East End Holdings Inc v London Communique Pty Ltd - [2002] WASC 233

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: EAST END HOLDINGS INC -v- LONDON COMMUNIQUE PTY LTD & ORS [2002] WASC 233

CORAM: MASTER SANDERSON

HEARD: 25 SEPTEMBER 2002

DELIVERED : 3 OCTOBER 2002

FILE NO/S: CIV 2657 of 2001

BETWEEN: EAST END HOLDINGS INC
Plaintiff
AND
LONDON COMMUNIQUE PTY LTD (ACN 009 308 034)
First Defendant
ROBERT MELVILLE
Second Defendant
LONDON PARTNERS AUSTRALIA PTY LTD (ACN 057 549 925)
Third Defendant

Catchwords:

Practice and procedure - Application for extension of time to comply with springing order - Repeated failure to comply with case management orders - Turns on own facts

Legislation:

Nil

Result:

Application refused

Category: B

Representation:

Counsel:

Plaintiff:     Mr S J Penrose
First Defendant             :     Mr D E Eley
Second Defendant         :     Mr D E Eley
Third Defendant           :     Mr D E Eley

Solicitors:

Plaintiff:     Tottle Christensen
First Defendant             :     Eley Palmer
Second Defendant         :     Eley Palmer
Third Defendant           :     Eley Palmer

Case(s) referred to in judgment(s):

Skahill v Kestral Holdings Pty Ltd (In Liq) [2000] WASCA 185

Case(s) also cited:

Nil

MASTER SANDERSON: This is the return of two chamber summonses. The first in time was the plaintiff's motion for judgment. There then followed an application to the Case Management Registrar by the defendants for an extension of time to comply with the springing order. In this latter application the defendants seek only to extend by one day the time for compliance with the order. Ordinarily it might be thought that in such circumstances an extension would be granted as a matter of course. However, this case is somewhat unusual. Counsel for the plaintiff submitted that taking into account a course of conduct by the defendants and their solicitors over a long period of time, the extension ought not be granted. It is appropriate if I deal with this application first.
The application is supported by two affidavits of Benjamin Shawn Morton ("Morton"), the first sworn 2 September 2002 and the other, tendered on the morning of the hearing, sworn 24 September 2002. In opposition to the application the plaintiff relied upon an affidavit of Lisa Marie Rudrum, sworn 20 September 2002.
The action has taken the following course. A first status conference was held before Registrar Rimmer on 21 November 2001. At that time the plaintiff had filed its statement of claim and the defendant had foreshadowed an application to strike out all or parts of the statement of claim. Given the likelihood of a strike‑out application, no programming orders were made and the matter was adjourned. The parties anticipated that the status conference would reconvene on 4 December 2001. However, the matter did not come back before the Court until 20 February 2002.
On that date Mr Penrose, of counsel for the plaintiff, appeared before Registrar Rimmer. No‑one appeared on behalf of the defendants. Mr Penrose explained to the Registrar that there had been settlement negotiations prior to Christmas and a tentative settlement agreement had been reached. The Registrar pointed out that no defence had been filed. He also pointed out that an application to strike out the statement of claim had been filed. Mr Penrose indicated that he had not been served with any such application. The Registrar observed that when the matter came on in Master's chambers there had been no appearance by any party. Against this background the Registrar adjourned the status conference to 1 May 2002 and reserved the costs.
As is the usual practice of the Court after the non‑appearance of counsel at the status conference, a letter dated 20 February was sent to the defendants solicitors asking for an explanation as to their non‑attendance at the hearing. The defendants' solicitors responded on 19 March 2002. The letter was written by Morton. He apologised to the Registrar for the failure to attend and explained his absence in the following terms:
"I have the general conduct of this matter and the failure to attend occurred when I was urgently required to go to Sydney. I transferred the entry from my electronic diary to that of another solicitor in the firm but it was somehow lost by the computer. Despite an extensive search (the cause of the delay in providing this letter) we have been unable to determine why the computer failed to transfer the entry to the diary of another solicitor."
That correspondence was referred to Registrar Rimmer, who noted it and indicated no further action was required. It is to be noted that the defendants' solicitors had provided a reasonable explanation for their non‑attendance at the status conference and, allowing for the search made of their computer, they had responded to the Court's inquiries within a reasonable period. It appears that a copy of this letter was not sent to the plaintiff's solicitors. Perhaps it should have been. Furthermore, given the solicitor's failure to attend the status conference, it was to be expected that greater care would have been taken in the future.
The matter came on for a further status conference on 1 May 2002. Mr Penrose again appeared for the plaintiff and Mr Vogt appeared for the defendants. Mr Penrose advised the Registrar that there had been further settlement negotiations but no concluded agreement had been reached. He sought an order that the defendants file their defence. For the defendants, Mr Vogt submitted that a tentative settlement had been reached and that it would be concluded, perhaps, in late May. He therefore sought an adjournment of some six to eight weeks to allow matters to be played out. The Registrar would have none of it. He ordered that the defence be filed by 17 May. The costs of the earlier status conference were dealt with and the matter was adjourned to 29 May. The Registrar warned the solicitor for the defendants that if the programming order was not complied with there was a possibility of a springing order.
In fact there was no compliance with the order and on 20 May 2002 the defendants' solicitors wrote to the Court pointing out the defendants' failure to comply with the orders and seeking to have the matter relisted. This letter was copied to the defendants' solicitors. The matter was referred to the Registrar and noted that the status conference had been adjourned to 29 May. Understandably no earlier date was scheduled and the plaintiff's solicitors were advised accordingly.
On 29 May 2002 the plaintiff's solicitor, Mr Penrose, appeared before Registrar Rimmer. No‑one from the defendants' solicitors attended. Mr Penrose proposed the Registrar make a springing order and after some discussion about the time the defendants would have to comply with the order, an order was made in the following terms:
"Unless within 10 days of the service of this Order by the plaintiff, the defendants file and serve a defence and any counterclaim, the plaintiff have leave to move for judgment as claimed in the Statement of Claim."
Once again, the Court wrote to the defendants' solicitors asking for an explanation for their non‑attendance at the status conference. This letter was dated 29 May 2002. The defendants' solicitors replied by letter dated 18 June 2002. It was again written by Morton. Relevantly, he said:
"I have checked our records and can find nothing that indicates this office was notified of the status conference. I am aware that the Plaintiff's solicitors requested the conference be re‑listed but I was not informed of the date or time that the conference was listed for."
Of course, the relisting of the conference on 29 May 2002 had been part of the orders made at the conference on 1 May 2002. Really, there was no excuse for the defendants' solicitors non‑attendance at the 29 May conference. This was the second time they had failed to attend the status conference and by now they were well and truly on notice that the matter required their attention.
A further status conference was convened on 24 July 2002. Mr Penrose appeared for the plaintiff and Mr Vogt appeared for the defendants. Mr Penrose advised the Registrar that his firm had been served with a defence on 7 June 2002. Mr Penrose then told the Registrar:
"I was told yesterday by a member of the firm of the defendants' solicitors that they would serve upon us an amended defence by next Friday, which my friend tells me is 2 August."
There then followed some discussion about the time for filing any amended defence. Eventually the Registrar ordered that the defendants file and serve any minute of proposed amended defence by 2 August 2002. He also ordered the solicitors for the defendants to pay the costs of the plaintiff's attendance on 29 May 2002 fixed in the sum of $200 payable by 5 August 2002. A reading of the transcript of this status conference shows two things. First, the plaintiff's solicitors regarded the defence as an entirely inadequate pleading. During the course of the hearing Mr Penrose described it as "a pleading of despair". It does not appear the defendants' solicitor disputed that the pleading was inadequate. Secondly, it is apparent that Mr Penrose was becoming increasingly frustrated. It was now late July and no adequate defence had been filed, despite the fact that the first status conference was held in November 2001 - some eight months earlier. One can sympathise with the plaintiff's solicitor's position.
The defendants failed to comply with the case management directions, yet again, and on 7 August 2002 the plaintiff's solicitors wrote to the Court seeking to have the status conference reconvened as a matter of urgency. The letter was referred to Registrar Rimmer, who advised that it was not possible to provide an earlier date than 21 August 2002, which was the date set for the status conference. Mr Penrose was advised accordingly. It is worthy of note that a copy of the plaintiff's solicitors' letters to the Court was provided to the defendants' solicitors.
