Mypolonga Co-op Society Ltd & Anor v Dubois & Ors No. Scgrg-99-713

[2000] SASC 165

MYPOLONGA v DUBOIS & ORS

[2000] SASC 165

Ex Tempore

1................ LANDER J ..... This is an application by the third to eighth defendants for an extension of time in which to deliver an expert’s report to the plaintiffs and other parties.

1. The plaintiffs commenced these proceeding on 21 June 1999. The third to eighth defendants are accountants who were employed by the plaintiffs to carry out the plaintiff’s accounting services and to serve as the plaintiff’s auditors. They had been with predecessor firms, the auditors for the first plaintiff, for about 80 years and the financial advisors and auditors of the second plaintiffs since about 1993.

2. The plaintiffs’ claim against the third to eighth defendant is in breach of contract and negligence in the carrying out of those accounting services and audit.

3. Immediately after the proceedings were commenced, the matter was referred by Judge Bowen Pain to the ‘long and complex’ list.

4. The matter first came before me on 14 July 1999. At that stage I made a number of directions. In particular, I directed that the plaintiffs file their experts’ reports within 20 weeks.  That was an onerous order imposed upon the plaintiffs because at that stage, of course, the defendants had not filed a defence and, in a sense, I was asking the plaintiffs to provide their experts’ reports well ahead of the requirements of rule 38. On that same day, I made other directions relating to pleadings and particulars and the like and I made a direction that:

   “If any party is unable to comply with the time limit imposed by these directions that party, if so advised, must apply for an extension of time within which to comply with the direction before the expiration of the time as prescribed by these directions.  Such application may be made on 24 hours notice to the opposing parties.”

5. There were reasons, of course, for the making of that last mentioned order. The courts’ directions are made at the interlocutory stage to manage the litigation.  The courts’ directions must be complied with. If unforeseen circumstances arise, and clearly they will from time to time, then the parties must seek the indulgence of the court. They simply cannot ignore the directions.

6. The parties will retain experts from time to time. Often those experts are persons who hold themselves out as offering opinions in relation to matters which come before the court. Those experts must also be aware that they must comply with the court’s directions. The failure by an expert to comply with a direction given by the court in the provision of that expert’s report, will interfere with the management of litigation and may prevent the matter coming to trial in a timely fashion.

7. In those circumstances the experts who, as practice direction 46 shows, have an overriding duty to assist the court on matters relevant to an expert’s area of expertise, are under a duty to ensure they comply with all time limits which are imposed by the court.

8. In this case the plaintiffs did comply with my directions and provided their expert’s report within the time prescribed.  I am told that their expert’s report relate to audit and tax questions.

9. On 16 December 1999 I ordered the third to eighth defendants file and serve any experts’ reports by 1 May 2000.  I was told at that time from the bar table that an expert had been retained to give accounting audit evidence. That order was made against the opposition of the plaintiffs’ counsel, Mr Lane, who asked that the defendants be ordered to deliver their experts’ reports by 28 February 2000. On the other hand, counsel who then appeared for the third to eighth defendants, sought until the end of June to have the reports delivered.  During argument in relation to that application, the third to eighth defendants submitted that they should not be called upon to deliver their experts’ reports until the pleadings had closed. I agreed with that submission at the time and I still think it is not unreasonable. The time limit which was set, which was to allow the expert to provide his report by 1 May 2000, took into account that pleadings would be closed well before that time.

10. On 18 April 2000 the third to eighth defendants sought an extension of time to deliver their expert’s report by 16 May 2000. That application was made, of course, within the time prescribed by my direction of 16 December 1999 and was not opposed. In those circumstances, I extended the time within which the third to eighth defendants might deliver their expert’s report until 16 May 2000. As it happened, the expert’s report was not delivered by 16 May 2000.  Nothing happened until 30 May 2000, when, at the instigation of the plaintiffs, the matter was listed before me on short notice. It was clear from submissions made by counsel, that the plaintiffs had been seeking the third to eighth defendants’ experts’ reports since 16 May 2000, but that the third to eighth defendants were not in a position to deliver any report.

