MEDITERRANEAN SHIPPING CO v HINES EXPORTS No. SCGRG-98-1648 Judgment No. S52 [1999] SASC 52

Supreme Court of SA|1999-02-19|Before: Nyland J

This is an appeal from an order of a District Court judge. The appellant was the defendant in the proceedings in the District Court and the respondent was the plaintiff. On 3 December 1998 the District Court judge struck out the defence and entered judgment for the plaintiff. For convenience, I will continue to refer to the parties as plaintiff and defendant.

The plaintiff in the course of its business as a meat exporter contracted with the defendant for the supply of certain refrigerated containers for the purpose of transporting frozen crumbed mutton carcases from Port Melbourne to Cape Town in South Africa. One of the containers was allegedly defective, with the result that upon arrival in Cape Town a substantial quantity of the meat was certified unfit for human consumption.

The plaintiff claimed damages for negligence. The defendant denied the claim and asserted reliance upon the terms of the bill of lading which required notice to be given within twelve months. The plaintiff instituted proceedings in the District Court on 7 June 1996. A more explicit statement of claim was filed on 23 September 1997. The original defence was filed on 22 May 1997 and a more explicit defence on 19 November 1997. The reply was filed on 28 January 1998.

In accordance with the usual procedures of the court, a conciliation conference was held on 11 July 1997. At that time there was no appearance by the plaintiff but an order was made that the time within which the defendant may file and serve on the plaintiff a notice pursuant to the provisions of R 46.20 be extended to 21 days from that date.

The proceedings were thereafter somewhat protracted. As the course of the proceedings is relevant to the issues which arise on this appeal, I set out hereafter my understanding of the relevant history of the case evaluation conference and related matters:

15.9.97 Noted that a R 46.20 notice has been served on the plaintiff and the plaintiff intends to respond within fourteen days. Conference adjourned to 27 October 1997. 27.10.97 Order for amended defence to be filed within fourteen days. Defendant to make discovery within fourteen days. Conference adjourned to 24 November 1997. 24.11.97 Order for filing of reply (if any) by plaintiff within fourteen days. Order for mutual discovery upon any new issues raised by amendments to the defence and reply within 21 days. Adjourned to 19 January 1998. (This date was subsequently amended to 29 January 1998.) 29.1.98 Conference adjourned. Noted that the defendant's counsel must get instructions re issues that need to be addressed. "Warned re further adjournments". Liberty to apply re further and better discovery. On the same date, leave was given to the plaintiff to issue interrogatories within 28 days and an order made for extending time to file and serve reply to 28 January 1998. 12.3.98 Mediation option raised. Conference adjourned to 30 April 1998. Further documents to be lodged. Leave given to the defendant to have an additional seven days over and above period provided by rules to answer the interrogatories. Leave to plaintiff to make application for further and better discovery within seven days of 26 March 1998. 24.4.98 Plaintiff lodged application inter alia seeking orders to strike out defence and for better and further discovery. 30.4.98 Conference further adjourned to 22 May 1998. Noted no appearance on behalf of defendant. Defendant had not complied with the order made at last case evaluation conference. 8.5.98 Strike out application heard - 14 days for defendant to comply with orders. 22.5.98 Leave granted to defendant for extension of time in which to comply with order as to interrogatories. Conference adjourned to 25 June 1998. 25.6.98 Application made by plaintiff for defence to be struck out and judgment for the plaintiff to be entered on the basis of the defendant's failure to supply further and better discovery and to answer interrogatories. Judge notes situation which has given rise to application but declines to make the order. Conference adjourned to enable the plaintiff to consider the defendant's answers to interrogatories, and request for further and better particulars served that day. 16.7.98 Conference further adjourned to 28 August 1998 for conciliation. 28.8.98 Failed conciliation conference but parties agree to consider whether they can agree facts and/or documents for the purpose of considering argument on the issue of whether there were two separate contracts - one for the supply of the container and carriage contract (terms in bill of lading). Case evaluation conference adjourned to 17 September 1998. 15.9.98 Plaintiff's solicitors forward by facsimile a letter proposing that certain documents and facts be agreed. 17.9.98 Case evaluation conference adjourned to enable parties to obtain instructions and communicate as to agreed facts with a view to proceeding to a hearing on first issue. 21.9.98 Defendant's solicitors seek instructions by letter of their instructing solicitors in Sydney. 15.10.98 No appearance by the plaintiff. Application by the defendant to adjourn, as parties still negotiating agreed facts and documents. Conference adjourned to enable the parties to further communicate re agreement of facts. Judge notes "no further adjournments". 19.10.98 Defendant's solicitors advise plaintiff's solicitors that the conference adjourned to 3 December 1998. Also advise judge's comment "no further adjournments". 28.10.98 Plaintiff's solicitors write to defendant's solicitors acknowledging receipt of letter of 19 October 1998 and requesting position on agreed facts and documents. At that stage new issue raised of the plaintiff having paid separately for container and requesting any documents related to the issue of separate payment for provision of the container. 2.12.98 Fax letter from the defendant's solicitors to the plaintiff's solicitors as to various facts which are agreed, denied or qualified. No agreement reached as to documents. Further particulars sought from the plaintiff as to allegation that the container the subject of the dispute, had been separately paid for. 3.12.98 Case evaluation conference resumed. Application made by the plaintiff to strike out the defence and enter judgment for the plaintiff. Order made.

