BETWEEN : RAPID METAL DEVELOPMENTS (AUSTRALIA) PTY LTD (ACN 004 304 447)

Practice and procedure - Discovery and interrogatories - Insufficient answers to interrogatories to enable adequate preparation for trial - Extensions of time granted to comply with order - Continued non­compliance with court order - Springing order for judgment - No attendance at hearing by defendants

Corporations Act 2001 (Cth), s 109X

Rules of the Supreme Court 1971 (WA), O 27 r 8, O 27 r 7, O 26 r 15, O 1 r 4A, O 1 r 4B, O 72 r 5(5), O 71A

Springing order to compel further and better answers to interrogatories

Freeman v Rabinov [1981] VicRp 52; [1981] VR 539

J & J Products (a firm) v Ken Gray & Co (a firm), unreported; FCt SCt of WA; Library No 960219; 24 April 1996

Magenta Nominees Pty Ltd v Bonini [1999] WASC 88

Monteleone v The Owners of the Old Soap Factory [2007] WASCA 79

Osgood v Wham [2007] WASCA 178

Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd (No 3) [2009] WASC 148

Skahill v Kestral Holdings Pty Ltd (in liq) [2000] WASCA 185

The State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146

1 HASLUCK J: The plaintiff Rapid Developments (Australia) Pty Ltd (Rapid) has applied for certain orders arising out of a failure by the first defendant Anderson Formrite Pty Ltd (Anderson Formrite) to comply with orders previously made concerning answers to interrogatories. The orders sought by the plaintiff are set out in the plaintiff's minute of proposed orders to be made at the directions hearing on 10 June 2009.

2 The subject minute originally submitted was dated 5 June 2009 and it was that minute that was the subject of procedures as to service I will mention in a moment. I have now before me an amended minute dated 10 June 2009 but the amendments relate only to incidental programming orders.

3 Put shortly, it is proposed in par 1 of the subject minute as now amended in the course of discussion that unless within 14 days of service of these orders the first defendant Anderson Formrite does, by its director Warren Perry Anderson, file and serve further and better answers verified by affidavit to certain specified interrogatories in accordance with the reasons for decision delivered on 21 May 2009, the first defendant's defence and counterclaim be struck out and judgment be entered for the plaintiff for the relief sought in pars (a), (e) and (f) of the plaintiff's re-amended consolidated statement of claim, being a claim for an alleged debt of $3,183,986.60 (par (a)); a claim for interest in par (e) and a claim for costs on a solicitor client basis in par (f).

4 For ease of reference I will call this part of the minute the plaintiff's application for a springing order; that is, an application allowing for a judgment to be entered by the operation of a self-executing order.

5 It is proposed also by the minute that orders be made for service of the springing order upon the defendants and that the first defendant pay the costs of the hearing on 10 June 2009 and all costs associated with the hearing fixed at $1000 in any event.

6 I have before me certain affidavits of service which are to the effect in summary that in recent days service of the subject minute was effected upon the defendants; that is, the minute in its original form as expressed in the copy dated 5 June 2009. The affidavits in question are the affidavit of Lauren Jane Osterlund sworn 5 June 2009, the further affidavit of service of Lauren Jane Osterlund sworn 10 June 2009, and the affidavit of Marie Louise van der Kwast sworn 10 June 2009.

7 It will be useful to summarise briefly the background to the plaintiff's application for a springing order. The plaintiff's claim in this action arises out of a dispute between Rapid and Anderson Formrite in relation to the formwork Rapid supplied to Anderson Formrite for the construction of the Woodside building at 240 St Georges Terrace, Perth. The contentious interrogatories relate to allegations made in a statement of claim filed by Anderson Formrite against Baulderstone Hornibrook Pty Ltd in the Federal Court concerning the same site.

