Du v Ivy Real Estate Pty Ltd

[2021] VCC 154

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

 Revised

  Not Restricted

 Suitable for Publication

EXPEDITED LIST

Case No. Cl-20-00451

SHAO SHAN DU	Plaintiff
v
IVY REAL ESTATE PTY LTD (ABN 96 160 261 030)	Defendant

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JUDGE:	HIS HONOUR JUDGE COSGRAVE
WHERE HELD:	Melbourne
DATE OF HEARING:	10 February 2021
DATE OF RULING:	24 February 2021
CASE MAY BE CITED AS:	Du v Ivy Real Estate Pty Ltd
MEDIUM NEUTRAL CITATION:	[2021] VCC 154

RULING
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Subject:Review of Judicial Registrar’s decision

Catchwords: Review of Judicial Registrar’s decision - failure to comply with a Warning Administrative Mention – where the Judicial Registrar dismissed the plaintiff’s application to set aside orders - Rule 24.05 – Section 51 of the Civil Procedure Act (2010)

Legislation Cited:      Civil Procedure Act 2010 (Vic); County Court Civil Procedure Rules 2018 (Vic)

Cases Cited:Bendigo and Adelaide Bank Limited v Grahame [2020] VSC 86; British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524; Collins Book Depot Pty Ltd v Bretherton [1938] VLR 40; Davies v Pagett (1986) 10 FCR 226; Jorgensen v Slater & Gordon Pty Ltd [2008] VSCA 110; Kostokanellis v Allen [1974] VR 596; Link Blocks (1981) Pty Ltd v Fullin [1986] WAR 187; MTQ Holdings Pty Ltd v Lynch [2007] WASC 49; Re Jokai Tea Holdings Limited [1993] 1 All ER 630

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P Wallis SC Mr T Sowden	Henley Legal Lawyers
For the Defendant	Mr A Bell	Corrs Chambers Westgarth

HIS HONOUR:

Nature of application

1This matter involves an application by the plaintiff, pursuant to notice filed on 22 December 2020, seeking to review the orders made by Judicial Registrar Burchell on 9 December 2020. On that day, JR Burchell dismissed the plaintiff’s application to set aside orders made by the Court on 28 September 2020. Those orders dismissed the plaintiff’s proceeding. This came about as a result of the plaintiff’s failure to comply with a Warning Administrative Mention (“WAM”) notice dated 15 June 2020. The plaintiff’s application is made pursuant to Order 84.03 of the County Court Civil Procedure Rules 2018 (Vic) (“the Rules”).

2This hearing is conducted as a hearing de novo.[1]  In general terms, a hearing de novo is one which is heard again from the beginning.  The court conducting the hearing is not confined to the evidence or materials which were relied upon at the original hearing.  The matter is heard afresh and a decision is made on the basis of the evidence presented at the review hearing.  The court is not fettered by the decision of JR Burchell and is not obliged to find any error in the decision of the Judicial Registrar in order to arrive at a different conclusion.  To that extent, a hearing de novo differs significantly from an appeal by way of a rehearing.  With respect to the latter, the powers of the appellate or reviewing court are exercisable 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 or review is affected by some legal, factual or discretionary error.  It is nonetheless appropriate for this court to give such weight to the Judicial Registrar’s decision as appears proper in the circumstances.

[1] See generally the discussion in Bendigo and Adelaide Bank Limited v Grahame [2020] VSC 86 at [15 – 18].

3The plaintiff relies upon the evidence which was before JR Burchell together with his written submissions dated 23 October and 28 October 2020 respectively.  The plaintiff has made reference to several court documents which were not included in the substantial affidavit of John Tuck sworn 13 October 2020 (“the Tuck affidavit”) and served on behalf of the defendant. The Tuck affidavit was used at the hearing before JR Burchell.

4The defendant relies upon the Tuck affidavit together with submissions dated 28 October 2020 (including a reply submission).  In addition, the defendant relies upon a second Tuck affidavit dated 9 February 2021 and some further submissions. 

