David Clifford Kerrigan and Beryl Kerrigan Formerly Trading as * "Singapore Restaurant* " v E Singer Pink and Co Pty Ltd No. SCGRG 94/243 Judgment No. 4720 Number of Pages 6 Judgments and Orders Amending,

[1994] SASC 4720

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA MILLHOUSE J

CWDS
Judgments and orders - amending, varying and setting aside - appeal against setting aside of default judgment and allowing the filing of a defence - on eve of trial. HELD: - Discretion miscarried - Failure to take into account principles of Case Flow Management - Appeal allowed. District Court Rules DCR
2.02, R 2.09. United Motors Retail Ltd v Australian Guarantee Corporation Ltd
(1991) 58 SASR 156 and Government Insurance Office of New South Wales v Ali
(1992) 59 SASR 124, applied. Janair Ptv Ltd v John Ives (Unreported Judgment 54288), discussed. Watson v Anderson (1976) 13 SASR 329 and Davies v Pagett
(1986) 70 ALR 793, considered.

HRNG ADELAIDE, 20 July 1994 #DATE 4:8:1994

Counsel for appellant:     Mr R Sallis

Solicitors for appellant:    Andersons Solicitors

Counsel for respondent:     Mr T Mcrae

Solicitors for respondent: Barratt Linquist

ORDER
Appeal allowed.

JUDGE1 MILLHOUSE J This is an appeal against an order of His Honour Judge Birchall in the District Court, setting aside, on terms, a default judgment just before the assessment of damages and allowing a tardy defendant to file a defence.

2. Mr Robert Sallis, for the appellant, first asked because of the importance of the point in relation to case flow management and because there is, as yet, no authority on it, that I should forthwith refer the appeal to the Full Court. Mr Terry McRae opposed this. I refused the request, feeling sufficiently confident to decide the matter myself.

3. The proceedings arise out of the cancellation by the landlord, the respondent, of the lease of premises in Hindley Street in which the appellants had been running the Singapore Restaurant. The appellants have sued the respondent, claiming several forms of relief but mainly damages. The action began in the District Court in December 1990, was transferred to the Supreme Court and later sent back again to the District Court.

4. This is the chronology of the action prepared by the appellants' solicitors and appearing in the Appeal Book:-
    "DESCRIPTION OF EVENT   DATE
    1. Summons issued in Action No 4088 of 1990        5/12/90
    in the District Court of South Australia.

2. Orders of Judge Burley in the Supreme Court
    of South Australia, granting the Plaintiffs
    leave to file and serve a Second Amended
    Statement of Claim, and transferring the
    action to the District Court of South Australia. 3/12/92

3. Seconded Amended Statement of Claim, filed.     3/12/92

4. Letter from the Plaintiffs' solicitors
    to the Defendant's solicitors, enclosing,
    by way or formal service, a sealed copy of
    the Orders made by Judge Burley in the
    Supreme Court ... on 3 December 1992,
    and requesting that the Defendant file and
    serve a Second Amended Defence within the
    period stipulated by the District Court Rules,
    and advising that in default thereof, the
    Plaintiffs would apply for Default
    Judgment and that the action be set
    down for an Assessment of Damages.                 22/1/93

5. Letter from the Plaintiffs' solicitors to
    Defendant's solicitors, referring to their
    letter dated 22 January 1993, and
    advising that unless the Defendant file
    and serve its Second Amended Defence before
    5.00pm on 2 July 1993, the Plaintiffs would
    apply for Default Judgment and request that
    the matter be set down for an Assessment of
    Damages.   28/6/93

6. Plaintiffs' Application ... seeking Default
    Judgment to be entered in favour of the
    Plaintiffs against the Defendant, and
    that the action be set down for an
    Assessment of Damages.   14/7/93

7. Plaintiffs' solicitors letter to the
    Defendant's solicitors enclosing, by way
    of formal service, a sealed copy of the
    said Notice For Further Directions dated
    14 July 1993, together with the affidavit
    of Robert Waleed Sallis, sworn on 14/7/93
    in support thereof, including all exhibits
    referred to therein.   15/7/93

8. Order of Master Berry, made in the
    District Court of South Australia, to the
    effect that Judgment be entered for the
    Plaintiffs, for damages to be assessed,
    and that the Pre-Trial Conference be listed
    with notification to issue from the Court
    Registry to all parties.   29/7/93