It is not clear from the file whether leave was given by the judge to appeal against her order, but at the commencement of the hearing of the appeal I indicated that if leave had not already been given I would do so on the basis of Supreme Court Rule 96B.02(1)(b) and that was not resisted by the plaintiff. There is no transcript of the proceedings which took place on 3 December 1998 but the judge subsequently prepared a report as to her reasons for making the order. She mentions that before the solicitors addressed her, she commented that this matter constituted the longest running case evaluation conference she had conducted in that it had been at the case evaluation conference stage for almost a year.

The specific reasons given by the judge for her order are set out in the report as follows:

"4. I considered the submissions. I decided to strike out the defence and enter judgment for the plaintiff for the following reasons. 4.1 The defendant had been exceedingly dilatory in its approach to this matter. In effect, nothing had been done by the defendant since the aborted conciliation attempt on 28 August 1998; a period of in excess of three months. 4.2 The defendant had agreed in good faith to communicate with the plaintiff with a view to agreeing facts and documents for the hearing of the first issue; a course which was embarked on in the interests of saving time and expense for both parties. The Court had accepted that such a course was in the interests of both parties and had adjourned the conference in the matter, without formal orders being made, to enable the parties to attempt to agree facts and documents for the hearing of the first issue. For the defendant to now assert, in the circumstances, that no formal orders had been made and that therefore the defendant was not in default, lay ill in the defendant's mouth. 4.3 Since the attempted conciliation on 28 August 1998, the case evaluation conference had been twice adjourned, at the request of the defendant, and on the last occasion (15/10/98), when the matter was adjourned to today, the defendant's solicitor had been informed that the Court would not further adjourn the case evaluation conference. The defendant had been on notice. 4.4 The defendant's solicitor had failed to communicate with the plaintiff's solicitor. 4.5 It would unfair for the Court to have expected the plaintiff to take action with respect to further and better discovery when there had been an agreement between the parties (made in the presence of the parties and their solicitors at the conciliation conference on 28 August 1998) in good faith to take a particular course, in the interests of both parties. 4.6 Although the Court acknowledge that the defendant's solicitor had to obtain instructions from Sydney, the defendant (through an employee of the defendant Company) had been present on 28 August 1998 and party to the then agreed course of action. 4.7 In all of the circumstances, an order for costs would not address the prejudice which the plaintiff was likely to suffer; namely that the plaintiff could not now fully prepare its case without penalty and that the delay occasioned could be detrimental. 4.8 The matter was not ready to go to pre-trial conference, but had been at case evaluation conference stage for almost 101/2 months. 4.9 The plaintiff was entitled to an order that the defence be struck out, in the circumstance where the defendant had been extremely dilatory in pursuing the course agreed, and the Court had given notice, the effect of which was that further delays would not be tolerated and an order for costs would not compensate the plaintiff for the likely prejudice. 4.10 Given that there was now no defence to the action, the plaintiff was entitled to judgment in its favour."

The judge indicated that she then exercised the power contained in R 56.06 to make the order which is the subject of this appeal. Rule 56.06(1) provides as follows:

"Each conference held by a judge or master pursuant to this rule (56) shall, if the judge or master shall so direct and subject to R 55.09, constitute a hearing of the application for directions within the meaning and for the purposes of R 55. At any such hearing of the application for directions, orders may be made: (a) striking out the action, a pleading or any other document of the party in default. ..."

