Court of Appeal (WA)|2008-11-28|Before: Newnes J, Steytler P, Buss JA, Johnson J

MARIOTTI -v- WANNEROO NORTH PTY LTD [2008] WASCA 243 (28 November 2008)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : MARIOTTI -v- WANNEROO NORTH PTY LTD [2008] WASCA 243

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : MARIOTTI -v- WANNEROO NORTH PTY LTD [2008] WASC 109

Practice and procedure - Abuse of process - Unrepresented litigant - Failure by litigant to obey court orders - Failure by litigant to obey pretrial directions hearings - Failure of litigant to prepare for trial - Failure to obey case management directions - Deliberate plan to abort trial - Evasive and mendacious litigant - Contumacious conduct - Protection of court processes

Appeals - Appeal from discretionary decision - Striking balance between the need to protect court processes and the interests of a contumacious litigant

Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B

1 STEYTLER P: This application for leave to appeal raises the question of what should be done in the case of a litigant who wilfully disobeys court orders so as to abort a trial. The answer, as in every case of that kind, depends upon the individual circumstances of the case. In the particular circumstances of this case the trial judge exercised her discretion to dismiss the action that had been brought by the defaulting litigant. He contends that she should not have done so. His grounds of appeal assert that she failed to have regard to the established rules or principles governing her discretion, that she failed to balance competing principles and that the dismissal was unjust and unreasonable.

History of the litigation until 21 February 2008

2 The appellant commenced his action in the District Court on 7 November 2005. In its ultimate form, the action is one for payment of equitable compensation or damages arising out of the sale of land (land sold) by the appellant to the respondent on 18 July 2001. The appellant contends that the sale was induced by misleading representations made to him by the respondent. The principal amongst these is said to have been a representation that, following the sale, the appellant and his wife would continue to live in, and would ultimately become the registered proprietors of, a house and some 4,000 sq m of land (retained land) which was included in the land sold. As matters have transpired, the retained land has since been designated as public open space. It forms part of a development of the land sold. The development was carried out by the respondent.

3 Under the District Court Rules 1996 (WA), the action was required to be entered for trial by 6 June 2006. The appellant had not entered it for trial by that date. On 17 November 2006 the respondent entered the action for trial. The action was remitted to the Supreme Court by consent on 3 August 2007. There, it was entered into the Commercial and Managed Cases List on 26 September 2007.

4 On 12 December 2007, Newnes J made orders requiring the appellant to file and serve amended papers for the judge by 1 February 2008. The appellant failed to do so. On 11 February 2008 a listing conference was held. The action was listed for trial from 21 to 23 April 2008. The appellant knew that the trial was to commence on 21 April 2008. He put that date in his diary.

5 On 21 February 2008, the parties arrived at what has been described as an 'in-principle' settlement agreement relating to the action. A draft deed of settlement was prepared by the respondent's solicitors. Ms Phatcha Tantiprasut, a solicitor for the respondent, sent a copy of it to the appellant's then solicitor, Mr Thomas Hobday. One of the conditions contained in the draft deed was that the appellant's wife sign it, as she had been a party to the contract for the sale of the land sold. The appellant told Mr Hobday, on 21 February 2008, that the terms proposed by the respondent would not present any obstacle to settlement of the action. Mr Hobday consequently ceased his preparations for the trial of the action.

6 In early March 2008, the appellant met with Mr James Tee, who claimed to represent a rather grandly styled organisation known as First International Merchant Bank North America Holding Ltd. The appellant had been introduced to Mr Tee by a friend with whom he had previously discussed his court action. The friend recommended Mr Tee to the appellant as a person who could assist him. The appellant was told that Mr Tee was a lawyer, but that he might not have a 'licence'. Mr Tee did not, in fact, have a practising certificate.

7 Mr Tee reviewed the papers relating to the action. He told the appellant that he should not accept the settlement offer that had been made by the respondent. He advised the appellant that the sale contract was illegal and that the appellant and his wife were entitled to the return of the land sold. The appellant and Mr Tee agreed that Mr Tee would take over the conduct of the action on the appellant's behalf. They also agreed that Mr Tee was to make available a sum of $750,000 to the appellant. In return, if the appellant recovered damages in the action, Mr Tee would share in any amount received by the appellant over and above $750,000, after Mr Tee had been repaid that sum. Alternatively, if the appellant was successful in having the title to his land returned to him, Mr Tee was to take a share in the land. Mr Tee said that he would contact the appellant's solicitors and tell them how to proceed.

8 Over the course of the weeks respectively commencing on 10 and 17 March 2008 Mr Hobday had a number of telephone conversations with the appellant. The appellant told him that his wife had some concerns about the draft deed, but that he would see her over the weekend of 21 March 2008, at which time matters would be resolved.

9 On 26 March 2008 a directions hearing was held in the action. Mr Hobday attended on the appellant's behalf. He told the court that the parties had effectively agreed a position, but that the appellant's wife had not yet agreed to sign the deed of settlement. He sought a further week in order to resolve the matter. The respondent's solicitors resisted an extension of that length, given the proximity of the trial. They sought and obtained trial directions, including the following:

(a) that the trial bundle be completed by 7 April 2008;

(b) that the appellant file a chronology by 10 April 2008;

(a) that the appellant file and serve his submissions by 15 April 2008.

