CVW Group Holdings Pty Ltd v Addison
[2011] WASC 267
•30 SEPTEMBER 2011
CVW GROUP HOLDINGS PTY LTD -v- ADDISON [2011] WASC 267
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2011] WASC 267 | |
| Case No: | CIV:3013/2009 | 31 MAY, 25 AUGUST 2011 | |
| Coram: | LE MIERE J | 30/09/11 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed | ||
| B | |||
| PDF Version |
| Parties: | CVW GROUP HOLDINGS PTY LTD MARK FREDERICK ADDISON CATHRINE LINDA BURKE BURKE ADDISON & ASSOCIATES PTY LTD |
Catchwords: | Practice and procedure Appeal from Registrar Application to set aside default judgment Judgment result of springing order Application for further and better discovery Order 26 r 6 Rules of the Supreme Court 1971 (WA) Inherent jurisdiction of court Turns on own facts |
Legislation: | Rules of the Supreme Court 1971 (WA), O 3 r 5, O 26 r 6, O 60A r 4, O 60A r 5, O 60A r 6 Supreme Court Act 1935 (WA), s 167(1)(c) |
Case References: | Allesch v Maunz (2000) 203 CLR 172 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 Fox v Percy (2003) 214 CLR 118 Freeman v Rabinov [1981] VR 539 Hancock Family Memorial Foundation Ltd v Fieldhouse (2005) 30 WAR 398 Harris v Caladine (1991) 172 CLR 84 Hytec Information Systems Ltd v Coventry City Council [1997] WLR 1666 MTQ Holdings Pty Ltd v Lynch [2007] WASC 49 Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341 Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218 Ward v Keet [No 3] [2010] WASC 71 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MARK FREDERICK ADDISON
First Defendant
CATHRINE LINDA BURKE
Second Defendant
BURKE ADDISON & ASSOCIATES PTY LTD
Third Defendant
Catchwords:
Practice and procedure - Appeal from Registrar - Application to set aside default judgment - Judgment result of springing order - Application for further and better discovery - Order 26 r 6 Rules of the Supreme Court 1971 (WA) - Inherent jurisdiction of court - Turns on own facts
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Legislation:
Rules of the Supreme Court 1971 (WA), O 3 r 5, O 26 r 6, O 60A r 4, O 60A r 5, O 60A r 6
Supreme Court Act 1935 (WA), s 167(1)(c)
Result:
Appeal allowed
Category: B
Representation:
Counsel:
Plaintiff : Mr B D Campbell
First Defendant : Mr G D Cobby (31 May 2011) & Mr A C Quahe (25 August 11)
Second Defendant : Mr G D Cobby (31 May 2011) & Mr A C Quahe (25 August 2011)
Third Defendant : Mr G D Cobby (31 May 2011) & Mr A C Quahe (25 August 2011)
Solicitors:
Plaintiff : Mony de Kerloy
First Defendant : Civic Legal
Second Defendant : Civic Legal
Third Defendant : Civic Legal
Case(s) referred to in judgment(s):
Allesch v Maunz (2000) 203 CLR 172
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616
Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55
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FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Fox v Percy (2003) 214 CLR 118
Freeman v Rabinov [1981] VR 539
Hancock Family Memorial Foundation Ltd v Fieldhouse (2005) 30 WAR 398
Harris v Caladine (1991) 172 CLR 84
Hytec Information Systems Ltd v Coventry City Council [1997] WLR 1666
MTQ Holdings Pty Ltd v Lynch [2007] WASC 49
Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341
Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218
Ward v Keet [No 3] [2010] WASC 71
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1 LE MIERE J: On 13 December 2010 a registrar made an order (the springing order) that unless within 10 days the defendants gave discovery of particular documents or classes of documents the defendants' defence be struck out and judgment be entered for the plaintiff.
2 The defendants did not file a further affidavit of discovery in accordance with the order of the registrar. The plaintiff entered judgment against the defendants. The defendants have brought two separate applications. First, the defendants appeal from the decision of the registrar and seek an order that the springing order be set aside. Secondly, by a separate application, the defendants seek an order that the time for compliance with the springing order be extended and the judgment against them be set aside.