11. Mr Evans, who then appeared for the plaintiffs, sought an order nunc pro tunc, extending the time by a further 2 weeks for delivery of the report. I refused that oral application and advised the third to eighth defendants if they wished to make an application for an extension of time within which to deliver the report, they ought to make a formal application supported by whatever evidence they wished to rely upon.  On 2 June 2000 the defendants applied for an extension of time within which to deliver the expert’s report of Mr Robert Kennedy nunc pro tunc to the date of hearing of the application. They sought to have the application specially returnable and I acceded to that request. They further sought that the costs of the application, as between the plaintiffs and themselves, be the plaintiffs’ costs but otherwise be costs in the cause.

12. The application was supported by an affidavit of Ms Lane, the third to eighth defendants’ solicitor. I want to say at the outset that the affidavit clearly shows that the solicitors and the legal advisors to the third to eighth defendants have done everything possible to ensure that their clients comply with rule 38 of the Supreme Court Rules, practice direction 46 and my directions. In fact, in this case the solicitors retained Mr Kennedy, a chartered accountant, to advise generally on this matter on 30 August 1999. That was about three months before I made an order for the provision of experts’ reports.  When they retained him, they provided him with a transcript of the s.597 examination of the fourth defendant and the plaintiffs particulars of losses, which are comprised in a letter of 11 August 1999. In November they provided Mr Kennedy with further information. On 30 March 2000 Ms Lane requested Mr Kennedy to undertake a calculation of the proper quantum of the plaintiff’s losses claimed in these proceeding on various alternative bases.  On that date she also asked him to comment on various tax returns lodged by another firm of chartered accountant and upon the contents of an expert’s report which had been obtained by the plaintiffs. She also asked him to comment on a section of the Income Tax Act. At that time, in compliance with practice direction 46, she provided him with a copy of that practice direction. Apparently Mr Kennedy indicated to her, at that stage, that he anticipated being in a position to have his report ready by the due date, which was, of course, 1 May 2000. She advised Mr Kennedy that he could attend at Mouldens’ offices for the purpose of perusing copies of the plaintiff’s discovered documents to determine which documents Mr Kennedy required to assist him in undertaking the matter for which he had been retained.

13. On 17 April 2000 Mr Trim QC, telephoned Mr Kennedy and advised him that the matter would be before the court on 18 April 2000, and asked Mr Kennedy if he would be in a position to finalise his report by 1 May 2000. After some discussion, Mr Kennedy advised Mr Trim that he might have difficulty in completing the report by 1 May 2000 and would welcome an extension being sought for delivery of his report.  That no doubt gave rise to the application, which I granted.

14. Mr Kennedy first attended Mouldens to peruse copies of the plaintiff’s discovered documents on 18 April 2000. There is no explanation why he had not attended earlier to obtain the relevant documents. The only inference that I can draw from the affidavit material is that Mr Kennedy had done little or nothing prior to 18 April 2000.  He requested copies of certain of those documents.

15. On the same day Mr Kennedy requested Ms Lane obtain from the plaintiffs discovery of certain other documents.  The documents which Mr Kennedy requested after his attendance at Mouldens office on 18 April 2000 were provided to him under cover of a letter from Mouldens on 19 April 2000. Ms Lane telephoned Mr Kennedy’s firm regarding the preparation and completion of the report on the 9th, 10th, 12th and the morning of 16 May 2000. Of course, the last mentioned day was the date upon which the report should have been delivered. On 12 May 2000 she was contacted by a person from Mr Kennedy’s firm who requested further material which was supplied by her to that firm on the same day.

