Federal Court of Australia|1990-12-20|Before: Spender J

Re Lenijamar Pty Ltd; Domenico Picone and Margaret Anne Picone v Agc (Advances) Limited [1990] FCA 520; 27 FCR 388 (20 December 1990)

Re: LENIJAMAR PTY LTD; DOMENICO PICONE and MARGARET ANNE PICONE

Practice and Procedure - dismissal of proceeding for want of compliance with Court's pre-trial directions - Applicable principles - Types of case where order justified - Circumstances where appellate court will interfere with primary exercise of discretion - Effect of "guillotine" order which came into effect whilst proceeding stood dismissed.

Counsel for the Appellants: C. Wall, QC and D. Savage

Solicitors for the Appellants: Wilson Ryan and Grose of

Townsville by their

Brisbane agents Chambers,

McNab, Tully and Wilson

Counsel for the Respondent: R. Chesterman, QC and J. Sheahan

Solicitors for the Respondent: Feez Ruthning

The order of Spender J. of 6 June 1990 dismissing the proceeding be set aside and, in lieu thereof, it be ordered that the notice of motion be dismissed.

The order for costs made by Spender J. on 6 June 1990 stand.

The respondent pay to the appellants their costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

This is an appeal against an order made by a Judge of the Court, Spender J., dismissing a proceeding in which the appellants, Lenijamar Pty Ltd, Domenico Picone and Margaret Anne Picone, sought damages in respect of an alleged contravention by the respondent, AGC (Advances) Limited, of s. 52 of the Trade Practices Act 1974. This decision is reported: see (1990) 22 FCR 364. His Honour did not dismiss the proceeding on its merits, but because of the delays of the appellants in prosecuting the matter and their failure to comply with procedural directions of the Court.

2. The claim arises out of negotiations between the parties concerning an offshore loan facility, the agreement for which was made on 8 October 1985. It is common ground between the parties that, if there was a contravention of the section, the time within which a claim might be brought expired some time late in 1988. Consequently, the effect of his Honour's order is not only to prevent the continuance of this particular proceeding, but also to bring to an end any prospect of the appellants successfully litigating the claim.

3. The litigation between the parties has had a considerable history. An earlier proceeding (G20 of 1987) was instituted on 13 March 1987. In that proceeding, the present appellants made similar allegations against the respondent. A statement of claim was filed on 9 April 1987. The respondent requested further and better particulars on 12 May 1987 and, on 11 June 1987, Spender J. directed that they be supplied by 25 June 1987. They were not supplied and, as the appellants' then solicitors saw difficulties in supplying the particulars within the immediate future, the parties agreed that an order should be made striking out the application with costs. This was done on 2 July 1987.

4. For reasons which do not appear, there was then a delay of over 13 months before the present proceeding (G309 of 1988) was commenced on 22 August 1988. A statement of claim was filed on that day. On 28 September 1988 an amended statement of claim was filed. Further and better particulars were sought on 12 October 1988. They were furnished on 15 December 1988. On 8 February 1989 a defence was filed. This was followed by a reply on 21 March 1989.

5. Then came the matter of discovery of documents, the step which has caused the present difficulties. On 19 December 1988 Spender J. had directed each party to give discovery by 28 February 1989, with inspection by 9 March 1989. Neither party complied with this direction.

6. On 11 April 1989 the appellants filed and served their list of documents. They were followed three days later by the respondent. On 2 May 1989 the appellants filed and served a supplementary list of documents

7. The solicitors for the appellants took the view that the respondent's discovery was inadequate. On 29 May 1989 they wrote a letter to the respondent's solicitors making that complaint. Those solicitors responded on the following day by denying that their discovery was incomplete and by referring to several categories of documents which, they contended, ought to have been discovered by the appellants.

8. The matter came before Spender J. again on 31 May 1989. His Honour made numerous directions, including a direction that discovery be completed by all parties within five weeks.

9. On 14 June 1989, pursuant to one of his Honour's other directions, an amended defence was filed. On 29 June 1989 the respondent's present solicitors came into the case; but, at least so far as the Court was concerned, the matter then went to sleep. Because of the comprehensive nature of the directions which he had given and, no doubt, in the expectation that no further directions would be required before trial, Spender J., on 31 May 1989, had not appointed a further mention date; he had simply reserved liberty to the parties to apply on five days' notice.

10. On 29 November 1989 the solicitors for the respondent asked for the matter to be relisted for further directions. For some reason, which does not appear, the date appointed for the further directions hearing was not until 2 March 1990. In the meantime, on 28 February 1990, the solicitors for the respondent wrote to the solicitors for the appellants taking up the queries made by their predecessors on 30 May 1989 regarding the adequacy of the appellants' discovery. They also indicated that they had identified additional documents which should have been discovered by their client and that it would take two to three weeks for them to obtain all of those documents.

