Shara Projects Pty Ltd v Blacktown City Council

The circumstances in which the proceedings were dismissed.

1. The matter was case managed in the professional negligence list by Harrison J. Shara repeatedly failed to comply with orders about the service of its evidence, with the result that on 29 April 2022 Harrison J gave it a final opportunity to serve its expert evidence, making self-executing orders that: "1. Direct the plaintiff by no later than 4pm on Friday 24 June 2022 to serve its expert liability evidence on the defendant. 2. Direct that if the plaintiff fails to comply with order 1 the proceedings be dismissed for want of due despatch in accordance with UCPR 12.7. 3. List the matter for further directions before me on 1 July 2022. 4. Grant liberty to the parties to apply, if so advised, on short notice by arrangement with my Associate."
2. There is no issue about the Court's power to make those orders, or their making in the circumstances with which Harrison J had to deal.
3. Reasons for those orders were given: Shara Projects Pty Ltd v Blacktown City Council (Supreme Court (NSW), Harrison J, 29 April 2022, unrep). There his Honour referred to twelve indulgences Shara had been given to allow it to serve its outstanding evidence. In April 2022 Shara had sought a further opportunity to serve its expert evidence, which had been opposed. His Honour thus arrived at what he there described to be a compromise, giving Shara a final opportunity to serve its outstanding expert's report, failing which the proceedings would be dismissed under r 12.7 of the Uniform Civil Procedure Rules 2005 (NSW).
4. That rule regulates the dismissal of proceedings for want of due despatch. The making of such an order is no bar to further proceedings being brought, if still within time.
5. When Shara later found that it could not comply with his Honour's orders, it made no application to have them varied, as it could have, before the proceedings were dismissed when the orders took effect in accordance with their own terms. Nor did it either appeal those orders, or bring further proceedings against the Council. That it could now do so seems doubtful, given that the applicable limitation period may have expired. But that need not be determined.

The motion

1. The motion was supported by an affidavit sworn by Shara's solicitor Mr Refenes. The orders sought were: "1. Pursuant to rule 2.1 and rule 2.3 to the UCPR 2005, Orders 1 and 2 of his Honour Justice Harrison of 29 April 2022 be set aside. 2. The plaintiff to serve its expert liability report (civil engineer) of Stefani Group by Friday 23 September 2022. 3. Matter relisted for further directions on a date convenient to this Honourable Court. 4. The costs of this Notice of Motion to be costs in the cause."

The evidence

1. Mr Refenes' affidavit exhibited numerous earlier affidavits which he had sworn and had been relied on at various direction hearings in 2020, 2021 and 2022. Shara also relied on that sworn by Mr Sultana, its sole director and shareholder.
2. Mr Sultana explained in his affidavit how the proceedings had come to be brought and the undoubted difficulties which he had confronted, at times when Shara and he were adversely affected by the impact of the COVID-19 pandemic and he by ill health. This helped explain the course the proceedings had taken before they were dismissed and the steps taken afterwards.
3. Mr Refenes' affidavit and correspondence explained problems Shara had encountered with obtaining expert evidence, partly as the result of delays in obtaining lay evidence. The efforts pursued with various experts sought to be engaged at different times were explained and Mr Refenes also explained that after he received funds to pay the expert Mr Stefani, he advised on 20 July 2022 that he could finalise his report by 17 September. His report was not served until October.
4. The Council relied on the affidavit of Mr Richard Oldfield, which also explained the various orders, including consent orders, made by Harrison J about the service of expert evidence, which had not been complied with.
5. On the case Shara advanced, only seven orders had been breached. This was in issue, but that does not have to be resolved, given that it was twelve "indulgences" to which Harrison J had referred.

How the Court's powers must be exercised

1. The making of orders for dismissal of proceedings for want of due despatch, as well as what is sought by the motion, have to be approached in light of the requirements of s 56 of the Civil Procure Act 2005 (NSW). It imposes obligations on the Court and the parties to adhere to the overriding purpose there specified, the just, quick and cheap resolution of the real issues in the proceedings.
2. When exercising its powers, s 58 requires that the Court "must seek to act in accordance with the dictates of justice", having regard to the matters specified in s 58(2)(b). They are: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) 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, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56(3), (v) 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 the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case.
3. The Court must also pay regard to the objects specified in s 57: (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
4. The Court is also obliged to pursue the objects of:

• "eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute": s 59; and
• "resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute": s 60.

