Fonseka v Epic Holels Pty Ltd

Fonseka v Epic Holels Pty Ltd - [2009] NSWIRComm 178 - NSWIRComm 1990 case summary — Zoe

[49]

Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it 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. … Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. 19 The principles espoused in J L Holdings regarding case management and the attainment of justice have been recently considered by the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 258 ALR 14. Notwithstanding the different factual settings before the High Court, French CJ said of J L Holdings 'to the extent that statements about the exercise of the discretion to amend pleadings in that case suggest that case management considerations and questions of proper use of court resources are to be discounted or given little weight, it should not be regarded as authoritative'. His Honour went on to say at [30]: It might be thought a truism that "case management principles" should not supplant the objective of doing justice between the parties according to law. Accepting that proposition, J L Holdings cannot be taken as authority for the view that waste of public resources and undue delay, with the concomitant strain and uncertainty imposed on litigants, should not be taken into account in the exercise of interlocutory discretions of the kind conferred by r 502. Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes. 20 Their Honours Gummow, Hayne, Crennan, Kiefel and Bell JJ considered the purpose of case management in the context of litigation: [94] It will be recalled that in J L Holdings the plurality said that nothing in Sali v SPC suggested that principles of case management might be employed "except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable". Their Honours said that case management was not to be seen as an end to itself and that the ultimate aim of the court remained the attainment of justice, even in changing times. In Gale v Superdrug Stores Plc Millett LJ expressed a similar concern, regarding the need to ensure that justice is not sacrificed. Waller LJ, delivering the judgment of the Court of Appeal in Worldwide Corporation Ltd v GPT Ltd , said that such a concern did not pay sufficient regard to the fact that the courts are concerned to do justice to all litigants. Where a party had had a sufficient opportunity to plead his or her case, it may be necessary for the court to make a decision which may produce a sense of injustice in that party, for the sake of doing justice to the opponent and to other litigants. [95] The statement of Waller LJ identifies a fundamental premise of case management. What may be just, when amendment is sought, requires account to be taken of other litigants, not just the parties to the proceedings in question. The statement is consistent with what was said in Sali v SPC , which reflected a proper understanding of case management. The statements in J L Holdings do not reflect such an understanding and are not consistent with what was said in Sali v SPC . To say that case management principles should only be applied "in extreme circumstances" to refuse an amendment implies that considerations such as delay and costs can never be as important as the raising of an arguable case; and it denies the wider effects of delay upon others.

[50]

[99] In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party's opponent. In Cropper v Smith Bowen LJ described an order for costs as a panacea that heals all. Such a view may largely explain the decision of this Court in Shannon v Lee Chun , which upheld a decision allowing the plaintiff to raise a new case at the second trial, but which imposed a condition as to costs. The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment. In the present case it is difficult to see that such an order could be sufficient compensation, given that Aon would be required to again defend litigation which was, effectively, to be commenced afresh. [100] The views expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd , that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants, are also now generally accepted. In Bomanite Pty Ltd v Slatex Corp Aust . French J said of Bowen LJ's statements in Cropper v Smith : "... That may well have been so at one time, but it is no longer true today ... Non-compensable inconvenience and stress on individuals are significant elements of modern litigation. Costs recoverable even on an indemnity basis will not compensate for time lost and duplication incurred where litigation is delayed or corrective orders necessary." [101] In Ketteman Lord Griffiths recognised, as did the plurality in J L Holdings , that personal litigants are likely to feel the strain more than business corporations or commercial persons. So much may be accepted. But it should not be thought that corporations are not subject to pressures imposed by litigation. A corporation in the position of a defendant may be required to carry a contingent liability in its books of account for some years, with consequent effects upon its ability to plan financially, depending upon the magnitude of the claim. Its resources may be diverted to deal with the litigation. And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, have to bear the strain of impending litigation and the disappointment when it is not brought to an end. The stated object in the Court Procedures Rules, of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings. [102] The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some ill-effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment. 21 Their Honours concluded at [111]-[114]:

[53]