11. When the matter came before Spender J. on 2 March 1990, there was no appearance on behalf of the appellants. This was apparently the fault of the Brisbane agents for the appellants' solicitors, who were located in Townsville. Apparently, somebody from the Brisbane agents was instructed to attend the Court but he arrived after the matter had been called and, in his absence, stood over. No doubt as a result of this omission, and apparently unembarrassed by their own failure to provide proper discovery, the solicitors for the respondent filed a notice of motion for an order dismissing the proceeding.

12. The notice of motion came before Spender J. on 9 March 1990. It was dismissed, but the costs of both the motion and the attendance on 2 March 1990 were ordered to be paid by the appellants. His Honour made further directions, including a direction that each party make further and better discovery "within four weeks of to-day's date" and that "(i)nspection take place within a further two weeks".

13. On the last day of the four week period, on 6 April 1990, the respondent delivered a supplementary list of documents. The appellants did not do so and, on 9 April 1990, the solicitors for the respondent filed a further notice of motion seeking dismissal of the proceeding. This notice of motion was made returnable on 12 April 1990.

14. On 11 April 1990, the Townsville solicitors for the appellants sent a facsimile letter to the respondent's solicitors seeking an adjournment of the projected hearing on the following day. In their letter they stated that they had been instructed by Mr Picone "that he has no other documents of any nature save for those detailed in his affidavit of last year", but that they wished to speak to him. An inconclusive reference was made to inspection of the documents.

15. The matters stated in the letter of 11 April 1990 were confirmed in an affidavit sworn by Mr C.J. Bowrey of the appellants' solicitors on 12 April 1990. We do not know whether any application was made to Spender J. to adjourn the hearing of the motion, on 12 April 1990. If it was, it must have been rejected, because his Honour made orders in these terms:

"1. Further and better discovery is to be made by the

applicants within 14 days of today's date by filing

a further verified list of documents by 4.00 pm

Thursday 26 April 1990 such affidavit to address the

documents which are listed in correspondence from

Messrs Henderson Trout in particular the documents

in the letter dated 30 May 1989.

2. In default of any applicant failing to comply with

this order, action G309/88 is to be dismissed as

against such applicant or applicants.

3. The applicants are to pay the costs of today."

16. It will be noted, and this point looms large in the appellants' submissions, that the orders made no reference to inspection of the documents.

17. On this same day, 12 April, the respondent's solicitors notified the appellants' solicitors that their client's documents were available for inspection. They said that they would like to inspect the documents listed in the appellants' supplementary affidavit and asked that they be forwarded to the Brisbane agents of the appellants for that purpose. Nothing was done, and the respondent's solicitors wrote again, in more urgent tones, on 20 April 1990. This letter elicited a response on 24 April 1990, when the appellants' solicitors sent a facsimile letter stating that they were forwarding to their Brisbane agents a further list of documents and would forward to them "the documents for your inspection". In fact, on 26 April, that is on the last day of the 14 day period specified by Spender J. on 12 April, a further list of documents was filed and served. This list was verified by an affidavit sworn by Mr and Mrs Picone which contained a certificate by Mr Bowrey and a statement that the documents referred to in the list were available for inspection at his office in Townsville.

18. Notwithstanding this notation, it had apparently been agreed between the solicitors that the appellants' documents should be made available for inspection in Brisbane. But this was not done. After waiting three weeks, the solicitors for the respondent wrote a letter dated 18 May 1990 informing the appellants' solicitors that, unless the documents were received by their Brisbane agents by 4 p.m. on 21 May 1990, they were to make another application to strike out the claim. This threat elicited a brief and enigmatic facsimile letter from the appellants' solicitors dated 21 May 1990:

"We advise that our client has now brought

in to us the documentation we were

awaiting from him in relation to discovery

and same is being packed up to be

forwarded to Chambers McNab Tully and

Wilson. Accordingly, we expect that they

will have it in the next day or two to

produce to you for inspection."

19. Chambers McNab Tully and Wilson are the solicitors' Brisbane agents.

20. The respondent's solicitors were unimpressed by this communication. On 22 May 1990, they filed yet another notice of motion. This was the motion pursuant to which his Honour made the order under appeal. It sought the dismissal of the proceeding and an order for costs. But it did not identify the ground relied upon by the respondent in making the application. However, in a supporting affidavit, the solicitor handling the matter on behalf of the respondent referred to the failure of the appellants to provide inspection of the documents discovered by them in their original affidavit of documents of 2 May 1989, and to the order in that respect made on 9 March 1990. Reference was also made to the correspondence on inspection during April.

21. The notice of motion was set down for hearing on 6 June 1990. According to an affidavit sworn on that day by Mr Bowrey, on 28 May 1990 Mr Picone brought into his office in Townsville a plastic bag containing a quantity of documents. His affidavit went on:

"Because of other Court matters in

Townsville last week, I was not able to

tag and despatch the documents to my

Brisbane agents."

22. However, on the eve of the motion, Mr Bowrey did bestir himself. On 5 June 1990, he forwarded the documents to his Brisbane agents by air courier. They arrived at about 5.30 p.m. That same evening, the Brisbane agents notified the respondent's solicitors of the arrival of the documents and their availability for inspection. Their facsimile letter stated that the documents had been identified to them by Mr Bowrey as being the documents referred to in the lists of "11 April 1989" (we are unsure whether this date is correct), "24 April 1989" (an error for 24 April 1990) and "2 May 1989".