10 On the same day, the appellant contacted Mr Hobday. He told him that his wife had obtained an adviser who had formed a different view regarding the 'whole' of the action. He declined to tell Mr Hobday who the adviser was. He gave Mr Hobday no instructions as to whether he should continue with the settlement or prepare for trial. Mr Hobday's response was that this was not acceptable, given the programming orders that had been made and his own obligations as an officer of the court. He said that if he was not given instructions as to how to proceed he would cease to act for the appellant.

11 On 27 March 2008 Mr Hobday wrote a letter to the appellant reminding him of the trial dates and of the directions that had been made. He said that, in the absence of further instructions, he would be unable to continue to act for the appellant. A meeting was arranged between Mr Hobday, the appellant, and either the appellant's wife or Mr Tee on 31 March 2008.

12 When the meeting took place on that day, the appellant's wife did not attend. Mr Tee introduced himself to Mr Hobday as the appellant's wife's adviser. He told Mr Hobday that there was an alternative cause of action available to the appellant. He said that this should be pursued and that it would be contrary to the appellant's interests to enter into the settlement or to proceed to trial without raising it.

13 On 1 April 2008 Mr Hobday still had no instructions as to how he should proceed. He told the appellant that he would cease to act for him. The appellant said that he would get back to him that afternoon or early the next day. He did not do so.

14 Mr Hobday telephoned the appellant again on 2 April 2008. Once again, the appellant said that he would get back to him. Again, he did not do so. Mr Hobday filed an application for an order removing his firm's name from the record as the solicitor for the appellant.

15 On 4 April 2008 an order was made removing Mr Hobday's firm from the record as the appellant's solicitor. The order was served on the appellant.

16 On the same day, and shortly after making the order removing the appellant's solicitors from the record, the court was provided with an affidavit sworn by the appellant on 2 April 2008. This had been sent by Mr Tee by facsimile, with a request that it be given to the trial judge's associate in court. However, it arrived after the hearing on that day had been completed.

17 In the affidavit, the appellant said that he was 81 years old. He said that he had migrated to Western Australia from Italy. He said that he would never have sold his property had he been aware that he could not keep his family home and the land immediately around it. He said that he had instructed his solicitors to exhaust every legal avenue available to him to secure title to an acre of land around his house. He said that on 14 April 2004 his solicitors obtained counsel's advice concerning the illegality of the contract of sale of the land to the respondent but that this advice was never fully explained to him. Notwithstanding his dissatisfaction with the compensation offer made by the respondent, he had followed the advice of his lawyer and presented the draft deed of settlement to his wife for her execution. He said that his wife was disappointed with the amount of the compensation and declined to sign the deed until she obtained other advice. He went on to say that on 1 April 2008 his wife told him that she had received advice that the contract of sale, or parts of it, might be illegal and void, that the contract might be set aside by the court and that the land sold might be recovered. He expressed dissatisfaction with Mr Hobday's subsequent conduct. Amongst other allegations made concerning Mr Hobday (all of them unjustified, as the trial judge found) was one to the effect that he had been told by the appellant to continue preparing for trial until such time as the appellant was able to get his wife to execute the settlement agreement.

18 The appellant said, in his affidavit, that, having been served with Mr Hobday's application that his firm be removed from the record on the afternoon of 2 April 2008, he had not had an ample opportunity to consult new solicitors. No explanation was given as to why the affidavit dated 2 April 2008 was not provided to the court in time for the hearing. Nor was any explanation given in the affidavit as to why there was no appearance by or on behalf of the appellant at the hearing on 4 April 2008.

19 On 4 April 2008, Ms Tantiprasut telephoned the appellant. She told him of the trial dates (already known to him) and said that she would attempt to urgently relist the matter. She was told by the appellant that he was planning to speak to his wife about obtaining new solicitors. She urged him to do so promptly.

20 No trial bundle was completed by 7 April 2008 as required by the directions given on 26 March 2008. On 8 April 2008 Ms Tantiprasut wrote to the appellant. She confirmed what had been said during her conversation with him on 4 April 2008. She told him that a directions hearing had been set for 10 April 2008. The appellant read the letter and passed it on to Mr Tee.

21 On 8 and 9 April 2008, Ms Tantiprasut telephoned the appellant on a number of occasions. She was unable to speak to him. On each occasion she left a message. On 9 April 2008 Mr Tee telephoned Ms Tantiprasut. He told her that he was taking an assignment of the action and that the documentation had yet to be completed. He said that this would be completed by 20 April 2008. Ms Tantiprasut told him that the respondent was not prejudiced by the failure to achieve settlement. She said that minor amendments to the trial directions would be sought at the hearing on 10 April 2008.

22 When the matter came on for hearing on 10 April 2008, there was no appearance by the appellant or on his behalf. Orders were made requiring him to serve his trial bundle on the respondent by 14 April 2008 and to serve his witness statements by that date. The matter was otherwise adjourned until 15 April 2008.

23 On 10 April 2008, a letter was issued by the court advising the appellant of the orders that had been made. The letter told him that it was imperative that he should obtain legal representation and attend the further pre-trial hearing on 15 April 2008. On the same day Ms Tantiprasut wrote to the appellant, enclosing the orders that had been made and telling him that it was imperative that he obtain further legal representation. He received both letters.

24 The appellant was to have lodged his chronology by 10 April 2008. He did not do so. On 11 April 2008, amended papers for the judge were filed and served by the respondent.