The action
3 The plaintiff is a company that provides business consultancy services including accounting, taxation and information technology services. The first and second defendants are accountants who are employed by the plaintiff until about August, September or October 2009. The first and second defendants are directors of the third defendant. The plaintiff alleges that in breach of their employment contract and during the term of their employment, the first and second defendants solicited or accepted offers to perform work for clients of the plaintiff for themselves or the third defendant. The plaintiff further alleges that the first and second defendants made secret profits from work done for clients of the plaintiff and other third parties. The plaintiff also alleges that the first and second defendants removed documents of the plaintiff.
4 By writ of summons filed on 26 November 2009 the plaintiff claimed an account of profit, damages and other relief against the defendants. The plaintiffs' claim was said to be against the first defendant (Mr Addison) and the second defendant (Ms Burke) arising out of the breach of their duty of fidelity to the plaintiff as their employer and against the third defendant (Burke Addison & Associates) for being knowingly involved in that breach and profiting thereby.
Events after springing order made
5 On 16 December 2010 the defendants filed a notice of appeal. The notice of appeal sought orders that the orders made by the registrar be set aside and that the plaintiff's application for a springing order for further and better discovery be dismissed. The notice of appeal also sought an order that the orders of the registrar be stayed pending the determination
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- of the appeal. The defendants did not make an interlocutory application for an order that the orders of the registrar be stayed nor did they take any steps to have the appeal expedited or do anything else in relation to an application for a stay until the appeal came on for hearing.
6 On 6 January 2011 the defendants filed a minute of proposed amended notice of appeal. The minute continued to seek an order that the orders of the registrar be stayed pending the determination of the appeal. The minute sought a further order that alternatively the time for compliance with the relevant order made by the registrar be extended until 14 days after the determination of the appeal.
7 The time for compliance with the springing order expired on 23 December 2010. On 17 January 2011 the plaintiff entered judgment pursuant to the order of the registrar that the defendants pay the plaintiff damages to be assessed and costs to be taxed.
Appeal followed by application for extension of time
8 The appeal came on for hearing before me on 31 May 2011. At the outset, counsel for the defendants referred to the application to amend the notice of appeal in accordance with the minute of 6 January 2011. Counsel stated that the order sought in the notice of appeal that the orders made by the registrar on 13 December 2010 be stayed pending the determination of the appeal had 'fallen away'. During the hearing of the appeal I informed counsel for the defendants that the court had power to extend the time for compliance with a springing order even after judgment had been entered but that there was no evidence before the court of the matters to which the court will normally have regard in deciding whether to extend the time for compliance with a springing order, that is the circumstances in which the springing order came to be made, the reason for noncompliance with the springing order, the prejudice to the defaulting party if the time was not extended and the prejudice to the other party if the time were extended. Counsel for the defendants said that the defendants wanted an opportunity to bring an application to extend the time for compliance with the order of the registrar. I informed the parties that I would reserve my decision on the appeal and if the defendants wished to bring an application to extend the time for compliance with the orders of the registrar then that application should be made.
9 On 21 June 2011 the defendants applied by chamber summons for orders that the default judgment entered on 17 January 2011 be set aside and the time for compliance with the orders of the registrar be extended until 14 days after the determination of the defendants' appeal.
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10 These are my reasons for determining the defendants' appeal and the defendants' application to set aside the default judgment and for an extension of time to comply with the order of the registrar. I will start with the appeal.
Nature of appeal
11 Order 60A r 6(1) of the Rules of the Supreme Court 1971 (WA) (RSC) provides that an appeal from a Registrar shall be by way of rehearing. In Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616, 619 - 622 Mason J distinguished between:
(i) an appeal stricto sensu, where the issue is whether the judgment below was right on the material before the trial court;
(ii) an appeal by a rehearing on the evidence before the trial court;
(iii) an appeal by way of rehearing on that evidence supplemented by such further evidence as the appellate court admits under a statutory power to do so; and
(iv) an appeal by way of a hearing de novo.
12 There are different meanings to be attached to the word 'rehearing': Fox v Percy (2003) 214 CLR 118 [20] (Gleeson CJ, Gummow & Kirby JJ). In Allesch v Maunz (2000) 203 CLR 172 Gaudron, McHugh, Gummow and Hayne JJ considered the distinction between an appeal by way of rehearing and a hearing de novo in the circumstances of the case before them:
For present purposes, the critical difference between an appeal by way of rehearing and a hearing de novo is that, in the former case, the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error, whereas, in the latter case, those powers may be exercised regardless of error. At least that is so unless, in the case of an appeal by way of rehearing, there is some statutory provision which indicates that the powers may be exercised whether or not there was error at first instance [23].
