Naroth v Innovative Hair Loss Solutions Pty Ltd
[2010] FMCA 908
•16 November 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| NAROTH v INNOVATIVE HAIR LOSS SOLUTIONS PTY LTD & ORS | [2010] FMCA 908 |
| PRACTICE AND PROCEDURE – Application in a case for summary or default judgment – respondents out of time filing defence and affidavits – insufficient explanation for delay – insufficient evidence of progress of preparation of affidavits – whether respondents have no reasonable prospect of success – interests of justice in delivering final judgment at this stage of the proceedings. COSTS – Self-represented litigant – no professional costs – fee waiver – form of costs order to reflect Court’s disapprobation of respondents’ non-compliance and conduct. |
| Federal Magistrates Act 1999 (Cth), ss.3, 42 Federal Magistrates Court Rules 2001 (Cth), rr.1.03, 13.03A, 13.03B(2) Occupational Safety and Health Act 1984 (WA) Superannuation Guarantee (Administration) Act1992 (Cth) Superannuation Guarantee Charge Act 1992 (Cth) Trade Practices Act 1974 (Cth) |
| Doukidis v Williamson (2008) 6 ABC(NS) 717; [2008] FMCA 1352 Goodall v Nationwide News Pty Ltd [2007] FMCA 218 Olsen v Wellard Feeds Pty Ltd [2007] FMCA 1885 Rana v University of South Australia (2004) 136 FCR 344; [2004] FCA 559 Sterling Commerce (Australia) Pty Ltd v Illiff (2008) 178 IR 378; [2008] FCA 702 Willis v State of Western Australia (No.2) [2009] WASCA 205 |
| A H Clark, The Clipper Ship Era (Biblio Bazaar, LLC, 2009; originally published by G P Putnam’s Sons, 1910) |
| Applicant: | NANDITA RAGINI NAROTH |
| First Respondent: | INNOVATIVE HAIR LOSS SOLUTIONS PTY LTD |
| Second Respondent: | DEREK BEST |
| Third Respondent: | DEBRA BEST |
| Fourth Respondent: | ALEXANDRA MCCLUNIE |
| File Number: | PEG 119 of 2010 |
| Judgment of: | Lucev FM |
| Hearing date: | 16 November 2010 |
| Date of Last Submission: | 16 November 2010 |
| Delivered at: | Perth |
| Delivered on: | 16 November 2010 |
REPRESENTATION
| The Applicant: | In person |
| Counsel for the Respondents: | Mr L. Hager |
| Solicitors for the Respondents: | Metaxas & Hager |
ORDERS
The time for compliance with Order 2 of the Court’s Orders of 11 October 2010 be further extended to 22 November 2010, including any expert evidence to be filed in relation to paragraphs 79-83 of the Points of Defence and Counter-Claim.
Ms Naroth’s default judgment application be adjourned to 4:30pm on 23 November 2010.
Ms Naroth’s summary judgment application be dismissed.
In any event, the applicant not be ordered to pay any of the costs of the hearings on 11 October 2010, 12 November 2010 and today.
The applicant not be required to comply with Order 3 of the Court’s Orders of 11 October 2010 until further order of the Court.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 119 of 2010
| NANDITA RAGINI NAROTH |
Applicant
And
| INNOVATIVE HAIR LOSS SOLUTIONS PTY LTD |
First Respondent
| DEREK BEST |
Second Respondent
| DEBRA BEST |
Third Respondent
| ALEXANDRA MCCLUNIE |
Fourth Respondent
REASONS FOR JUDGMENT
(Ex tempore reasons revised and edited from the transcript)
Introduction
This application was filed on 20 July 2010. There are breaches alleged of the Trade Practices Act 1974 (Cth), the Occupational Safety and Health Act 1984 (WA),[1] the Superannuation Guarantee Charge Act 1992 (Cth) and the Superannuation Guarantee (Administration) Act1992 (Cth). The breaches related to the termination, alternatively repudiation, by the first respondent of a contract for services undertaken by the applicant to provide bookkeeping and accounting services to the first respondent. On 20 July 2010 an affidavit was filed with the application.[2] That affidavit runs to some 34 pages and also has 84 annexures, running to 241 pages. In the Court's view it is evident from the content and length of that affidavit that the applicant was prepared to keenly contest this matter.
[1] “OSH Act”.
[2] Ms Naroth’s 20 July 2010 Affidavit.