25 The appellant did not serve his trial bundle on the respondent on 14 April 2008 or at all. In the days prior to that date, Ms Tantiprasut made numerous attempts to contact him by telephone. He returned her calls only on 14 April 2008. Ms Tantiprasut told him of the directions hearing that was to take place on the following day, notwithstanding that he must, by then, already have been aware of that as a result of his receipt of the letters to which I have referred. Ms Tantiprasut urged the appellant to attend the hearing. She told him where it would be held. He responded by saying that he would 'have to see', as he was supposed to go to Jurien Bay. He said that his wife had appointed new solicitors, but, when asked, he said that he did not remember the name.

26 At the directions hearing held on 15 April 2008 there was no appearance by or on behalf of the appellant. He had not filed submissions in accordance with the orders that had earlier been made. During the hearing, senior counsel for the respondent foreshadowed that an application to dismiss the action would be made prior to 21 April 2008. An application was made accordingly and was listed to be heard on 18 April 2008.

27 On 15 April 2008, Ms Tantiprasut sent the appellant a letter. In it, she told him that he was in default of the orders made on 10 April 2008. She said that the respondent would be making an application to dismiss his action. The appellant was urged to seek legal advice immediately. He received the letter.

28 On the same day, Ms Tantiprasut telephoned the appellant and read aloud the letter that she had sent to him. He confirmed that he had spoken to her on 14 April 2008. He said that he had told Mr Tee about the hearing and that he (the appellant) had gone to Jurien Bay on that day. He went on to say that he 'didn't want to hear any of this' and hung up the telephone.

29 On 17 April 2008, the appellant was served with the application to dismiss his action. On the same day, Mr Tee telephoned Ms Tantiprasut's office. He left a message for her saying that the chamber summons included no application for an abridgement of time. He was wrong in this respect.

30 The application to dismiss the appellant's action was supported by an affidavit sworn by Mr Brendan Toohey, a project manager employed by the respondent. He said that the continued delay had created uncertainty for the finalisation of the respondent's project for development of the land sold. He said that the development had by then been 'nearly completed'. He also said that the respondent had been established as the vehicle by which the development was pursued and that a number of interested parties were shareholders in the respondent. He said that the outstanding claim against the respondent left it in a position in which it was unable to finalise the share of the development to be paid to each interested party. Were it not for the claim, the respondent would have completed the development and the company would have been wound up.

31 At 7.00 pm on 17 April 2008, the appellant instructed his current solicitors. On the following morning, the court received a message from Mr Tee informing it that solicitors would appear that morning to oppose the application to dismiss the action. When the application came on for hearing, counsel for the appellant informed the trial judge that he had been briefed only that morning by his instructing solicitors. The application for dismissal was adjourned until 21 April 2008.

32 On 18 April 2008 the appellant swore a second affidavit. In it, he blamed his former solicitors for his inability to proceed to trial. He also said that he was unaware that he was required to attend hearings because he had not been able to understand Ms Tantiprasut. The trial judge subsequently found that both statements were untrue.

33 On 21 April 2008, the court was provided with a further affidavit sworn by the appellant. This was dated 19 April 2008. It gave a different account of events. In this affidavit, much of the blame for what had occurred was placed on Mr Tee.

34 The appellant gave oral evidence at the hearing on 21 April 2008. He was found by the trial judge to have been 'a most unsatisfactory witness'. She said that he had been at times evasive and that at other times he had told deliberate lies. She rejected the suggestion that the appellant had been in any way confused about any of the matters that had relevantly taken place. Notwithstanding that the appellant was adamant that he did not want to have anything more to do with Mr Tee and that he would provide his current solicitors with timely instructions, the trial judge dismissed his action.

The trial judge's reasons for dismissing the action

35 Apart from her findings concerning the appellant's dishonesty and general lack of credibility, the critical passages from her Honour's reasons for dismissing the action are as follows [136] - [138]:

Having read all the affidavit material and heard the evidence of the plaintiff, I am satisfied that, by 21 February 2008, the parties had reached an in principle settlement agreement, subject to a deed of settlement being agreed. At some point soon after, the plaintiff became dissatisfied with the settlement. He made contact with Mr Tee, having been introduced by a friend. He was aware that Mr Tee was not a solicitor. The plaintiff provided Mr Tee with the materials in his possession concerning his claim, including the early advice of counsel referring to the issue of the illegality of the contract. Mr Tee advised the plaintiff that the settlement was inappropriate and that the plaintiff's solicitors had not handled his claim in a reasonable manner. He advised the plaintiff that the illegality issue should be pursued. Mr Tee also told the plaintiff that he could achieve the return of the plaintiff's land, or an increased amount of damages, in return for a share in the land or a proportion of any amount received above the amount offered in settlement. However, in order to achieve for the plaintiff the return of his land, or an increased settlement or an increased judgment sum, it would be necessary to ensure that the trial did not go ahead on the listed dates.

The plaintiff accepted and acted upon Mr Tee's advice. Whilst his initial motivation may have been the return of the land ... [from 11 April 2008] the plaintiff was motivated by financial gain. I wholly reject any proposition that the plaintiff was confused by Mr Tee or was in some way misled by him. As I have noted above, the plaintiff's grasp of written and spoken English was more than adequate to understand Mr Tee's proposal. The plaintiff was well aware that Mr Tee was not a practising solicitor. He was also aware that Mr Tee's advice was in direct conflict with that of Mr Hobday and his counsel, both of whom were qualified practitioners. However, the plaintiff decided to accept and act upon Mr Tee's advice.

