Practice and procedure - Appeal from decision of Case Management Registrar refusing defendant an extension of time - Turns on own facts

First Appellant (First Defendant) : Mr P G Clifford

Second Appellant (Second Defendant) : Mr P G Clifford

Third Appellant (Third Defendant) : Mr P G Clifford

Connelly v Director of Public Prosecutions (1964) AC 1254

Hughes v Gales (1995) 14 WAR 434

Inform Form Work Pty Ltd v McInnes Concrete Services Pty Ltd, unreported; FCt SCt of WA; Library No 950611; 15 November 1995

Melville v East End Holdings Inc [2003] WASCA 133

Magenta Nominees Pty Ltd v Bonini [1999] WASC 88

Willis v Normandy Golden Grove Operations Pty Ltd [2003] WASCA 221

1 MASTER NEWNES: This is an appeal by the defendants against an order of a Registrar of the Court made on 16 September 2003 by which the learned Registrar dismissed the defendants' application of 1 September 2003 for an extension of time within which to file an application to amend their defences. The dismissal of the application was of greater than usual significance because the result was to give effect to an earlier "springing" order made against the defendants, by which the plaintiff was entitled to enter judgment in the action.

2 In the action, the plaintiff says that he entered into an agreement with the second defendant, acting on behalf of the first defendant, to provide, by way of security for a loan to be made to the plaintiff's son by the first defendant, the certificate of title to certain property and a signed transfer of the plaintiff's half interest in the property. The plaintiff alleges that the security was limited to an amount of $42,000 and to a period of six weeks. According to the plaintiff, the first defendant sold the property, outside the six-week period, for an amount of some $178,917. Pursuant to a further agreement between the plaintiff and the first defendant, the third defendant was to hold the amount received for the plaintiff's half interest, an amount of some $89,458, in trust until a dispute as to what, if any, amount the first defendant was entitled to under the security agreement was resolved. The plaintiff says that the third defendant failed to hold the funds on trust and the first defendant has disposed of them. The plaintiff seeks to recover that sum and claims damages and other relief.

3 The defendants deny the agreements alleged by the plaintiff and plead that, prior to this transaction, the first defendant had loaned the plaintiff's son an amount of some $400,000. It refused to lend him any more. In February 1990, the first defendant agreed to lend the plaintiff the sum of $8,000 for a very short period on the basis that the plaintiff would also repay an amount of $45,000 in reduction of his son's indebtedness. Interest at the rate of 15 per cent was to be paid on the full amount of $53,000. The defendants say that the property referred to by the plaintiff secured that debt. When the property was sold in November 2000, the amount realised for the plaintiff's interest was sufficient to repay the principal of $53,000 and to pay part of the accrued interest, leaving an amount of some $36,000 in interest still owing. The first defendant counterclaimed in that sum.

4 The issue that is the subject of the current appeal came about in the following way. At a status conference on 15 July 2003 the learned Registrar ordered that, unless within 14 days the defendants gave discovery on oath, and provided further and better particulars of their defence and counterclaim pursuant to the plaintiff's request of 5 May 2003, the plaintiff be entitled to enter judgment. On 19 August 2003, following submissions by the defendants that far-reaching amendments were to be made to the defences, the learned Registrar ordered that, subject to the defendants filing and serving an application to amend their defences by 26 August 2003, the order of 15 July 2003 be discharged.

5 In fact, although the application to amend the defences was served on 26 August 2003, it was not filed until 27 August due to problems with the form of the documents, leading to the application being rejected by Central Office when it was presented for filing on 26 August. I will come to the reasons for that in due course. It was in those circumstances that the defendants sought an extension of one day to the time within which they were required to file the application. The application for an extension was refused, with the result that the order of 15 July 2003 remained alive.

6 It is necessary to deal in some detail with the history of the action in order to put in context the refusal of the learned Registrar to extend the time for the filing of the application to amend the defences.

7 The action was commenced on 15 November 2001 by the filing of a generally endorsed writ. On 24 November 2001, a memorandum of conditional appearance was filed on behalf of what are now the first and third defendants. At that stage, they were the first and second defendants. The current second defendant had not been joined as a party. The statement of claim was not filed until 18 May 2001. Shortly afterwards, on 11 June 2001, orders were made at a status conference that the first and second defendants file their defences by 2 July 2001. That was not done. At a further status conference on 2 August, the time for the filing of defences was extended to 24 August 2001.

