Rayscan Management Pty Ltd & Ors v Siv Nandan Moodliar

CATCHWORDS : Overriding purpose rule - Self executing orders - Extension of time periods provided in self executing orders

LEGISLATION CITED : Civil Procedure Act 2005 (NSW)

Battenberg v Union Club [2007] NSWSC 265 Cropper v Smith (1884) 26 Ch D 700 Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 CASES CITED : FAI General Insurance Company Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Goodwill Group Pty Ltd v Pongrass Associates Pty Ltd [2002] FCA 1203 Porter v Gordian Runoff Ltd (No. 3) [2005] NSWCA 377 Michael Wilson and Partners Ltd v Nicholls [2008] NSWSC 501 State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146; [1997] HCA 1

Rayscan Management Pty Ltd (First Plaintiff) PARTIES : CAA Partners No. 1 Pty Ltd (Second Plaintiff) Pacific Healthcare (Australia) Ltd (Third Plaintiff) Siv Nandan Moodliar (Defendant)

COUNSEL : Mr S Habib (Plaintiffs) Mr H Stowe (Defendant)

SOLICITORS : Horton Rhodes (Plaintiffs) McLachlan Thorpe (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

Friday 15 August 2008 ex tempore Revised 20 August 2008

50160/05 Rayscan Management Pty Ltd & Ors v Siv Nandan Moodliar JUDGMENT The background 1 On 29 January 2008, McDougall J, after an ex parte hearing, directed judgment for the plaintiffs in these proceedings. On 30 January 2008, orders were made by his Honour giving effect to his Honour's reasons and these orders were entered on 31 January 2008. 2 On 1 July 2008, Windeyer J made the following self-executing orders:

"1. Upon the conditions that: (a) The defendant pay to the plaintiffs by 29 July 2008 the sum of $60,000 on account of the costs of the application of 24 January 2008, the applications and hearing of 29 and 30 January 2008, the notice of motion of 11 February 2008 and this motion; and

(b) The defendant by 29 July 2008, give security for the plaintiffs' costs of this action in the sum of $60,000 by payment into court or by bank bond or in such other form as is agreed by the parties or determined by the Registrar; then upon such conditions being met order that the judgment and orders of Justice McDougall of 30 January 2008, other than the order for costs be set aside.

2. Order that if the above conditions are not fulfilled by 29 July 2008, the notice of motion stand dismissed on 30 July 2008…" 3 The defendant has failed to comply with these orders. The effect of the defendant's non-compliance is that, presently, his notice of motion dated 14 April 2008 (seeking to set aside the judgment and the orders of McDougall J) stands dismissed. The further notice of motion 4 By notice of motion dated and filed on 29 July 2008, the defendant now seeks orders extending time for compliance with orders 1(a), 1(b), and 2 made by Windeyer J on 1 July 2008. Defendant's standing and the power of the Court 5 The plaintiffs accept that the defendant has standing to seek, and the Court has power to grant, an extension of the time period contained in a self-executing order of the type made by Windeyer J: FAI General Insurance Company Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 at 283; 290; see also Goodwill Group Pty Ltd v Pongrass Associates Pty Ltd [2002] FCA 1203. 6 The jurisdictional basis for the orders sought by the defendant in his notice of motion is UCPR 1.12. That rule provides a discretionary power to extend time periods fixed by, inter alia, orders of the Court. 7 Although the rule provides a discretionary power to extend such time periods, "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". [FAI General at p.283 per Wilson J with whom Brennan, Deane & Dawson JJ agreed]. 8 Moreover, where there is a history of failure to obey the Court's orders, there may be a more rigorous approach by the Court to the application of self-executing orders: Goodwill Group Pty Limited v Pongrass Associates Pty Limited [2002] FCA 1203 per French J. 9 The onus is upon the defendant to establish sufficient grounds for the exercise of the discretion to extend the time limits imposed by Windeyer J. The present position 10 The present position is that the defendant, albeit belatedly, has paid $60,000 to the solicitors for the plaintiffs on account of costs and has paid a further $60,000 into Court as security for costs [notably the final $10,000 security for costs moneys was only paid to the Court yesterday by trust account cheque from the defendant's solicitors, which has not yet been presented but in respect of which the plaintiffs have not sought to be heard] The background history 11 The background history of the defendant's failure to comply with directions and sundry applications to vacate hearing dates is a matter of record: cf the judgments of Campbell JA, 24 January 2008; McDougall J, 29 January 2008 (two judgments); McDougall J, 11 March 2008; and Windeyer J, 1 July 2000. 12 There have been a number of affidavits read on behalf of the defendant, in each case on information and belief from the defendant's solicitor on the record. Although the plaintiff has taken the Court to several anomalies in these affidavits I do not accept that the affidavits cannot be relied upon as explaining, in somewhat inconsistent and stilted form, the reasons why the defendant defaulted in meeting the dates fixed by Windeyer J. 13 More to the point however is the obvious proposition that the defendant, having now paid over $120,000, has clearly indicated an intent to defend the proceedings. The argument to the contrary put by the plaintiffs on the theory that the raising of these monies should be seen as a cynical attempt to stave off the entry of judgement in the sum of $800,000 for reasons arguably aliunde the litigation is rejected. The overriding purpose rule 14 The lodestar by which the practice and procedure of the Commercial List is steered is to be found in the overriding purpose rule set out in section 56 of the Civil Procedure Act 2005 ["the CPA"]:

(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 15 Both the Court, the parties to the proceedings and their legal counsel are required to give effect to and promote this overriding purpose. The CPA also goes on, in sections 57 and 58, to set out the objectives of case management, and to detail a range of matters to which the Court may have regard when making an order or direction, in order to ensure that such orders are in accordance with the dictates of justice. These elements include:

(i) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(ii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iii) the degree to which the respective parties have fulfilled their duties under section 56 (3),

(iv) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of court or any direction of a procedural nature given in the proceedings,

(v) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vi) such other matters as the court regards relevant in the circumstances of the case. 16 Sections 59 and 60 of the CPA also go on to emphasise the need for the Court to take into account the need to minimise delay and ensure that costs to the parties remain proportionate to the issues in dispute. 17 It is difficult to over-emphasise the significance which these provisions have had in terms of the constraints placed upon the Commercial List by the exigencies of the complex litigation which constitutes its daily fare. In many ways the transformation of the anterior overriding purpose rules of the Court into statutory form has given a new lease of life to the curial process where, over past decades, case management procedures were alternately hailed or derided. 18 With the passage of time judges continue to approach the due administration of justice conscious of the importance of weighing carefully the alternate claims put forward by those seeking the indulgence of the Court [as for example to make late amendments or to introduce late witness statements or indeed in this case to have an extension of time in a self-executing order made] and the claims of those resisting such orders [as for example on the grounds that they will suffer irremediable prejudice were the Court to grant such leave]. These are issues which can only be determined on a case-specific basis. In State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146, Kirby J (at 170) observed that courts now take into account the strain which litigation may place upon those involved and the natural desire of most litigants to be freed, as quickly as possible, from the anxiety, distraction and disruption which litigation causes. At the same time his Honour, with respect entirely correctly, observed that departures from a court-ordered timetable, whilst relevant to the court's power to sanction such departure, was not decisive. As his Honour put it "[s]uch orders are the servants of justice" (at 170). 19 Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 is a recent decision by the Court of Appeal of particular significance which emphasises what I have indicated in terms of the statutory underpinning of the overriding purpose duty. Relevantly Nicholas J at first instance had refused to grant leave to the applicant to replead and in doing so exercised the discretion solely on the basis that the limit to which leave should be given to replead "has been well and truly reached" by what was effectively the sixth pleading. The holding was that the trial judge was correct to do so. Further and in any event, no error had been identified which would justify this Court of Appeal interfering with the exercise of the discretion.

20 The Chief Justice [with whose reasons Basten and Campbell JJA agreed] put the matter as follows: [28] The respondent invoked the authority of State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 in support of its ability to amend, even for the fifth time. Case management practices in all Australian courts have changed significantly in the decade since that judgment. Although it remains binding authority with respect to the applicable common law principles, the circumstances of the case were significantly different from those in the present case and do not dictate its outcome. In any event, such principles can be, and have been, modified by statute both directly and via the statutory authority for Rules of Court.

[29] In this State J L Holdings must now be understood as operating subject to the statutory duty imposed upon the courts by s 56(2) of the Civil Procedure Act 2005 , which requires the Court in mandatory terms - "must seek" - to give effect to the overriding purpose - to "facilitate the just, quick and cheap resolution of the real issues in the proceedings" - when exercising any power under the Act or Rules. That duty constitutes a significant qualification of the power to grant leave to amend a pleading under s 64 of the Civil Procedure Act (Cf: Michael Wilson and Partners Ltd v Nicholls [2008] NSWSC 501 at [3] - [8]).