On 3 August 2010 a notice of address for service for all of the respondents was filed by solicitors Metaxas and Hager. They therefore have been engaged in this matter for over three months. The Court adds that the second, third and fourth respondents appear to be, on the evidence presently before the Court, a director and principal of the first respondent in the case of the second and third respondent, and a manager employed by the first respondent in the case of the fourth respondent.
There was, on 13 August 2010, a first directions hearing. The matter was, unusually in this Court, referred straight to mediation and it was adjourned to a directions hearing on 11 October 2010. The Court says unusually, because in the ordinary course of events there would have been programming orders made, including mediation, listing the matter through to hearing.
It is evident from the Court file that there was a mediation on 28 September 2010, and the Court understands that that was adjourned to 10am today.
At the directions hearing on 11 October 2010 the Court made the following orders:
1. The Applicant file and serve:
(a) Points of Claim; and
(b)any further affidavits that she intends to rely on at hearing,
by 25 October 2010.
2. The Respondents file and serve:
(a) Points of Defence and any Counter-Claim; and
(b) any affidavits that it intends to rely on at hearing,
by 8 November 2010.
3. The Applicant file and serve any:
(a)Points of Reply and any Points of Defence to Counter-Claim; and
(b)affidavits in support of the Points of Reply and Points of Defence to Counter-Claim,
by 22 November 2010.
4. The Respondents file and serve:
(a) any Points of Reply to Defence to Counter-Claim; and
(b)affidavits in support of that Points of Reply to Defence to Counter-Claim,
by 6 December 2010.
5. There be liberty to apply in respect to particular discovery.
6.The Applicant file and serve an outline of submissions by 20 December 2010.
7.The Respondents file and serve an outline of submissions by 17 January 2011.
8.The matter be listed for hearing at 10:15am on 21, 23, 24 and 25 February 2011.
9. The costs of today be reserved.
In compliance with those orders the applicant filed two further affidavits on 25 October 2010, and on that day the applicant also filed points of claim. Those points of claim run to 36 pages and 173 paragraphs, and claim loss and damage in the sum of $171,048.54 plus interest, and also claim other relief under the OSH Act and the superannuation guarantee legislation of the Commonwealth.
It ought then to have been evident – if it was not evident before - to the respondents that this is a serious claim, seriously advanced for a reasonably substantial sum, and insofar as it is alleged, for example, that there are breaches of superannuation guarantee legislation – matters which have potentially serious implications for the first, second and third respondents, because it will no doubt be necessary for the Court to traverse those matters as part of the factual narrative, and what might come out of that will be a matter for the Court to determine.
What did the respondents do faced with the points of claim and the affidavits filed on 25 October 2010 and the earlier application and Ms Naroth’s 20 July 2010 Affidavit? The respondents, quite simply, did not comply with the Court’s orders. By 8 November 2010 the respondents had not filed points of defence, a counter-claim or any affidavit intended to be relied upon at hearing.
Unlike the respondents, Ms Naroth acted swiftly, and on 10 November 2010 she filed an application in a case seeking, amongst other things, orders for default judgment or summary judgment. Ms Naroth also filed a detailed affidavit in support of the application in a case. Much of what is said in that affidavit, as with a further affidavit filed in support today, is effectively by way of submission and argumentative points, and would otherwise not ordinarily be admissible. But there are some genuine points which arise and are made quite properly. They are, for example, that the respondents’ conduct impedes the objects of the Federal Magistrates Court Rules 2001 (Cth),[3] and the Court adds, the Federal Magistrates Act 1999 (Cth),[4] to resolve matters justly, efficiently and economically.[5] Secondly, that the applicant is, as a self-represent litigant, not a lawyer, but a person who would expect that lawyers would comply with the Court's orders, and it has evidently come as somewhat of a shock to her that the lawyers and respondents engaged in this matter have not complied with the Court's orders of 11 October 2010.
[3] “FMC Rules”.
[4] “FM Act”.
[5] See FM Act, ss.3 and 42; FMC Rules, r.1.03
Ms Naroth is concerned that the respondents’ conduct will be productive of and result in delay and protraction of the proceedings if the Court agrees to further extend time for compliance with the filing of Court documents by the respondents. The respondents did, however, file, on 10 November 2010, a detailed points of defence and cross-claim running to some 10 pages and 83 paragraphs, which traverses, in various fashions, all of the allegations which are made in the points of claim. In parts it might lack particularisation, but that is not unusual in this Court, and in this Court it is not unusual for affidavits to be required to be filed to provide the required further particulars.[6] That approach, does not assist where there is also a failure to file the affidavits, and as already noted, the respondents in this case failed to file the affidavits ordered by the Court by the due date of 8 November 2010.
