Kirby J discussed the basis for special leave to adduce further evidence in superior courts:

Ordinarily, such courts are obliged to be satisfied that there is something 'special' about the case in order to justify the reception of fresh evidence. For the Family Court, the parliament has left the decision to 'its discretion'. Furthermore, it has, apparently deliberately, refrained from describing the 'evidence' in question as 'new', 'fresh', or by some other appellation suggesting that it was not earlier available. It is enough that it is 'further evidence upon questions of fact'.[5]

24 The discussion of the meaning of 'special' in Harrison v Schipp, CDJ and Doherty v Liverpool District Hospital[6] occurred in the context of s 75A of the Supreme Court Act 1970 (NSW), and relate to the power of an appellate court to receive further evidence on appeal. Section 75A can be seen as more closely analogous to r 64.22(3),[7] which provides that the 'Court of Appeal shall have power to receive further evidence upon questions of fact, either by oral examination in court, by affidavit, or by deposition taken before an examiner.' In Mobilio v Balliotis[8] Brooking JA (Winneke P, Ormiston, Phillips and Charles JJA agreeing) stated that in the exercise of the discretion conferred by r 64.22 to receive evidence of facts which have arisen since the hearing, this court should apply the principles laid down by the House of Lords and by the Court of Appeal of New South Wales in cases such as Doherty. Gleeson CJ in Doherty had observed of what he described as the 'long-standing English rule' that it:[9]

... in its terms draws a distinction between evidence as to matters occurring before the date of the trial and evidence as to matters occurring after the date of the trial, and, further, in terms confers a general discretion in relation to evidence of the latter kind but limits the power to receive evidence of the former kind to cases where there are "special grounds".

25 The respondents, relying upon this line of authority, submit that evidence of special circumstances or special grounds is necessary before 'special leave' will be granted; thresholds which have not been met by the evidence contained in the additional affidavits and list of documents.

26 The applicants contended in oral argument that it is the nature of the proceedings and not the nature and content of the documents sought to be introduced which qualify the meaning of the word 'special'. As 'special leave' under the rule is to be granted in the context of a rehearing de novo, that informs the scope of special leave. The ability of parties to introduce evidence not relied upon at first instance being broad, the rule permitting additional evidence by 'special leave' should also be given broad amplitude.

27 The policy underlying r 77.06(7)(b) was explained by Hansen J in Brownport Management v Aquatec 21 Pty Ltd in these terms:[10]

It is important to bear in mind the reason why the requirement of special leave was introduced. It was introduced to stop the mischief of a party using the hearing before the Master as a dry run and, depending on the result, appealing and, on the appeal, filing additional affidavits to bolster its case in light of the arguments presented to the Master and the Master's reasons for decision. This became all too common an occurrence. It could cause vexation to another party in terms of time and costs, and it could take up an unreasonable amount of a Judge's time when there might not have been an appeal if the case had been properly presented to the Master. In short, in many cases it constituted an unreasonable taking advantage of the fact that under r 77.05(7) an appeal is by re-hearing de novo.

28 In Octagon Inc v Hewitt & Anor (No 2),[11] Dixon J, referring to Brownport, rightly observed that 'the dry run example is no more than an illustration based on the facts of that case of the attempt to take unreasonable advantage.'[12] Pagone J considered the issue of 'special leave' in depth in Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd & Ors, in which his Honour said:[13]

Special leave should not be given lightly. ... To grant special leave too freely will 'undermine the importance of proceedings before' Associate Judges and 'encourage an abuse' of the Court's processes. The policy against permitting a party to rely upon material not previously before the Associate Judge in an appeal from an Associate Judge can be seen by the requirement that the leave to be obtained be 'special leave'. The concern expressed in the decided cases to prevent misuse of the Court's processes is reinforced by the provisions of the Civil Procedure Act 2010 (Vic). An important question in determining whether to grant leave will be why the material sought to be relied upon was not adduced before the Associate Judge.