The parties' cases

1. On this application Shara did not suggest that Harrison J had failed to adhere to these obligations. Nor was any complaint made about his Honour's exercise of the Court's discretions. It was accepted that his Honour was seeking to do justice between these parties, in the difficult circumstances which unfolded at the height of the COVID-19 pandemic.
2. There was also no issue that the dismissal of the proceedings which it brought was thus the result of Shara's breach of the April 2022 order. That gave it what was contemplated to be a final opportunity to serve its outstanding expert liability report, before the proceedings were dismissed. Shara's non-compliance with that order resulted in Harrison J refusing to make further orders after the proceedings had been dismissed, when the parties appeared again in July 2022, Shara not to that time having made any application to disturb the April orders: Shara Projects Pty Ltd v Blacktown City Council (Supreme Court (NSW), Harrison J, 1 July 2022, unrep).
3. His Honour there observed that the outstanding evidence not having been served as ordered, the April order for dismissal had taken effect automatically. On 1 July Shara sought further time to serve its evidence, but his Honour considered it to be necessary for an application to be made to set aside the April order dismissing the proceedings, before such an order could be entertained.
4. Shara's motion sought an extension of time to serve its expert's report by September 2022, but it had only been served in October. At the hearing an extension until the date of service was thus sought. But that was opposed in circumstances where the report disclosed that the expert still needed to give further consideration to other matters. Shara then contended that what had been raised by the expert related to subpoenaed material which could be dealt with at the hearing.
5. The Council's case was that the Court did not have power to make the orders sought and that Shara could also not justly be given yet a further opportunity to finalise its expert evidence, in all the circumstances which arose to be considered. Further, that the Rules did not permit expert evidence to be led orally.
6. That there was power to make the orders sought, given limitations on the Court's jurisdiction and the requirements of the applicable rules was thus in issue. On the Council's case Shara's application was misconceived.
7. It was contended for Shara that its claim was a bona fide one with reasonable prospects of success, prosecuted in circumstances where consistent and candid explanations had been given for its breaches of the Court's orders. It was acknowledged that the proceedings stood dismissed from 24 June 2022, to which point all that had been served was a two page document from the liability expert, providing an outline of the claim. Still it was submitted that the proceedings had been pursued with due despatch.
8. That was because a liability expert had been promptly briefed in January 2019, within five months of commencement and a second expert later retained. In the ensuring two years there had been "many false starts" in the preparation of the lay evidence, without which the expert could not prepare his report, with the result his "unfortunate" withdrawal in 2021, having already been paid considerable sums. Had the expert not withdrawn, the evidence could have been served before October 2022.
9. Five further experts had been approached, but they proved to be unsuitable given what was in issue and an attempt to reengage the former expert was also made.
10. Those steps were submitted not to have been consistent with a failure to pursue the proceedings with due despatch. The problems encountered reflected the nature of the claim and the resulting specificity of the liability evidence required. There had also been funding problems.
11. In the circumstances there were argued to be reasonable explanations for all of the delays. When Harrison J's orders were made in April 2022, enquiries about funding the expert report were still being pursued at a time when Mr Sultana was experiencing health and other problems, which were explained by his affidavit. That was why further time for service of the report had been sought.
12. It was accepted that opportunity was provided by Harrison J's April 2022 orders, but explained they were not complied with because of ongoing funding problems as a consequence of the COVID-19 pandemic and long periods of inclement weather and their effects on Shara's ability to generate income.
13. The lay evidence had been served in February 2021 and so, it was argued, Shara should not be penalised for its later failures to comply with the Court's orders, given the unforeseen challenges it encountered and that its breaches were not deliberate. Further, the Council had not been prejudiced by the delays, which had been cured by service of the expert evidence in October 2022, which meant that the case was now ready to proceed.
14. The Council disputed this.
15. Its case was that it was well settled that failure to comply with the Court's orders could result in dismissal of proceedings for want of due despatch: Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274. There was no error in making the April 2022 self-executing orders, given the circumstances of Shara's repeated and continuing defaults and the Court's power under s 61(3) of the Civil Procedure Act to order dismissal, in the case of such failure.
16. The exercise of that power depended on what justice required. This involved a party being given a reasonable opportunity to lead evidence and present their case, but that does not mean being given multiple, repeated opportunities: Thiele v Radford [2008] NSWSC 1162 at [31]-[32].
17. It was necessary for the Court to take into account the prejudice which the Council suffered by having to remain active in litigation which had dragged on without progressing. Further, Shara serving the expert evidence it relied on had not cured such prejudice.
18. There had been no error in Harrison J's April 2022 orders, which could not be set aside in the way sought, rr 2.1 and 2.3 not permitting the setting aside of orders dismissing the proceedings. The Court was functus as a result, given those orders and Harrison J's refusal to make any further orders in July 2022: FAI General Insurance Company Ltd v Southern Cross Exploration N L (1988) 165 CLR 268; [1988] HCA 13.
19. Harrison J's orders having dismissed the proceedings as they did, a purported application to set aside or vary the orders under r 2.1 also involved an impermissible attempt to appeal the dismissal order.
20. In any event, there had been no material change demonstrated. There had been extensive delay before the lay evidence was served by Shara; the retained expert had withdrawn because of time constraints; there had been difficulty in retaining a replacement, as well as in funding another expert. That had all been considered by Harrison J, who as the result of an appropriate balancing exercise, had made the April 2022 self-executing orders.
21. They had not been complied with, even when the matter again came before his Honour in July, there having been no earlier application to vary the orders or extend the time for service of the outstanding evidence.
22. While the orders pressed on the motion was for service of the expert's report by October, what had been served suggested that even further material had to be considered and dealt with by the expert. What was proposed was also inconsistent with the Rules. There was thus no power to make the orders sought or any just basis for their making.