8 Shortly before the defences were due, the defendant's solicitors wrote to the plaintiff's solicitors pointing out discrepancies between the statement of claim and the writ. As a result, at a status conference on 11 October 2001, consent orders were made that an amended writ and minute of amended statement of claim, which had been filed on behalf of the plaintiff, stand as the amended writ and statement of claim and service be dispensed with. The defendants were ordered to file their defences and any counterclaim by 26 October 2001. The substantive effect of the amendment to the writ was to add the current second defendant.

9 The defendants did not file their defences in time and on 7 November 2001 the plaintiff's solicitors wrote to the defendants' solicitors advising that judgment in default would be entered unless the defences were filed by 8 November 2001. There was then apparently a telephone discussion between the solicitors, following which, on 9 November 2001, the plaintiff's solicitors received a letter setting out what the defendants' solicitors said were a number of defects in the existing statement of claim. The parties agreed to disagree on the adequacy of the statement of claim and on 28 November 2001, a chamber summons was filed on behalf of the first and second defendants seeking to strike out parts of the statement of claim. The chamber summons was adjourned for hearing at a special appointment. On 21 March 2002, Master Sanderson ordered that the plaintiff have leave within 28 days to file and serve a minute of amended statement of claim and the defendant file any objections to it within 14 days thereafter. The matter was adjourned to 14 May 2002.

10 The plaintiff's solicitors sent a minute of amended statement of claim to the solicitors for the defendants in mid-April 2002 and, following discussions between the parties, that minute was filed by the plaintiff's solicitors on 22 April 2002.

11 On about 10 May 2002, consent orders were signed by both parties and subsequently filed. Relevantly, the consent orders provided that the defendants would file their defences by 17 May 2002. They did not do so.

12 A further status conference took place on 18 June 2002. The learned Registrar ordered that, unless the defendants filed and served their defences and any counterclaim by 2 July 2002, the plaintiff have leave to apply to enter judgment against the defendants. The plaintiff was ordered to file and serve any reply and defence to counterclaim by 16 July 2002 and the parties were to give discovery on oath by 30 July 2002. The status conference was adjourned to 20 August 2002.

13 The defence of the first and third defendants and counterclaim of the first defendant was not filed until 4 July 2002, two days outside the time limit specified in the order. A memorandum of appearance for the second defendant was filed on 8 July and his defence on 10 July 2002. According to the plaintiff's solicitor, all of those documents were served on him on 15 July 2002.

14 On 18 October 2002, the plaintiff applied for interlocutory judgment on the basis of the order of the Registrar of 18 June 2002. The application was initially listed for a special appointment on 28 January 2003 but that date was vacated. The application was heard by Master Sanderson on 6 March 2003. An affidavit of the defendants' solicitors, David Eley, sworn 22 November 2002, was filed on behalf of the defendants. In it Mr Eley said that the defence of the three defendants and the counterclaim of the first defendant had been prepared for filing on 2 July 2002. He was away from the office until 4 July 2002. On his return, he found that the defence and counterclaim had been rejected at Central Office on the ground that the second defendant was not a party to the action. A practitioner from Mr Eley's office then attended to attempt again to file the defence and counterclaim. It turned out that no memorandum of appearance had been filed on behalf of the second defendant. Mr Eley arranged for the filing of the defence of the first and third defendants and counterclaim of the first defendant. Upon checking the file, Mr Eley discovered that the second defendant had not been served with the amended writ of summons by which the second defendant had been joined as a party to the action. Mr Eley arranged for a memorandum of appearance to be filed, thus overcoming the service question, and with it a defence of the second defendant. The question of whether the order dispensing with service, made when the writ was amended, was intended to apply to the second defendant was, and remains, a matter of contention between the parties.

15 In the event, Master Sanderson dismissed the plaintiff's application for judgment and extended the time for filing of the defences of each defendant to 15 July 2002. He ordered that the first and third defendants pay the plaintiff's costs of the application, but that there be no order as to costs in respect of the second defendant.

16 A further status conference took place on 1 April 2003. On that occasion, the learned Registrar ordered that the plaintiff file and serve any reply and his defence to counterclaim, and any requests for further and better particulars of defence, by 22 April 2003. The defendants were ordered to provide any particulars so sought by 13 May 2003. The parties were to give discovery on oath by 13 May 2003. The status conference was adjourned to 27 May 2003.