Applicable legal principles

5The orders made by the Judicial Registrar dismissing the proceeding were an exercise of the powers conferred upon the Court pursuant to Rule 24.05 of the Rules and Part 4.2 of the Civil Procedure Act 2010 (Vic) (“the CPA”).

6Rule 24.05 provides as follows:

“Nothing in this Order affects the inherent power of the Court to dismiss any proceeding for want of prosecution or to order that upon the failure of a party to do any act or to take any step which under these Rules the party is required to do or take or to comply with an order that the party do any such act or take any such step the proceeding shall be dismissed or the defence struck out and that judgment may be entered or that there be judgment accordingly.”

7The discretion to set aside an order made under Rule 24.05 is contained in Rule 24.06 which states:

“The Court may set aside or vary—

(a)       an order under this Order or an order referred to in Rule 24.05;

(b)a judgment entered or given upon the failure of a party to do any act or take any step which under these Rules the party is required to do or take or to comply with an order that the party do any such act or take any such step.”

8Section 51 of the CPA is in the following terms:

“If a person to whom a direction has been given or to whom an order made under this Part applies contravenes the direction or order, the court may do any one or more of the following –

(a)       dismiss the civil proceeding, whether –

(i)        generally; or

(ii)       in relation to a particular cause of action; or

(iii)      in relation to the whole or part of the particular claim;

(b)       strike out or limit any claim made by a plaintiff

9Section 51 provides for a range of sanctions against a contravening party. Part 4.2 of the CPA indicates that the object of section 51 is to assist in ensuring that a proceeding is managed and conducted in accordance with the overarching purpose, namely, to facilitate the just, efficient, timely and cost effective resolution of the dispute between the parties. When exercising its powers, it is important that the court have regard to provisions such as sections 7, 8 and 9 of the CPA. I note that section 52 enables a court to revoke or vary any direction or order made by it under this Part of the CPA

10The principles applicable to the exercise of the court’s discretion under Rule 24.06 were discussed by the Victorian Court of Appeal in Jorgensen v Slater & Gordon Pty Ltd.[2] There, the court noted that it enjoyed a wide discretion to relieve a party of the consequences of non-compliance with a self-executing order.

[2] [2008] VSCA 110.

11I observe that, in my view, the WAM in the present case was not a self-executing order as that expression is commonly understood. Although the WAM put the parties on notice that a failure to respond by 27 July 2020 might result in the proceeding being dismissed without further notice, the plaintiff’s failure to comply did not automatically have that effect.  An order described as a self-executing order is precisely that – it operates by reason of its own force.  By this, I mean that if the order is not complied with, the sanction specified in the order takes effect automatically upon the expiration of the time fixed for compliance.

12When deciding whether to set aside or vary a self-executing order, the governing consideration is what justice requires when all the circumstances of the case are weighed in the balance.[3] 

[3]        Jorgensen v Slater & Gordon Pty Ltd [2008] VSCA 110 at [9].

13It is well recognised that, when conducting this exercise, the court must act in an even handed manner so that the justice of the situation is considered as it affects all parties.[4]

[4]        See for example Link Blocks (1981) Pty Ltd v Fullin [1986] WAR 187, 190.

14The court is to exercise the power to relieve a party cautiously and with due regard to the necessity of maintaining the principle that court orders are to be complied with and not ignored.  The Victorian Court of Appeal expressly agreed with what was said by Newnes J in MTQ Holdings Pty Ltd v Lynch[5] where he said:

“The authority of the Court will equally be undermined, and the quality of justice for the innocent party eroded, if the ultimate sanction effected by the operation of a self-executing order can be avoided by showing that non-compliance with the springing order came about by the same sort of inattention or laxity that caused the order to be made in the first place.”[6]

[5] [2007] WASC 49.

[6] Ibid at [51].

15The sanction of dismissing a proceeding so the plaintiff cannot bring its case before the court is an extreme measure reserved for the most serious cases where there is an egregious offence against the court or the opposing party.  It is a last resort where no alternative and less severe, but effective, remedy is available.[7]

[7]        British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524 at [171].

Discretionary factors

16The court identified various factors which should ordinarily be considered when exercising the discretion:

(a)   the circumstances in which the self-executing order was made;

(b)   the reasons for non-compliance with the order;

(c)   prejudice to the defaulting party if relief is not granted; and

(d)   the prejudice to the innocent party if relief is granted.