9. Plaintiffs' solicitors letter to the
    Defendant's solicitors, advising them of
    all orders made by Master Berry in the
    District Court of South Australia on
    29/7/93.   30/7/93

10. Notice of Hearing of Pre-Trial
    Conference issued by the District
    Court of South Australia to all parties,
    setting down the said Pre-Trial
    Conference for hearing on 6/10/93                 16/8/93

11. First Hearing of the ... Pre-Trial
    Conference before Chairman Austin,
    which was adjourned until 14/10/93 ...
    Mr Sallis attended for the Plaintiffs
    and Mr Hay attended for the Defendant.
    No Application to set aside the ... Default
    Judgment was mentioned or made at the Pre-Trial
    Conference.  6/10/93

12. Second Hearing of the ... Pre-Trial
    Conference before Chairman Austin
    (and) the ...... Conference .......
    adjourned until 28/10/93. ..... Mr Sallis
    attended for the Plaintiffs, and
    Mr Hay attended for the Defendant.
    No Application to set aside the Default
    Judgment was mentioned or made at the said
    Pre-Trial Conference.   14/10/93

13. Third Hearing of the ... Pre-Trial
    Conference before Chairman Austin,
    wherein it was ordered, by the consent
    of all the parties, that the action be
    set down for an assessment of damages,
    commencing on Monday, 7/2/94 (for 3 days,
    if necessary). Mr Sallis attended for
    the Plaintiffs, and Mr Hay attended for
    the Defendant. No application to set
    aside the said Default Judgment was
    mentioned or made at the said Pre-Trial
    Conference.  28/10/93

14. Trial Notice issued by the District
    Court of South Australia to all parties,
    confirming the said trial date of
    Monday 7/2/93.   28/10/93

15. Application by the Defendant dated
    4/2/93 (brought pursuant to Rule
    51.06 of the District Court Rules),
    seeking Orders that the progress of ....
    action to trial be delayed, that the
    Default Judgment entered on 29 July 1993
    be set aside, an order that the Defendant
    be granted leave to file a Second Amended
    Defence, and any other Order deemed fit by
    the Court, together with the affidavit
    of Stephen Earle Hay, sworn on 4/2/93
    in support thereof.  4/2/94

16. Trial Date (the trial being an
    assessment of damages set down
    for 3 consecutive days, if necessary).             7/2/94"

5. The application by the respondent was filed late on Friday 4 February - I was told this by counsel - to stop the hearing on the following Monday 7 February. In support was the affidavit by the solicitor for the respondent, Mr Stephen Earle Hay sworn on the same day, the relevant paragraphs of which are:-
    "2. On the 14th day of July 1993, the plaintiffs' solicitors
    issued an Application seeking inter alia an order that
    default judgment be entered in favour of the plaintiffs
    against the defendant as a consequence of the failure of
    the defendant to file a Second Amended Defence.

3. The Application was listed for hearing on the 29th July
    1993.

4. On the 16th July 1993 I received a copy of the
    Application from the plaintiffs' solicitors.

5. In error I noted in my diary that the hearing of the
    Application was listed for the 30th July 1993.

6. At the hearing on the 29th July 1993, there being no
    attendance on behalf of the plaintiff, Master Berry ordered,
    inter alia, that judgment be entered for the plaintiffs
    against the defendant for damages to be assessed.

7. On the 30th July 1993 and upon realising my error, I
    contacted Mr Sallis of the plaintiffs' solicitors and
    advised him of my error and that it would be necessary for
    me to make application to set aside Master Berry's order.

8. As a result of other pressures of a personal nature, I
    have not previously taken any steps to have the default
    judgment set aside and I have not advised the defendant of
    the order made by Master Berry on the 29th July 1993.

9. The hearing of this matter in so far as the assessment of
    damages is concerned is listed for the 7th February 1994.

10. The defendant is not aware of the hearing next week.

11. The defendant has a good defence on the merits to the
    plaintiff's claim.

12. In the premises, I seek orders that the hearing on the
    7th February 1994 be vacated, that the default judgment
    against the defendant be set aside and that the defendant
    be given leave to file a Second Amended Defence." In the Appeal Book there is another short affidavit by Mr Hay sworn on 13 February, to the effect that his client has a good defence on the merits.