17 The plaintiff filed detailed requests for further and better particulars of the defence of each defendant on 5 May 2003.

18 When the matter came on for the further status conference on 27 May 2003, the plaintiff had not filed or served any reply or defence to counterclaim and the defendants had not provided the particulars of defence sought by the plaintiff. Neither the plaintiff nor the defendants had given discovery. The learned Registrar extended the time within which the plaintiff was to provide its reply and defence to counterclaim, and the defendants were to provide further and better particulars of their defences, to 10 June 2003 and extended the time for the parties to give discovery to 24 June 2003. A further status conference was listed for 1 July 2003.

19 As it turned out, by the time of the status conference on 1 July, none of the parties had complied with those directions. The status conference was adjourned to 15 July.

20 On 8 July 2003, the plaintiff filed his discovery and his reply and defence to counterclaim. Both were, of course, substantially out of time.

21 At the status conference a week later, on 15 July 2003, the defendants had still not given discovery or provided further and better particulars of their defences. There was no appearance for the defendants at that status conference. On the plaintiff's application, the learned Registrar ordered that unless, within 14 days of service of the order, the defendants gave discovery on oath and provided further and better particulars of their defences, the plaintiff would be entitled to judgment.

22 It is not apparent, from the material before me, when the order was served on the defendants' solicitors. On 31 July 2003, however, the defendants filed an application for the orders of 15 July 2003 to "be cancelled" and for leave to file and serve a minute of amended defence and counterclaim within seven days.

23 That application came on for hearing on 5 August 2003 and was adjourned to 19 August with a direction that by 12 August the defendants file any affidavit on which they relied in support of the application.

24 An affidavit of the defendants' solicitor, Mr David Eley, was filed on 12 August 2003. In that affidavit Mr Eley said, among other things, that he had recently become aware of some handwritten notes that were inconsistent with the defences filed on behalf of the defendants. The notes showed that the transaction referred to in the defences was structured quite differently to the way it was pleaded and that it would be necessary to make substantial amendments to the defences of the defendants. Mr Eley also went on to say that he had recently discovered that the second defendant was not the person who had conducted the negotiations with the plaintiff, but rather that the negotiations had been conducted by a Steven Masel. It was Mr Steven Masel who had made the handwritten notes. Mr Eley said that on his current instructions the second defendant had no real involvement in the transaction with the plaintiff. Mr Eley said that whilst he had received instructions from the second defendant in relation to the matter, at no stage had the second defendant revealed that it was Mr Steven Masel, not the second defendant, who had been the party involved on behalf of the first defendant. Mr Eley said that the amendments to the defences were such that they would affect the requests for particulars that had been served on behalf of the plaintiff. Mr Eley also said that he had very recently come into possession of additional documents that would need to be discovered. He said that it was only since the plaintiff had filed his reply and defence to the first defendant's counterclaim that the whole picture of the plaintiff's case had become evident.

25 At a status conference on 19 August 2003, the learned Registrar ordered that:

"Subject to the defendants filing and serving an application to amend their defence by 26 August 2003, order 1 made 15 July 2003 be discharged."

26 As I have mentioned, the application to amend the defences was filed on 27 August 2003, one day late. The circumstances in which that came about are set out in an affidavit of Benjamin Shawn Morton, a solicitor and a partner in the third defendant, who has had some involvement in the action on behalf of the defendants.

27 In his affidavit, sworn 1 September 2003, Mr Morton says that his partner, Mr Eley, has the general conduct of the matter but Mr Morton had attended the status conference on 19 August 2003. When he returned to the office he realised from Mr Eley's diary that, owing to other court commitments, Mr Eley would not be in a position to draft the amendments to the defences by 26 August 2003. Mr Morton said that he therefore undertook that task, but had difficulty obtaining instructions because Mr Eley was generally not available to speak to him and the telephone at the first defendant's offices was not answered until 21 August, despite many attempts by Mr Morton to make contact. On Thursday, 21 August, Mr Morton spoke by telephone to Mr Steven Masel and arranged to meet him on the following Monday morning, 25 August, as Mr Masel was not available prior to that date. Mr Morton said he did obtain some instructions over the telephone and set about preparing a draft of the amendments based on those instructions. Mr Morton says he had a meeting with Mr Masel on 25 August and obtained instructions that enabled him to complete the amendments to the defences. He completed the amendments on the Monday night and faxed them to the first defendant's offices the following morning, Tuesday, 26 August. Mr Morton says that, despite a number of attempts to contact the first defendant, he was not able to speak to anyone until early Tuesday afternoon. He obtained final instructions to file the pleading at about 2.30 pm and, having made final adjustments, left the office with a clerk at about 3 pm to file and serve the documents.