29 The procedure of appeal by rehearing de novo should not be abused to confer an unreasonable advantage but special leave may be granted where the court considers the justice of the case is best served by the additional evidence being received. In Duncan Davis (Sales) Pty Ltd v Davis,[14] Hansen J observed that each matter must be considered in light of its own circumstances, and that the interests of justice were paramount:[15]

I am of the view that in the circumstances of this case in which so much money has been spent, if not a deal wasted, on legal costs that it is important for the Court to have regard to all evidence that may bear upon the proper disposition of the application. It seems to me that too much time has been spent on costly point-taking without dominant regard being had to the substance and overall direction of the matter. In my view the interests of justice make it appropriate, in the particular circumstances and bearing in mind that the Nolan affidavit does not raise new matter but seeks to establish by sufficient evidence that which was always in issue, to give special leave to rely on the affidavit, and I do so.

30 In Todaytech Distribution Pty Ltd v Yu,[16] I observed that special leave 'is not to be freely given as it will otherwise undermine the importance of proceedings before the Master and encourage an abuse of this Court's processes.'[17] Nonetheless, I concluded that special leave should be granted on the basis that the further material more clearly exposed the facts said to support an already identified and arguable defence. In SC Capital Pty Ltd v Primebrokers Securities Limited (in liq); Cablerand Pty Ltd v Primebrokers Securities Pty Ltd (in liq),[18] the plaintiffs submitted that special leave to adduce further evidence should be revoked on the basis that the further evidence was available to be put before the Associate Justice. The plaintiffs argued that the receivers had 'chanced their arm and had a dry run'. Davies J declined to revoke special leave for a number of reasons including that the mischief referred to by Hansen J in Brownport had been overtaken by the need to ensure that multiple proceedings in the Supreme Court were ready for trial and listed together and that the material related to matters on which the parties would in any event have another full opportunity to put their submissions on how the additional material would impact on the determination of the appeal. In Black Creek Deer Farm Pty Ltd v Australia and New Zealand Banking Group Ltd,[19] Beach J gave special leave to a plaintiff to rely upon an affidavit where the application for summary judgment had failed 'because of an irregularity in the plaintiff's material filed in support of the application'.[20] In National Australia Bank Ltd v Macrae[21] Batt J (as he then was) granted special leave to the plaintiff to rely upon an affidavit sworn after the hearing before a Master because the additional affidavit addressed an objection which his Honour described as 'a highly technical one which was first raised only after [a luncheon] adjournment'.[22] In Artek Productions Pty Ltd v World of Adams Platform Pty Ltd,[23] Kaye J granted special leave to the plaintiff to adduce further material because the defence was singularly uninformative and the issue when raised in front of the Master was one which fairly might have taken the plaintiff by surprise. Kaye J concluded that the facts of the case justified its admission.[24]

31 There must be a sound reason given as to why additional material was not adduced at first instance. In Farrow Mortgage Services Pty Ltd v Moguls Investments Pty Ltd[25] Vincent J, in a passage which I gratefully adopt said:

The range of situations in which a grant of special leave may be made is such that it is not possible to identify with precision when it should occur. A judge in dealing with such an application would have to, as is so often the case, exercise discretion on the basis of the particular circumstances of the matter under consideration and by reference to the letter and spirit of the Rules. A party who desires to rely upon such material would need to demonstrate that circumstances exist which would justify the judge permitting something which would not ordinarily be allowed; in other words there must be a good reason shown for the adoption of this course. While the Rules must not be construed or applied in a fashion which would render them arbitrary impediments to the attainment of fair outcomes, parties must understand that if they fail to comply with them they do so at their peril. This is particularly so in a situation where non-compliance can only be cured by a grant of special leave. One important question would always be why was not the material sought to be relied upon adduced before the Master?

32 It can be seen from this brief review of authority that the grant of special leave is a discretionary decision, not to be granted lightly. Parties seeking to rely upon further evidence are required to explain to the Court why this evidence could not have been adduced before the Associate Justice. The rule is designed to prevent a party from obtaining an unreasonable advantage of a hearing de novo. It is undesirable to otherwise attempt to prescribe the circumstances in which leave is to be granted as it is not possible to identify with any precision when special leave is appropriate. The expressions 'special circumstances' or 'special grounds' suggested by the respondents may obscure the true breadth of the rule. The rule has sufficient amplitude to accommodate a range of circumstances in which a grant of special leave will do justice by allowing a party a further opportunity to introduce evidence where a satisfactory explanation is provided for its conduct at first instance.

