McWILLIAM & ORS v WATSON & ORS [2000] NSWSC 761 | Case summary

JUDGMENT: 1 HIS HONOUR: This is an appeal from an order of the Master refusing a motion to extend time limits expressed in self-executing orders made on 11 February 1998. They required, amongst other things, that an Amended Statement of Claim be forwarded to the defendant's solicitor on or before 6 March 1998, and that the plaintiffs were to provide a reply to the defendants' request for particulars within 21 days. Failure to comply with either of these requirements would result in the Statement of Claim being dismissed by virtue of the order. 2 On 6 March 1998 the plaintiffs filed an Amended Statement of Claim in accordance with the first of the requirements, but did not answer particulars in accordance with the second. Those particulars were requested on 18 May 1998 and it followed that the plaintiffs were ordered to answer them by 8 June 1998. They were not answered until 16 October 1998. Accordingly, the plaintiffs delayed four months in providing particulars in circumstances where a self-executing order was made. 3 By notice of motion filed 31 August 1999 the second and third plaintiffs (the first plaintiff having died in the meantime) seek that the time of compliance with the second requirement of the self-executing orders be extended up to and including 16 October 1998, and other ancillary orders. Essentially, the reason advanced by the plaintiffs to the Master for the failure to comply with the request for particulars by the required date was that they were impecunious and were unable to pay to their solicitor in respect of outstanding fees $200 until 16 October 1998 and the balance until 2 June 1999. In the meantime, the solicitor had declined to do any further work. 4 In dealing with the application, the Master noted a chronology set out in the affidavit of Bruce Scott McWilliam, the second plaintiff. That affidavit did not, however, explain how the impecuniosity of the plaintiffs led to the delay in payment, and to this extent might fairly be described as exiguous. 5 Dealing with the history of the matter since the imposition of the self-executing orders, the Master noted that on 25 June 1998 a formal order that the Statement of Claim be dismissed was entered, that the particulars were answered on 16 October 1998, but it was not until 31 August 1999 that the notice of motion seeking relief from the effect of those orders was filed, as the Master stated, "a further delay of 10 months since the particulars were answered and some months after the plaintiffs were put in funds". There was no explanation before the Master as to why, after the plaintiffs were put in funds, there was a further delay in filing the notice of motion. 6 For reasons which it is unnecessary to go into in this judgment, fresh evidence has been led before me that demonstrates for at least six weeks of this period, and possibly slightly longer, the plaintiffs had been engaged in negotiations through a Mr Forsyth (a solicitor who was acting, however, as a personal friend of the family) in an attempt to settle the litigation, as a result of which there was, in effect, an understanding reached with a solicitor for the other parties to this litigation that the notice of motion would not be filed unless the negotiations proved fruitless. It was accepted - and indeed there was good reason to do so - by those very experienced lawyers that the commencement of proceedings might be regarded by the parties as pointlessly adding to the expense of the litigation which the negotiations were intended to avoid. 7 In the circumstances, this material which, as I have said, was not before the Master, seems to me to be significant. 8 The arguments advanced by the defendants to the motion dismissed by the Master were, firstly, that there was a need for finality in litigation and the plaintiffs had been given what was described as "a very last chance" which they had, in effect, abused. It was also argued that the defendants were prejudiced because a Mr Lanigan of counsel, whose evidence was material to the issues in the principal litigation, had died in 1993. Although it was submitted otherwise by counsel for the defendants in this Court, my reading of the Master's judgment leads me to the conclusion that this consideration, affecting as it did the opportunity of the defendants fairly to present their case in the substantive proceedings, played a substantial role in her ultimate decision to dismiss the plaintiff's motion. 9 Mr Lanigan had, however, died in 1993, well before any issue of time limits became important in the case. Defendant's counsel in this Court has submitted, and rightly, that the true significance of the loss of this witness was that the delay had a much greater impact on the other evidence which the defendants might be able to call on the issues in the trial and that the Master's reference to the absence of the evidence of Mr Lanigan should be seen in that light. However, the Master did not advert to this derivative significance and I am driven to the conclusion that the crucial question, namely the unfairness to the defendants caused by the delay so far as any unfairness in the trial itself was concerned, was not considered by her as material, except in so far as the delay meant that Mr Lanigan could not be called. 