Circumstances in which the order was made

17In paragraphs 8 and 9 of her order dismissing the plaintiff’s claim, the Judicial Registrar summarised the steps taken in the proceeding and detailed some additional correspondence which had passed between the parties.  I gratefully adopt the Judicial Registrar’s summary, and rely upon it.  A number of matters are apparent from the chronology which she has given:

·        between February 2020, when the plaintiff issued the proceeding, and June 2020, the plaintiff had filed and served its claim, responded to a notice to produce, filed two sets of further and better particulars, sought particulars of the defence, served an amended statement of claim, agreed upon the likely trial duration, discussed possible trial dates, and negotiated a timetable for outstanding interlocutory steps to be completed before trial;

·        the plaintiff did not comply with the court order made on 22 April 2020.  This required the plaintiff to file an amended written statement of claim by 4 May 2020 and for the parties to advise the court as to whether they were ready to proceed to trial by the same date;

·        the plaintiff did not comply with the orders made on 13 May 2020 which required the parties to advise the court by a nominated date if they were ready to proceed to trial.  The plaintiff failed to respond to the defendant and the court;

·        the court issued the WAM to the parties.  The defendant took the initiative to try to secure the plaintiff’s compliance with the WAM.  It sent the plaintiff an email expressly referring to the WAM, and mentioned the relevant date of 27 July 2020.  Again, the plaintiff did not respond and failed to comply with the WAM.

·        the WAM advised the parties that failing to respond by 27 July 2020 might result in the proceeding being dismissed without further notice;

18In short, the court issued the WAM in circumstances where the defendant was more active in managing the proceedings than the plaintiff, and the latter had failed to comply with orders in a timely manner.  Notwithstanding this conduct of the plaintiff, the proceeding went forward towards trial reasonably well, at least until June 2020.

19The plaintiff conceded that between July and September 2020 the plaintiff did not properly and effectively progress the proceeding.[8] Also, as noted, while the plaintiff was dilatory and acted inconsistently with his obligations under the CPA, he did not fail to satisfy a self-executing order.

[8]        Plaintiff’s submissions paragraph 24.

Reasons for non-compliance

20When examining the non-compliance with the order, the court should ascertain whether the failure to comply was wilful in the sense that the failure reflected a deliberate disregard of, or indifference to, the court’s order. If a court is satisfied that the defaulting party did not intend to ignore or flout the order, then that can be an important factor in how the discretion should be exercised.

21Within a day of the Judicial Registrar making the orders to dismiss the plaintiff’s case, the plaintiff’s solicitor, Henry Wong, issued an application to set aside those orders and reinstate the proceeding.  Initially, Wong swore an affidavit in which he said that:

(a)   he did not receive any warning of the administrative mention on or prior to 27 July 2020; and

(b)   he had not heard from the defendant about the WAM.

22Both statements Wong made were false.  In a subsequent affidavit he admitted his errors. He agreed that the defendant solicitors had brought the administrative mention date of 27 July 2020 to his attention by email and that he was warned about the WAM.  Wong said that he had not “picked up” the reference to the administrative mention notice when he checked his records before swearing the initial affidavit.

23It appears from the reasons given by the Judicial Registrar in the “Other Matters” section of the 9 December 2020 orders that she took a dim view of Wong’s conduct as an officer of the court in swearing an affidavit which contained false statements.  She suggested that Wong displayed a “reckless indifference”[9] to making accurate statements to the court.  The Judicial Registrar was well justified in being critical of Wong’s first affidavit.  However, in my view, especially in circumstances where the errors were so clear and virtually certain to be revealed, the falsehoods were more likely attributable to haste and lack of attention to detail than a calculated intent to mislead the court.  In other words, my assessment is that Wong’s conduct was driven by ineptitude rather than deliberate deceit.

[9]        Paragraph 46 of Other Matters in the orders of 9 December 2020.