16. On the afternoon of 16 May 2000, the day upon which Mr Kennedy should have provided the report, Mr Trim conferred with Mr Kennedy who indicated he required some further time. The solicitors did not make an application for an extension of time within the time prescribed by my direction. In this case I think that may be excused because they believed that Mr Kennedy would provide them with the report up until close of business on 16 May 2000. In those circumstances it was not unreasonable for them to believe that their clients could comply with the direction which I had made.

17. On 22 May 2000 Mr Kennedy advised that there would be some further delay. A member of his staff had fallen ill. Next he indicated that the report would be delivered on 24 or 25 May 2000.  It was still not delivered on either of those days and on 25 May 2000 Ms Lane made a further inquiry and she was informed she would be contacted by someone else who could inform her when the report would be delivered. She next spoke to Mr Kennedy and conveyed to Mr Kennedy the remarks which I made on 30 May 2000 in relation to the third to eighth defendant’s default, and no doubt conveyed to him the fact that I had refused to extend the time within which the third to eighth defendant might deliver its expert’s report.

18. Mr Kennedy’s report came to hand on 2 June 2000. As I have already said, any expert retained by a party for the purpose of offering expert’s evidence owes an overriding duty to this court to assist this court in the business of the court. All experts owe a duty to comply with any direction given by this court or, if the direction cannot reasonably be complied with, to assist the court to manage the litigation so as to allow the litigation not to be disrupted by the expert’s failure to comply with the order.

19. Rule 38.02 of the Supreme Court Rules gives the Court various powers in relation to the failure by a party to deliver an expert’s report within the time prescribed by rule 38, or inferentially in the time provided in any direction of the court. In particular, the rule allows me to have regard to the obligations which are imposed on parties under the rules pursuant to rule 2. Rule 2 requires this Court to manage litigation with the object of promoting the just determination of litigation, disposing efficiently of the business of the court; maximising efficient use of available judicial and administrative resources; and facilitating the timely disposal of business at a cost affordable to the parties. The failure by experts to comply with directions interferes with and may frustrate all of those objects.

20. Rule 38.02 allows me to direct that evidence from an expert not be adduced by a party at the trial of the action. I could, in the circumstances, make an order that no evidence be adduced from Mr Kennedy at the trial of this action. Mr Trim, counsel for the third to eighth defendants, asked me not to do that but to make an order extending the time within which to deliver the expert’s report until today. He said that his clients have not been in default, those instructing him had made every effort to obtain the report and the blame, if it lay anywhere, lay with the expert. He asked me, in the circumstances, not to visit any penalty against his clients for the expert’s failure to comply with his obligations.

21. I put to Mr Trim that eventually the only way to ensure that experts understand their obligations to the court is, in effect, to penalise those who have retained the expert who will not comply with directions. There is no other way of obliging experts to comply with directions other than to make orders of the kind envisaged in rule 38.02(b); that is to direct their evidence not be adduced at the trial.

22. I want to make it clear that if, in the future, those who hold themselves out as willing to provide expert evidence for the courts do not comply with directions of the court, then they can expect that their evidence will not be received by the court. If that is the case, their tardiness may cause irreparable damage to the parties who have retained them.

23. In this case, in the end result, I am persuaded by Mr Trim that this would not be an appropriate case to visit an order under rule 38.02 upon his clients, and that I should extend the time within which the third to eighth defendants should be allowed to deliver their expert’s report.  I make an order extending the time for the delivery of Mr Kennedy’s report until 4 p.m. today.

24. That leaves the question of costs. Clearly enough the plaintiffs must have their costs of this application and any costs thrown away by reason of the extension of time which I have granted. Mr Kennedy is not before the court and in those circumstances I could not make an order for costs against him personally. The defendants’ application was that the plaintiffs should have their costs but the defendants do not indicate who should pay those costs. I will hear Mr Trim in relation to who should be ordered to hear the costs.

25. I order that the third to eighth defendants pay the plaintiffs’ costs on a solicitor and client basis.