- The meaning of 'by way of rehearing' in O 60A r 6(1) RSC is a matter of construction.
13 A registrar is not a member of the court. Supreme Court Act 1935 (WA) s 167(1)(c) provides that rules of court may be made conferring on
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- a registrar jurisdiction to determine certain matters. In Harris v Caladine (1991) 172 CLR 84 the High Court considered O 36A r 7(4) of the Family Law Rules which provided that:
A court reviewing an exercise of power by a … Registrar shall proceed by way of a hearing de novo but may have regard to the proceedings, including the evidence given and any affidavit filed, before the … Registrar, as the case requires.
Mason CJ and Deane J held that the delegation of some part of the jurisdiction, powers and functions of the Family Court as a Federal Court to its officers is permissible so long as two conditions are observed. The second condition is that the delegation must not be inconsistent with the obligation of a court to act judicially and that the decisions of the officers of the court in the exercise of their delegated jurisdiction, powers and functions must be subject to review or appeal by a judge or judges of the court. Their Honours said:
For present purposes it is sufficient for us to say that, if the exercise of delegated jurisdiction, powers and functions by a court officer is subject to review or appeal by a judge or judges of the court on questions of both fact and law, we consider that the delegation will be valid. Certainly, if the review is by way of hearing de novo, the delegation will be valid. The importance of insisting on the existence of review by a judge or an appeal to a judge is that this procedure guarantees that a litigant may have recourse to a hearing and a determination by a judge (95).
For where the function of exercising a discretion is delegated by a court, as it may be delegated to a Registrar, the exercise of the delegated discretion cannot confine the exercise of the same discretion by the person in whom it is primarily reposed … Upon a hearing by way of review of the decision of a Registrar the court is exercising its own discretion. There are not the same restrictions which exist when there is an appeal from a judge to whom a discretion is confided, rather than delegated, at first instance (125).
15 Gaudron J considered that the review of the exercise of power delegated to a registrar entailed a consideration of whether, quite apart from legal or other error, a different result should be arrived at.
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- McHugh J considered that nothing less than a hearing de novo to review the exercise of the power by the registrar was sufficient:
That is to say, appellate review is an insufficient condition of the delegation of the exercise of the power; there must be a complete rehearing of the facts and the law as they exist when the justice or judge reviews the order made by the officer. Otherwise, the officer and not the Justices or judges of the court would be exercising the original jurisdiction of the court (164).
17 The appeal from a registrar to a judge is not a hearing anew as if there had been no hearing before, and decision by, the registrar. That is apparent from O 60A r 5 which requires an appeal to be commenced by filing a notice of appeal and for the notice of appeal to state, amongst other things, the grounds of the appeal. Nevertheless, having regard to the fact that a registrar is exercising delegated powers, and having regard to the provisions of O 60A r 4, 5 and 6, an appeal from a registrar by way of rehearing involves many of the features of a hearing de novo. The appeal may be on the evidence before the registrar or as supplemented by any further evidence the judge admits. The appeal from a registrar to a judge is a hearing de novo in the sense that the powers of the court on appeal are exercisable not only where the appellant can demonstrate that, having regard to all the evidence now before the court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error. On an appeal from a registrar the court may exercise its powers regardless of error.
Evidence on appeal
18 The evidence before the registrar consisted of an affidavit of Stephen Vining, the managing director of the plaintiff, sworn 21 September 2010 and an affidavit of Blair Campbell, the plaintiff's solicitor, sworn
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- 19 August 2010. In addition, the affidavits of discovery sworn by the first defendant on 14 June 2010 and by the second defendant on 13 September 2010 were before the registrar. The appeal was heard on the evidence that was before the registrar together with additional evidence adduced by the plaintiff in the form of an affidavit sworn by Mr Campbell on 17 February 2011.
19 The plaintiff applied for an order for discovery of particular documents in the form of a springing order. I will first consider whether an order should be made for discovery of the specified documents or classes of documents and then whether the order should be in the form of a springing order.
