Procedure - Supreme Court Procedure - Tasmania - Practice under Rules of Court - Other Matters Arising Before Trial - Failure to Comply with Order - Entry of Judgment.

Judgment Number: [2009] TASSC 41

1 This is an application for an order striking out the defendant's defence and counterclaim with judgment to be given for the plaintiff. The application is based on a contention that the defendant has intentionally and contumeliously failed to comply with Court orders.

2 On 20 March 2009 the plaintiff, through its legal practitioner, wrote to the District Registrar requesting a directions hearing. A copy of the letter was sent to the defendant's legal practitioner. The plaintiff proposed in the letter that directions be given referring the action for mediation and setting it down for trial.

3 On 23 March the District Registrar caused to be issued a notice appointing 16 April for the directions hearing. When the matter was called on there was no appearance on behalf of the defendant. Orders were made referring the action for mediation and requiring the defendant, through its legal practitioner, to attend a compulsory conference and sign a certificate of readiness within 14 days. An order was also made that, unless in the meantime the certificate of readiness had been filed, the directions hearing was to resume on 7 May. The defendant was granted liberty to apply for a vacation or variation of the orders.

4 The making of the orders was notified by the Court to the defendant's legal practitioner. The defendant did not apply for orders vacating or varying those made on 16 April. Its legal practitioner did not attend a compulsory conference and did not sign the certificate of readiness.

5 The directions hearing was called on on 7 May. Again, there was no appearance for the defendant. An order was made that, unless in the meantime a certificate of readiness was filed, the directions hearing was to resume at 9.15 am on 21 May. The defendant's practitioner was given notice of this order and notice that he was required to personally attend the resumed directions hearing.

6 At about 5.30 pm on 20 May the defendant's legal practitioner sent a letter to the Court by facsimile transmission. It included the following:

"We note that the Court has ordered the personal attendance of the writer at the hearing tomorrow.

The writer has received no instructions from our client in relation to the certificate of readiness or the directions hearing. We anticipate that this may be a result of significant management changes which we understand are currently being implemented at CB&M Design Solutions.

At this time we do not know when or if we are likely to receive instructions in relation to the certificate of readiness. If we are unable to obtain instructions in the very near future we may be forced to withdraw our appearance in this proceeding.

The writer will not be in a position to attend tomorrow's hearing. We sincerely apologise for any inconvenience this may cause to the Court ...."

7 At the directions hearing on 21 May, counsel for the plaintiff advised that the plaintiff was ready for trial. An order setting the action down for trial with a hearing date in about six weeks' time was offered. Counsel advised, however, that the plaintiff wished to apply for judgment based on the defendant's non-compliance with Court orders. The application was made. The defendant's practitioner, by email to the Court, acknowledged receipt of the notification of the return date.

8 When the strike out application was called on there was no appearance on behalf of the defendant. No explanation by correspondence or otherwise for the failure to appear was given.

9 The non-compliance is occurring because the defendant is not issuing instructions to its legal representative. The defendant's legal practitioner speculates that this may be due to management changes at the company. This might or might not be so. The fact, however, is that the defendant company itself has provided no explanation.

10 An ASIC extract dated today, being 28 May was tendered. It shows the defendant is not in liquidation, administration or receivership. It shows that the principal place of business is here in Launceston and that the defendant's sole director lives in Launceston.

11 I infer that the non-compliance is intentional and contumelious. In this circumstance the Court has the power within its inherent jurisdiction to impose the sanction sought.

12 The question is whether the justice of the case lies with the power being exercised.

13 The plaintiff, through its counsel, has said that it is ready for trial. A setting down order can be made without the need for co-operation from the defendant and without delay. There is no suggestion from the plaintiff that a fair trial cannot now occur.

14 However, if the sanction sought is not granted the plaintiff will need to prepare for the trial. The dispute is complex. The plaintiff proposes to produce several hundred documents at the trial. The defendant has included in its discovery over 1,300 documents. In the draft certificate of readiness the plaintiff's legal practitioner estimates the likely length of the trial to be eight days. The preparatory work will put the plaintiff to inconvenience and expense.

15 An order setting the action down for trial will result in judicial time being reserved for the conduct of the trial.

16 I infer from the defendant's failure to respond to the plaintiff's strike out application that it now has no intention of contesting the plaintiff's claim and no intention of pursuing its own counterclaim. There will be a significant waste of private and public resources if the defendant does not intend participating at the trial. In such a circumstance there would be injustice and inconvenience if a sanction is not given and no injustice in depriving the defendant of a trial in which it does not intend to participate.

17 It might be said that if the plaintiff is put to a trial no injustice will occur because if successful the plaintiff could expect to recover its costs. In that regard, I refer to the decision of the Federal Court in Bomanite Pty Ltd v Slatex Corporation Australia Pty Ltd [1991] FCA 536; (1991) 32 FCR 379. There French J said at 392:

"The liberality of the approach expounded by Bowen LJ in Cropper v Smith (1884) 26 Ch D 700 reflected his perception that '... there is one panacea which heals every sore in litigation and that is costs'. That may well have been so at one time, but it is no longer true today. As Samuels JA commented in the GSA Industries Pty Ltd v NT Gas Ltd (1990) (unreported, Court of Appeal, NSW, 6 December 1990) '... the emollient effect of an order for costs as a panacea may now be consigned to the Aladdin's cave which Lord Reid rejected as one of the fairy tales in which we no longer believe'. Non-compensable inconvenience and stress on individuals are significant elements of modern litigation. Costs recoverable even on an indemnity basis will not compensate for time lost and duplication incurred where litigation is delayed or corrective orders necessary. The public interest also has become an increasingly significant element in the application of judicial resources. Inefficiencies in their use arising from lost and wasted time can never be compensated by costs."

18 The jurisdiction to strike out a defence for failure to comply with a court order should be sparingly exercised and saved for exceptional circumstances. I am persuaded, however, that these are such circumstances and that a sanction should be given.

19 I propose the following order, but I will hear counsel as to its terms:

The defence and counterclaim are struck out and the defendant is taken to be a defaulting defendant for the purpose of Division 2 of Part 11 of the Rules.