[114] Rule 21 of the Court Procedures Rules recognises the purposes of case management by the courts. It recognises that delay and costs are undesirable and that delay has deleterious effects, not only upon the party to the proceedings in question, but to other litigants. The Rule's objectives, as to the timely disposal of cases and the limitation of cost, were to be applied in considering ANU's application for amendment. It was significant that the effect of its delay in applying would be that a trial was lost and litigation substantially recommenced. It would impact upon other litigants seeking a resolution of their cases. What was a "just resolution" of ANU's claim required serious consideration of these matters, and not merely whether it had an arguable claim to put forward. A just resolution of its claim necessarily had to have regard to the position of Aon in defending it. An assumption that costs will always be a sufficient compensation for the prejudice caused by amendment is not reflected in r 21. Critically, the matters relevant to a just resolution of ANU's claim required ANU to provide some explanation for its delay in seeking the amendment if the discretion under r 502(1) was to be exercised in its favour and to the disadvantage of Aon. None was provided. 22 Since the decision in August 2009, Aon Risk Services has been applied in a number of cases in the Supreme Court and other jurisdictions. Many of those cases have concerned the procedural issues governing the amendment to pleadings, apposite to the facts of Aon Risk Services. The principles to be applied by courts in governing case management and procedural issues have similarly been applied. Schmidt J discussed the principles in the decision of Paskin v City and Industrial Demolitions (NSW) Pty Ltd [2009] NSWSC 1027. In that case, her Honour dealt with a situation where a defendant had applied for the dismissal of proceedings in circumstances where the plaintiff had a history of non-compliance with court orders and directions. Given the extenuating circumstance of a serious car crash injury sustained by the plaintiff in 2007, her Honour granted the plaintiff a final opportunity to adhere to previous court orders. However, in doing so, her Honour stated at [11]-[13]:

[56]

[14] In my opinion, this is a case that comes very close to warranting dismissal. The claim was initiated in 2003. It is now 2008. There has been such a degree of procrastination and delay on the part of the applicant that, despite attempts by the respondents to progress the proceedings, one may be forgiven for believing the applicant simply could not make a decision about whether she wished to press her case for relief. The applicant has also breached the Court's orders and directions. 25 At that stage, the Court allowed the applicant to pursue her claim by staying the proceedings until previous orders were complied with. There is no evidence before the Court that demonstrates the applicant has made any attempt to progress her claim since April 2008. Indeed, the applicant's solicitor concedes that is the case. 26 No proper basis has been put to the Court as to why it should now change the position it adopted in April 2008 in requiring the applicant to comply with the orders of Backman J of 21 September 2006 and the New South Wales Supreme Court in proceedings 11824/2007. There has, as the respondents submitted, been a complete absence of any activity or interest by the applicant in prosecuting these proceedings. The only reason the matter came again before the Court is because the Court called the matter on in order to discover what progress had been made towards clearing the way for the matter to proceed. The answer is: none. 27 The proceedings cannot be left to languish indefinitely in the Court's list. Given the applicant's history of delay, procrastination and default and the failure to take reasonable steps to comply with the orders made by the Court in April 2008, the applicant leaves the Court with no choice but to grant the respondents' application to dismiss for want of prosecution. 28 The applicant's reliance on J L Holdings is misplaced. It has relevantly been overtaken by Aon Risk Services. There has been very substantial delay in these proceedings. They have been in the Court's list since 2003. Recognition has to be given to the deleterious effects of delay on the respondents, the Court and the public and to the need for the timely disposal of cases.

[57]

29 In circumstances where an applicant has had sufficient opportunity to plead their case and has a history of non-compliance with court orders and procedures, the delay and costs associated with permitting the prolongation of a matter may mean that it is 'necessary for the court to make a decision which may produce a sense of injustice in that party, for the sake of doing justice to the opponent and to other litigants': Aon Risk Services at [94]. 30 The applicant submitted that the 'onus clearly lies on them [respondents], apart from the payment of money to the Applicant, to show the kinds of prejudice that may arise'. This submission is rejected. Aon Risk Services emphasises that the delay and costs associated with litigation such as the one before the Court is in fact the type of 'injustice' or 'prejudice' that the respondents suffer in this situation. 31 The applicant further submitted that this 'clearly is not a case where justice demands that the action be dismissed'. The Court must reject this submission in light of Aon Risk Services. The applicant has been afforded ample opportunity to pursue her claim since its initiation in 2003. The history of the matter illustrates some procedural issues both parties faced, the kind that often cause minor delays in a matter progressing expeditiously. However, this matter has been 'on foot' for over six and a half years, the last 19 months of which the applicant has failed to progress the matter at all. The Court has no option other than to dismiss the proceedings, in the interests of administering justice for the respondents, other litigants in this jurisdiction and to maintain 'public confidence in the legal system' (Aon Risk Services at [30]). These issues are not ameliorated in any way by the applicant's procurement of legal representation on a pro bono or 'successful conclusion' basis, nor are there any extenuating circumstances such as those described in Paskin that would warrant providing the applicant with further time.

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