Discovery of particular documents under O 26 r 6
20 Order 26 r 6(1) provides that the court may order a party to make an affidavit stating whether particular documents or classes of documents are or have been in their possession, custody or power. Order 26 r 6(3) requires an application for discovery of particular documents to be supported by an affidavit stating the belief of the deponent that the party from whom discovery is sought has or has had in his possession, custody or power the document or class of documents specified or described in the application and that it relates to one or more of the matters in question.
21 The plaintiff relies upon the affidavit of Mr Vining sworn 21 September 2010 and the affidavit of Mr Campbell sworn 19 August 2010. Counsel for the plaintiff submitted that at [14], [17], [20] and [21] of his affidavit Mr Vining swore that he believed that the defendants have documents of the type sought within the application that are relevant to the matters in question and that Mr Campbell, in his affidavit sworn 19 August 2010, swore that he believed that the defendants have additional materials within the scope of the application in their possession. I find that neither of those affidavits comply with O 26 r 6(3).
22 In the absence of an affidavit stating the belief of the deponent that the defendants have, or have had, in their possession, custody or power the documents or classes of documents specified in the application and that they relate to one or more of the matters in question in the action, the court's discretion to make an order for further discovery under O 26 r 6 is not enlivened.
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Discovery under inherent jurisdiction
23 That is not the end of the matter. The court has inherent jurisdiction to order further and better discovery in addition to the power conferred by O 26 r 6. The inherent jurisdiction to order further and better discovery was recently considered by Murphy JA in Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218 [3] - [8] where his Honour summarised the relevant principles as follows:
First, the court has, in its inherent jurisdiction, the power to order further and better discovery: Benjamin v Pulfer (Unreported, WASC, Library No 6618, 4 March 1987) 3 - 4.
Secondly, the court's inherent jurisdiction is exercised according to the former practice of the Court of Chancery: Kent Coal Concessions Ltd v Duguid [1910] 1 KB 904, 915, 916; Kent Coal Concessions Ltd v Duguid [1910] AC 452, 453. That practice was that an affidavit of documents by a party was conclusive as to the relevant documents in the possession, custody or power of that party unless the insufficiency of the discovery appeared from an admission in the pleadings by the party from whom discovery was sought, or from the affidavit of documents itself, or from the documents referred to in the affidavit, or from any source that constituted an admission by that party of a discoverable document, or where the party had excluded documents under a misconception of the case. Insufficiency could not, however, be demonstrated by a contentious affidavit from the party seeking to challenge the discovery. See British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] 1 KB 369; [1912] AC 709; Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341, 343. Thirdly, O 26 r 6 and its predecessors were introduced to relax the Chancery rule, and to allow a challenge to discovery based on a contentious affidavit seeking discovery of particular documents, or a particular class of documents: Mulley v Manifold, 343.
Fourthly, the introduction of O 26 r 6 enlarged, but did not modify, the court's inherent jurisdiction: Kent Coal Concessions Ltd v Duguid [1910] 1 KB 904, 915. Thus, if a party applies pursuant to both O 26 r 6 and the court's inherent jurisdiction, but the O 26 r 6 application is for some reason irregular, providing that the criteria for the exercise of the inherent jurisdiction are satisfied, an order may be made under the inherent jurisdiction for discovery, including for a particular class of documents.
Fifthly, under the inherent jurisdiction, where the insufficiency of a party's discovery appears from the party's pleadings, or its affidavit of documents, or the documents referred to therein, or any source constituting an admission by that party of a discoverable document, the test is whether the court has reasonable grounds for being fairly certain that there are other relevant documents which ought to have been disclosed. That is also the test that is to be applied under O 26 r 6. See Beecham Group Ltd v Bristol
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- Myers Co [1979] VR 273, 276, 278 - 279; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [3].
Sixthly, under the inherent jurisdiction, it is not necessary to infer the existence of a particular document to ground an order for further and better discovery, where it appears that a party has excluded documents under a misconception of the case: Mulley v Manifold 343; British Association v Nettlefold.
Seventhly, although the misconception of the discovering party is relevant to the exercise of the court's inherent jurisdiction, it is also, in my view, a factor which may assist in the drawing of inferences for the purposes of determining an application under O 26 r 6.
24 In its application for further and better discovery the plaintiff sought discovery of banking and financial records and client records (collectively the Records). Counsel for the defendants conceded that the Records are relevant in the requisite sense and hence discoverable (ts 53). In any event, I am satisfied that, having regard to the pleadings, the Records relate to a matter in question in the action as that requirement is explained in Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55, 63 (Brett LJ) and Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341, 345 (Menzies J). However, counsel for the defendants submitted that the plaintiff had not proved that the defendants had, or had had, the Records, or any of them in their possession, custody or power.