[6] Rana v University of South Australia (2004) 136 FCR 344 at 348-350 and 355 per Lander J; [2004] FCA 559 at paras.28-41 and 75 per Lander J; Sterling Commerce (Australia) Pty Ltd v Illiff (2008) 178 IR 378 at 387 per Gordon J; [2008] FCA 702 at para.21 per Gordon J; Olsen v Wellard Feeds Pty Ltd [2007] FMCA 1885 at para.5 per Lucev FM; Doukidis v Williamson (2008) 6 ABC(NS) 717 at 724 per Lucev FM; [2008] FMCA 1352 at para.31 per Lucev FM.
The application in a case filed by Ms Naroth was listed for hearing on 12 November 2010. The Court notes that Ms Naroth did not confer with the respondents prior to making the application in the case. Likewise, the respondents did not confer with Ms Naroth concerning the lateness of the filing of their affidavits. Prior to, and indeed at the hearing of the application in the case on 12 November 2010, no explanation was tendered by the respondents as to why the affidavits were not filed on time, and the Court determined ultimately, over strenuous objection from Ms Naroth, to extend time by one week (that is, to 15 November 2010) for the filing of the respondents’ affidavits including expert evidence relating to, or said to relate to, certain bookkeeping issues. The Court notes that the issue of expert evidence was the subject of an application by the respondents for a longer period in relation to its filing, but the Court made it apparent that affidavit evidence for these purposes included the expert evidence, and it was not prepared to have, effectively, two streams of evidence running with different programming dates.
The Court adjourned the application in a case to today. The respondents, through Counsel, at the application in a case hearing on 12 November 2010 immediately foreshadowed that an application for a further extension of time would be made, and the Court suggested that it would be appropriate that an affidavit be filed if such an application was to be made. There was no written extension of time application filed, but an oral application was made, as foreshadowed at hearing, and foreshadowed otherwise to all concerned, and no prejudice can be said to arise because of the failure to file a written application for extension of time. Mr Hager did file an affidavit, sworn, although it is on its face said to be sworn on 15 October 2010, clearly sworn on 15 November 2010, in support of the then putative extension of time application.[7]
[7] “Mr Hager’s 15 November 2010 Affidavit”.
Mr Hager’s 15 November 2010 Affidavit relevantly provides as follows:
4. Following the hearing in the Federal Magistrates Court on Friday, 12 November 2010, I verbally informed Mr Metaxas, in effect, that we (the respondents) must file our affidavit evidence by Monday (15 November 2010) and Mr Metaxas verbally responded, in effect, that the Bests (the second and third respondents) were interstate.
5. Mr Metaxas and I then had a conference telephone call with Derek Best (the second respondent) who verbally made, in effect, the following comments to respond to Mr Metaxas’ questions:
5.1 yes, we are interstate and are returning next week (the week commencing Monday, 15 November 2010); and
5.2 Debra, Alex and I have been over here for 2 weeks.
6. Following the conference telephone call, I asked Mr Metaxas the current position of the proceedings to which he verbally responded, in effect, as follows:
6.1 we have filed the defence; and
6.2 I have been in regular contact with the client and received at least 40 emails to assist us prepare our case and the affidavits.
7. Mr Metaxas and I then counted 74 emails that he had received from the client since 17 August 2010 that Mr Metaxas verbally said, in effect, were used to prepare the defence and counterclaim and contained the substance of what is being included in the affidavit evidence.
8. I estimate that we (Metaxas & Hager) will require a further 4 to 7 days to complete, swear, file and serve the respondents’ affidavit evidence that is to be relied upon at trial.
9. The respondents have not engaged an expert to provide evidence in relation to the allegations raised in paragraphs 79 to 83 of the defence and counterclaim. The respondents would propose that if the applicant denies the allegations in the counterclaim then the respondents file their expert evidence 21 days thereafter.
When one looks at the respondents’ evidence in support of the application for a further extension of time it can be seen that:
a)there was no explanation as to why affidavits were not filed on time on 8 November 2010, and indeed today there was no explanation of that from the bar table in response to inquiries from the Court;
b)the individual respondents, that is, the second, third and fourth respondents are presently interstate, and have been interstate for the past two weeks at a time when they knew, or ought to have known, and certainly the solicitors for them knew, that these documents were required to be filed.