23. Notwithstanding this last minute provision of the documents, the hearing of the motion went ahead on the following day. The affidavit of Mr Bowrey was read. It emerged from that affidavit that his statement of 11 April 1990 that he understood the appellants to have no further documents depended on his instructions from Mr Picone; but, since then, further documents had been discovered through Mr Picone's accountants. It is not clear whether all of these documents were included in the list of 26 April. It seems that, in preparing the list of 26 April,Mr Bowrey relied upon his client for a description of the documents. He did not see the documents themselves. This is a most unsatisfactory course for a solicitor to adopt. The affidavit proffered no explanation of the delay between 26 April and 28 May in the documents being brought into his office. The only explanation offered by Mr Bowrey for his failure to send the documents to Brisbane immediately after their receipt by him was the lame excuse already quoted.

24. Not surprisingly, under these circumstances, Spender J. was highly critical of the conduct of the matter on behalf of the appellants. His Honour referred to the decision of the House of Lords in Birkett v James (1978) AC 297 where, at p 318, Lord Diplock said:

"The power (to dismiss an action for want

of prosecution) should be exercised only

where the court is satisfied either (1)

that the default has been intentional and

contumelious, e.g., disobedience to a

peremptory order of the court or conduct

amounting to an abuse of the process of

the court; or (2) (a) that there has been

inordinate and inexcusable delay on the

part of the plaintiff or his lawyers, and

(b) that such delay will give rise to a

substantial risk that it is not possible

to have a fair trial of the issues in the

action or is such as is likely to cause or

to have caused serious prejudice to the

defendants either as between themselves

and the plaintiff or between each other or

between them and a third party."

25. Spender J. said that, if it was appropriate to apply this approach, "it would be competent for the court to proceed on the basis of the first limb of the power referred to in Birkett v James"; that is, that the appellants' default has been intentional and contumelious. He expressed the opinion

"... that the want of compliance with

the directions of the court has been

flagrant and properly deserving opprobium;

it is impossible to escape the conclusion

that the obligations to the court of the

applicant or his solicitor or both, have

been persistently flouted in serious respects."

26. Towards the end of his reasons, after referring to some of the authorities and to the history of the matter, Spender J. said:

"As those events show, there has been

persistent non-compliance with the

directions of the Federal Court by the

applicants or by those acting on their

behalf. It is difficult to say whether

the fault, at least to such a significant

degree, is solely the fault of the

solicitor having the carriage of the

action on behalf of the applicants. It is

impossible to allocate with precision the

degree of blame for this inexcusable

scenario. The repeated explanations or

attempts at explanations border on

contempt of the obligations of a solicitor

to this court. What I regard as

inordinate patience has been demonstrated

in this case. On repeated occasions the

court has, through those who appeared

before it on behalf of the applicants,

urged compliance with the obligations of

the court's directions to the applicant.

These urgings have been consistently rebuffed.

Given the history of the earlier

proceedings, and given the history of the

persistent and inexcusable tardiness or

default demonstrated by the events

prompting the three motions to dismiss the

application for non-compliance with the

court's orders, I feel that I ought, in

the proper exercise of the discretion

given to the court, and consistent with

the role of the court in the efficient and

fair management of the business of parties

before it, grant the relief sought in the

most recent notice of motion. To do

otherwise would seriously harm the

credibility of the court's directions."

27. The Judge then ordered that proceeding G309 of 1988 be dismissed with costs.

28. The order made by Spender J. on 6 June 1990 was an order made in the exercise of his Honour's discretion upon a matter of practice and procedure. A party who appeals against such an order undertakes a formidable task. This was made clear by Gibbs C.J., Aickin, Wilson and Brennan JJ. in Adam P. Brown Male Fashions Proprietary Limited v Philip Morris Incorporated [1981] HCA 39; (1981) 148 CLR 170 at p 177:

"Nor is there any serious dispute between

the parties that appellate courts exercise

particular caution in reviewing decisions

pertaining to practice and procedure.

Counsel for Brown urged that specific

cumulative bars operate to guide appellate

courts in the discharge of that task. Not

only must there be error of principle, but

the decision appealed from must work a

substantial injustice to one of the

parties. The opposing view is that such

criteria are to be expressed

disjunctively. Cases can be cited in

support of both views ... For

ourselves, we believe it to be unnecessary

and indeed unwise to lay down rigid and

exhaustive criteria. The circumstances of

different cases are infinitely various.

We would merely repeat, with approval, the

oft-cited statement of Sir Frederick

Jordan in In re the Will of F.B. Gilbert

(dec.) [1946] NSWStRp 24; (1946) 46 SR (NSW) 318 at p 323:

'...I am of opinion that,...

there is a material difference

between an exercise of

discretion on a point of

practice or procedure and an

exercise of discretion which

determines substantive rights.