25 As Murphy JA explained in Technomin the court's inherent jurisdiction is exercised according to the former practice of the Court of Chancery. That practice was that an affidavit of documents by a party was conclusive as to the relevant documents in the possession, custody or power of that party unless the insufficiency of the discovery appeared from an admission in the pleadings by the party from whom discovery was sought, or from the affidavit of documents itself, or from the documents referred to in the affidavit, or from any source that constituted an admission by that party of a discoverable document, or where the party had excluded documents under a misconception of the case.
26 The plaintiff provides business consultancy services including accounting, taxation and information technology services. By their pleadings the defendants admit that the first and second defendants worked for the plaintiff as accountants. The first and second defendants are directors of the third defendants. The defendants discovered five documents. None of them were bank statements, financial records or client records of any description. I am practically certain that each of the
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- defendants has, or has had at some time since the first and second defendants commenced employment with the plaintiff banking or financial records and client records in their possession, custody or power. I am satisfied that the basis on which the defendants' affidavits of documents were made was wrong. That is, the defendants have misconceived their case in considering that banking and financial statements and client records are not relevant to the matters in issue in this action. They are. That is a sufficient ground for ordering the defendants to give further and better discovery. In the exercise of its inherent jurisdiction the court may make an order for further discovery, including for a particular class of documents: Technomin [5]. I would affirm the decision of the Registrar to order the defendants to give discovery of the Records.
Springing order
27 It is next necessary to consider whether a springing order should be made, that is an order that unless the defendants give the further discovery within 10 days their defence be struck out and judgment be entered for the plaintiff.
28 On the hearing of this appeal the defendants did not argue that the court did not have power to make the springing order but that, in the exercise of its discretion, the court should not have done so. The plaintiff submitted that a springing order may be made in the following cases:
(a) contumacy;
(b) persistent dilatory behaviour;
(c) where it can be inferred that a party is unlikely to take steps as required;
(d) to further the principles of positive case flow management;
(e) to protect an innocent party;
(f) to support the integrity of the court's own processes; and
(g) to facilitate the achievement of justice.
The plaintiff referred to the commentary in Seaman P, Civil Procedure Western Australia at [43.0.17] in support of those propositions.
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29 This is not a case of contumacy which, in this context, means 'perverse and obstinate resistance of authority': Hytec Information Systems Ltd v Coventry City Council [1997] WLR 1666, 1673 (Ward LJ). The statement that a springing order may be made in cases where a party has been persistently dilatory in taking steps in the action or when it can be inferred that he or she will not or is unlikely to take them is based on the judgment of Lush J in Freeman v Rabinov [1981] VR 539, 544. In that case it had been ordered that the trial of the action be fixed for 8 November 1979. An application to adjourn the trial was granted and a direction was given that the case be fixed for hearing in December but during October and November the defendant's solicitors complained repeatedly to the plaintiff's solicitors that the plaintiff had not delivered further particulars, answers to interrogatories and a further affidavit of discovery sought by the defendants. Lush J considered that those matters led to the result that the case was not fixed in November for hearing in December and caused the case not to be fixed in December for hearing in early 1980. Lush J held that 'the plaintiff's conduct between October 1979 and February 1980, bearing in mind that the case was subject to the accelerated procedures of the building cases list, was persistently dilatory' and it was significant that although not consenting the plaintiff's solicitor did not oppose the making of the order. Lush J held that in those circumstances 'a drastic order asserting the judge's disciplinary control of the proceedings was not inappropriate'.
30 Caution should be exercised in making a springing, or self-executing, order. It will be unusual for the court to make a springing order against a party who has not failed to comply with earlier orders of the court. In this case the plaintiff says that the defendants have caused the matter to be substantially delayed and the court should not allow the appeal which would exacerbate the delay which has already occurred. In his affidavit of 17 February 2011 Mr Campbell refers to delays caused by the defendants. On 1 September 2010 the plaintiff's managing director and solicitor attended before a registrar for a court ordered mediation. The mediation did not take place because there was no appearance by the defendants.