6. At the hearing of the appeal Mr McRae told me that Mr Hay had problems of a personal and financial nature which had caused him to neglect the matter. Mr Sallis accepted that.

7. Mr McRae with his usual cogency, clarity and brevity, said all that could be said for the respondent. He argued that the appellants, if the judgment were to be set aside, would suffer no prejudice for which costs would not be a sufficient recompense. I told him that had we only to consider the traditional principles upon which a Court would set aside a judgment by default - as expounded in such cases as Watson v Anderson 13 SASR 329 and Davies v Padget 70 ALR 793 - then I thought he would succeed.

8. Unfortunately for his client we now have to take account as well of the principles of case flow management. They are superimposed on the traditional principles.

9. The system of case flow management is set out in Rule 2 of the District Court Rules. The sub-rules relevant to this appeal are:-
    "(DCR R 2.02) (System of case flow Management)
    (1) With the object of -
    (a) promoting the just determination of litigation;
    (b) disposing efficiently of the business of the Court;
    (c) maximising the efficient use of available judicial and
    administrative resources; and
    (d) facilitating the timely disposal of business at a cost
    affordable by parties; actions in the Court will be managed
    and supervised in accordance with a system of positive case
    flow management. These Rules are to be construed and
    applied and the processes and procedures of the Court
    conducted so as best to ensure the attainment of the above
    objects.
    ...

(R 2.09) Striking out for non compliance
    Where any party does not proceed with the hearing of an
    action or application therein at the time fixed for such
    hearing, the Court may, on the application of the opposing
    party or of its own motion, revoke any order to proceed to
    trial, strike out the action or application or dismiss such
    action or application for want of prosecution, and may do so
    in order to protect the integrity of case flow management
    system and to implement the Court's requirement that matters
    proceed at the time fixed for hearing notwithstanding that
    any injustice to the opposing party might have been avoided
    by an order for costs or some other order."

10. Mr Sallis in his most thorough argument had referred me to the Full Court decisions of United Motors Retail Limited v Australian Guarantee Corporation Limited (1991) 58 SASR 156 and of Government Insurance Office of New South Wales v Ali (1992) 59 SASR 124. In the latter Olsson J with whom King CJ and Mulligan J agreed, said (at 127-128):-
    " It is not overstating the situation to say that earlier
    experience within the District Court rendered it absolutely
    vital that the integrity of the case flow management
    principles expressed in the Local Court Rules be maintained
    at all times to ensure that its high volume of work could be
    disposed of within an acceptable space of time; and on a
    footing which ensured that the limited judicial resources
    available would not only be applied in a manner which was
    efficient, but also so as to accord justice to all the
    litigants who came before it."

11. Olsson J went on to say (at 129) (relying on the Chief Justice in the United Motors Retail case at 160), " that, in circumstances in which there is a clear breach of the rules related to Caseflow Management (sic) ... it would be quite inappropriate to exercise the reserve discretion to dispense with compliance in other than the most compelling situations."

12. Mr McRae sought to distinguish these two decisions on the ground that they did not concern the setting aside of judgment by default. It seems to me, however, that the principles of case flow management apply just as much where there is an application to set aside judgment by default as to other applications which will result in delay in an action.

13. Mr McRae also argued that Mr Hay had taken personal responsibility for the delay: it had nothing to do with the lay client, the two directors of which live in Victoria. That may be so and I appreciate Mr Hay's candour in accepting the blame but the Full Court said in Janair Pty Ltd v John Ives (Unreported Judgment S4288) that the obligation of a litigant extends beyond simply engaging a lawyer, the more so here as I was told that the lady and gentleman in Victoria are both legal practitioners and one of them a silk. It is certainly a factor in favour of the appellant but it is weak in comparison with those against it.

14. Judge Birchall did not give reasons for his decision. I can only think that on this occasion he overlooked case flow management. Had he borne the principles of case flow management in mind I do not see how he could have come to the decision he did. I am therefore compelled to the conclusion that his exercise of discretion miscarried and I may substitute my own.

15. In the light of the principles of case flow management set out in the Rules and as construed by the Full Court in United Motors v AGC and GIO v Ali, the application to set aside the default judgment ought to have been refused and the assessment of damages ought to have been allowed to proceed on the day set down.

16. The appeal is allowed. I shall hear counsel as to the orders I should make.