The trial was listed to commence on 21 April 2008, as the plaintiff well knew. The plan involved the plaintiff refusing to instruct his solicitor to prepare for trial, or at all, and failing to comply with any obligation in relation to preparing the matter for trial. Mr Tee and the plaintiff may not, at that early stage, have discussed the need for there to be no appearance on behalf of the plaintiff at any pre-trial hearing and no response to any correspondence. However, once Mr Hobday ceased to act and the matter was listed for a directions hearing on 10 April, such a step was a logical extension of the plan being implemented by the plaintiff and was indeed the approach adopted. The plaintiff's evidence that he was forced by Mr Tee to cause Mr Hobday to cease to act could only be a reference to the fact that, consistent with Mr Tee's plan of delaying the trial, it was necessary for the plaintiff not to be represented by counsel.

I am not prepared to accept the submission of counsel for the plaintiff that the plaintiff was unaware that the conduct proposed by Mr Tee was improper. The plaintiff may have been mistakenly of the view that there was nothing the defendant or the court could do about his conduct and he may not have been aware that his conduct might be regarded as an abuse of process. However, in my view, the plaintiff was aware of his obligations, was well aware that his actions were very wrong and would be seen that way by the defendant and by the court.

That conclusion is evidenced by the fact that, from the start, Mr Hobday told the plaintiff that it was not acceptable to take no action where programming orders had been made by the court. Further, the plaintiff repeatedly lied in order to hide or obscure the fact that his conduct was deliberate, that Mr Tee was acting for him and that it was all part of a course of conduct designed to ensure that the trial would not proceed on the trial date. At no stage did the plaintiff advise anyone that he had no intention of complying with any orders, preparing for trial or attending any hearing. On most occasions, the plaintiff behaved as if someone should have been handling his case and carrying out his obligations.

I accept the submission of counsel for the defendant that the plaintiff was involved in a deliberate and calculated plan to abort the trial. Further, it was the plaintiff who carried out each step of the plan, knowing that he was in breach of his obligations, but blaming others for what had occurred. The evidence to which I have referred in detail leads inexorably to that conclusion. It is also the case that the plan achieved its purpose because, in the circumstances created by the plaintiff, it was not possible for the trial to proceed on the listed dates. As counsel for the defendant observed, the plaintiff carried out a successful plan to abort the trial of an action which had been on foot for four years so that a cause of action could be added which was entirely spurious and of which the plaintiff and his legal representatives had been aware from the outset. Counsel's advice had been available since 2004 but neither the cause of action referred to in the advice nor a claim for recovery of the land were included in the statement of claim.

The plaintiff deliberately, repeatedly and improperly disregarded the orders of the court and his obligation as a litigant to achieve a personal benefit. Further, he has repeatedly lied in order to attribute blame to others but, most importantly, to relieve himself of any responsibility. It was a calculated plan to ensure that a defendant who had pushed the action to trial could not finalise the action and, in my view, can properly be described as contumacious, a degree of conduct considered sufficient to justify an order in the court's inherent jurisdiction dismissing proceedings: Seaman's Civil Procedure commentary of Supreme Court Rules 1971 (WA) O r 4B.

38 Her Honour went on to consider the prejudice that was said to have been caused to the respondent by the appellant's conduct. She also considered submissions that had been made on behalf of the appellant as regards the adverse consequences for him if the proceedings were to be dismissed. After taking into account a number of considerations that had respectively been raised on behalf of the parties in the light of the applicable principles, she concluded [186] that she could think of no other way for the court to maintain the authority of its orders or to protect the integrity of its processes than to dismiss the action.

39 There is no challenge to any of the findings of fact made by the trial judge.

40 I have mentioned that the trial judge's exercise of discretion is challenged on three grounds.

41 The first of these asserts that the trial judge failed to apply established rules or principles. The particulars to that ground are extensive and repetitive. They can be summarised as follows:

(a) Having found that the appellant was not aware that his conduct might be regarded as an abuse of process, and that his conduct was contumelious (in fact, she found that it was 'contumacious'), the trial judge failed to take into account that 'the paramount object of the Court is to decide the rights of parties and not to punish them for mistakes made in the conduct of their cases'.

(b) Having found that the appellant's conduct amounted to an abuse of process, the trial judge failed to determine whether it could be corrected without injustice to the respondent which could not be compensated by costs and related orders and whether there could still be a fair trial on the merits.

(c) The trial judge failed to recognise that she could only dismiss the action in 'extreme' or 'exceptional' circumstances.

(d) The trial judge failed to have regard to the principle that an order for dismissal will usually only be made 'where the relevant party has been the subject of a pre-emptorary [sic] order or, at least, will not be taken by surprise that an order for dismissal of the action is to be made'.

(e) The trial judge failed to assess and determine the degrees of consequence or punishment that should be ordered or should follow from the appellant's contumelious [sic] conduct, and in particular whether the consequences could have been less than dismissal of the claim.

(f) The trial judge wrongly took into account that the appellant might have an action against a third party (Mr Tee) that would ameliorate the effect of the dismissal of his actions.

(g) The trial judge generally erred in the exercise of balancing the competing considerations.

42 Ground 2 asserts that the trial judge failed to give any or any sufficient weight to identified facts. These are said to include the lack of any special prejudice on the part of the respondent, the substantial prejudice to the appellant (his claim was said to be worth $1 m), the fact that there was nothing to suggest that the appellant would not subsequently have progressed the proceedings to trial in accordance with the court's orders, the fact that the appellant would have no further dealings with Mr Tee and the fact that the appellant had expressed remorse for his conduct.

43 Ground 3 does no more than assert that the dismissal was unjust and unreasonable in the circumstances. It adds nothing to the other two grounds.