8 I note in passing that in December 2008 this action was listed for trial for the dates 27 July - 21 August 2009. An application by the defendants to adjourn the trial was dismissed on 19 January 2009. Since that time the parties have had to assume that the matter would proceed to trial on the listed date.

9 By letter dated 29 April 2009 the plaintiff renewed its application for further and better answers to interrogatories as to certain specified interrogatories. That application was brought on for hearing before me on 21 May 2009 in the presence of counsel for the plaintiff and counsel for the defendants instructed by the defendants' solicitors on the record, Solomon Brothers.

10 The nature of the controversy concerning the interrogatories is described at some length in the reasons for decision delivered by me on 21 May 2009 in Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd (No 3) [2009] WASC 148. I will call this 'the May 2009 judgment concerning the plaintiff's interrogatories'.

11 It emerges from the May 2009 judgment concerning the plaintiff's interrogatories that the interrogatories in question were administered on 2 October 2008. As a consequence of court orders made on 19 January 2009, answers were provided by Anderson Formrite in early February 2009. Certain of the answers provided were said to be insufficient. However, I was not persuaded at that stage that Rapid was in a position to enter judgment pursuant to what was said to be an earlier springing order.

12 On 27 February 2009 I adjourned the plaintiff's application for further and better answers to certain of the interrogatories having made some observations about the issues which were intended to assist the process of conferral.

13 It is apparent from the May 2009 judgment concerning the plaintiff's interrogatories delivered in the presence of counsel on 21 May 2009 that the plaintiff's application for further and better answers to interrogatories was successful and that Anderson Formrite by its director Warren Perry Anderson was required to serve further and better answers within 14 days, that is, by 4 June 2009.

14 I observed in the course of the May 2009 judgment that as the matter was coming closer to trial it was essential that the parties complied promptly with any orders made. I said at par 86 of the May 2009 judgment that there is a provision in the rules for a springing order to be made if there be a lack of compliance. This could result in the defence of a party being struck out.

15 A copy of the reasons for decision comprising the May 2009 judgment was subsequently delivered to Solomon Brothers as solicitors on the record for the defendants. I am therefore entitled to assume that the defendants by their solicitors were acquainted with the orders made on 21 May 2009 and the fact that there could be severe consequences if there was a failure to comply with the orders.

16 Moreover, the orders made on that occasion included at par 3 a direction that there was to be a further hearing at 10.30 am in chambers on 10 June 2009 at which any outstanding matters would be reviewed. It follows from these observations that as of 21 May 2009 the first defendant must be taken to have had a clear understanding as to what its obligations were in regard to providing further and better answers to the specified interrogatories and that there was to be a further hearing on 10 June 2009.

17 There was then a further hearing on Friday 29 May 2009 on which occasion the solicitors for the defendants applied for orders on an ex parte basis that they cease to be the solicitors for the defendants. The plaintiff was not represented at that hearing pursuant to the usual practice of the court upon the basis that the plaintiff did not have an interest in the matter the subject of the application.

18 At that hearing before any order was made, and thus while the solicitors for the defendants could still be regarded as the solicitors on the record, counsel for the defendants confirmed that the substance of the orders made on 21 May 2009 and a copy of the May 2009 judgment concerning the plaintiff's interrogatories had been transmitted to the defendants. In due course, after hearing submissions, an order was made for Solomon Brothers to cease to be the solicitors for the defendants as their relationship with the defendants had been terminated. For the reasons I gave at that time I noted that the defendants were thought to have continuing access to legal advice because they were being advised by other solicitors in regard to the Federal Court action which is due to be tried shortly.

19 It appears from the materials before me, including the court file, that the first defendant has failed to comply with the orders made on 21 May 2009 for the filing and serving of further and better answers to interrogatories and is in default in that regard. No explanation has been provided. The defendants are not represented by counsel or in person at the hearing before me today. It is against this background, having regard to the approaching trial date and a lack of compliance, that the plaintiff has now applied for the springing order referred to in earlier discussion.