33 Proven negligence or incompetence by the solicitor in failing to comply with time limits or other orders may, depending upon the circumstances of the case justify a grant of special leave. Pagone J in Portbury referred to Murphy v Doherty[26] where Tadgell J (as he then was), though not dealing with r 77.06(7)(b) had given leave in circumstances where a party's practitioner had erred in advising a client, adding that the 'court does not like to see parties to litigation penalized because of default, through incompetence or negligence, or for any other reason, of their legal advisers'.[27] However a party who disobeys a court order does so at his peril and must therefore demonstrate as Tadgell J observed that circumstances exist which would justify the judge permitting something which would not ordinarily be allowed; in other words there must be a good reason shown for the adoption of this course.[28]

34 The affidavit material shows that from the time that the self-executing orders were made on 10 May 2012 to the time of the hearing before Pagone J on 4 July 2012, Mr Adamson was suffering from a range of health issues. In May 2012, Mr Adamson underwent a series of examinations. On 19 June 2012, he had surgery to remove a rectal polyp. It is also apparent that in May 2012, the applicants were having significant difficulties with respect to funding the litigation. Mr Adamson met with the applicants' representative, Mr Michael Quinn, on numerous occasions during May 2012 in order to secure payment from the applicants for CEEL's costs in the litigation, without success. At some time in the middle of May, Mr Quinn advised Mr Adamson that he was considering withdrawing CEEL as solicitors and engaging another firm. On 31 May, the retainer Mr Adamson had with the applicants was terminated.

35 These matters were raised by the applicants' solicitor, to explain his reasons for non-compliance with the self-executing orders. However it was not suggested in any of the affidavits that the expiration of the time limit had been overlooked by Mr Adamson or that the applicants were unaware of the time limit. Nor was it explicitly stated that the time limit was disregarded because the applicants' solicitors did not have funds at that time. No explanation was proffered as to why the Associate Justice was not asked for an extension of time. Upon being pressed in oral argument as to the omission of these matters from the affidavit material, counsel for the applicants stated that the affidavits were 'not entirely vacuous' but conceded that the contents of the applicants' affidavits and that of the solicitor were inadequate. Those concessions were in my view appropriate. The prominent inference that remains open from the generality of the affidavits is that there was a knowing failure by the solicitor and the applicants to comply with the time limit notwithstanding that it was understood to be a self-executing order.

36 A wilful failure to comply with time limits at first instance, accompanied by an absence of any explanation for that non compliance, in the expectation that material will be provided at a later date, supports the conclusion that the non compliant party is seeking to take unreasonable advantage of the appeal process. Such conduct may be viewed as indistinguishable from a case where the initial hearing is used as a 'dry run'. This being a hypothesis left open by the state of the affidavit material, the decision of Pagone J in refusing special leave is not in my view attended by sufficient doubt to warrant the grant of leave to appeal on that issue.[29] His Honour was rightly concerned as to the vague and general nature of the explanation which it was then sought to proffer before him. Moreover when regard is had to the applicants' quite unsatisfactory explanation for their non-compliance, a grant of special leave was not justified.

37 After refusing the applicants special leave to file the additional documents, Pagone J dismissed the application to set aside the self-executing orders having taken into account the material before Mukhtar AsJ, the fact that the applicants had obtained sufficient funding to proceed with the litigation and that counsel had the documents in court that were required under the order of Mukhtar AsJ. His Honour stated that the relevant issue for determination was:

not whether Mukhtar AsJ's original orders on 10 May 2012 were erroneous, nor whether his decision on the summons of 12 June 2012 was erroneous. The issue is what decision I ought independently to reach in respect of the matters that were before him on the summons of 12 June 2012.[30]

38 The applicants by their proposed notice of appeal contend that his Honour failed to have regard to the prejudice to them if relief under r 24.06(b) were not granted, namely the denial of a right of audience at the trial of the proceedings against them. They contend that as the granting of the relief sought would not have required the vacation of the trial date, there would have been no material prejudice to the respondents had the relief been granted. In their written submissions in support of this ground, the applicants repeated that they should have been granted special leave to rely upon the further affidavits and that such material justified setting aside the self-executing order. They advanced no other argument in support of the application for leave to appeal from the refusal to set aside the self-executing order. Substantial oral argument, quite different to that set out in the written submission, was now addressed to the dismissal by Pagone J of the appeal from Mukhtar AsJ.