31 The plaintiff next refers to the events which led to the making of the springing order. On 3 May 2010 the defendants were ordered to give discovery on affidavit by 14 June 2010. On 14 June 2010 an affidavit verifying the list of documents were filed on behalf of the first and third defendants. The second defendant failed to comply with that order but served an affidavit of discovery on 13 September 2010, that is after the plaintiff's application for springing orders had been filed but before the application was heard. On 9 July 2010, and on four subsequent occasions
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- the plaintiff's solicitor wrote to the defendant's solicitor stating that the defendant's affidavit of discovery was inadequate. The only written response from the defendant's solicitor was a letter on 20 July 2010 stating that the defendant's solicitor would consider, clarify and if necessary amend the list of documents. I have found that the defendants failed to discover the Records, which are discoverable, because they misconceived the case. It may be inferred that the defendants failed to deal with the plaintiff's request that they discover the Records at all until the hearing of the plaintiff's application for springing orders. That conduct is contrary to the conduct expected of a party to advance the expeditious and efficient resolution of the litigation. However, it does not justify the drastic step of a springing order.
32 The plaintiff relies also on the conduct of the defendants after the making of the springing order. The appeal from the order of the registrar was listed for hearing before the master on 9 February 2011. The appeal came on for hearing before the master on 9 February 2011. There being no appearance by the defendants, the master gave brief reasons and ordered that the appeal be dismissed and the defendant pay the plaintiff's costs. The defendant's counsel arrived 20 minutes late for the hearing of the appeal. The master recalled the orders that he had made and ordered that the appeal be adjourned sine die and be heard by a judge.
33 The conduct of the defendants which led to the making of the springing order, when considered together with their conduct in failing to attend the mediation and failing to attend the hearing of the appeal before the master at the listed time, is conduct falling below that expected of litigants and their legal representatives. However, the defendants have not failed to comply with an order that they give discovery of the Records. The circumstances do not warrant the drastic step of a springing order.
Outcome of appeal
34 I would allow the appeal, set aside the order made by the registrar on 13 December 2010 and order that within 10 days of the order being made the defendants give discovery on affidavit of the documents or classes of documents described in the schedule to the order made by the registrar on 13 December 2010. The defendants should pay the costs of the application to the registrar, including reserved costs.
Application for extension of time
35 I have found that the appeal should be allowed and the springing order made by the registrar set aside. It follows that the judgment for the
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- plaintiff entered on 17 January 2011 must be set aside and it is unnecessary to determine the defendants' application for an extension of time to comply with the springing order. However, in case the matter should proceed further I will briefly set out my findings in relation to that application.
36 An extension of the time to comply with a springing order may be granted under O 3 r 5 RSC notwithstanding that a judgment has been entered upon proof of default: FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268, 286. The court has a discretion whether to extend time. A party does not have an entitlement to an extension of time subject to payment of costs by way of compensation. All matters relevant to the exercise of the power to extend time should be weighed. The fact of substantial delay and wasted costs and their effect on the parties, the court and other litigants - the concerns of case management - must be taken into account: see Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175. The factors to be taken into account when exercising the discretion to set aside judgment and extend time for compliance include:
1. the circumstances in which the springing order came to be made;
2. the reason for the non-compliance with the springing order;
3. the prejudice to the defaulting party if time is not extended; and
4. the prejudice to the other party if the time were extended.
See MTQ Holdings Pty Ltd v Lynch [2007] WASC 49.
37 I have already discussed the circumstances in which the springing order came to be made. The defendants had given discovery but their discovery was inadequate. That was because they had misconceived the case. They had failed to respond to requests by the plaintiff that they give discovery of the Records. The plaintiff applied for an order for further discovery. The defendants resisted that order. The defendants default was not contumacious.
38 The reason for the non-compliance with the springing order was that the defendants determined to appeal against the order. The defendants were entitled to do so. The appeal from a registrar to the master or a judge is an appeal where the appellant body exercises its discretion afresh. The defendants were entitled to appeal against the orders of the registrar and to seek a stay of the orders pending determination of the appeal. The
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- defendants included in their notice of appeal that they sought an order that the orders of the registrar be stayed pending the determination of the appeal. The defendants took no steps to obtain that stay before the 10 days expired and the order that the defendants' defence be struck out and judgment be entered for the plaintiff became self-executing. That was the fault of the defendants' lawyers. They failed to understand what they had to do to obtain a stay or at least they failed to take the necessary steps to obtain a stay of the orders of the registrar. This is not a case of deliberate or contumacious non-compliance.