As the Court has indicated to Counsel for the respondents, the mere fact that they are interstate is hardly an impediment in this day and age to their preparing, settling and filing affidavits, although Counsel did strongly suggest that they needed to be settled in person. The Court simply observes then that it is incongruous that the second, third and fourth respondents would go interstate for an unnamed purpose at a time when the affidavits were due to be filed by an earlier order of the Court, and by order of the Court with respect to the further extension of time ordered last week.
There is no explanation, other than the fact of being interstate, as to why no affidavits at all have been filed by the expiry of the further extended period of time on 15 November 2010. There is no indication that the drafting of the affidavits has even been commenced. The Court observes that:
a)firstly, para.7 of Mr Hager’s 15 November 2010 Affidavit refers to some 74 emails dated from 17 August 2010 which:
…contained the substance of what is being included in the affidavit evidence.
b)secondly, paragraph 8 of Mr Hager’s 15 November 2010 Affidavit speaks of the further time, four to seven days, required to “complete” the affidavit evidence.
The references to what is being included, and to the affidavits being completed, does not indicate whether what is being referred to is completion of:
a)partly completed tasks; or
b)a task that has not yet even been begun.
There is no explanation as to why it would take four to seven days from yesterday to complete the affidavits, apart from the second, third and fourth respondents being interstate, and there is no proper indication of what progress, if any, has actually been made, or what stage the preparation of the affidavits has actually reached, or, indeed, what time has been spent by the lawyers engaged on the matter in the preparation of the affidavits.
There is no indication as to what evidence is to be led from whom, that is, who is going to depose to affidavits for the respondents, and the Court notes that the respondents, according to para.9 of Mr Hager’s 15 November 2010 Affidavit, have not yet engaged an expert in relation to the allegations at paras.79 to 83 of the defence and cross-claim, and suggest that they ought not do so unless or until the applicant denies the allegations therein.
The Court must consider the objects of the FM Act and the FMC Rules, and reading together the objects of the FM Act in s.3, the mode of operation in s.42, and having regard to the objects of the FMC Rules in r.1.03, it is apparent, and it has been said before, that the Court is intended to operate in a manner which:
a)is as informal as possible in the exercise of the judicial power of the Commonwealth;
b)is not protracted in its proceedings;
c)resolves matters justly, efficiently and economically;
d)uses streamlined procedures; and
e)avoids undue delay, expense and technicality.[8]
[8] Goodall v Nationwide News Pty Ltd [2007] FMCA 218 at para.21 per Lucev FM.
The respondents’ current approach is the antithesis of that required by the FM Act and FMC Rules. It is in the context of the approach outlined in the FM Act and FMC Rules that the application for summary judgment and default judgment falls to be determined.
This is not a suitable case for summary judgment. It is clear that the respondents’ case cannot be said on the pleadings alone to have no reasonable prospect of success. One simple example is Ms Naroth’s claims with respect to alleged contraventions of the OSH Act, which, on their face, and without any form of pre-judgment, look more likely to fail in this Court than succeed. Another example is Ms Naroth’s claim with respect to superannuation guarantee charges, and the request that they be paid to massage therapists who are not parties to this application. Again, it is unlikely that the applicant will obtain judgment in that regard, no matter what the merit or otherwise of the massage therapists’ claims to payment of the superannuation guarantee charge.
In terms of default judgment, r.13.03B(2) of the FMC Rules provides that:
(2) If a respondent is in default, the Court may:
(a) order that a step in the proceeding be taken within the time limited in the order; or
…
(c) if the proceeding was commenced by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings — give judgment against the respondent for the relief that:
(i) the applicant appears entitled to on the statement of claim; and
(ii) the Court is satisfied it has power to grant; or
(d) give judgment or make any other order against the respondent; or
…
Rule13.03A of the FMC Rules provides that a party is in default if it fails to comply with an order of the Court.
It is apparent in this case that the respondents are, and continue to be, in default of the Court’s orders of 11 October 2010 and 12 November 2010. The Court observes, as Buss JA observed in Willis v State of Western Australia (No.2)[9] that:
…apologies are a poor and unacceptable substitute for performance. If a solicitor becomes aware that he or she will be unable, for any reason, to comply with an order of the court, his or her duty is to inform the court and the other party or parties immediately of this inability, and to apply for new or varied orders by consent or otherwise. It is unprofessional to ignore or otherwise fail to comply with orders of the court and leave it to the court or the other party or parties to take remedial or enforcement action.[10]
[9] [2009] WASCA 205 (“Willis”).