39 It was said that once Pagone J was prepared to act upon the assertions from the Bar table as to the fact that the applicants had now provided CEEL with funding and that all required documents for the trial were in existence and available at court, the absence of the affidavits before his Honour ceased to make any difference. The applicants primarily rely upon the prejudice to them in being shut out of their defence. Plainly enough the applicants risked a great prejudice if these proceedings were undefended. In his affidavit, Mr Meyer stated that if he was precluded from defending this proceeding, he expected to be forced into bankruptcy. In essence it was submitted that by the time that the proceedings were before Pagone J the applicants had in hand money to pay for the proceedings and had remedied their defaults as all of the documents necessary to satisfy the orders of Mukhtar AsJ were available so that the trial could proceed almost immediately. Further it was said that as this was a 'documents' case the merit of the defence case was evident and the failure to comply should not be viewed as so serious as in a case dependant on the credibility of witnesses. Finally, it was contended that the error made by the trial judge on the question of special leave so deflected his attention that he failed to give adequate weight to the fact that the applicants had prepared all necessary material so that the trial could proceed on the trial date. In my view, these submissions cannot be sustained.

40 Where a party is precluded from pursuing its claim or defence by reason of a self executing order, the court has always had a wide discretion to set aside or vary the self executing order if injustice flowed from its operation even though no fault was to be found in the making of the order at the time it was made.[31] In Jorgensen v Slater & Gordon,[32] this Court set out the principles governing the discretion to relieve a party of the consequences of non-compliance with self-executing orders:[33]

We respectfully agree with what was said by Newnes J in the Western Australia Supreme Court in MTQ Holdings Pty Ltd v Lynch as follows:

'The authority of the court will equally be undermined, and the quality of justice for the innocent party eroded, if the ultimate sanction effected by the operation of a [self-executing] order can be avoided by showing that non compliance with [that] order came about by the same sort of inattention or laxity that caused the order to be made in the first place.'

We would also adopt what Newnes J said regarding the considerations which should ordinarily be brought to bear in considering the exercise of this discretion. The court should have regard at least to the following matters:

(a) the circumstances in which a self-executing order was made;

(b) the reasons for non-compliance with it;

(c) the prejudice to the defaulting party if relief were not granted; and

(d) the prejudice to the innocent party if relief were granted....

As to the reasons for non-compliance, it is of the first importance to ascertain whether the failure to comply was wilful, that is, was reflective of deliberate disregard of, or indifference to, the court's order. As Browne-Wilkinson VC said in Re Jokai Tea Holdings Ltd:

'The court should not be astute to find excuses for such failure since obedience to orders of the court is the foundation on which its authority is founded. But, if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed.'

41 Pagone J made his findings by reference only to the material that was before Mukhtar AsJ and the assertions made by the applicants at the hearing which apparently included Mr Adamson's health. Counsel for the applicants noted that Mr Adamson, who had suffered from skin cancers in the past, had surgery to remove potentially cancerous tissue the day after the proceeding before Mukhtar AsJ on 18 June 2012. It was said that during the period between the making of the self-executing orders on 10 May 2012 and 18 June 2012, Mr Adamson's medical difficulties affected his ability to comply with the self-executing orders. These matters together with Mr Adamson's difficulty in obtaining funding and in briefing counsel at best went some way towards an explanation for the applicants' failure to comply with the self-executing order.

42 Pagone J carefully considered each of the matters referred to in Jorgensen v Slater & Gordon. His Honour noted the circumstances in which the self-executing orders were made. The applicants had a history of non-compliance and procedural default in these proceedings. The matter had been set down in November 2011 for trial in July 2012. He considered that if leave to file the additional documents was granted, the hearing date would have to be vacated. In relation to the reasons for non-compliance, he found that the explanation proffered by the applicants involved an assertion 'in the most general way' of a lack of funds. His Honour said that '[a] litigant asking to be excused for non-compliance of an order of the court needs to do more than rely upon such generalities as has been the case in this instance'.[34]

43 Plainly enough the applicants risked a great prejudice if these proceedings were undefended. While the seriousness of the consequences flowing from non-compliance with a court order may in some circumstances affect how severely the court should treat that non-compliance, it will not of itself excuse such disobedience. The nature of the non-compliance may be of such a serious order that its consequences cannot be mitigated. That outcome is even more likely where no satisfactory explanation is provided for the non-compliance. Failure to comply with a self-executing order which will result in the proceedings becoming undefended and where no adequate explanation for the failure to comply is provided falls into this category. So to say is to recognise that a litigant who disregards the dire natural consequences of disobedience to a court order does so at their peril.

