JALUN POOL SUPPLIES PTY LTD v ONGA PTY LTD No. SCGRG-98-842 Judgment No. S20 [1999] SASC 20

Supreme Court of SA|1999-01-22|Before: Adam P, Debelle J

On Appeal from ADELAIDE MAGISTRATES COURT (MR GUMPL)

2 This is an appeal from an order striking out the plaintiff's action because its solicitor was on one view of the facts, thirty-five minutes late in delivering a document or on another view was only five minutes late.

4 The plaintiff's statement of claim has been amended on four occasions. Since the transfer of the proceedings to the Magistrates Court, the conduct of the action by the plaintiff or his solicitors has, on its face, been unsatisfactory in that the plaintiff or its solicitor has failed to comply with orders made at directions hearings and there have been quite a number of delays on the part of the plaintiff or its solicitor. One of the delays was caused by the failure to obtain an expert's report within the period initially ordered. It is not apparent whether the delay was caused by the solicitors for the plaintiff or the expert. I will not go into every aspect of the delay and failures to comply with orders made at directions hearings. I note all the matters going to the delay that have been proved by the defendant. For present purposes it is sufficient to note that the prosecution of the action has been altogether less than satisfactory.

5 At a directions hearing on 14 May 1998 Mr Gumpl SM ordered the plaintiff to give further and better discovery of its documents within seven days. The plaintiff's solicitor had opposed the order indicating that the plaintiff was obtaining the expert's report and was considering amending its claim in the light of that report. He added that a final decision could not be made until the expert's report had been received. At that same directions hearing, Mr Gumpl SM also ordered that the plaintiff deliver its expert's report within seven days. The directions hearing was adjourned to 28 May 1998.

6 On 28 May 1998, the plaintiff had not received its expert's report and had not given further and better discovery. The plaintiff's solicitor gave notice of an application to amend the plaintiff's claim. Mr Gumpl SM insisted that these matters be dealt with promptly and ordered that the expert's report be delivered to the defendant "by close of business on 29 May" and that the plaintiff give further and better discovery "by close of business on 2 June 1998". The directions hearing was adjourned to Tuesday, 4 June 1998.

7 On 2 June 1998 the plaintiff's solicitor sent by facsimile transmission a supplementary list of documents to the defendant's solicitors, Phillips Fox. The transmission of the documents commenced at 4.59 p.m. Although the transmission was completed in just over three minutes, Phillips Fox assert that the document was not received until 5.35 p.m. Mr Everett is an administrative clerk employed by Phillips Fox. His duties include sending and receiving facsimile messages for members and employees of Phillips Fox. He was present when the plaintiff's supplementary list of documents was received at 5.35 p.m. The facsimile message he received bore an endorsement showing that it had been sent at 4.59 p.m. on that day. Phillips Fox suggest that the explanation for the delay is that there is often a build up of facsimile messages at about 5.00 p.m. when a number of messages are being sent at once. The messages are stored in a memory function and are reproduced in documentary form some time after the electronic receipt. It is suggested that this is probably what occurred on this occasion. It is reasonable to infer, and the defendant accepts, that the facsimile message was received in an electronic form between 5.02 and 5.03 p.m. but was not physically received until 5.35 p.m.

8 Another magistrate heard the directions hearing on 4 June 1998. Phillips Fox asked that the order of 28 May 1998 be enforced. The magistrate ordered that the application be heard by Mr Gumpl SM and adjourned it until 10 June 1998. On 10 June Mr Gumpl SM noted that the order made on 28 May 1998 was self-executing so that the plaintiff's claim had been struck out. He made an order that the defendant have its costs of the application. The plaintiff's solicitor applied to Mr Gumpl SM for leave to appeal which was granted.

9 The plaintiff's solicitor was one day late in lodging the notice of appeal. He had failed to allow sufficient time to travel to the Registry and did not arrive until after the Registry had closed. The plaintiff therefore issued an application out of this court for an extension of time within which to appeal and for leave to appeal. On 15 July 1998 I granted the application. Shortly stated, my reasons were that the plaintiff should not be prejudiced by the failure of its solicitor to lodge the notice of appeal by the due date and, in any event, the notice was just over one half hour late.