21 The classical statement of the approach to be taken in the exercise of the discretions to permit pleading amendments [and I would add, like case management granting leave to depart from set directions] is found in the opinion of Bowen LJ in Cropper v Smith, in which his Lordship held that:

"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." [(1884) 26 Ch D 700 at 710-711] 22 Whilst this statement remains strictly accurate, I would venture to suggest that, with the advent of sections 56 to 60 of the CPA, the court is now required to consider the degree and type of injustice which each party may suffer as a result of the order sought, and to do so in the context of other factors, such as the elimination of delay and the desire to ensure that disproportionate costs are not incurred in the proceedings. 23 The CPA sections certainly operate to permit the courts to walk the unstable line between handling the mega-litigation of our time without compromising the courts' capacity to deal with litigation of a somewhat lesser scale [often equally requiring very urgent treatment]. The appropriate exercise of the relevant discretion 24 There is of course a natural tendency by the Courts to be particularly careful before shutting a party out of its entitlement to litigate. There are many examples where this approach is to be found. One only such example is to be found in the world of pleading where the well established general principles which treat with the entitlement of a party to a final determination of his/legal rights make clear that a party will not be denied a trial unless the absence of a cause of action is clearly demonstrated: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. Hence, once it is apparent that there is a real question to be determined the court does not deal with the matter summarily: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91. 25 The particular environment in which the present application requires to be determined is concerned of course with a self-executing order. In that regard French J in Goodwill Group [at 106] listed a number of relevant factors to be considered including:

iii. the history of delay or breach of orders in the past on the part of the applicant;

iv. any prejudice to the applicant arising from the dismissal of the proceedings;

v. any prejudice to the respondents from permitting the proceedings to continue;

vi. the authority of the Court. 26 As His Honour went on to observe:

"[The necessary] judgement must be informed by the proposition that the Court will not lightly deny a party a trial for failure to meet procedural requirements…. Litigation is a dynamic process and the rules and directions under which it is managed must be able to accommodate that reality. On the other hand, where there is a history of failure to obey the court's orders there may be a more rigorous approach to the minimum requirements of a self-executing order." 27 The present is certainly a case where there has been a history of failure to comply with the court's orders. But it is important it seems to me to focus upon the fact that effectively the orders made by Windeyer J were intended to right the imbalance, and at least in terms of the requirements to pay the amount in question, those orders, albeit out of time, have now effectively been met.

28 There is no doubt that the court's discretion is a wide discretion: cf Nicholas J in Battenberg v Union Club [2007] NSWSC 265 at [32], in turn citing Tobias JA in Porter v Gordian Runoff Ltd (No. 3)[2005] NSWCA 377:

[it is necessary to take into account] all the relevant circumstances of the case consistently with interests of justice, having regard to the significance of an order which would deny [a party] his day in court] 29 Treating seriatim with the factors to which French J alluded:

i. I accept that the seriousness of the non-compliance has been made out in terms of the context already described;

ii. The reasons for the non-compliance had left a deal to be desired in terms of the inconsistency of the several explanations: ultimately, however, there are reasons which have come forward;

iii. the history of delay or breach of orders in the past on the part of the applicant is clear; however, as I have already explained, the orders made by Windeyer J were intended to right the imbalance;

iv. There is a very obvious prejudice to the applicant which would arise from the dismissal of the proceedings: in short the applicant would be shut out from litigating its defence and cross-claim;

v. Outside of the usual problems faced by a party seeking to prove its case in a court of law, the plaintiffs cannot point to any such prejudice in terms of factor five;

vi. the authority of the Court is of course of special significance but that authority must be tempered in this particular circumstance, by the above described righting of the imbalance. Conclusion 30 Litigation is not a plaything. Self-executing orders are meant to be honoured. But whilst the conduct of the defendant in his approach to this litigation has clearly been obstructionist in higher order, it cannot be described as contumelious, and he has now, even after the so-called 11th hour, produced the money to make good his entitlement to litigate the defence and cross-claim. 31 Every set of circumstances requires to be determined on an instant specific basis. Subject to one special condition, the principled exercise of the relevant discretion is to accede to the application pursued in the notice of motion. 32 The special condition is quite simple. It will be a condition of the Court acceding to the extension of the time for compliance with the orders made by Windeyer J that the parties be ready on 29 August 2008 for the list judge to fix the proceedings for final hearing. To that end trial counsel on both sides who will be briefed are to be present before the list judge. The list judge should not be expected by either party to necessarily be in a position to meet either of their counsel's convenience [but of course the list judge will exercise her own discretion to fix the matter for hearing on such date as she determines to be appropriate and if there is to be any difficulty as between the respective counsel, the list judge will make a decision as to the appropriate way to move forward]. 33 The orders of the Court are as follows:

i. the Court orders that time for compliance with orders 1(a), 1(b) and 2 made by Windeyer J on 1 July 2008 be extended to 14 August 2008;

ii. the Court orders that the defendant pay the plaintiffs' costs of the notice of motion. **********

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