In the former class of case, if

a tight rein were not kept upon

interference with the orders of

Judges of first instance, the

result would be disastrous to

the proper administration of

justice. The disposal of cases

could be delayed interminably,

and costs heaped up

indefinitely, if a litigant with

a long purse or a litigious

disposition could, at will, in

effect transfer all exercises of

discretion in interlocutory

applications from a Judge in

Chambers to a Court of Appeal.'

... It is safe to say that the question of

injustice flowing from the order appealed

from will generally be a relevant and

necessary consideration."

29. In the present case, if his Honour's discretion miscarried, there can be no doubt that the result was to cause injustice to the appellants. As we have pointed out, the effect of the order was to terminate finally any prospect of their successfully litigating their claim. But did the discretion miscarry?

30. In relation to that matter, counsel referred us to several English authorities: Birkett v James, already mentioned, the earlier decision of the Court of Appeal in Allen v Sir Alfred McAlpine and Sons Ltd (1968) 2 QB 229, and the later decisions in Janov v Morris (1981) 1 WLR 1389, Greek City Co. Ltd v Demetriou (1983) 2 A11 ER 921, United Bank Ltd v Maniar (1988) 1 Ch 109, Hayes v Bowman (1989) 2 All ER 293, Department of Transport v Chris Smaller (Transport) Ltd (1989) 1 AC 1197 and Barclays Bank PLC v Miller (1990) 1 WLR 343. These cases involved a variety of factual situations, the common element being unjustified delay at some stage of the curial process. They turned upon a miscellany of Rules of Court, depending upon the nature of the case and the Division of the High Court of Judicature in which the case was brought. They afford little assistance to us. This Court has its own rules relating to the summary dismissal of proceedings. It is to them that we must look. Moreover, this Court has a system of case management which is different from the procedures adopted in any of the Divisions of the High Court of Judicature. The critical significance of a case management system was pointed out by Lord Griffiths, with whom the other four members of the House of Lords agreed, in Department of Transport v Chris Smaller (Transport) Ltd at p 1207. Dealing with a submission that inordinate and inexcusable delay after the expiration of the limitation period should be a ground for striking out an action as a deterrent to other dilatory plaintiffs, even though a fair trial was still possible, Lord Griffiths expressed his scepticism that such a course "would produce any greater impact on delay in litigation than the present principles". He went on:

"I believe that a far more radical

approach is required to tackle the

problems of delay in the litigation

process than driving an individual

plaintiff away from the courts when his

culpable delay has caused no injustice to

his opponent. I, for my part, recommend a

radical overhaul of the whole civil

procedural process and the introduction of

court controlled case management

techniques designed to ensure that once a

litigant has entered the litigation

process his case proceeds in accordance

with a time table as prescribed by Rules

of Court or as modified by a judge ..."

31. In this Court, there is just such a system. From that circumstance we extract two propositions. First, the fundamental differences in procedure render inapplicable most, if not all, of the principles evolved by the English courts in relation to their own procedures. Secondly, the existence of a case management system within this Court is the backdrop against which the relevant rules must be considered and applied. That the Court follows the case management approach is well known to the legal profession. The practice was adopted immediately upon the establishment of the Court in 1977. It was, at that time, a radical innovation in Australian superior courts; and was recognised as such. It is reasonable to suppose that all litigious solicitors and all barristers are aware that if they choose this Court for the litigation of a claim - and, these days, there is a choice in matters arising under s. 52 of the Trade Practices Act - they go to a Court which seeks to minimise the delays of litigation by issuing procedural directions to the parties which they are expected to observe. In return, the Court does its best to provide to the parties an early hearing date.

32. Order 10 of the Federal Court Rules is the foundation of the Court's case management system. It deals with direction hearings. Rules 1 and 2 confer wide powers on a Judge conducting a directions hearing which are unnecessary to list. They include power to issue orders with respect to discovery and inspection of documents: see rule 1 (2) (a) (i). If a party fails to appear, the Court may nonetheless deal with the matter: see rule 3. Interlocutory orders may be made: see rules 4-6. Rule 7 deals with the procedure on default. It provides:

"7 (1) Where a party fails to comply with an order of

the Court directing that party to take a step

in the proceeding, any other party may move the

Court on notice -

(a) if the party in default is an applicant -

for an order that the proceeding be stayed

or dismissed as to the whole or any part

of the relief claimed by him in the proceeding;

(b) if the party in default is a respondent -

for judgment or an order against him; or

(c) for an order that the step in the

proceeding be taken within the time

limited in that order.

(2) The Court may make an order of the kind

mentioned in sub-rule (1) or any other order or

may give such directions, and specify such

consequences for non-compliance with the order,

as the Court thinks just.

(3) This rule does not limit the powers of the

Court to punish for contempt."

33. It is to be noted that the power given by this rule is conditioned on one circumstance only: the failure of a party to comply with an order of the Court directing that party to take a step in the proceeding. There is no requirement of intentional default or contumelious conduct, although the attitude of the applicant to the default and the Court's judgment as to whether or not the applicant genuinely wishes the matter to go to trial within a reasonable period will usually be important factors in weighing the proper exercise of the discretion conferred by the rule. There is no requirement of "inordinate and inexcusable delay" on the part of the applicant or the applicant's lawyers, although any such delay is likely to be a significant matter. There is no requirement of prejudice to the respondent, although the existence of prejudice is also likely to be significant. And it must be remembered that, in almost every case, delay adversely affects the quality of the trial and is an additional burden upon the parties.

