Plaintiffs v Defendant

Supreme Court of Victoria|2012-07-04|Before: PAGONE J

PRACTICE AND PROCEDURE - Supreme Court (General Civil Procedure) Rules 2005 (Vic) Rule 77.06 - Judicial review - Non-compliance with self-executing orders - Principles for consideration to relieve a party of the consequences of non-compliance with self-executing orders - Whether there is prejudice to the defaulting or innocent party.

2 An appeal under Rule 77.06 is a hearing de novo and the issue before me is not whether Mukhtar AsJ's original orders on 10 May 2012 were erroneous, nor whether his decision on the summons of 12 June 2012 was erroneous. The issue is what decision I ought independently to reach in respect of the matters that were before him on the summons of 12 June 2012.

3 A relevant background fact is that his Honour had made orders on 10 May 2012 with significant consequences. The issue which came before him on 18 June 2012, and which comes now before me, is not whether the orders made on 10 May 2012 ought to have been made. The issue was, and is, rather, whether the defendant should be excused from non compliance with those orders.

4 The trial in this proceeding is set down for hearing on 16 July 2012. It was set down for hearing on that date as long ago as 29 November 2011. Indeed it was on 29 November 2011 that orders were made which the defendant did not comply with and which the plaintiff sought to have complied with by having the matter relisted. It was that which led to self executing orders being made on 10 May 2012.

5 The principles for my consideration are conveniently set out in the judgment of the Court of Appeal in Jorgensen v Slater & Gordon:[1]

The court has a wide discretion to relieve a party of the consequences of non-compliance with the self-executing order. The governing consideration, as in every aspect of practice and procedure, is what justice requires. As Burt CJ said in Link Blocks Pty Ltd v Fullin, all the circumstances must be weighed in the balance and

"one must not lose sight of the fact that the justice spoken of is an evenhanded justice to [both sides]."

The power to relieve must be exercised with care. As Roskill LJ said in Samuels v Linzi Dresses Ltd, it is a power

"which should be exercised cautiously and with due regard to the necessity for maintaining the principle that orders are made to be complied with and not to be ignored."

We respectfully agree with what was said by Newnes J in the Western Australia Supreme Court in MTQ Holdings Pty Ltd v Lynch as follows:

"The authority of the court will equally be undermined, and the quality of justice for the innocent party eroded, if the ultimate sanction effected by the operation of a [self-executing] order can be avoided by showing that non compliance with [that] order came about by the same sort of inattention or laxity that caused the order to be made in the first place."

We would also adopt what Newnes J said regarding the considerations which should ordinarily be brought to bear in considering the exercise of this discretion. The court should have regard at least to the following matters:

(a) the circumstances in which a self executing order was made;

(b) the reasons for non-compliance with it;

(c) the prejudice to the defaulting party if relief were not granted; and

(d) the prejudice to the innocent party if relief were granted.[2]

I shall return to each of those four matters. It is fundamental to those principles that litigants are entitled to expect compliance with the court's orders. The parties have a duty to do so by operation of law, the orders having been made. They also have an entitlement to expect that opposing parties will comply with the orders in the proper administration of justice. The administration of justice is undermined if parties can avoid their obligations to each other and to the court without penalty, sanction or consequence.

6 Self-executing orders can be severe and are not imposed lightly. However, once imposed the parties are on notice that the obligations imposed by the orders may carry severe consequence for non-compliance and it is the non-compliance with the obligation that may cause the severe consequence which the self-executing order effects. It is the party with the risk who has the means of avoiding the risk by complying with the order. A party not able to comply with the orders should seek to have them varied.

7 The first of the matters identified in Jorgensen is the circumstance in which the orders were made. The self-executing orders were made in this case by reference to a number of circumstances, some of which I have already referred to, namely that the matter was set down in November 2011 for trial in July 2012. Orders had been made in November 2011 and by 10 May 2012 they had not been complied with. Mukhtar AsJ noted on 10 May 2012 under 'Other Matters', that the court made these orders on that day because of; (i) a history of procedural default by the defendant; (ii) non responsiveness by the defendant or his lawyers to requests or urgings of the plaintiffs and; (iii) the proximity of the trial date (for a proceeding that is about three years old). His Honour continued, under 'Other Matters':

These facts are recounted in an affidavit of A R Maher sworn 9 May 2012. The Court has refused the Defendant's application for a three week adjournment which was sought because, it was said, there is a prospect of new solicitors acting.