10 On 29 July 1998 Phillips Fox, on behalf of the defendant, applied for an order rescinding the grant of leave to appeal. When the matter came on for hearing I heard that application and the appeal together.

11 The grounds on which the defendant submitted that the grant of leave to appeal should be set aside was an alleged failure to disclose all material facts: see Thomas A. Edison Ltd v Bullock [1912] HCA 72; (1913) 15 CLR 679 at 682 and Bond and Caboche v England (1997) 194 LSJS 401 at 434-5. It was asserted that the plaintiff's solicitor had failed to make full disclosure of the past delays and correspondence between the parties complaining of that delay. I accept that all of the past history had not been disclosed in the affidavit filed in support of the application for leave to appeal, but it did disclose recent failures. The affidavit disclosed, and it was readily apparent, that the plaintiff's solicitor had been dilatory on more than one occasion and that his prosecution of the action was less than satisfactory. I am not, therefore, persuaded that the plaintiff failed to disclose material facts. Furthermore, the real question was whether the plaintiff should have his action struck out for what was a fairly insignificant delay. Viewed at its best from the defendant's standpoint, the plaintiff was only thirty-five minutes late in filing its document. I am therefore not satisfied that I should set aside the grant of leave. That conclusion is reinforced by the reasons which follow.

12 The defendant takes no issue as to the form of service. It acknowledges that service by facsimile is sufficient service: see Supreme Court Rule 12.05. Nor is there any suggestion that the document received by facsimile transmission was illegible. Therefore, it is unnecessary to canvass some of the issues debated in Hastie & Jenkerson v McMahon [1991] 1 All ER 255. The only ground on which the defendant relies is that the facsimile transmission was not physically received until 5.35 p.m. which, it is said, is after ordinary business hours. Relying on Hastie & Jenkinson v McMahon (supra) at 259-260, the defendant submitted that good service of a document by facsimile transmission requires that the document be in a complete and legible state. As the document was not received in a physical form until 5.35 p.m, it is said that it was received after the close of business. For the reasons which follow, I do not accept that submission.

13 The magistrate had ordered that further and better discovery be given to "close of business" on 2 June. The first question which arises is what is meant by "close of business". Does it mean 5.00 p.m. or some later hour? Does it mean the hour at which the defendant's solicitors close their offices? Or does it mean when the plaintiff's solicitor closes his office? Or is it intended to refer to the hour when most solicitors usually close their offices? One example of the meaning is to be found in Re Kent Coalfields Syndicate (1898) 67 LJQB at 503.

14 There is no commonly accepted or settled meaning of the expression "close of business" and I do not think there is anything which points clearly to which of these alternatives should be preferred. Viewed most favourably by the defendant, it could mean either the time at which Phillips Fox closes its office or the time on which most solicitors close their offices. However, the evidence does not assist in resolving which of those alternatives should be adopted.

15 The evidence suggests that Phillips Fox was still conducting business at 5.35 p.m. on 2nd June. There is no evidence when their office is closed for business. Although in past years, close of business might have meant 5 o'clock in the afternoon, I do not think it can be assumed that in the modern business world the expression still has that meaning. It is a notorious fact that, although banks may close at 4.00 p.m. on all week days except Fridays, when they close at 5.00 p.m., other kinds of commercial and retail businesses remain open until later than 5.00 p.m. on a weekday. There is no evidence when most solicitors close their offices. I doubt whether such evidence could be obtained as it is well-known that, while some legal offices close at 5.00 p.m., others remain open until later. Quite a few remain open until 5.30 p.m. and others even later still. The hour tends to vary according to the nature of any one firm's practice. For these reasons, the expression "the close of business" was ambiguous. It was also submitted on behalf of the defendant that the expression derived its meaning from the expression "ordinary business hours", an expression which is occasionally used in the Supreme Court Rules: see, for example, Rules 58.01, 58.03 and 66. So it was submitted that ordinary business hours meant between 9 a.m. and 5 p.m. on week days. One flaw with that argument is that the expression "ordinary business hours" is as ambiguous as the expression "the close of business". The order is, therefore, expressed in ambiguous terms.