34. In the present case, both at first instance and before us, the respondent relied primarily upon Order 10 rule 7. But reference also was made to Order 30 rule 5. That rule authorises the dismissal, for want of prosecution with due despatch, of a proceeding which has been formally set down for trial by the filing of a notice of trial. No notice of trial has been filed in this case, so this rule is not applicable.

35. The observations which we have just made about the scope of Order 10 rule 7 are not intended to convey the impression that any failure to comply with a procedural direction will appropriately result in the dismissal of the proceeding. On the contrary, the rules must be administered sensibly and with an appreciation both of the fact that some delays are unavoidable, and unpredictable, by even the most conscientious parties and their lawyers, and of the likely serious consequences to an applicant of staying or dismissing a claim; compare the approach taken to non-compliance with time limitations in respect of appeals in Van Reesema v Giameos (1979) 27 ALR 525. We would not wish our observations to cause respondents to apply for dismissal of proceedings simply because there has been a non-compliance with a direction by the applicant, even though it does not cause or indicate a continuing problem in preparing the matter for an early trial.

36. The discretion conferred by Order 10 rule 7 is unconfined, except for the condition of non-compliance with a direction. As it is impossible to foresee all of the circumstances under which the rule might be sought to be used, it is undesirable to make any exhaustive statement of the circumstances under which the power granted by the rule will appropriately be exercised. We will not attempt to do so. But two situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period and cases - whatever the applicant's state of mind or resources - in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. Although the history of the matter will always be relevant, it is more likely to be decisive in the first of these two situations. Even though the most recent non-compliance may be minor, the cumulative effect of an applicant's defaults may be such as to satisfy the Judge that the applicant is either subjectively unwilling to co-operate or, for some reason, is unable to do so. Such a conclusion would not readily be reached; but, where it was, fairness to the respondent would normally require the summary dismissal of the proceeding.

37. In the second of the two situations we postulate, a significant continuing default, it does not really matter whether there have been earlier omissions to comply with the Court's directions. Ex hypothesi the default is continuing and is imposing an unacceptable burden on the respondent. But the continuance of the non-compliance is of the essence of this situation. If, when the Court looks at the matter, the direction has already been complied with, the defaulting applicant may be ordered to pay any wasted costs; but it would be difficult to justify the dismissal of the proceeding solely because of that default.

38. As we have already mentioned, the notice of motion made returnable on 6 June 1990 did not indicate the non-compliance upon which the respondents relied. Only one continuing non-compliance was identified in the solicitor's supporting affidavit: the failure of the appellants to provide inspection of the documents identified in their affidavits of discovery. In a further affidavit sworn on the day of the hearing of the motion the solicitor for the respondent stated that the appellants had failed to provide inspection of either the documents listed on 2 May 1989 or the documents listed on 26 April 1990. He added another complaint: the failure of the appellants' solicitors to inspect the documents discovered by the respondent.

39. Notwithstanding this last matter, to which we shall return, the gist of the case against the appellants was their failure to comply with the Court's directions concerning discovery of their own documents. That failure was clearly established. But, by the time that the motion came on for hearing, the documents were all available for inspection and the respondent's solicitors were aware of that fact. So far as the evidence establishes, there was no continuing non-compliance, in relation to the appellants' discovery, when the order for dismissal was made. His Honour's order cannot be justified on this ground; that is, the second of the two situations identified above.

40. In fairness to Spender J., we add that he did not attempt to do so. His Honour did not make any finding that there was a continuing non-compliance or base his decision on that ground. As is indicated in the passage from his reasons which we set out above, Spender J. based his order upon the history of the matter, what he called "the persistent and inexcusable tardiness or default demonstrated by the events prompting the three (previous) motions". Counsel for the appellants challenge this approach, contending that the objective facts do not support the findings as to their clients' conduct which were made by his Honour.

41. In evaluating this submission, it is necessary to refer back to the history of the matter. We can do so in a summary way, dividing the sorry saga into a number of periods. The first period covers that of the earlier action, G20 of 1987. It was unfortunate that this proceeding was commenced before the appellants' then solicitors had the instructions necessary to enable them to comply with the respondent's request for particulars; the reasonableness of which they did not challenge. It is true that they did not furnish the required particulars within the two week period specified on 11 June 1987. But, within that period, they conceded their inability to do so; and, shortly afterwards, they consented to the dismissal of that proceeding with costs. The action was in existence for a period of only 3-4 months. The costs were apparently paid and it is not suggested that, in the event, this first action occasioned any loss or prejudice to the respondent.

42. The second period is the 13 months which elapsed between the dismissal of the earlier proceeding and the commencement of the present one. The evidence does not disclose what caused this delay, during which the appellants' present solicitors were apparently instructed.