20 Order 27 r 8 of the Rules of the Supreme Court 1971 (WA) provide that if any party against whom an order is made for further answers to interrogatories under O 27 r 7 fails to comply with it the court may make such order as it thinks just, including in particular an order that the action be stayed or dismissed or as the case may be, an order that the defence be struck out and that judgment be entered accordingly.

21 By O 27 r 8(3) service of an order to answer interrogatories or to make a further answer on the solicitor for the party against whom the order has been made shall be sufficient service to found the application to enforce the order, but it shall be an answer to the application if the party shows that he had no notice or knowledge of the order.

22 I turn to the decided cases. It will be useful to begin with the observations of Lush J in Freeman v Rabinov [1981] VicRp 52; [1981] VR 539 to the effect that the making of a springing order or self-executing order resulting in judgment may be appropriate not only in a case where there was something contumacious in the conduct of the party against whom the order was made, but also in the case in which a party has been persistently dilatory in taking steps in the action or where it can be inferred, for instance from non-appearance on interlocutory proceedings, that the party will not or is unlikely to take the necessary steps.

23 This view is cited with approval in Seaman Civil Procedure [43.0.17]. The learned author goes on to observe that in exercising the discretion to make a springing order pursuant to the principles of positive case management the Court has wide-ranging powers which are not confined to considerations of intentional default or contumelious conduct or inordinate delay. An innocent party is entitled to expect that the court will act to support the integrity of its processes. The fact that a party has an apparently meritorious case cannot be permitted to insulate it from a failure to comply with the orders of the court. The absence of any explanation for the delay or default permits an inference to be drawn that the conduct is contumelious.

24 In Seaman Civil Procedure the learned author makes these observations:

A failure to comply with an order made under rule 7 enlivens the Court's discretion under rule 8 subparagraph (1) to order that an action be dismissed or that a defence be struck out and judgment entered accordingly. The court will have regard to the general context of the litigation and not just the particular noncompliance when considering this equivalent of its inherent power to deal inter alia with gross disregard of its orders; see [1.4B.1A]. Because of the serious consequences of doing so, the Court will exercise the discretion with some reluctance and in such manner as seems to the Court best calculated to do justice in the particular case; see Magenta Nominees Pty Ltd v Bonini [1999] WASC 88. [27.8.2]

25 It will be useful to look at Magenta Nominees Pty Ltd v Bonini [1999] WASC 88 in more detail. That was a case in which the defendant had taken out a summons for orders striking out the plaintiff's claim and defence to counterclaim and for judgment pursuant to O 26 r 15 based upon a failure to provide discovery because the purported compliance with an order for discovery was insufficient. Wheeler J provided lengthy reasons in support of her final decision to make the orders sought. Her Honour said:

By contrast, this case is one which has been case managed by a judge, and in which many programming orders have been made. The parties have had the opportunity to be heard on the making of the programming orders, and on most occasions orders have been proposed by one side and largely accepted by the other. Where necessary, a judge has enquired concerning any difficulties a party may have with an order.

A very important consideration, although not the only consideration, in a case such as the present, is the need to ensure that orders of the type made here are not habitually disregarded. There are a number of reasons why this is so, aside from the obvious need to maintain the authority of any orders of the court. The orders are made in order to advance the objectives set out in O 1 r 4A and r 4B of the Rules of the Supreme Court.