16 An ambiguity in a self-executing order with such drastic consequences as striking out an action is, generally speaking, resolved in favour of the party against whom the order has been made: Trnka v The Commonwealth (1986) 44 SASR 572 at 575 and the cases there cited. In this case, the order lacked the precision required for an order to be self-executing. The order did not, therefore, take effect. However, I do not rest my decision on that ground alone. If it is intended to fix the time by which documents must be served or delivered, it is preferable to designate the time rather than use expressions such as "the close of business" which are ambiguous and lack clarity.

17 On the face of the matter, the document was physically received at a time when Phillips Fox was still conducting business. Since clerks and solicitors were both present, the defendant has not, therefore, proved that the document was received outside business hours or after the close of business. If it is assumed that the offices of Phillips Fox did not close for business until 5.30 p.m., there is further support for the conclusion that the document was received before the close of business. Even if the order meant by the close of business at Phillips Fox, I find that the plaintiff complied with that order. As already mentioned, it is common ground that the facsimile transmission would have been received at about 5.02 p.m. At that time the office was still open. The electronic message was stored and became physically available at 5.35 p.m. When stored, it was in a condition which would produce a legible copy. That is evident from the fact that at 5.35 p.m. it was physically reproduced in a legible form. The position can also be likened to that of a queue of people waiting to lodge documents who have entered the office before 5.30 p.m. but are not dealt with until after that time. Perhaps a better analogy is that of a stack of letters being delivered at 5.02 p.m. but the plaintiff's letter is not opened until 5.35 p.m. In this instance the document would be received before 5.30 p.m., notwithstanding that it is not opened until after that time. Another analogy which comes to mind is a telephone which is giving the engaged signal and the caller cannot get through. However, I do not think it is apt since the technology of the facsimile machine differs in that the message can be received and stored for printing at a later time when the line is free.

18 Facsimile transmission enables instantaneous or virtually instantaneous communication and is therefore to be treated in a manner similar to transmission by telex: Reese Bros Plastics Ltd v Hamon-Sobelco Australia Pty Ltd (1988) 5 BPR 11, 106 applying Brinkibon Ltd v Stahag Stahl GmbH [1983] 2 AC 34. There are features of facsimile transmission which point to the conclusion that, at least for the purposes of determining whether a document has been received by a particular time in compliance with an order, the time of receipt would be the time when the document is electronically received. First, the sender of the document is able to tell if the message is being received. Generally speaking, facsimile machines indicate whether or not the message has been transmitted and received. If the recipient's machine is not operating, the message will not be received. In this case the machine in the office of the plaintiff's solicitor showed that the message had been received and printed a note stating the time it took to send the message. The evidence shows that the message was stored electronically and was not physically reproduced immediately following receipt. Although the sender's machine advises that the message has been received, it says nothing as to the quality of the document received, or its legibility. There is also a question of whether the sender's machine records whether the transmission is incomplete. In addition, the sender does not know whether it has been physically reproduced in documentary form. He knows no more than that the document has been received electronically. He can of course telephone to enquire whether a copy has been reproduced. The issue is should the sender be penalised if the copy is not reproduced until after the time for compliance with the order has passed. I will return to that question.

19 Secondly, generally speaking, a facsimile message bears an endorsement showing the time when the message was sent. By adding the time taken to send the message to that time, it is possible to determine the time of receipt. Thirdly, once the message has been received on the recipient's machine, it is not unreasonable to treat it as delivered because it is the recipient's responsibility to monitor and clear his machine: Brinkibon per Lord Fraser at 43. For example, the message will be stored electronically, even if the facsimile machine has run out of paper. Once it has been refilled with paper and reactivated, it will print messages which have been electronically stored. The sender should not be penalised because of a failure by the recipient to monitor his facsimile machine in a satisfactory way.