44 It is trite that, in order to succeed in an appeal from a discretionary decision, an appellant must establish that the primary judge has expressly or impliedly made a material error of fact or law: House v The King [1936] HCA 40; (1936) 55 CLR 499, 505. Failure to give adequate weight, or giving too much weight, to a relevant consideration does not give rise to an appealable error unless the failure results in a failure to exercise the discretion actually entrusted to the court: Lovell v Lovell [1950] HCA 52; (1950) 81 CLR 513, 519; Monteleone v The Owners of the Old Soap Factory [2007] WASCA 79 [36] (McLure JA).

J L Holdings and case management principles

45 In this jurisdiction, the submission is often made that it will almost always be an error of principle to fail to permit a litigant to litigate an issue that is fairly arguable, regardless of that litigant's non-compliance with court procedures and orders. We are frequently referred to The State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 and told that it supports this very broad proposition. In Osgood v Wham [2007] WASCA 178 [20], McLure JA has pointed out that this misconceived view of J L Holdings has produced a culture in the legal profession in this State of non-compliance with court rules, practice directions and court orders (see also Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd [2005] WASCA 106; (2005) 30 WAR 290 [91] - [93]).

46 It is important to understand what was decided in J L Holdings. In that case, the parties were in dispute concerning a lease to develop land into an amusement park. The respondent sued the appellants on a number of causes of action and claimed damages in the vicinity of $60 m. Some six months before the trial of the action was to be heard, the appellants sought to make a late amendment to their defence. The trial judge refused leave to make it. She said that the consideration that was most relevant to her decision was that the making of the amendments would jeopardise the hearing dates that had been fixed (the estimated length of the trial was four months). She said that the disallowance of the amendments in these circumstances would take account of the fact 'that the loss of the hearing at that time could be said to amount to severe prejudice to the applicant, particularly since the matter ... would be unlikely to be relisted until the following year'. She also said that this approach took account of 'a shift in attitude'. She said that 'in these times a party's "right" to present their case or their defence is viewed as subject to some limitation'. The appellants appealed to the Full Court of the Federal Court. By a majority the appeal was dismissed. The appellants appealed to the High Court. The appeal was allowed and the decision of the Full Court was reversed.

47 In their judgment, Dawson, Gaudron and McHugh JJ endorsed what had been said by Bowen LJ in Cropper v Smith (1884) 26 Ch D 700, 710, as follows:

Now, I think it is a well established principle that the object of Courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. Speaking for myself, and in conformity with what I have heard laid down by the other division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or of grace.

48 Dawson, Gaudron and McHugh JJ also referred to what had been said by Toohey and Gaudron JJ in Sali v SPC Ltd [1993] HCA 47; (1993) 67 ALJR 841, 849 as follows:

The contemporary approach to court administration has introduced another element into the equation or, more accurately, has put another consideration onto the scales (see GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710). For the implications of this aspect for the amendment of pleadings, see Ketteman v Hansel Properties Ltd [1987] AC 189; The Commonwealth v Verwayen (1990) 170 CLR 394. The view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard are pressing concerns to which a court may have regard.

Sali v SPC Ltd was a case concerning the refusal of an adjournment in relation to which the proper principles of case management may have a particular relevance. However, nothing in that case suggests that those principles might be employed, except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable. 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.

49 Dawson, Gaudron and McHugh JJ went on to say (155):

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. In taking an opposite view, the primary judge was, in our view, in error in the exercise of her discretion.

50 Kirby J, too, approved what had been said in Cropper v Smith. Although he, too, found that the trial judge's discretion had miscarried, he recognised (168) that a return to the 'languid days' in which Cropper v Smith was decided was impossible. He said that any attempt to do so 'would now afford justice to one litigant at a potential cost of inflicting serious injustice on many others and on the public'. He noted (169) that in some jurisdictions changes of approach had been sustained by special rules of court made under legislative authority. He gave, as an example, O 1 r 4A, r 4B of the Rules of the Supreme Court 1971 (WA).

51 Kirby J discussed a number of considerations which either favoured, or worked against, the extension of an indulgence to a party applying for it. Amongst those favouring an extension were that this is the only way in which the true issues and the real merits could be litigated and artificiality avoided; that the oversight is adequately explained; that the proposed amendment is of considerable importance to the rights of a party; that any fault is that of the parties' legal representatives; that the oversight was wholly accidental; that the oversight was the product of unavoidable human error or, possibly, the outcome of the application to the case of fresh legal minds; that cost orders or the imposition of other conditions could adequately rebalance the competing claims to justice; and that the hearing date is sufficiently in the future to permit a party to meet the amendment. It is unnecessary, for present purposes, to mention the factors which, he said, tended to work against the grant of an indulgence.

52 It is consequently plain that J L Holdings dealt with a situation that is very different to the present. That case involved the making of an amendment at a time when it would jeopardise the hearing dates, but in circumstances in which the litigant was not at fault and the delay was explicable by the fact that his legal advisers had only recently discovered the point sought to be raised. It was not a case of wilful disobedience of the court's orders for ulterior purposes or even a case of repeated delays in complying with orders of the court.