One may add to what was said by his Honour that the two critical complaints before me, (that is, the two critical matters of non-compliance that were engaged before me), are matters which are said to be remedied but which, if they have been remedied, have been remedied only very recently. A list of documents was required to be served. The defendant does not come to court seeking to be excused from earlier non-compliance saying that the list was given before the hearing. Rather, I was informed by counsel for the defendant that the document which was to have been given pursuant to the order was "in court". That is not the same as showing diligent attempts at the first available opportunity to comply with an order; not only is there no evidence of any diligence at the first available opportunity, but the existence of a document, as I am told, existing somewhere in the body of the court is indicative of a lack of diligence. At best the court is told that an obligation as yet unsatisfied could be complied with by service of a document which was not yet served at the time of the appeal.

8 Witness statements had also been ordered to be filed. Documents and affidavits had been prepared for use primarily in another aspect of the appeal which I am told would stand as the witness statements in the trial of the proceeding. Again, the matter comes very late. More significantly, however, I am told by counsel for the plaintiffs that the contents of that material (which the plaintiff was given) would cause the hearing date to be vacated because the period of time between when they have been made available and the hearing date is insufficient for the plaintiffs to be ready to conduct the trial on 16 July 2012 which, I repeat, had been set down as the date for trial on 29 November 2011.

9 The second circumstance identified by the court in Jorgensen was the reasons for non-compliance. In short, the reason proffered to me was essentially a previous lack of funds. I am told, in rather general terms, that funds are now available. The explanation for the lack of funds in the past, I think, is not adequately explained and is asserted in only the most general way. A litigant asking to be excused for non-compliance of an order of the court needs to do more than rely upon such generalities as has been the case in this instance. What is said does little to provide excusable reasons for the non-compliance. That there was a general lack of funds is a matter that may be understandable as a difficulty for a party but the explanation in this case is not sufficient to provide an excuse for the non-compliance of a court order which had been made so long ago. If a party were not able to comply with the court order, it is incumbent upon the party and, in some cases, the practitioners, to approach the court promptly to seek an alternative means of proceeding.

10 The third factor is the prejudice to the defendant. A self-executing order can produce a severe effect upon a party subject to it, and many of the matters raised by the defendant as reasons for the appeal are in effect that the consequences of a self- executing order are severe. That is both self evident and the consequence of the self- executing order. It does little to identify prejudice beyond that flowing from the consequence of the self-executing order. Not much more has been said in support of the plaintiffs' case under this heading except what I may infer from the nature of the pleadings and the statement made by the counsel for the plaintiff that there is a lot of money that is owed. One may assume that judgment on a large amount of money is a matter that will cause some inconvenience and insofar as that may amount to prejudice, then it may be said that there is some additional prejudice that flows from an order of the court consequent upon the failure to comply with the orders.

11 The fourth matter was the prejudice to the innocent party. This is a proceeding in which what is sought is essentially the payment of money. It is a commercial dispute and in Aon Risk Services Australia Ltd v Australian National University[3] Heydon J said:

The litigation thus commenced was commercial litigation. While in general it is now seen as desirable that most types of litigation be dealt with expeditiously, it is commonly seen as especially desirable for commercial litigation. Its claim to expedition may be less than those of proceedings involving, for example, extraordinary prejudice to children or the abduction of children; or a risk that a party will lose livelihood, business or home, or otherwise suffer irreparable loss or extraordinary hardship, unless there is a speedy trial. But commercial litigation does have significant claims to expedition. Those claims rest on the idea that a failure to resolve commercial disputes speedily is injurious to commerce, and hence injurious to the public interest.[4]

His Honour then set out a passage from what Rogers J had said in Collins v Mead[5] and went on:

Commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible, whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case that is because it is important that both the claimants and those resisting claims are able to order their affairs. How they order their affairs affects how their creditors, their debtors, their suppliers, their customers, their employees and in the case of companies, their actual and potential shareholders, order their affairs. The courts are thus an important aspect of the institutional framework of commerce. The efficiency or inefficiency of the courts has a bearing on the health or sickness of commerce.[6]

12 It follows that a further delay in the proceeding would be a substantial prejudice to the plaintiff. I am also mindful that senior counsel for the plaintiff has said that if the orders had been overturned, the proceeding on 16 July 2012 would not be able to go ahead and that, I think, is a significant prejudice to the plaintiff.

[2] Ibid [9]-[11] (citations omitted) (Maxwell ACJ and Forrest AJA).

[5] Unreported, Supreme Court, NSW, No 1222174 of 1989, 7 March 1990.

[6] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, 224.

Court (General Civil Procedure) Rules 2005

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