24I consider it probable that Wong’s failure to satisfactorily comply with the court’s orders stemmed more from lack of professionalism than wilful indifference to, or disregard of, the court’s orders.  While his prompt response to the dismissal of the plaintiff’s case showed that he could be stirred into urgent action, his false statements in his initial affidavit, and his failure to engage as he should have with the defendant’s solicitor and the court, suggest lax work practices.  Wong’s conduct suggests that he does not attend properly to the details of a case.  Possibly he is uncomfortable with litigation and lacks knowledge and experience.

25Whatever the precise explanation is for Wong’s conduct, I am not prepared to find or infer that the plaintiff or Wong deliberately flouted the authority of the court.  Unfortunately, my experience within the court has taught me that too many lawyers conduct their work at a substandard level.  This constituted yet another example.

26I reject the defendant’s submission that I should find that Wong’s sworn evidence was not just wrong, but was recklessly and possibly deliberately false.[10]  As already observed, I attribute the errors in Wong’s affidavit to acting too quickly and with insufficient attention to detail when faced with the dismissal of his client’s action.

[10]        Defendant’s submissions paragraph 38.

Prejudice to plaintiff

27If the Judicial Registrar’s decision remains operative, then the plaintiff will suffer grave prejudice.  He will be prevented from bringing his action before the court.  The plaintiff claims to be owed commission from the sale of more than 400 properties which the defendant sold during the period when it employed the plaintiff.  It appears from the claim that the plaintiff alleges that he is owed more than a million dollars in outstanding commissions.

28The defendant suggested that if the action remains dismissed, the plaintiff could pursue Wong or his firm for any loss suffered.  While that is correct as a matter of legal theory, it is not necessarily a complete answer to the issue of potential prejudice.  Historically, courts have often been reluctant to penalise a client who has been placed in a difficult situation due to the action or inaction of the client’s solicitors.  This is apparent from cases such as Collins Book Depot Pty Ltd v Bretherton;[11] Kostokanellis v Allen;[12] Davies v Pagett.[13]

[11] [1938] VLR 40, 44.

[12] [1974] VR 596, 606-7.

[13] (1986) 10 FCR 226.

Prejudice to innocent party

29The defendant submitted[14] that there had been inordinate and inexcusable delay by the plaintiff since the proceeding was initiated, and that, if the plaintiff obtained the relief it sought in this application, the defendant would suffer “significant prejudice”.  I infer from the defendant’s submissions that the prejudice was constituted by the defendant having to continue to “divert critical business resources into the defence of the plaintiff’s claim”.  In my opinion, that factor alone does not constitute significant prejudice.  The position might be otherwise if, for example, the proceeding had dragged on for years and, since the dismissal of the plaintiff’s claim in September 2020, a witness critical to the defence had died, or the defendant had suffered a fire and crucial, irreplaceable records were destroyed.  Litigation always creates an element of inconvenience and trouble for those involved.  Often it is worse for defendants who are brought to court against their will.

[14]        Defendant’s submissions paragraph 60.

Conclusion

30The Court of Appeal in Jorgensen v Slater & Gordon Pty Ltd, when faced with the application for relief from the operation of a self-executing order, posed the question of whether the punishment fitted the crime. This was the terminology used by Parker LJ in Re Jokai Tea Holdings Limited.[15]

[15] [1993] 1 All ER 630, 641.

31In circumstances where:

(a)   the case commenced in February 2020 and progressed with reasonable dispatch until June 2020;

(b)   contrary to the finding by the Judicial Registrar, the plaintiff has not committed numerous breaches of self-executing orders;

(c)   I am not satisfied that the non-compliance with the WAM was due to wilful or deliberate disregard of the court’s orders;

(d)   the prejudice to the plaintiff could be substantial if he is prevented from pursuing his claim to trial; and

(e)   the defendant has not identified any irreparable prejudice which it will suffer if the Judicial Registrar’s order is set aside

I consider that justice as between both parties requires that I set aside the order of the Judicial Registrar. Although Wong’s conduct was unsatisfactory, the punishment visited upon the plaintiff was disproportionately severe. This was not in my opinion a case of the most serious kind sufficient to warrant the extreme measure of dismissing the proceeding.

32I will hear from the parties on the form of final order and costs.