28 What then followed was something of a comedy of errors. Mr Morton says he drove the clerk to the Supreme Court to avoid any problems with filing the documents. On presentation at Central Office for filing, the application was rejected because the O 59 r 9 certificate was incorporated as part of it, rather than being a separate document. The amended pleading was accepted for filing. Mr Morton then returned to his office and had the application changed to delete the O 59 r 9 certificate, which was prepared as a separate document. He then drove back to the Supreme Court, arriving at about 3.50 pm. In his haste, however, he left the application at his office and had with him only the O 59 r 9 certificate. He went back to his office to collect the application, but by the time he returned to Central Office it was closed. He therefore served all the documents on the plaintiff that afternoon and filed the application and the O 59 r 9 certificate the following day.

29 The defendants then applied to extend the time within which to lodge the application to 27 August 2003.

30 On 16 September 2003, having heard argument, the learned Registrar refused the application for an extension of time. In his ex tempore reasons for decision the learned Registrar observed that this was the third occasion on which the defendants had sought the indulgence of the Court in relation to a springing order. He said that the grounds relied upon by the defendants on 19 August 2003 to extend the time for compliance with the earlier orders were quite sketchy and devoid of any detail. It was not clear why the defendants could not give discovery. The learned Registrar commented that the difficulties experienced in filing the application had come about because the defendants had been tardy in the way in which they had dealt with the matter following 19 August 2003, and even prior to that, as evidenced by the various springing orders and extensions that had been granted over the course of the matter. The learned Registrar said that it appeared the defendants had simply dragged their feet and left important matters to the last minute, with the consequences which eventuated in this case. In the light of the failure of the defendants to meet previous springing orders, the learned Registrar considered that "enough is enough" and accordingly refused the application for an extension of time.

31 The defendants lodged a notice of appeal on 19 September 2003. The grounds of the appeal are, in essence, that the learned Registrar gave too much weight to the fact that the defendants had not strictly complied with the terms of the order of 19 August 2003 and did not give sufficient weight to the prejudice which would be suffered by the defendants, as opposed to that which would be suffered by the plaintiff, if the extension were not granted.

32 The defendants did not seek to set aside the springing order of 15 July 2003, so the only question on this appeal is whether the time for the filing of the application to amend their defences should be extended.

33 It was submitted by the plaintiff, relying upon the decision of the Full Court in Magenta Nominees Pty Ltd v Bonini [1999] WASCA 249, that an order dismissing proceedings or striking out a defence is appropriate where a party has been persistently dilatory in taking steps in the action; litigants who deliberately and without proper excuse disobey orders should not be allowed to proceed in litigation. The plaintiff contended that in this case the defendants had continually and deliberately, without proper excuse, disregarded case management orders. In those circumstances, the refusal of the extension of time, which had the effect of enabling the plaintiff to enter judgment, was appropriate.

34 It is clear from the reasons of the learned Registrar that the decisive consideration that caused him to refuse an extension of time was the fact that this was the third springing order which had not been complied with by the defendants. The learned Registrar plainly concluded that the conduct of the defendants reflected a cavalier approach to time limits, even those with such draconian sanctions.

35 It is not difficult to see how that impression was created. However, with respect to the learned Registrar, I consider that, in the view he took of the defendants' failures to comply with the three springing orders, the learned Registrar did not have sufficient regard to the particular circumstances, and the context, in which those failures occurred.

36 The first springing order, made on 18 June 2002, required the defendants to file and serve a defence and any counterclaim by 2 July 2002. The circumstances in which the defendants did not comply with that order are set out in an affidavit of Mr Eley sworn 22 November 2002, to which I have referred. There is no suggestion of any intention to flout or disregard of the orders of the Court. The defences were presented for filing in time. They were rejected because of problems associated with the status of the second defendant. The rights and wrongs of that remain unresolved.