Leave to call evidence from the expert about outstanding matters at trial cannot be given

1. I am satisfied that what Shara proposed in relation to the outstanding expert evidence could not be accepted. That is not how expert evidence is received.
2. To the contrary, r 31.29 contemplates that expert evidence will be given by way of report, not oral evidence at a hearing. Indeed, oral expert evidence is not admissible unless the substance of those matters has been dealt with in the report served: r 31.28(3)(c). Even if there was a discretion to permit the course proposed, that it could be justly exercised in the circumstances is not apparent.

The motion must be dismissed

1. That supports the conclusions which the Council urged. For reasons which follow I am satisfied that Shara's motion must be dismissed.

The Rules

1. The Rules relied on by Shara in its motion deal with the case management of proceedings which are on foot.
2. They allow the Court, "at any time and from time to time, [to] give such directions and make such orders for the conduct of any proceedings as appear convenient (whether or not inconsistent with these rules or any other rules of court) for the just, quick and cheap disposal of the proceedings": r 2.1. Further, without limiting the generality of r 2.1, to make orders and directions as to the "the delivery or exchange of experts' reports and the holding of conferences of experts": r 2.3(g).
3. But there is no question that these proceedings have already been dismissed.
4. The orders sought are thus not orders of the kind which the Rules relied on permit, Shara not having complied with Harrison J's April 2022 self-executing orders, intended as they were to give it a final opportunity to serve the outstanding expert evidence.
5. Despite this Shara neither took advantage of that opportunity, nor sought to have the orders varied before they took effect, even when it became apparent that they could not be complied with. Despite all the matters explained in the affidavits, the result was that the proceedings are no longer on foot, the April 2022 orders also not having been appealed.
6. That Shara would have had any prospects of a successful appeal is difficult to see on all of the evidence about the circumstances in which the orders were made. Indeed it does not suggest that Harrison J fell into any error. That reflects that it had received a reasonable opportunity to advance its case, before the orders took effect, with the result that the proceedings were dismissed.
7. That explains Harrison J's refusal to make further orders in July 2022, when the matter came into the list again, it having been expected in April that the outstanding evidence would have been served.
8. It was only some three weeks later that this motion was served, even though the expert evidence was still outstanding.
9. It is r 36.16 which regulates applications which seek to set aside or vary orders which have been made, but Shara also did not rely on it, understandably in the circumstances, as it transpires. It provides: 36.16 Further power to set aside or vary judgment or order (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if - (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order. (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it - (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. (3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered. (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order.
10. While not relied on in the motion, the requirements of this rule were also addressed by the parties in their oral submissions. It was common ground that there are limited circumstances in which an order can be set aside under r 36.16.
11. Given that the April 2022 orders were made in the presence of the parties, with the result the dismissal of the proceedings when they were not complied with and Shara's motion only having been filed in July 2022, long after the 14 days of the orders having been made, that being the time by which a motion to set aside the order had to be filed, it was properly accepted that the orders sought could not be made under this rule.
12. The rule arose to be considered in Mahommed v Unicomb [2021] NSWCA 108. There, unlike this case, the motion seeking to set aside an order made by Robb J dismissing the proceedings had been brought within the required 14 days. But it was refused by Parker J, who it was found on appeal had correctly accepted that the power given by r 36.16(3A) to set the dismissal order aside "ought not to be exercised for the simple purpose of reviewing an earlier decision of the same court in the manner that that would occur on appeal": at [5].
13. What was there sought was found to have been an opportunity to re-argue what Robb J had decided, which Shara said it did not seek to do. But some of the arguments it advanced did challenge that it had not pursued the proceedings with due despatch. That case cannot be pursued under this rule.
14. It was also observed in Mahommed at [7] that the exercise of the Court's jurisdiction to re-open a judgment must "be exercised with great caution, having regard to the importance of the public interest in the finality of litigation": Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; [1993] HCA 6 at 301-302.
15. Further, that for the jurisdiction to re-open to be exercised in relation to an interlocutory order, an applicant must establish "a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application": Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46 and De Varda v Austin [2019] NSWCA 133 at [14].
16. Shara accepted that given that its motion had not been made within the 14 days specified in r 36.16(3A), the power there given to the Court to set aside the order dismissing the proceedings was not available to be exercised. Even if it could that the necessary material change could be established, appears doubtful.
17. Reliance was thus finally placed on what was said to be the Court's inherent power to make the orders sought, given that it was accepted that the rules it had relied on in its motion, also did not empower the Court to make those orders.