20 Having regard to all of these factors, it is reasonable to proceed on the footing that, for the purposes of determining whether a party has complied with an order of the court, a document sent by facsimile transmission is received at the time of the electronic receipt. I do not think that the sender should be required to check whether the document has been reproduced or the quality of the reproduction. If it is satisfactory, there is no difficulty. However, he bears the risk that it may not be sufficient service if the document is illegible or incomplete. The question whether service is sufficient in the case of illegible and inadequate copies will be a matter for consideration when it arises. It may turn on the facts in each individual case. In this case, the document when reproduced was legible and complete. It was received electronically, shortly after 5.02 p.m. I am therefore prepared to find this document was received shortly after 5.02pm. Because it appears that the offices of Phillips Fox were then open for business, the documents were received before close of business.

21 These observations are confined to questions as to compliance with orders. In other circumstances different factors may obtain. For example, when considering whether an offer to enter into a contract has been accepted, those other factors may include the intention of the parties, good business practice, and a judgment as to where the risks should lie: Brinkibon per Lord Wilberforce at 42.

22 For these reasons, although the facsimile message was received at 5.02 p.m. in an electronic form, that constituted a receipt before 5.30 p.m. notwithstanding that the copy of the document was not physically received until 5.35 p.m. In all the circumstances, I find that the document was served between 5.02 p.m. and 5.03 p.m.

23 Even if there is an error in the above reasoning, I would nevertheless set aside the order on the following ground. Although the order made on 28 May 1998 was self-executing, the Magistrate had a discretion to excuse a failure to comply with it: see Magistrates Court Rules 10(c), 12(4) and Supreme Court Rule 3.04. At worst, the plaintiff was only thirty-five minutes late. There could be no conceivable prejudice to the defendant but the prejudice to the plaintiff was abundantly manifest. Further, the delay was apparently caused by the plaintiff's solicitors not the plaintiff. It is well settled that, as a general rule, a party should not be prejudiced by the neglect of his solicitor: Ularski v Miller [1968] SASR 277 at 282. Notwithstanding the dilatory prosecution of this claim and the neglect to comply with earlier orders, the fact that the plaintiff's solicitor was only thirty-five minutes late in delivering its document should not require the plaintiff's claim to be struck out.

24 Two principles which are relevant in this context are enunciated in Adam P. Brown Male Fashions Pty Ltd v Phillip Morris Inc. [1981] HCA 39; (1981) 148 CLR 170 at 177. The first is that appellate courts should exercise particular caution when reviewing decisions pertaining to practice and procedure. The second is that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration. The second has compelling force in this case. Even if all due regard is had to the delays in the prosecution of this action and to the defendant's sense of frustration in the fact that the action was not being prosecuted with all reasonable expedition, there is a manifestly obvious injustice in striking out the action for a delay of thirty-five minutes. Even allowing for the fact, as Mr Gumpl SM properly said, that the plaintiff's solicitor was skating on very thin ice by sending the document so late when he could not be sure when it would be received in a physical form and, even allowing for all the past delays by the plaintiff or its solicitor, this was but a relatively inconsequential failure to adhere to the specified time limit. The prejudice to the plaintiff in striking out the claim more than balanced the fact that the document was late. No weight has been given to the fact that the document was in fact received on the last day and there could be no prejudice to the defendant. It is apparent that the magistrate has failed to have regard to this relevant factor. If, in fact, Phillips Fox remains open for business until 5.30 p.m., the delay is one of five minutes only. In either case, the magistrate erred in not exercising his discretion to set aside the order striking out the action. Neither the need for the timely conduct of litigation nor the fact that the plaintiff is able to institute a fresh action, justifies upholding this order.

25 Before leaving this appeal, I add that self-executing orders should be used sparingly, if at all. There are dangers in making self-executing orders. Not infrequently, there are grounds in which it is reasonable to excuse the failure to comply. If the order is self-executing, there is a danger that the court may perceive its discretion to be circumscribed or that the court may lose full control of this action. These and other dangers were identified in Trnka v The Commonwealth (supra) and Ford v Gray (1988) 50 SASR 425. It is for that reason that it is, generally speaking, undesirable to make such orders.

26 For these reasons, I dismiss the defendant's application to set aside the grant of leave to appeal and allow the appeal. There will be orders setting aside the self-executing order made on 28 May 1998 and the order for costs made on 10 June 1998.

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