10 As the Master rightly said, each case depends on its own facts. It appears to me that she accepted that the plaintiffs were impecunious and that this was material to the exercise by her of the discretion invited by the motion for extension of the time limits. As she also rightly observed, however, impecuniosity did not sufficiently explain the 10 months' delay in filing the notice of motion after the provision of the particulars. Although that delay has not been entirely, it has been substantially explained by the evidence of the solicitors as to the understanding about filing the summons. 11 The relevant test applying to the Master's task is adequately stated by the High Court of Australia in FAI General Insurance Company Limited v Southern Cross Exploration NL (1998) ALR 77 at 411 in a passage cited by the Master, to the following effect - "It is common ground that I can make an order varying my previous order pursuant to Part 2 r 3 of the Supreme Court Rules (SCR). In Southern Cross Exploration the High Court in relation to Part 2 r 3 SCR stated: "The plain meaning of these words is very wide. The court may extend "any time" fixed by "any...order" and may do so as well after as before the time expires and even though the application to extend is not made until after the time has expired. As Baggallay LJ said in Carter of the analogous English rule, it gives "very full discretionary power; indeed, I can hardly imagine a more extended discretion" (at 120). It is a remedial provision which confers on a court a broad power to relieve against injustice. The discretion so conferred is not readily to be limited by judicial fiat. The fact that it manifestly is a power to be exercised with caution and, in the case of conditional orders, with due regard to the public policy centred in the finality of litigation does not warrant an arbitrary limitation of the power itself, not expressed in the words of the rule, so as to deny its capacity to apply to circumstances such as those which are to be found in the present case. It would be wrong to so read the rule as to deny to a court power to prevent injustice in circumstances where the party subject to a conditional order ought to be excused from non-compliance." 12 The Master said that she took into account that it would be a drastic step to deprive plaintiffs from a trial on the merits. It is no less drastic when the reason or a significant reason for plaintiffs being unable to ready their case for trial arises from their impecuniosity. It has been submitted to me by counsel for the defendants that whether impecuniosity is a material factor in the exercise of the Court's discretion in cases of this kind is at least doubtful, and even if it has some relevance, it is slight. 13 I am of the view that established impecuniosity, where it is proved to be a substantial factor in the failure by a plaintiff to satisfy procedural requirements of litigation, is a very significant consideration in the exercise by the Court of its discretionary powers to terminate litigation without a hearing on the merits. It is unfortunate that in this case greater attention was not given by the plaintiff's legal advisers to the need to explain how the relevant impecuniosity arose, what steps the plaintiffs took to overcome the difficulty and why those steps were not effective. However, having regard to the way in which this matter was litigated before the Master, I do not see that the exiguity of the evidence in this case should stand in the way of assigning to the issue of impecuniosity an appropriate and substantial significance. 14 The Master adverted to the consequence for the defendants that their belief that from 25 June 1998 the proceedings were at an end was disappointed by the reactivation of them on 31 August 1999 and then by the hearing in February this year, especially since the litigation could affect their professional reputations. I consider that the Master was correct to place this matter in the scales and give it due weight. However, in the circumstances of this case I do not consider that it bore the weight assigned to it by the Master. 15 The Master also referred to the need for finality in litigation. In the context the only litigation which was material was that which concerned the appropriateness of the self-executing orders. However, with the greatest respect, as I read the Master's judgment on this matter, I think that she had in mind the need for finality as it applied to the principal proceedings. Since there had been no determination on the merits in that regard, the consideration of finality was not, in all the circumstances, a significant one. Here too, if I may say so with unfeigned respect for the Master, I consider that she erred. 16 In some ways, as the matter unfolded below, the considerations on each side were finely balanced. I have no doubt that had the Master been aware of the additional evidence, which I have permitted to be led in this Court, that she would not have dismissed the summons and would have provided the relief granted. At all events, I have no doubt that I should so act. 17 Accordingly, the appeal is allowed. I extend time for the answering of the particulars requested by the defendants of the plaintiffs on 18 May 1998 to 16 October 1998. The matter is set down for further directions on Monday 21 August. 18 (Discussion re costs) 19 The orders will be as I have stated. I make no order as to costs. The costs order below stands.

McWILLIAM & ORS v WATSON & ORS

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