37 It was against that background that at the special appointment on 6 March 2002 Master Sanderson extended the time for filing the defences to 15 July 2002.

38 The second springing order, made on 15 July 2003, was made at a status conference which the defendants' solicitors failed to attend. Apparently within the 14-day period within which the defendants were required to give discovery and provide further and better particulars, they applied for the orders to be varied so as to enable an amended defence and counterclaim to be filed. That was based upon fresh instructions which, Mr Eley said in his affidavit of 12 August 2003, required substantial changes to be made to the defendants' case. That led to the order of 19 August 2003 which underlies the present application. Once again, there does not appear to have been any intention to flout or disregard the orders of the Court.

39 The failure to comply with the third springing order was a result of problems with the form of documents presented for filing, the filing of them being, unadvisedly, attempted somewhat at the eleventh hour.

40 I think it can nevertheless fairly be said that the defendants' approach to time limits has been, to say the least, highly unsatisfactory. A number of case management directions have been made and very few, if any, have been complied with within the time specified. At the same time, however, it is the case that the plaintiff is far from beyond reproach in that regard. The statement of claim was filed almost six months after the defendants entered an appearance. At the status conference on 1 April 2003 orders were given for, among other things, the plaintiff to file a reply and defence to counterclaim by 22 April and for the parties to give discovery by 13 May. Neither the plaintiff nor the defendants complied with those orders. At a status conference on 27 May 2003 the times for compliance were extended. Once again, none of the parties complied with that timetable. The plaintiff, who was to file his reply and defence to the first defendant's counterclaim by 10 June 2003 and his discovery by 24 June 2003, did not do so until 8 July 2003, approximately three months and two months respectively after the initial due date and one week before the status conference at which he obtained a springing order against the defendants on the basis of their failure to provide discovery and further and better particulars of the defence and counterclaim.

41 The plaintiff's record of non-compliance does not, of course, justify the defendants' failure to comply with time limits, but it is part of the overall context in which the defendants' non-compliance must be viewed, in circumstances where the defendants' non-compliance is said by the plaintiff to justify an order that would have the effect of depriving the defendants of their right to contest the plaintiff's claim.

42 It is the case, however, that while both sides have been seriously remiss in complying with case management orders, the greater fault lies with the defendants. It is evident that from an early stage the defendants, or their solicitors, have not given the action the attention it requires and have failed to attend to the interlocutory steps required of them with an appropriate degree of diligence and timeliness, resulting in unnecessary delay. In that regard, their conduct has fallen well short of an acceptable standard.

43 But to deprive the defendants of their right to defend the claim is a drastic sanction. As the High Court said in State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, it must always be borne in mind that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim. The touchstone must always be, what will best serve the interests of justice?

44 In the present case, no prejudice was occasioned to the plaintiff by the failure to file the application to amend on 26 August 2003. The papers were served on his solicitors in time. The fault, as Mr Morton candidly confessed in his affidavit, was his, because of problems with the documents that he sought to file. It is true that the filing of the documents was left to the afternoon of the last day. That is to invite disaster if anything goes wrong. Nevertheless, in this case I am satisfied that there was no intention to disregard the Court's orders and, but for human error, the problem would never have arisen.

45 In the end, although they are sailing close to the wind, I am not satisfied that, at this stage, the defendants' conduct is sufficient to justify the termination of their right to contest the plaintiff's claim. I consider that, in the present circumstances, the consequences of refusing to extend the time by one day are too drastic.

46 I should mention that counsel for the plaintiff also submitted that what was said to be the lack of merit of the defendants' defences was a relevant consideration on this application. I do not consider that on the materials before me I am in a position to make any proper assessment of the merits. I also note that substantial amendments to the defences have been foreshadowed.

47 Accordingly, I would allow the appeal, set aside the order of the learned Case Management Registrar of 16 September 2003 and extend the time within which the defendants were required to make an application to amend their defences to 27 August 2003.

48 I do not, however, consider that in the circumstances of this case the costs should follow the event. Whilst I am persuaded that the drastic consequences attendant upon refusing to grant the extension of time sought should not be imposed upon the defendants, the problems have come about through the defendants' solicitors' own making. It was not unreasonable for the plaintiff to contest the appeal. I consider the plaintiff is entitled to the costs of the appeal and I will hear the defendants' solicitors on why an order for costs should not be made against them personally.