Underlying those objectives are a number of factors. Those factors include a recognition of the prejudice to a fair trial which may ultimately be caused by delay, a recognition of the enormous stress and anxiety which is usually caused to litigants (particularly individual litigants, such as the Boninis), and a recognition of the fact that undue delay and inefficient use of the court's resources by some litigants has the potential to impair access to the court by others. Finally, in a case such as the present, it must be remembered that unnecessary expense is incurred whenever it is necessary to write letters or make applications to the court prompting a party to do that which it is already obliged, by the Rules or by an order, to do. [86] - [88]

26 Her Honour Wheeler J then went on to make these further observations:

It appears to me that the principles governing an application of this kind are to be found in J & J Products (a firm) v Ken Gray & Co (a firm), unreported; FCt SCt of WA; Library No 960219; 24 April 1996. Such an order may be appropriate in the case of contumacy, but it may also be appropriate in a case in which a party has 'been persistently dilatory in taking steps in the action, or where it can be inferred, for instance, from non-appearance on interlocutory proceedings, that the party will not or is unlikely to take the necessary steps.' The power of the court to strike out for failure to comply with an order for discovery is to be exercised in such manner as seems to the court best calculated to do justice in the particular case. It is a power that a court will exercise only with some reluctance, because of its serious consequences. However, the orders of the court must be obeyed. A point is reached at which a litigant, who deliberately and without proper excuse disobeys an order, will not be allowed to proceed. [89]

27 Her Honour then proceeded to her final conclusion in Magenta's case in this way:

In the end, it appears to me that it is a matter of balancing the hardship to the Magenta parties of the orders sought on the one hand, against, on the other hand, the hardship to Bonini and others in being required to continue with litigation in circumstances where the other parties persistently disregard their obligations, and the need to ensure that the court's orders in respect of the conduct of litigation are respected.

In this case, the third defendants by counterclaim have been guilty of unreasonable and unexplained delay in the provision of very simple discovery. I am satisfied that the discovery, which they have now given, in purported compliance with a springing order, is incomplete and inadequate.

The plaintiffs have been guilty of gross and unexplained delay in the provision of answers to requests for further and better particulars. The expert report, which they have provided, was provided late and is yet incomplete. No explanation is advanced for its lack of completeness, save for a partial and inadequate explanation, which refers to a dispute concerning provision of taxation returns. The Magenta parties' reply to Bonini and others' complaints is effectively that they have now, however belatedly, complied with the orders that were made against them and that if Bonini and others are concerned with the adequacy of their compliance, then it is open to the defendants to incur the expense of further interlocutory proceedings.

In my view, the words of Kennedy J from J & J Products (at p 26) may appropriately be adapted to the circumstances of this case. The plaintiffs and defendants by counterclaim have demonstrated 'at best a reckless disregard for their obligations in the conduct of the litigation and, at worst, a calculated attempt' not only to avoid disclosure of documents, but also to avoid putting the defendants in a position in which they will be able to prepare adequately for trial.

I consider it would be appropriate to make orders in terms of the defendants' chamber summons. [90] - [94]

28 There are various decided cases bearing on the principles to be applied in dealing with an application to extend the time for compliance with a springing order. An application of that kind can raise different considerations. However, for present purposes, it will be useful to keep in mind what was said by McLure J in Osgood v Wham [2007] WASCA 178. Her Honour said:

As I have noted elsewhere, there is a widely held view in this jurisdiction, based on the decision of the High Court in The State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, that the justice of the case will always, or practically always, permit a party to litigate an issue that is fairly arguable regardless of non-compliance with court procedures and orders. It has produced a culture in the legal profession in this State of non-compliance with court rules, practice directions and court orders, in particular, interlocutory orders. The view is misconceived: see Monteleone v The Owners of the Old Soap Factory [2007] WASCA 79. The Court has the duty and power to protect the integrity of its processes once they are set in motion. Case management is not an end in itself but it exists to further the interests of justice which are advanced by the timely and efficient disposition of proceedings. [20]

29 In reviewing the decided cases, it will be useful also, having regard to the fact that the defendants are not represented before me at this hearing, to refer to Skahill v Kestral Holdings Pty Ltd (in liq) [2000] WASCA 185. In that case Owen and Heenan JJ set out a number of principles which bear upon the practice relating to springing orders. Their Honours said:

Some case managers may regard springing orders as a legitimate and effective sanction to assist in achieving the proper ends of justice. Each case has to be assessed on its facts and in accordance with its merits. Accordingly, we would respectfully question whether the practice to which Master Adams referred should be an 'invariable' one. In our view the following principles should guide the practice relating to springing orders. All of what follows is, of course, subject to any orders that the case manager may make to suit the circumstances of a particular case.