53 It must, of course, be accepted that, as Dawson, Gaudron and McHugh JJ said, case management is not an end in itself and that the ultimate aim of the court is the attainment of justice, which no principle of case management can be allowed to supplant. However, that does not mean that case management principles can be ignored. As was explained in the Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398 [94], the effect of O 1 r 4A is that the court takes its own positive steps to require parties to conduct litigation with proper expedition and O 1 r 4B introduces management and supervision of litigation by the court to the extent that its resources permit in accordance with a system of positive case flow management (see also J & J Products v Ken Gray & Co (Unreported, WASCA, Library No 960219, 24 April 1996)). A failure to comply with case flow management orders will be relevant. That will especially be so if the failures are repeated. It will even more especially be so if the failures are deliberate and unexplained, or if there is no acceptable explanation for repeated deliberate failures. In cases of the latter kind, the defaulting party runs grave risks: Fieldhouse [94]. That is because, as Wheeler J pointed out in Magenta Nominees Pty Ltd v Bonini [1999] WASC 88 [87], it is an important consideration, although not the only consideration, that there is a need to ensure that orders of the court are not habitually disregarded. She went on to say [87] - [88]:

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 ... ), 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.

54 This case is in a worse category than one where there is no acceptable explanation for repeated deliberate failures to comply with orders of the court. In this case, the repeated failure to comply with the court's orders was part of a concerted plan to abort the trial and obtain a consequential opportunity to amend. The need to ensure that such conduct does not succeed in its object, and the need to deter others from engaging in such conduct, involves more than case management principles. Conduct of this kind gives rise to significant additional considerations in the exercise of the power to summarily dismiss an action.

55 The striking out of a defence or the summary dismissal of an action for failure to comply with an order or orders of the court is a power that the court will exercise only with some reluctance: Freeman v Rabinov [1981] VicRp 52; [1981] VR 539, 544; J & J Products. In Freeman, the Victorian Full Court said:

The making of 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.

Also, in J & J Products the court (Kennedy ACJ, with whom Pidgeon & Ipp JJ agreed) endorsed the proposition that orders of the court must be obeyed and that a litigant who deliberately, and without proper excuse, disobeys an order is not allowed to proceed (see also Re Jokai Tea Holdings Ltd [1992] 1 WLR 1196, 1202). The court rejected the proposition that a springing order should necessarily have been made in a case of this kind.

56 What was said in these cases must now be considered in the light of what was said by Dawson, Gaudron and McHugh JJ in J L Holdings, to the effect that case management principles may not be employed to shut a party out from litigating an issue which is fairly arguable, except perhaps in extreme circumstances (154). However, repeated deliberate failures to obey the court's orders and to comply with its processes might amount to extreme circumstances for this purpose, at least where there is no, or no acceptable, explanation for them. In such a case the point may be reached when the court has no real option, if respect for its authority and processes is to be maintained, than to dismiss an action or a defence, as the case may be. Moreover, as I have said, cases such as this, involving an unchallenged finding of abuse of the court's processes, give rise to significant additional considerations.

57 It is well established that superior courts have inherent jurisdiction to permanently stay proceedings which are an abuse of process: Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 518 (Mason CJ, Dawson, Toohey & McHugh JJ) and the cases there cited; Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334, 344 - 345; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256. The power arises from the need for the court to be able to exercise effectively the jurisdiction which it has to dispose of the proceedings: Williams, 518 [fn 22]; Connelly v Director of Public Prosecutions [1964] AC 1254, 1301 (where Lord Morris said that a court must have such powers 'in order to enforce its rules of practice and to suppress any abuses of its process and to defeat any attempted thwarting of its process'); Christmas Island Resort, 344 - 345. The power exists to enable the court to protect itself from abuse of its process, thereby safeguarding the administration of justice: Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210; Batistatos [12]. That purpose may transcend the interest of any particular party to the litigation: Batistatos [12]. There is no requirement that the continuance of the action would involve moral delinquency on the part of the plaintiff: Batistatos [70] (and see also [141], [142] (Kirby J)).

58 In Christmas Island Resort, the court (Franklyn, Owen & Parker JJ) said (344 - 345):

The most obvious example of the court's jurisdiction extending to allow it to 'act effectively' is in relation to abuse of process. Hunt J in Packer v Meagher [1984] 3 NSWLR 486 at 492 explained what is meant by an 'abuse of process', by identifying 3 classes of abuse:

'The legal process of a court is being abused when it is used to exert pressure to effect an object not within the scope of the process; see Grainger v Hill [1838] EngR 365; (1838) 4 Bing (NC) 212; 132 ER 769 at 773; or where it is used for a purpose other than that for which the proceedings are properly designed and exist; see Re Majory, A Debtor; Ex parte the Debtor v FA Dumont LD [1955] Ch 600 at 623; or where the plaintiff in those proceedings is seeking a collateral advantage beyond what the law offers: see Castanho v Brown & Root (UK) Ltd [1981] AC 557 at 567.'

This dicta [sic] has been applied in this Court: see Re Bond Corporation Holdings Ltd (1990) 1 WAR 465 at 467 - 477; Blossomtree Pty Ltd v Brunswick NL (1991) 4 WAR 480 at 487; Hay v Butler & Crooks (a firm) (1991) 7 WAR 333 at 341.

At the heart of all three of the above classes of abuse of process is the same problem - the processes of the court are being used for a purpose different to the purposes for which they were designed. An abuse of process will be an attempt to use the court's processes to achieve a result different to the objects of the court. When a court 'acts effectively' it is achieving results consistent with its objects. Therefore, an abuse of process, by definition, will prevent the court from 'acting effectively'.

