Pogue Fodder Services Pty Ltd v Kurmond Feed and Freight Pty Ltd
[2022] VCC 1893
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
General List
Case No. CI-21-03024
| Pogue Fodder Services Pty Ltd (ACN 077 956 506) | Plaintiff |
| v | |
| Kurmond Feed and Freight Pty Ltd (ACN 126 779 459) | Defendant |
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JUDGE: | Judicial Registrar Bennett | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 October 2022 | |
DATE OF RULING: | 8 November 2022 | |
CASE MAY BE CITED AS: | Pogue Fodder Services Pty Ltd v Kurmond Feed and Freight Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 1893 | |
RULING
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Subject: PRACTICE AND PROCEDURE
Catchwords: Self-executing order in relation to discovery – Non-compliance – Defence struck out – Application to set aside self-executing order – Relevant discretionary factors
Legislation Cited: County Court Civil Procedure Rules 2018 (Vic) rr24.06, 29.08 and 63A.23; Civil Procedure Act 2010 (Vic) ss25, 26 and 28
Cases Cited:Jorgensen v Slater & Gordon Pty Ltd [2008] VSCA 110; Brakatselos v ABL Nominees Pty Ltd [2012] VSCA 231; (2012) 36 VR 490; Du v Ivy Real Estate Pty Ltd [2021] VCC 154; Khan v The Age Company Pty Ltd [2019] VSC 839; Ridge Lane Pty Ltd v Gadzhis [2007] VSC 212; ACN 092 675 164 (in liq) v National Builders Group Pty Ltd [2014] VSC 530; National Builders Group IP Holdings Pty Ltd v ACN 092 675 164 Pty Ltd (in liq) [2015] VSCA 260; Smith, In the Matter of Barron Entertainment Ltd (in liq) v Barron [2004] FCA 1596; (2004) 139 FCR 566; Deppro Pty Ltd v Daly [2006] FCA 1727; Bolitho v Banksia Securities Ltd (No 18) [2021] VSC 666; Lord v Australian Safeway Stores Pty Ltd [1996] 1 VR 614; ABL Nominees Pty Ltd v Brakatselos [2012] VSC 265; British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524; Kostokanellis v Allen [1974] VR 596; Pavlovic v Punt Road Hostel Pty Ltd [2021] VCC 750
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | Mr N Elias | Dawes and Vary Riordan Lawyers |
| For the defendant | Mr L Hogan | Turner Freeman Lawyers |
Judicial Registrar:
Introduction
1On 10 June 2022, I made a self-executing order in this proceeding, requiring the defendant to make discovery by 20 June 2022 at 4.00pm. The defendant did not comply and, consequently, its defence was struck out automatically by the operation of that order.
2These reasons deal primarily with an application by the defendant, which was opposed by the plaintiff, to set aside the self-executing order and thereby relieve the defendant from the consequences of its non-compliance with that order.
3An application was also made by the plaintiff on 1 August 2022, which only becomes relevant if the defendant’s application succeeds, requiring the defendant to make particular discovery. At the commencement of the hearing on 13 October 2022, I was informed by counsel that the parties had resolved the plaintiff’s application by agreement. Accordingly, it became unnecessary for me to determine that application, save to the extent that orders are required to give effect to the parties’ agreement. I refer further to that application in paragraph 110 below.
4Before dealing with the substance of the defendant’s application, it is necessary to describe the plaintiff’s claim and set out the procedural history of the matter.
The plaintiff’s claim
5The plaintiff carries on a business of farming, including the production of hay. The defendant carries on a business of supplying hay, including buying, carting and selling hay to third parties.
6The principal issue in this proceeding is whether or not the parties entered into a binding agreement in around April/May 2020 pursuant to which the defendant was to purchase all of the plaintiff’s 2019/2020 season hay. The plaintiff alleges that such an agreement was entered into, but this is denied by the defendant. The parties agree that the defendant has not collected all of the 2019/2020 season hay and has not paid the invoice rendered by the plaintiff in respect of that hay. The issue between them is whether the defendant was obliged to do so.
7The plaintiff alleges in paragraph 3 of the statement of claim that the parties reached an in-principle agreement in around April 2020 in relation to the sale of the plaintiff’s 2019/2020 season hay. In paragraph 5 of the statement of claim, it is alleged that on or about 1 May 2020 the parties reached a binding agreement for the sale and purchase of the 2019/2020 season hay (“May Agreement”). The May Agreement is said to have been partly written, partly oral, and partly to be inferred. Insofar as it is written, the May Agreement is said to have been contained in the two documents referred to in paragraphs 4(a) and 4(b) of the statement of claim.
8Paragraph 4(a) alleges that on 1 May 2020, Jackie Elliott of Farm Tender emailed both parties a sales confirmation for contract JE00042 dated 21 April 2020 (the “Sales Confirmation”). Farm Tender is the term used in the pleadings to refer to a company known as The Farm Trader Pty Ltd, a broker through whom the plaintiff had sold the plaintiff’s 2018/2019 season hay to the defendant. Paragraph 4(b) alleges that the parties agreed that DelayPay Pty Ltd, a finance company associated with Farm Tender, would pay the plaintiff $45,000 on behalf of the defendant by way of deposit for the 2019/2020 season hay. This agreement is said to have been partly in writing and partly oral, the written component being sales contract DPSC-001470 dated 1 May 2020 (“DelayPay Contract”).
9It is unnecessary for present purposes to deal with the oral and implied components of the May Agreement.