43. On the principle that it is almost always desirable to minimise the gap between the events out of which litigation arises and the hearing of the litigation itself - especially where, as here, oral representations are involved - this 13 month delay is regrettable. But, even with that delay, the second action was apparently commenced within the three year limitation period regarded as acceptable by the Parliament. So it is difficult to categorise the delay in instituting the present proceeding as inexcusable tardiness.

44. The next relevant period, as it seems to us, is from the commencement of the proceeding on 22 August 1988 until 31 May 1989. During that period the matter progressed with reasonable efficiency, if not startling celerity. There is no basis for criticism of the appellants during this period, and none has been made.

45. The next period is from 31 May 1989, when comprehensive directions were made by Spender J., until 2 March 1990. So far as the evidence indicates, during these nine months nothing happened except the filing of the respondent's defence. The omission of the appellants to comply with the directions made on 31 May 1989 is unexplained. On its face it warrants strong criticism. But the same comment may just as forcefully be made against the respondent, whose inaction is equally unexplained. It seems that both parties were content to allow the matter to remain dormant. This was wrong of them; but it is not possible to impute more fault to one side than the other.

46. The final period lies between 2 March 1990 and the date of his Honour's order, 6 June 1990. This period started badly for the appellants with the failure of their Brisbane agent to attend the directions hearing on that day. That was reprehensible and costly for the appellants, or someone on their side of the case. Apparently, it was this non-appearance which triggered the first motion for dismissal. Although that motion was dismissed, costs were ordered against the appellants. For present purposes, the relevant point is that this was not a motion in respect of which it could accurately be said that it was prompted by the appellants' "persistent and inexcusable tardiness or default". It was triggered by a single default of their solicitors' Brisbane agents.

47. The real problem for the appellants is the period from 9 March 1990, when directions were made for further discovery within four weeks, until 5 June 1990. It took the appellants twelve weeks to do what they ought to have done in four. No explanation has been given to the Court. We appreciate that Mr and Mrs Picone live some distance out of Townsville, but there is nothing to indicate any problem of communication with them. We also appreciate that it was necessary for Mr Bowrey to contact their accountants, and perhaps other professional advisers. But there is nothing to indicate that this caused any problem. In any event, if there was a problem, the proper course was for the appellants to obtain a variation of the direction so as to extend time for its compliance; not to ignore it. And when the documents were eventually received by Mr Bowrey on 28 May, it was inexcusable for him to retain them for a further week before sending them to Brisbane. It must clearly be understood that pressure of other business is not an acceptable reason for non-compliance with the Court's directions. If solicitors are so circumstanced that they are unable properly to handle a matter in this Court, they should arrange for it to be taken over by someone who can.

48. But, having said all this, and with respect to Spender J., we think that it is difficult to describe the conduct of the appellants' case as exhibiting such a degree of persistent and inexcusable tardiness as would justify an order for summary dismissal of the application. The second motion for dismissal was filed on 9 April 1990, only three days after the expiry of the discovery period specified on 9 March. The motion was not ignored. Both by his facsimile letter of 11 April and his affidavit of 12 April, Mr Bowrey stated that Mr Picone had instructed him that there were no other discoverable documents held by him. This response was not very satisfactory. It did not deal with the specific categories mentioned by the respondent's previous solicitors on 30 May 1989. Nor did Mr Bowrey indicate whether or not he had then made enquiries from the appellants' accountants; presumably he had not. But, although Mr Bowrey's response warrants criticism, it is one which is consistent only with a continuing desire by the appellants to press their claim. Once again, the appellants suffered penalties in costs for their failure to comply with the direction of 9 March.

49. In relation to the direction of 12 April, the fact is that the appellants did file their affidavit of discovery within the specified 14 days. And they made the documents available for inspection in Townsville. Their omission was to send them to Brisbane, an omission which was at once unnecessary and irritating. But that omission did not represent a non-compliance with a direction. Probably through oversight, the directions of 12 April made no reference to inspection. So it is not correct to describe the failure of the appellants to provide inspection before 5 June 1990 of the documents listed on 26 April as a non-compliance with a direction; and, as we have indicated, this was the major complaint pressed against the appellants at the hearing of the motion.

50. The other outstanding matter was the appellants' solicitors' failure to inspect the respondent's documents. They had ample opportunity to do so. The direction of 9 March 1990 required inspection within two weeks of the further discovery. The respondent's further discovery was made on 6 April. Consequently, the inspection should have occurred by 20 April. The failure to inspect was a non-compliance enlivening the power granted by Order 10 rule 7. But no reference was made to this default in his Honour's judgment. It does not appear to have been taken into account; the gravamen of the matter upon the return of the motion seems to have been the appellants' delay in finalising discovery of their own documents. Although a failure by a solicitor to inspect the documents discovered by the opposing party will ordinarily invite the criticism that the solicitor is neglecting the interests of his or her own client, it will not ordinarily impair the preparation or readiness for trial of the opposing party. Under some circumstances, such a failure may be seen as an indication that the defaulting party does not genuinely intend to bring the matter on for trial. But all the indications are that these appellants do genuinely wish the case to go to trial. And the failure of the appellants' solicitors to inspect the respondent's documents has not impeded the respondent's preparations for the trial. Especially having regard to the absence from his reasons of any reference to that matter, we would not be prepared to assume that Spender J. took into account the appellants' failure to inspect the respondent's documents. Nor do we think that this failure would justify maintenance of his Honour's order.