There is an even more fundamental point. The observations of Hunt J in Packer focus on the actions of the parties to the dispute. The power of a court to control its own proceedings and to arrest an abuse of process exists for the public interest. It has done so for centuries. It is even more critical that a court in the late 20th century should guard its processes jealously and be sensitive to the public interest. Access to justice is a critical factor in the functioning of a fair society. Court resources, both in terms of time and facilities are scarce and shrinking. This makes it even more important for a court to ensure that public resources are applied in the best and most efficient means possible. The way in which parties to a dispute seek access to the public resources that the courts represent must be closely monitored. That the courts can have regard to the public interest in deciding whether there has been an abuse of process is beyond doubt: see Moevao v Department of Labour and the joint judgment of Mason CJ, Deane and Dawson JJ in Walton.

Looked at in this light the phrase 'abuse of process' is not necessarily a pejorative term. It is a question of balancing the private interests of the parties against broader public interest considerations involved in the administration of justice.

As the court's inherent jurisdiction extends to the extent necessary to enable it to act effectively, the court has the inherent jurisdiction to control all abuses of its process.

(See also Imaging Applications Pty Ltd v Vero Insurance Ltd [2008] VSC 178 [24] - [26] (Vickery J) and Clark v The State of New South Wales [2006] NSWSC 673; (2006) 66 NSWLR 640 [55] - [64] (Johnson J).)

59 In Jago v District Court of New South Wales [1989] HCA 46; (1989) 168 CLR 23, 74, Gaudron J said that the power of a court 'to control its own process and proceedings is such that its exercise is not restricted to defined and closed categories, but may be exercised as and when the administration of justice demands'. She went on to say (74):

[A]t least in civil proceedings, the power to grant a permanent stay should be seen as a power which is exercisable if the administration of justice so demands, and not one the exercise of which depends on any nice distinction between notions of unfairness or injustice, on the one hand, and abuse of process, on the other hand.

These comments were endorsed by Mason CJ, Deane and Dawson JJ in Walton v Gardiner (1993) 177 CLR 378, 394. (See also CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; (1997) 189 CLR 345, 391, where Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ referred to the inherent or implied power which every court must have to prevent its own processes being used to bring about injustice. They referred also to the counterpart power to protect the integrity of those processes once set in motion.)

60 In Batistatos Gleeson CJ, Gummow, Hayne and Crennan JJ said that what amounts to abuse of court process is insusceptible of a formulation comprising closed categories and that development continues [9]. They also endorsed what had been said by Gaudron J in Ridgeway v The Queen [1995] HCA 66; (1995) 184 CLR 19, 74 - 75 as follows (citations omitted):

The powers to prevent an abuse of process have traditionally been seen as including a power to stay proceedings instituted for an improper purpose ... as well as proceedings that are 'frivolous, vexatious or oppressive' ... This notwithstanding, there is no very precise notion of what is vexatious or oppressive or what otherwise constitutes an abuse of process. Indeed, the courts have resisted, and even warned against, laying down hard and fast definitions in that regard ... That is necessarily so. Abuse of process cannot be restricted to 'defined and closed categories' ... because notions of justice and injustice, as well as other considerations that bear on public confidence in the administration of justice, must reflect contemporary values and, as well, take account of the circumstances of the case ... That is not to say that the concept of 'abuse of process' is at large or, indeed, without meaning. As already indicated, it extends to proceedings that are instituted for an improper purpose ... and it is clear that it extends to proceedings that are 'seriously and unfairly burdensome, prejudicial or damaging' ... or 'productive of serious and unjustified trouble and harassment' ...

Finally, for present purposes, they agreed with the following comments of McHugh J in Rogers v The Queen (1994) 181 CLR 251, 286:

Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute.

Application of the principles by the trial judge

61 The present case is not one in which the court's procedures have been 'invoked' for an illegitimate purpose or 'used' in an unjustifiably oppressive way or in such a way as to bring the administration of justice into disrepute in the conventional sense in which such expressions are ordinarily used. What has happened is that the court's authority has been deliberately flouted, and its orders deliberately ignored, by a litigant so as to force an adjournment in order to make it more likely that he will be given leave to amend. That conduct was accompanied by deceit on oath in an attempt by the litigant to conceal his true motives from the court.

62 Regardless of whether conduct of that kind does, or does not, fall within conventional categories of abuse of process (as I have stressed, the appellant does not challenge the categorisation of it as an abuse by the trial judge), it is undoubtedly conduct of a kind that is prejudicial and damaging to the court's procedures and designed to bring about injustice. Moreover, conduct of that kind, unless severely dealt with, undoubtedly has the propensity to bring the administration of justice into disrepute. If the court is to be, and to be seen to be, effective, it must, when confronted with conduct of that kind, and after taking into account all relevant considerations (including prejudice to the offending litigant and the range of available remedies), exercise its undoubted powers to safeguard the administration of justice by taking whatever steps are reasonably necessary in the circumstances (and the power to enter judgment will ordinarily be one of last resort) to overcome any resulting injustice and to protect its processes, and its authority, from such conduct.

63 The uncontradicted findings made by the trial judge in the present case include the following:

(a) The appellant and Mr Tee agreed upon and pursued a deliberate and calculated plan to abort the trial ([136] - [138], [163]).

(b) The appellant was aware that this conduct was 'very wrong and would be seen that way by the defendant and by the court' ([141] - [143], [163]).

(c) The appellant was content to ignore orders of the court and to file false affidavits to conceal his true motives for doing so ([144] - [150], [163]).

(d) The appellant was evasive and dishonest ([125], [129], [132], [163]).

(e) The respondent was prejudiced by the appellant's conduct as a consequence of the delay and increased expenditure ([164] and [165]).

(f) An important consideration was the need for the court, acting in the public interest, to protect its processes from the kind of abuse that the appellant had engaged in ([173], [175] - [177], [187]).