44 For the reasons I have already given, the applicants' have not shown that their failure to comply within the known time limits was not wilful or reflective of deliberate disregard. On the state of the material before his Honour it was open to infer that the applicants and their solicitor ignored the time limits of the order. Whether there was a lack of funds at that time or some other extraneous

circumstances which contributed to their non-compliance with the order, and which has been insufficiently disclosed, the inference is unavoidable that the applicants and their solicitor knowingly failed to comply with the order.

45 To deny the applicants the opportunity to contest the respondents claims is a serious thing but the applicants did not provide anything approaching a satisfactory reason to excuse their disobedience to the orders of the court. Moreover, in addition to the absence of a satisfactory explanation there were other considerations which bore upon the exercise of the discretion to refuse to set aside a self-executing order. Sections 25 and 26 of the Civil Procedure Act 2010 impose overarching obligations on the parties and their legal representatives to act promptly, minimise delay and disclose the existence of documents. Section 28 specifically provides that the Court may take account of any contravention of these overarching obligations in exercising any power.

46 The decision of Pagone J to dismiss the appeal before him is not attended by sufficient doubt to warrant a grant of leave. I should add that even if regard was had to the content of the affidavits upon which the applicants sought to rely, their content was of such a general and unsatisfactory nature that leave should still be refused.

47 I agree that the application for leave to appeal should be refused. But I wish to add some brief observations of my own.

48 Like my brother Redlich, I consider that the discretion for which Rule 77.06(7)(b) provides is of such breadth and complexity that there is little to be gained by seeking to define it in terms of an a priori rule of practice as to when leave to adduce additional evidence should and should not be granted.

49 To say that the requirement for special leave to adduce additional evidence was designed to prevent parties having a dry run before an Associate Justice is

perhaps accurate enough, but it is neither a necessary nor representative description of the many considerations which may inform an exercise of the discretion. It is I think more accurate, and certainly more helpful, to approach the task, in the words of Vincent J (as he then was) in Farrow Mortgage Services,[35] on the basis that a party who desires to rely on additional material on appeal must demonstrate that circumstances exist which justify a judge in permitting something to be done which would not ordinarily be allowed.

50 In this case, the applicants have not demonstrated that circumstances existed which would justify a judge in permitting something to be done which would not ordinarily be allowed. Indeed, to the contrary, the Delphic quality of the material on which they relied below and, even more significantly, of the additional affidavits on which they seek to rely on appeal, leaves one with a real sense of doubt and apprehension as to the true reasons for their failure to comply with the self-executing orders.

51 Ironically, however, much of the argument as to whether the judge erred in refusing special leave to rely on fresh affidavits has turned out upon analysis to be beside the point. As counsel for the respondents demonstrated in the course of oral submissions, although the judge did not allow the applicants to read the additional affidavits, by consent his Honour allowed the applicants' counsel to inform the court that the applicants had rectified their default, in the qualified sense that they had done late what the self-executing order required them to do before time expired, and that they now had funds sufficient to prosecute their defence at trial. It is clear from the transcript of argument below and from paragraphs [6] to [12] of the judge's reasons that his Honour dealt with the matter on that basis.

52 Consequently, the applicants' argument before us came down in the end to a contention that, although the judge took each of the relevant considerations into account, as well as the prejudice to the applicants of being denied the ability to defend the action and the prejudice to the respondents of an adjournment of the trial date, his Honour's refusal to set aside the self-executing orders was so unreasonable that no reasonable judge would do the same.

53 I must say that I regard that as a bold submission. Since the applicants have never condescended to explaining why they did not put their solicitors in funds in time to comply with the self-executing orders, it amounts to saying that the applicants should be excused the consequences of their failure to comply in time with the self-executing orders, despite choosing not to explain why they did not comply with those orders in time, because refusal to excuse compliance would result in the applicants suffering the hardship which they knew would be the consequence of failure to comply within time.