Mr Howard who appeared as counsel for the defendant on the hearing of the appeal submitted that this rule did not authorise the summary striking out of an otherwise proper pleading of a party absent default by that party. In this case the defendant was not in breach of any order or any rule of the court. Mr Howard also submitted that the District Court judge had wrongly taken into account a number of matters. The judge said that nothing had been done by the defendant since 28 August 1998 whereas the defendant had responded to the plaintiff's proposal on 2 December 1998. The comment that the defendant had agreed in good faith to communicate with the plaintiff with a view to agreeing facts and documents and had failed to do so suggested that the initiative for the proposals as to agreed facts and documents lay upon the defendant, but this was incorrect. The statement that it would be unfair of the court to expect the plaintiff to take an action for further and better discovery in light of the agreement to attempt to agree facts and documents did not appear to take into account the matter was first raised by the plaintiff on 28 October 1998 separately from the proposed agreed facts and documents.

The judge recorded that it was upon the defendant to submit proposed facts to be agreed, but Mr Howard argued that it was for the plaintiff to propose and for the defendant to respond, as had occurred, including the defendant seeking further time to respond.

Mr Howard also submitted that no submission had been made that the delay occasioned to the plaintiff could be detrimental. He pointed out that this action was a commercial dispute between commercial entities with no suggestion of personal stress being occasioned.

Mr Howard submitted that, in all the circumstances, the judge ought not to have applied case flow management principles so as to prevent the defendant from litigating a fairly arguable case.

Mr Downs who appeared as counsel for the plaintiff on the hearing of the appeal submitted, however, that the judge had properly found the defendant to be in default. He referred to R 56.04 which is part of the case flow management structure of the court which was (inter alia) implemented for the purpose of the court overseeing procedural matters for the purpose of expediting court hearings. The significance of that rule was that no further interlocutory order is to be made later than the date fixed at the case evaluation conference unless exceptional circumstances are shown to have arisen. On that basis, the plaintiff was prejudiced as it was placed in the position where it had to show, and probably would not succeed, that exceptional circumstances had arisen if it wished to seek further orders. He submitted that the judge had correctly concluded that the defendant was in default due to its last minute effort to attend to outstanding matters, that is, on 2 December 1998, the conference having been adjourned from 15 October 1998, at its request.

He submitted that the judge therefore correctly concluded that the defendant was not genuinely endeavouring to comply with the procedures of the court. He referred to R 2.01, 2.02 and 2.03 as to case flow management and submitted that any alleged injustice suffered by the defendant was self-inflicted.

The judge was understandably concerned at the lack of progress in this matter. It is unacceptable for a matter to remain at the case evaluation stage for such a lengthy period of time. It was essential that the matter be brought to conclusion. The defendant has been extraordinarily dilatory in this matter. It would appear, however, that the plaintiff is not altogether blameless in that it raised a new issue in October 1998 in proceedings commenced in May 1996 and it was at the hearing in October, just before the new issue was raised, that the judge alerted the parties to the fact that there would be no further adjournments.

Most of the problems with respect to the further issues of discovery appear to have related to the fresh issue raised by the plaintiff. Even so, the defendant appears to have been extremely slow in obtaining instructions as to those matters. It should have been in a position to respond to the plaintiff well before 2 December 1998, that is, the day before the conference was due to resume. There was an obvious prejudice to the plaintiff if the case evaluation conference concluded on 3 December 1998, as it would have effectively been precluded from further pursuing matters relative to discovery. The defendant's lack of haste in the matter is contrary to the spirit of the case flow management procedures of the court. The defendant was not, however, in default of any specific order or rule of the court. The matter had not been set for trial.

In The State of Queensland & Anor v J.L. Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 the High Court (per Dawson, Gaudron and McHugh JJ) said at 155:

"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 my view this matter is finely balanced. The defendant does appear, however, to have an arguable defence which it has been precluded from raising as a result of the order of the court. I have finally concluded, therefore, that it is appropriate in this case to allow the appeal and remit the matter to the District Court judge to resume the case evaluation conference. I anticipate that at that stage, the judge will make such further orders as she considers appropriate in order to bring the interlocutory proceedings to a close. Any party in default of those orders will be aware that it will be at risk of having its pleadings struck out for non-compliance.

At a glance

Court

Decision date

Before

Source

Judgment (23 paragraphs)

Parties

Cases Cited (1)