The Court's inherent power

1. I am satisfied that the case pressed finally for Shara also cannot be accepted.
2. Shara did not take advantage of the further opportunity it was given, over the Council's objections, by the April 2022 orders which permitted it to put on the outstanding evidence. Even now what was belatedly served still needs to be further supplemented. If the Court had the claimed inherent power to grant Shara the relief it seeks, that would tell against its exercise.
3. But contrary to the case it advanced, the Court does not have the inherent power to set aside orders dismissing proceedings for which it contended.
4. It is settled that the Court's later orders may generally not amend, vary or recall a final judgment which correctly reflects the intended decision and has been formally entered: DJL v Central Authority (2000) 201 CLR 226; [2000] HCA 17 at [38]. That also applies when a self-executing order which brings the proceedings to an end, of the kind Harrison J made, is entered and takes effect, because what had otherwise been ordered was not complied with: Bailey v Marinoff (1971) 125 CLR 529; [1971] HCA 49.
5. The reasons reached in Bailey were considered and explained in FAI General Insurance Co Ltd: at 281-282. The orders in issue in FAI General were made under rules which did permit an appellate court to extend the time fixed by an order, even after the time expired: at 283. But the Uniform Civil Procedure Rules do not give this Court such a power.
6. Rule 36.16 provides for limited exceptions to the common law position. But rule 36.16(3C) expressly excludes any power to extend the time limit imposed by r 36.16(3A) for any motion Shara might have brought, seeking to set aside the April 2022 order. Otherwise, there is no power to set aside the April 2022 order dismissing the proceedings: r 36.16(3)(b).
7. In the result it must be concluded that the Court does not have the inherent power for which Shara contended.

Exercise of any discretion

1. Even if that conclusion was not reached, I struggle to see that justice could permit the orders sought to be made, if there was any available discretion to exercise, despite the undoubtedly difficult situation Mr Sultana explained.
2. While there must be sympathy for the position Shara and Mr Sultana found themselves in, the evidence established that they have been given every reasonable opportunity to put on the expert evidence they were ordered in April 2022 to file and serve. Even now that evidence is not complete. I am thus not persuaded that the evidence establishes a just basis for the orders sought, if there was a power which could be exercised to permit the proceedings now to be reinstated.
3. All of the matters which the Civil Procedure Act requires the Court to take into account in exercising its discretions, which I have earlier explained, would have to be taken into account in that exercise. The Council's case that they would not permit the conclusions which Shara urged, would have to be accepted, in all the circumstances I have explained.

Costs

1. The usual order under the Rules is that costs follow the event. In this case that is an order that Shara bear the Council's costs, as agreed or assessed. Unless the parties approach to be heard within 14 days, that will be the Court's order
2. In the event that the parties wish to be heard on costs they should approach within 14 days and file short written submissions about what is in dispute.

Orders

1. For the reasons given I order that: 1. The motion is dismissed. 2. Unless the parties approach to be heard within 14 days, Shara must bear the Council's costs, as agreed or assessed.

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