64 As the trial judge rightly recognised, these were very powerful considerations in favour of the exercise of her discretion in a manner seriously adverse to the appellant. She also recognised that an action is summarily dismissed by the court only with the greatest reluctance [186]. She took into account those few factors that militated in favour of the grant of an indulgence. These included the obvious prejudice to the appellant resulting from the dismissal of his claim [166], [167]. Moreover, her Honour recognised that the power was to be exercised only when no other power of the court would adequately deal with the conduct which led to the bringing of the application to dismiss [179].

65 In these circumstances, I am not persuaded that the trial judge failed to have regard or sufficient regard to any established principle guiding the exercise of her discretion. Rather, it seems to me that she was acutely conscious of the guiding principles and that she gave effect to them. She did not regard the case as one for punishment of the appellant as a result of mistakes made in the conduct of his case. She was not dealing with mistakes by the appellant. As she found, the conduct of the appellant was deliberate, with knowledge that it was wrong. It is also wrong to say that the trial judge erred in failing to determine whether the conduct could be corrected without injustice to the respondent. She plainly (and rightly) considered that an adjournment would result in injustice, but said that this was only one of the considerations relevant to the exercise of her discretion. Whether there could still be a fair trial on the merits was, quite properly, not regarded by her Honour as a consideration of any significance in the circumstances of this case. If she had allowed the appellant to have his trial at a later date, his stratagem would have achieved at least part of its objective. Finally, her Honour carefully balanced the competing principles and, as I have said, recognised that the power to dismiss was to be exercised only in exceptional circumstances.

66 It is also wrong to say either that some peremptory order was required before the action could be dismissed. A springing order was inappropriate in circumstances in which the appellant had already engaged in a deliberate, planned course of conduct designed to abort the trial by flouting the court's orders. It was too late and the conduct was too serious for an order of that kind.

67 Nor is there any basis for the submission that the appellant was taken by surprise by the application for dismissal of his action. He was told, on 15 April 2008, that an application for dismissal of his action was to be made prior to 21 April 2008. He knew, very well, what was the factual basis for it. He had sufficient time to prepare for it. I have said that the application was listed on 18 April 2008 (three days after he had notice of it) and adjourned to 21 April 2008, so as to give his counsel more time to prepare for it. His opposition to the application was supported by affidavit and by his oral evidence.

68 Finally, it is not the case that the trial judge made a material error in taking into account that the appellant may have a cause of action against others, being his solicitors (if, as she doubted, they had been negligent) and Mr Tee. She mentioned this possibility only in the course of summarising submissions made on behalf of the respondent [168]. She did not again refer to it and apparently accorded it no or insignificant weight. She found that the overriding consideration, in all of the circumstances, was the need to protect the processes of the court from conduct of the kind that the appellant had deliberately engaged in ([174], [186], [187]). The possible existence of a claim against others was seemingly (and appropriately) not regarded by her as a relevant consideration in that respect.

70 As to ground 2, the trial judge was aware of each of the matters raised in support of that ground and, where appropriate, gave due weight to those matters. I have said that she identified, accurately, the prejudice that would be suffered by the respondent if the trial was adjourned and that which would be suffered by the appellant if his action was dismissed [164] - [167]. She took into account the appellant's engagement of new solicitors and the fact that he had instructed them to proceed with the

action in a timely way. She also took into account his assertions that there was no reason why the action would not be pursued in a timely way although she doubted (with good reason) his assurances that he would not again disregard his obligations to the court [182]. She said in that respect that the appellant had consistently 'adopted the course which he considered to be in his own best interests, irrespective of whether in doing so he was flouting orders of this court or his obligations as a litigant, a deponent or a witness' [183]. She considered his assertions that he had determined to have no further dealings with Mr Tee [150]. However, she pointed out (rightly) that, until the evening before the hearing of the application to dismiss, he had still been taking advice from Mr Tee [150]. She said that the appellant had made a deliberate decision to follow Mr Tee's advice ahead of the conflicting advice of Mr Hobday ([156], [157], [185]). She found that the appellant had understood what he was doing (although he had not appreciated that it might result in the dismissal of his action) and that he had not been 'the guileless pawn of an inter-meddler' ([135], [137], [185]). Finally she mentioned the appellant's expression of remorse [105], but found that he had repeatedly been dishonest with the court ([144] - [148]). His expressions of remorse could clearly have carried no weight in these circumstances.

71 Having considered all of these matters, the trial judge found, as I have said, that in the circumstances of this case the overriding consideration was the need to protect the processes of the court from conduct of the kind that had deliberately been engaged in by the appellant. It was open to her to arrive at that conclusion. If the position was otherwise, respect for the authority and processes of the court would be lost. Unscrupulous litigants would feel free to abuse the court's processes if, after weighing up the benefits of an abuse against the likely detriment that would follow from it, the ledger favoured the abuse. Those who wish to make use of the processes of the court are required to respect them.

73 There is no substance to ground 3, for the reasons already given.

74 I would give leave to appeal (as to which see Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273 [2]) but dismiss the appeal. The appellant should pay the respondent's costs of the appeal, to be taxed.

MARIOTTI -v- WANNEROO NORTH PTY LTD [2008] WASCA 243 (28 November 2008)

At a glance

Court

Decision date

Before

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Judgment (119 paragraphs)

MARIOTTI -v- WANNEROO NORTH PTY LTD [2008] WASCA 243 (28 November 2008)

J L Holdings and case management principles

Legislation Cited (2)

Cases Cited (20)