1. If the party against whom the order is made is present in Court, personally or by solicitor or counsel, when the order is made, the party can be taken to have had actual knowledge of the making of the order and of its terms and no special steps need be taken by a party seeking to enforce the order. In those circumstances there is no objection to the order being framed so that compliance is required by a specified date.
2. If the party against whom the order is made is not present in Court, personally or by solicitor or counsel, when the order is made, the order ought normally to be framed so that the party is required to comply within a specified number of days after the order has been served on the party.
3. In a case to which the preceding paragraph applies, the onus is on the party seeking to rely on the order to serve the order on the party against whom it is made. It should not be left to the Court to bring the orders to the notice of the defaulting party. Where the defaulting party is represented by solicitors and has an address for service that complies with the Rules, service at the address for service in accordance with O 72 r 5 normally would be sufficient. Where the litigant is unrepresented, actual personal service normally would be required. [20]

30 It emerges then from a consideration of these principles that a springing order can be made even where a party is not represented at the relevant hearing provided certain safeguards are introduced whereby provision will be made for service of the order and a sufficient time for compliance is prescribed. This indeed is what is proposed by the plaintiff in the subject minute in the present case.

31 Let me now return to the circumstances of the present case. It emerges from the narrative I have provided that since 2 October 2008 the defendants have been acquainted with the interrogatories to be answered. They have been on notice since 19 January 2009 when the application to adjourn the trial was dismissed that the matter was proceeding to trial and that it was therefore necessary for the parties on both sides in the case management era to comply with programming orders and other orders made by the court promptly.

32 They have been on notice since 27 February 2009 that the answers provided to the contentious interrogatories were thought to be insufficient and further or better answers were required. They made no real effort to resolve the impasse by conferral.

33 Since 29 April 2009 the defendants have been acquainted with the details of the application for further and better answers to the contentious interrogatories, being the interrogatories specified in that letter.

34 Since 21 May 2009 they have been subject to specific orders of the Court to provide further and better answers. At that time they were forewarned that there could be severe consequences in the form of a springing order if there was a failure to comply. They were also informed that there was to be a directions hearing on 10 June 2009 so that the progress of the matter towards the trial commencing on 27 July 2009 could be reviewed, including reference to any outstanding matters arising out of orders previously made.

35 I am therefore of the view that there has been a significant failure to comply with the requirements of the May 2009 judgment concerning the answers to the plaintiff's interrogatories. To my mind, there has been a degree of prevarication which must be viewed seriously. An opportunity has been afforded to the defendants to be heard at this hearing on 10 June 2009 but they have not taken advantage of that opportunity to provide any matters of explanation which might bear upon what appears to be a significant default on the part of the first defendant.

36 It follows from my review of the relevant provisions and authorities that the court must generally be cautious in making a springing order. However, at the same time the court must be conscious that a party to litigation cannot be allowed to avoid its responsibilities and its obligation to comply with court orders by simply not taking any action at all. The legal system would fall into disrepute if it were thought that the orders of the court could be disregarded with impunity. An innocent party is entitled to expect that the court will act to support the integrity of its processes.

37 I am conscious also that the plaintiff has been and continues to be seriously prejudiced by the noncompliance because its preparation for trial has been compromised.

38 The plaintiff may be left with insufficient time to gather evidence to prove the issues in question by other means. The fact that the defendants are not represented at this hearing does not alter the views I have expressed. Wheeler J observed in Magenta's case at [68] that it is the duty of all litigants to ensure that litigation is conducted with reasonable expedition, and this may be expected of a sophisticated corporate client such as the first defendant in the present case. It cannot escape its responsibilities by simply failing to attend when it had clear notice for several weeks since the hearing on 21 May 2009 that there was to be a further hearing today, 10 June 2009, to review outstanding issues and the progress of the matter towards trial.