39 The next matter to be considered is the prejudice to the defendants if time is not extended. The prejudice is that they will suffer a judgment against them and not be able to defend the action on its merits. The pleadings disclose an arguable defence. There is no material before the court that would enable the court to find that the defence is not genuine and arguable.
40 The next matter to be considered is the prejudice to the plaintiff if the time is extended. In Ward v Keet [No 3] [2010] WASC 71 [28] Murphy J, in considering an application to extend time for compliance with springing orders, said that in assessing the prejudice to the plaintiffs it is appropriate to have regard to the strain which litigation imposes upon litigants, particularly, but by no means exclusively personal litigants. His Honour referred to Aon Risk Services Australia Ltd v Australian National University where Gummow, Hayne, Crennan, Keifel and Bell JJ said:
And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, have to bear the strain of impending litigation and the disappointment when it is not brought to an end. The stated object in the Court Procedure Rules, of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings [101].
41 Mr Vining, the managing director of the plaintiff, has sworn that the plaintiff has had to expend considerable time, resources and money in order to investigate and repair the harm it has suffered as a result of the actions of the defendants complained of in this action. Mr Vining says that he has suffered a considerable and significant degree of stress and anxiety endeavouring to address the harm caused to the plaintiff. He says that during the legal proceedings a considerable amount of his time was spent investigating issues in the action, advising his solicitors, preparing the matter and instructing his solicitors, and endeavouring to repair client
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- files. The plaintiff says that it will incur further legal fees in proceeding with this matter as well as likely further delays. The plaintiff says that it has to try to repair its name and operations after the actions of the defendants and that to allow the judgment of 17 January 2011 to be set aside would expose the plaintiff to further hardship such as loss of business, profitability and legal fees.
42 The prejudice which must be considered is the prejudice resulting from the time for compliance with the orders of the registrar being extended. It is not the harm or damage resulting from the actions of the defendants complained of in the action, nor the stress caused to the plaintiff, or its directors and employees, in trying to redress such harm and damage. I accept that extending the time for compliance would cause stress to Mr Vining by reason of the strain of the reactivated litigation and the disappointment when it is not brought to an end. However, I am not satisfied that the plaintiff will suffer any specific prejudice beyond the general prejudice that litigation causes to litigants. It is still possible for there to be a fair trial and the plaintiff would not suffer any substantial prejudice as a result of the defendants default in complying with the order of the registrar.
43 The plaintiff submitted that the court should refuse to exercise its discretion in favour of the defendants because of their delay in seeking an extension of time to comply with the orders of the registrar. The application was heard on 25 August 2011. That is eight months since the order was made by the registrar. The defendants are partly responsible for that delay. The delay has in part been caused by the defendants' legal representatives failing to make the application expeditiously and efficiently. The plaintiff's legal representatives erroneously considered that it was sufficient to include in the notice of appeal against the judgment of the registrar a request for an order that the order of the registrar be stayed pending the appeal and subsequently to seek to amend the notice of appeal by including an order that the time for compliance with the order be extended. The defendants' legal representatives caused further delay by failing to attend the hearing of the appeal before the master at the time it was set down for hearing and arriving 20 minutes late. However, the delay in determining this application has also been caused by delays in listing the appeal for hearing before a judge and subsequently listing the application for extension of time. The defendants are not responsible for those delays.
44 The court must exercise its discretion having regard to all of the matters to which I have referred. However, after considering all of these
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- matters, the court must ask: 'What does justice, in all the notions or senses of it that are relevant, require in the circumstances of this case?': Hancock Family Memorial Foundation Ltd v Fieldhouse (2005) 30 WAR 398 [103] (Steytler P & Owen JA). The defendant's failure to comply with the springing order of the registrar was not contumacious. It came about because the defendants wished, as they were entitled to, to appeal against the orders of the registrar. Their failure to seek a stay of the orders pending the determination of the appeal and their failure to apply for an order extending the time for compliance earlier was the fault of their legal representatives. Of course, a party is not excused from the consequences of their legal representatives' defaults. However, in this case the prejudice to the defendants if time is not extended outweighs the factors tending against the extension of time. If I had not allowed the appeal against the order of the registrar I would have extended the time for the defendants to comply with those orders.
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