[10] Willis at para.12 per Buss JA.
The conduct of the respondent and its solicitors is, as the Court has observed, unprofessional, and the approach taken in this case can be characterised as comparatively casual. On the evidence the Court is unable to say that affidavits have been prepared in the matter, or what stage of preparation they might be at, and on the face of it the Court observes that Ms Naroth has made out a justifiable case for bringing an application for default judgment.
The Court has to balance that preliminary conclusion against a number of factors, including:
a)the fact that the respondents appear to have an arguable case, and in the parts already referred to a strongly arguable case;
b)that the respondents have already had a second chance, by way of the extension of time ordered on 12 November 2010, and have not availed themselves of that opportunity, even by filing a single affidavit, which gives rise to the question as to whether or not they ought to be given a third chance;
c)whether, ultimately, it is in the interests of justice that respondents with an arguable case be shut out from arguing that case;
d)that this litigation has proceeded, as the New England shippers would have once said, “at a fast clip,”[11] and is scheduled for a four-day hearing in February 2011, just seven months after the application has been lodged; and
e)whether any intermediate steps between now and the hearing of the matter can be adjusted, so as not to affect the hearing date, or adversely prejudice the party not in default, who in this case is a self-represented litigant.
[11] “The word [clip] survived in the New England slang expression, “to clip it,” and “going at a good clip,” or “a fast clip,” are familiar expressions there to this day”: A H Clark, The Clipper Ship Era (Biblio Bazaar, LLC, 2009; originally published by G P Putnam’s Sons, 1910), page 57.
In the Court’s view, although the respondents have twice been in default, and although the evidence of what has actually been done by way of preparation is minimal, and although they have already had a second chance, it is not in the interests of justice that the Court makes an order for default judgment today. That is particularly so in circumstances where Ms Naroth’s complaints about the crimping of future time lines in the intermediate steps, and a potential loss of hearing date, can both be accommodated so that Ms Naroth is not disadvantaged and the hearing dates are not lost. The Court notes that the respondents in any event do not contend that the hearing dates ought to be adjourned to dates later than those already listed. That assumes, of course, that if the respondents are given further time in which to file the affidavits that they will comply. If they do not, it is not terribly difficult to envisage what application Ms Naroth might then make.
In the circumstances, the Court considers it appropriate to give the respondents the further week that they have requested to file the affidavits, that is, until 22 November 2010. The affidavits are, as the Court has previously made clear and previously ordered, to include the expert evidence in relation to paragraphs 79 to 83 of the points of defence and cross-claim. The Court has made clear that it is simply not going to have two time lines running for the submission of evidence, expert or otherwise. Furthermore, in fairness to Ms Naroth, she is entitled, in the Court’s view, to know what that expert evidence is before being required to file her reply. The Court observes that the filing of expert evidence in this way is not unusual and orders for expert evidence to be filed at the same time as other evidence are common in this Court.
With respect to costs, the Court notes that Ms Naroth is a self‑represented litigant and incurs no professional costs which could ordinarily be awarded. And the Court also notes that she has been granted a fee waiver, so she incurs no costs with respect to the filing fees. As the Court indicated in the course of discussion or argument, the Court would have been prepared to order that the respondents pay the costs of Ms Naroth’s application in a case by way of filing fees as a disbursement in the proceeding, but no costs have been incurred.
The Court has considered the issue of costs and, bearing in mind what has been said already by way of judgment today, and given the respondents’ defaults to date, and the inability of the Court to order by way of positive order that the respondents pay a particular sum of money to Ms Naroth for either costs incurred or disbursements incurred, the Court considers that some form of order is appropriate to reflect the necessity for Ms Naroth to bring the application in a case because of the respondents’ non-compliance, and to reflect the Court’s disapprobation of the respondents’ conduct in the matter. In the circumstances the Court will order that Ms Naroth not be ordered to pay any costs of the hearings on 11 October 2010, 12 November 2010 and today, in any event.
The Court notes that order 3 of the Court’s orders of 11 October 2010 presently requires Ms Naroth to file a reply by 22 November 2010. Given that that is now the further extended time for filing of the affidavits by the respondents, it will not be possible or appropriate for Ms Naroth to comply with that order by that time. The Court will order that compliance with order 3 not be required until further order of this Court.
I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 19 November 2010
6
6