39 It follows from the narrative that the defendants have been offered an opportunity to be heard pursuant to the earlier directions for a hearing on 10 June 2009 but, as I have noted, they have not acted on that opportunity. The principles in Skahill's case establish that a springing order can be made in the absence of a defendant if, as in this instance, time for compliance is allowed to the party in default to comply with what is sought.

40 Accordingly, I am of the view in the circumstances of this case, having regard to the reasoning in Magenta, that the plaintiff is entitled to a springing order of the kind sought and the related orders mentioned earlier. The need for prompt compliance with the subject orders in the lead up to trial date and the possibility of severe consequences for noncompliance, including a springing order, was referred to at the earlier hearing on 21 May 2009 in the presence of counsel for Anderson Formrite.

41 The defendant has been dilatory and it can be inferred from its lack of explanation and non-appearance that the defendants will not take the necessary steps. A springing order is by its nature intended to mark the end of the line for a party that has failed to comply. It cannot be insulated from the consequences of noncompliance by the fact that it may appear to have an arguable case. It follows that the orders sought must be made, bearing in mind that orders in the terms proposed will allow to the defendants a further period for compliance.

42 The orders made by me at this hearing on 10 June 2009 are as follows:

(1) Unless within 14 days of service of these orders the first defendant does by its director, Warren Perry Anderson, file and serve further and better answers verified by affidavit to interrogatories 1(a), (b), (d), (e), (f), (g), 2(c), 3(d), 3(e), 3(f), 4(a), 6 and 7(a) and (b) of the plaintiff's interrogatories administered by notice to the first defendant dated 2 October 2008 and 19 January 2009 in accordance with the reasons for decision delivered by the Honourable Justice Hasluck on 21 May 2009, the first defendant's defence and counterclaim be struck out and judgment be entered for the plaintiff for the relief sought in pars (a), (e) and (f) of the prayer for relief in the plaintiff's re-amended consolidated statement of claim amended pursuant to the order of the Honourable Justice Johnson made on 12 October 2006; that is, judgment for the plaintiff in the sum of $3,183,986.60, interest thereon pursuant to the Trade Account at the rate of 1.5% per month from 30 May 2002 (e) and costs on a solicitor/client basis (f).

(2) For the avoidance of doubt, service of these orders on the first defendant for the purpose of par (1) herein may be effected by the plaintiff in accordance with any method prescribed by s 109X of the Corporations Act 1901 (Cth).

(3) Pursuant to the Rules of the Supreme Court O 72 r 5(5)(c), it is directed that unless and until the first defendant files and serves a notice of contact details pursuant to the Rules of the Supreme Court O 71A, a document may be served on the first defendant in accordance with any method prescribed by s 109X of the Corporations Act.

(4) Further, pursuant to the Rules of the Supreme Court O 72 r 5(5)(c) it is directed that unless and until the second defendant files and serves a notice of contact details pursuant to the Rules of the Supreme Court O 71A, a document may be served on the second defendant by delivering it, or posting it by pre-paid post, to the second defendant at:

(a) Fernhill, Mulgoa in the State of New South Wales; and

(b) 53 Johnston Street, Peppermint Grove in the State of Western Australia.

(5) Until further order, the plaintiff be excused from complying with direction 13 of the trial directions made on 27 February 2009 as amended on 21 May 2009 and with direction 14 of the trial directions made on 27 February 2009.

(6) The plaintiff have leave to extract these orders on an expedited basis.

(7) The matter be listed for further directions on Friday 3 July 2009 before a judge in the CMC list.

(8) The first defendant pay the costs of the hearing on 10 June 2009 and all costs associated therewith fixed at $1,000 in any event.