The status conference was duly convened on 21 August 2002. Mr Penrose appeared again for the plaintiff. There was no appearance for the defendants. Mr Penrose moved for judgment. He pointed out no amended defence had been filed and he reiterated that the defence which was on file was entirely inadequate. The Registrar settled on a springing order. The precise form of the order was as follows:
"Unless within 7 days of service of this order the defendants file and serve a minute of proposed amended defence the defence filed 7 June 2002 be struck out and the plaintiff have leave to move for judgment as claimed in the statement of claim with any damages to be assessed, with the costs of the action to be paid by the defendants."
A copy of this order was served on the defendants' solicitors at 10.30am on 22 August 2002. This is confirmed by an affidavit of service of Thea Eves, sworn 2 September 2002.
Again the Court wrote to the defendants' solicitors asking for an explanation as to their failure to attend the status conference. As at the date of hearing this application, I could find nothing on the file to indicate that the defendants' solicitors had responded to this Court's inquiry. It seems, however, that on 24 September 2002 the defendants' solicitors provided to the Court a letter dated 4 September 2002 which, it is said, was forwarded to the Court. It was said that this letter was sent by facsimile but the defendants' solicitors were unable to confirm its transmission. There is no record of the Court having received the letter. In any event, the operative portion of the letter, which is written by Morton, is in the following terms:
"The failure to attend the status conference on 21 August 2002 is my fault and error. I diarised the date incorrectly and as a result did not attend".
The defendants' solicitors did not then comply with the springing order. As I have indicated above, they were one day late. In his affidavit of 24 September 2002, Morton says (by par 15):
"The request for an extension of time in relation to the springing order is the period of 1 day only, which has resulted as a result of an error with our Receptionist, not bringing the copy of the springing order to my attention. The served copy has still not been located and it is quite likely that it has been misfiled."
That explanation seems remarkable. The correspondence on the Court file shows that a copy of the orders made at the status conference were enclosed with the letter of 21 August 2002. As I have said, the plaintiff arranged for service on the defendants' solicitors. It would seem then that both copies of the order went astray. That is breathtaking inefficiency.
Both in the affidavits filed in support of this application and before the Registrar the defendants seem to have maintained that the issues between the plaintiff and the defendants had been resolved. They may or may not have had good reason on their instructions to hold that view. But a reading of the transcript of what occurred before Registrar Rimmer at the various status conferences makes it plain that Mr Penrose was always sceptical about whether the matter had been settled. He was anxious to push the matter along. The defendants' solicitors must have been aware of that fact. Yet they took no positive steps to ensure that a proper defence was filed. The plaintiff's solicitors now say that the proposed amended defence is deficient. This is not the time to deal with complaints about the form of the minute. But even a cursory reading of the proposed defence indicates there may be substance in their complaints. Either way, the plaintiff is not going to concede that the proposed amended defence is a satisfactory pleading.
The position is then that 10 months after the first status conference there is no satisfactory pleading on foot. In Skahill v Kestral Holdings Pty Ltd (In Liq) [2000] WASCA 185 the Full Court dealt with an appeal against my decision to refuse to extend time for a party to the action to comply with a springing order. One of the grounds of appeal was that the failure to comply with the order was the fault of the solicitors and not the applicants themselves. It was said insufficient weight had been given to that consideration with the result the appeal should be allowed. The Court noted that absence of fault on the part of the client will always be relevant and might be a determining factor - the justice of the case is an important consideration (see par 10). The defendants' solicitors in their affidavit material have not addressed that question. It is not clear whether or not the defendants are even aware of the springing order. There is nothing in the evidence to suggest that any fault can be attributed to the defendants themselves. It rather appears that the difficulty lies with their solicitors. This is a significant factor and one which clearly supports the extension being granted.
In the course of allowing the appeal in Skahill, the Court set out the three principles which should guide the practice relating to springing orders. The Court expressed these principles as follows (at par 18):
"(1)… If the party against whom the order is made is present in Court, personally or by solicitor or counsel, when the order is made, the party can be taken to have had actual knowledge of the making of the order and of its terms no special steps need be taken by a party seeking to enforce the order. In those circumstances there is no objection to the order being framed so that compliance is required by a specified date.
(2)If the party against whom the order is made is not in Court, personally or by solicitor or counsel, when the order is made, the order ought normally be framed so that the party is required to comply within a specified number of days after the order has been served on the party.
(3)In a case to which the preceding paragraph applies, the onus is on the party seeking to rely on the order to serve the order on the party against whom it is made. It should not be left to the Court to bring the orders to the notice of the defaulting party. Where the defaulting party is represented by solicitors and has an address for service that complies with the Rules, service at the address for service in accordance with O 72 r 5 normally would be sufficient. Where the litigant is unrepresented, actual personal service normally would be required."
The plaintiff's solicitors were aware of the Full Court's decision in Skahill and that is why they arranged for service of the orders on the defendants' solicitors. It is also why the orders were framed as they were - that is, they were to take effect from the date of the service of the order. In this respect the plaintiff's solicitors have observed not only the spirit but the letter of the case management regime.
What then is to be done? The consequences of allowing the springing order to stand and refusing this application are grave. The defendants are put out of Court - they will have no opportunity to even properly plead out the defence, let alone have the merits examined by the Court. The fault appears to lie entirely with the defendants' solicitors, not the defendants themselves. Yet inevitably if no extension is granted, the defendants will be penalised. It may be they will have recourse to their solicitors but that action has its own problems. I am acutely conscious of the affect upon the defendants personally of refusing the application.
But on balance, I am satisfied that the application should be refused. This whole sorry saga is a shocking catalogue of mismanagement and neglect on the part of the defendants' solicitors. On three separate occasions they failed to attend at status conferences. Perhaps the first occasion when they failed to attend is understandable. But thereafter they should have been alive to the need to properly manage the action. Yet things seem to have gone from bad to worse. There really can be no excuse for their eventual failure to comply with the springing order.
In all of this the plaintiff cannot be ignored. The case management regime which operates in this Court is designed to allow for the disposal of action in a reasonable expeditious fashion. It is not a draconian scheme and it depends for its effectiveness on the cooperation of solicitors. A litigant in the plaintiff's position is entitled to ask what benefit case management offers when after 10 months and five status conferences, the defendants have not put on a properly pleaded defence. The plaintiff would not doubt say that the system is being flouted, perhaps even exploited, and one can sympathise with their complaints. In my view, in this case, the merits are with the plaintiff.
For these reasons I would decline to extend the time within which the defendants are to comply with the springing order. I will hear the parties as to the appropriate orders and as to costs. I will also hear the parties in relation to the plaintiff's motion for judgment.