51. The appellants submit that his Honour failed to specify their relevant default. We think that there is substance in this submission. Although, as we have said, the only pre-condition to the exercise of the power given by Order 10 rule 7 is that there has been a default in compliance with a direction, it is important that an applicant whose proceeding is under threat of dismissal be made aware of the nature of the alleged default and that there be a finding on that matter. That did not occur in this case. As we have said, the notice of motion failed to state any ground for the proposed order. The appellants were left to divine this from the evidence. There was no finding of default and there could not have been a finding of continuing non-production of the documents on 6 June. His Honour seems to have been influenced entirely by the history of the matter. While this history was unsatisfactory, it seems to us that it does not support the findings made by his Honour in justification for his order. We think that his Honour's discretion miscarried, so that this Court should intervene and set aside the order.

52. One further matter must be dealt with. After making his order for costs on 9 March 1990, Spender J. added a further direction that, if the costs were not paid within four weeks of the certificate of taxation being delivered to the appellants' solicitors or within four weeks of agreement as to the amount of the costs, the principal proceeding would stand dismissed. It appears that the relevant costs were taxed. A certificate of taxation was delivered to the appellants' solicitors on 9 August 1990. They were not paid until 17 September 1990, after the expiration of the four week period. Accordingly, say counsel for the respondent, in any event the principal proceeding stands dismissed; the appeal is futile. Counsel say that any other result would be anomalous and unjust; that the appellants, having breached the order as to payment of costs, would be in a better position than they would have been if the order of 6 June 1990 had not been made.

53. As to this latter point, the situation is not so clear as counsel suggest. It appears from an affidavit which we allowed to be read before us that, after 6 June 1990, the carriage of this matter, within the office of the appellants' solicitors, passed from Mr Bowrey to a different solicitor. The new solicitor was not aware of the terms of the order of 9 March. He was aware of the order of 6 June and he concerned himself with the present appeal against that order. Although he took steps to arrange payment of the costs, he did not appreciate that this was a matter of urgency; so the payment was made out of time. It would not be correct to assume that, absent the order of 6 June and the distraction of the appeal, the same oversight would have occurred. It is not suggested that, in itself, the late payment of the costs caused any prejudice or difficulty to the respondent. In this connection we note the evidence that at no stage did the respondent's solicitors seek payment or give a reminder about the four week period.

54. The respondent's point in relation to these costs must be decided by reference to legal principles, not general notions of what is just in the circumstances. The respondent accepts the general principle that the decision of a superior court of record, even if made without jurisdiction, is valid unless and until it is set aside: see Cole v Cameron [1944] HCA 5; (1944) 68 CLR 571, Wilde v Australian Trade Equipment Co Proprietary Limited [1981] HCA 13; (1981) 145 CLR 590. It follows that, after 6 June 1990 and until the orders which we propose are actually made, proceeding G309 of 1988 stands dismissed by virtue of that order. It stood dismissed on 6 September 1990 when the time for payment of the costs expired. Although Spender J.'s orders of 9 March 1990 in respect of costs, including the "guillotine" order relied on by the respondent, also still stood, there was no proceeding upon which the guillotine could operate. A dismissed proceeding could not again be dismissed. It is true, as counsel say, that the proceeding survived for some purposes; for example, rights of appeal and taxation of costs. But, after 6 June 1990, there was no longer an extant claim for the relief sought in the Application; that claim stood dismissed. This "guillotine" order would have achieved no less and no more.

55. Contrary to the respondent's submission, we do not think that the guillotine order will operate according to its tenor on the "revival" of the proceeding pursuant to our order allowing the appeal. The whole point of a guillotine order is its certainty of operation; it operates on a particular day unless a particular event has occurred. If there is nothing upon which it could operate on that day, its force is spent. It cannot be treated as having the ambulatory effect of operating at some future date when there is again a proceeding to be dismissed. The result may seem unsatisfactory, but it is a feature of guillotine orders that they may take effect in a manner, and under circumstances, which were not foreseen when they were made; a consideration which suggests that such orders should rarely, if ever, be made.

56. Perhaps we should add that, if the position had been otherwise and the "guillotine" order would be effective to cause the dismissal of the proceeding, we would have been willing to extend the time for payment of the costs until 17 September 1990. Order 3 rule 3 permits an extension of time notwithstanding that the time specified for the doing of an act has already expired. A rule to like effect was held to apply to a "guillotine" order in FAI General Insurance Company Limited v Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268.