54 Given that the purpose of a self-executing order is to ensure timely compliance with a procedural requirement, and that the means of achieving it are the threat of dire consequences of failure, it would significantly undermine the utility of self-executing orders and more generally cast doubt on the integrity of the processes of the court if a party who chose not comply in time with a self-executing order could expect to be relieved from the consequences simply by demonstrating that he has since complied with the requirement and that, if the breach is not excused, he will suffer the consequences which it was intended he should suffer if he failed to comply within time.

55 Of course there are exceptions and inevitably each case will turn on its own facts and circumstances. Prejudice is obviously a most relevant consideration and in this case it looms large. But in the end it is a question for the exercise of discretion and in this case I see no justification for appellate intervention.

56 Possibly, the judge did not regard the prejudice to the applicants as seriously as I would have regarded it and his Honour may have considered that the prejudice to the respondents of adjourning the trial was greater than I would have assessed it to be. His Honour spoke about the prejudice to the applicants in terms of the entry

of judgment for the sum claimed causing 'some inconvenience', whereas in the additional affidavits it was said that judgment for the amount claimed would result in the bankruptcy of at least one of the applicants and, in any event, it is self-evident that the amounts at stake are such that judgment would be bound to constitute a very heavy financial blow for almost anyone. Equally, although an adjournment of the trial would cause some prejudice to the respondents, as any adjournment is bound to do, at base the action is just a debt collection of very old debts, which have been assigned many times and, in the scheme of things, presumably at significant discounts.

57 Be all that as it may, however, it remains that it was a matter for the judge to assess in the exercise of discretion and I am not persuaded that his Honour's assessment was unreasonable or otherwise erroneous. As the judge said, if the applicants had demonstrated that there was an acceptable excuse for their failure to comply with the orders, it might well have been appropriate to excuse them. But the fact is that, even with the benefit of the additional material on which the judge allowed the applicants to rely, it was not and is not open to exclude the possibility that the applicants deliberately chose not to comply within time for any of a number of reasons.

58 In the result, I am not persuaded that the orders of the judge below are attended by sufficient doubt to warrant the grant of leave to appeal.

60 I also agree that leave to appeal should be refused for the reasons given by Nettle JA and Redlich JA.

61 The order of the Court is that the application for leave to appeal is refused.

63 It is ordered that the applicants pay the respondents costs of the application.

[1] ABL Nominees Pty Ltd v Peter Brakatselos; ABL Nominees Pty Ltd v Terence Clancy; Primary Yield Finance Pty Ltd v Philip Meyer [2012] VSC 265, (Reasons) [9].

[3] [2002] NSWCA 78; (2002) 54 NSWLR 612, 642 [195] ('Harrison v Schipp').

[5] Ibid 234 [186] (emphasis in original).

[6] (1991) 22 NSWLR 284 ('Doherty').

[13] [2012] VSC 362 (citations omitted) ('Portbury').

[18] [2011] VSC 565, [14]-[17].

[19] (Unreported, Supreme Court of Victoria, Beach J, 31 July 1995).

[21] (Unreported, Supreme Court of Victoria, Batt J, 14 June 1994).

[25] (Unreported, 22 October 1992, Supreme Court of Victoria, Vincent J), ('Farrow') 5-6.

[26] (Unreported, Supreme Court of Victoria Appeal Division, Tadgell and Cummins JJ, 4 February 1994).

[29] Niemann v Electronic Industries Ltd [1978] VicRp 44; [1978] VR 431.

[31] Composite Buyers v JC Taylor Constructions [1983] VicRp 91; [1983] 2 VR 311 (Lush J, with Murphy and Fullagar JJ agreeing).

[32] [2008] VSCA 110 ('Jorgensen').

[33] Ibid [10]-[12] (Maxwell ACJ and Forrest AJA) (citations omitted).

[35] Farrow Mortgage Services Pty Ltd v Moguls Investments Pty Ltd (Unreported, Supreme Court of Victoria, Vincent J, 22 October 1992).

Court (General Civil Procedure) Rules 2005

Supreme Court of Judicature Act 1873

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