57. The appeal should be allowed. The order made by Spender J. on 6 June 1990 dismissing the application should be set aside and, in lieu thereof, it should be ordered that the notice of motion be dismissed. However, we propose to retain his Honour's order that the appellants pay the costs of the motion heard that day. It was only because of their solicitors' flurry of activity on the previous day, after the notice of motion was filed and served, that the appellants avoided being in continuing default regarding production of the documents. The question who should bear those costs, as between the appellants and their solicitors, is a matter which does not fall for determination by us.

58. In relation to the appeal, the usual costs position should apply. The appellants have been successful in challenging the order of 6 June 1990, in the teeth of strong opposition from the respondent. They should have their costs of the appeal.

59. By way of postscript, we add that, since writing the above, we have read the reasons for judgment of Pincus J. We would like to associate ourselves with the comments made by his Honour regarding the function and operation of Order 10 Rule 7.

I have read the reasons for judgment of Wilcox and Gummow JJ. and respectfully adopt their Honours' analysis of the facts. However, I prefer to state my own reasons for agreeing, as I do, that the matter should be disposed of as they propose.

2. Order 10 Rule 7, which is quoted in the reasons of Wilcox and Gummow JJ., appears to me to give a broad discretion to the Court to deal with non-compliance with orders made at directions hearings. Although the circumstances which have to be dealt with may vary widely, commonly the problem is to balance the desirability of letting the party in default present his or her case, in order that the substance of the dispute may be dealt with, against the desirability of encouraging compliance with the Court's directions. If non-compliance is routinely excused and never visited with significant penalties, it is likely to increase. I think sub-rule 7(2) is drawn so as to enable a range of sanctions to be applied, whether or not they would have been available under older rules of Court. Suppose the Court has, as commonly happens, required statements of expert evidence to be furnished or exchanged by a certain date; if one party fails to do that, it appears to me that the Court could fix a new date for production and order that, in default of production by the new date, the right to adduce such evidence be lost. A cross-claiming respondent who makes default may, in some circumstances, be appropriately dealt with by having the hearing of the cross-claim deferred, rather than made to take place concurrently with the hearing of the claim. An order for costs can be a substantial penalty, although there is sometimes reason for concern as to whether it is fair to saddle the litigant with a liability for costs, if the default has been caused, in part, by solicitors or counsel.

3. It appears to me, as to Wilcox and Gummow JJ., that it is "undesirable to make any exhaustive statement of the circumstances under which the power granted by the rule will appropriately be exercised". Such a range of considerations may be material to the just exercise of the discretion that attempts by this Court to prescribe criteria and indicate their weight are not likely to be helpful. In some circumstances, the Court may, in my opinion, take into account such matters as whether the claim or defence of the party in default appears to have substance, whether the case is one in which delay in hearing is likely to be particularly damaging to prospects of correctly deciding the dispute, whether the party applying for dismissal has itself transgressed, whether the party in default has gained some advantage by delay (for example, where it has had the benefit of an interlocutory injunction), whether credible assurances (supported, perhaps, by arrangements to commit the conduct of the matter to another firm or other counsel) have been given as to the prompt carrying out of future steps and whether the delay has been such as to induce the party not in default to think that the matter has probably gone to sleep; as to the last point, I refer to The Commonwealth v. Verwayen (1990) 64 ALJR 540 at 561R, 568L In that case, the party which had adopted a particular attitude in litigation was held to be absolutely precluded from departing from it. But short of that, the existence of reasonable expectations that a claim has been abandoned may be a relevant factor in exercising the discretion under Order 10 Rule 7.

4. In the present case, it appears to me that the learned primary Judge's discretion miscarried because, as Wilcox and Gummow JJ. have pointed out, the material filed in support of the application to dismiss relied on a failure to give inspection. There appears to have been an assumption that inspection was required by his Honour's order of 12 April 1990. It is true that the primary Judge did not specify that as a matter on which he relied, but I have been persuaded by the argument on behalf of the appellant that the failure to give inspection was, in all probability, thought to be a default. The consequence is that it is necessary for this Court to exercise its own discretion. While I recognise the force of the criticisms of the appellant's conduct of the case, made in the reasons of the primary Judge as well as in those of Wilcox and Gummow JJ., it is my opinion that the case was not an appropriate one for the application of the ultimate remedy, that of dismissal. I respectfully agree with my brothers' analysis of the history of the matter and particularly of the circumstances surrounding the previous motions to dismiss mentioned in the primary Judge's reasons.

5. I also concur in the conclusion which Wilcox and Gummow JJ. have reached as to the effect of the "guillotine" order. That order did not take effect because, before it could do so, the proceedings were dismissed; setting aside the dismissal does not give the guillotine order a retrospective effect.

6. I agree that the appeal should be allowed and that the other orders proposed by Wilcox and Gummow JJ. should be made.

Re Lenijamar Pty Ltd; Domenico Picone and Margaret Anne Picone v Agc

At a glance

Court

Decision date

Before

Source

Judgment (85 paragraphs)

Re Lenijamar Pty Ltd; Domenico Picone and Margaret Anne Picone v Agc (Advances) Limited [1990] FCA 520; 27 FCR 388 (20 December 1990)

Parties

Legislation Cited (4)

Cases Cited (7)