10Paragraph 3 of the defence denies the existence of the alleged in-principle agreement. Paragraph 4(a) of the defence alleges that the Sales Confirmation was sent by Farm Tender following a unilateral request or direction from the plaintiff and that the Sales Confirmation amounted to an offer only. Paragraph 4(a) further denies that there was any agreement that the defendant would purchase all of the plaintiff’s 2019/2020 season hay. Paragraph 4(b) of the defence alleges that the DelayPay Contract is a standalone contract and does not reflect a deposit relating to any other agreement, and that there was no agreement as to any further purchases. Paragraph 5 of the defence denies the entirety of paragraph 5 of the statement of claim in which the May Agreement is alleged.
11Accordingly, the defendant says that, save for the $45,000 worth of hay which was the subject of the DelayPay Contract, there was no sale or purchase contract between the parties in respect of any other 2019/2020 season hay.
Procedural history
12This matter has a somewhat tortured procedural history. Initial timetabling orders were made on 15 October 2021 by Judge Burchell. Amongst other things, her Honour’s orders set the proceeding down for trial on 26 July 2022, required the parties to make discovery of the usual 4 categories of documents by 15 November 2021, and required mediation to be completed by 31 January 2022.
13Neither party made discovery by 15 November 2021. The plaintiff ultimately filed its affidavit of documents on 28 March 2022.
14On 25 March 2022, the parties emailed the Court seeking orders extending certain dates in the interlocutory timetable. Accordingly, on 28 March 2022, I made orders on the papers by consent, extending the time for discovery of the usual 4 categories of documents to 1 April 2022 and the time for completion of mediation to 3 June 2022.
15On 3 June 2022, the plaintiff filed a request for interlocutory determination (“RID”) dated 1 June 2022, together with a bundle of inter partes correspondence, in which the plaintiff sought orders requiring the defendant to make discovery. As at 3 June 2022, the defendant had made no discovery at all, notwithstanding the 28 March 2022 consent orders. By email to the defendant’s solicitors, Turner Freeman, dated 3 June 2022, the Commercial Registry sought to ascertain the defendant’s position in relation to the plaintiff’s application. No response was received.
16Having considered the plaintiff’s RID, the accompanying correspondence bundle, and the lack of any response from Turner Freeman to the Court’s email, I determined the plaintiff’s application on the papers and made orders on 10 June 2022 (“June Orders”). Paragraphs 2 and 3 of those orders, which are of central relevance to the present application, provided:
“2. By 20 June 2022 at 4.00pm, the defendant is to make discovery (including full inspection) of the documents referred to in paragraphs 2(a) to 2(d) of the orders of Judicial Registrar Bennett made on 28 March 2022.
3. Paragraph 2 of these orders is a self-executing order. In the event that the defendant does not comply with paragraph 2, the defendant’s defence is struck out and the plaintiff is at liberty to enter judgment against the defendant.”
17I will return later in these reasons to discuss the defendant’s default in making discovery which led to the plaintiff’s RID and the June Orders.
18On Monday 20 June 2022 at 1.18pm, Amber Geake of Turner Freeman sent an email to the plaintiff’s solicitors, Dawes & Vary Riordan (“DVR”), stating: “In accordance with the Orders made by Judicial Registrar Bennett on 10 June 2022, we attach copies of our client’s documents”. Attached to that email was a pdf file containing a number of documents. On the same day at 4.12pm, a further email was sent by Ms Geake, stating that “an Affidavit of Documents has been finalised by our client. As soon as it has been signed, it will be filed and served on you as a matter of urgency”.
19Later on Monday 20 June 2022, under cover of an email sent at 4.22pm, DVR sent a letter noting that the defendant had not yet filed and served a sworn affidavit of documents and stating:
“Please be advised that unless we receive a sworn Affidavit of Documents by 4pm 22 June 2022, we will apply to the court for summary judgment.
Having reviewed the material you provided to us today, it appears that your client’s discovery is deficient. Please ensure your client discovers all relevant material in its possession and control.”
20It was not until Wednesday 22 June 2022 at 3.14pm that the defendant’s affidavit of documents, sworn by Stephen McMillan Bennett, the defendant’s sole director and secretary, was served on the plaintiff by email. That affidavit was consistent with the production which had occurred on 20 June 2022, in that it identified the same documents which had been sent by Ms Geake on that day. Because the defendant did not file and serve its affidavit of documents by 4.00pm on 20 June 2022, it failed to comply with paragraph 2 of the June Orders and, accordingly, its defence was struck out by the operation of paragraph 3 of those orders.
21In late June 2022, after reviewing certain material produced on subpoena, DVR formed the view that the defendant’s discovery had been deficient in content. Consequently, on 4 July 2022, and notwithstanding that the defence had been struck out, DVR wrote to Turner Freeman stating that the defendant “has not discovered all the emails and contracts received from Delay Pay and Farm Tender, in particular, but not limited to, documents that Jackie Elliott emailed to your client on 21 April 2020, 24 April 2020 and 1 May 2020”. The letter requested that the defendant discover those documents as a matter of urgency. Turner Freeman did not respond to this letter.
22On 11 July 2022, the proceeding came before me for a pre-trial directions hearing. There were two main issues at that hearing. The first was that the defendant’s defence had been struck out. The second was that the plaintiff did not accept that the defendant had made complete discovery. Notwithstanding these issues, the position of each party at that hearing was that the 26 July 2022 trial date could be maintained. The plaintiff sought orders requiring the defendant to file a further discovery affidavit and contended that any application by the defendant to set aside the self-executing order should be determined after the defendant had filed its further affidavit, because the contents of the affidavit might be relevant to the defendant’s application. The defendant consented to orders requiring that it make further discovery.
23Accordingly, I made orders on 11 July 2022, paragraph 1 of which was an order for particular discovery pursuant to r29.08 of the County Court Civil Procedure Rules 2018 (Vic) (“Rules”) requiring the defendant, by 14 July 2022 at 4.00pm, to file and serve an affidavit in relation to documents in the following classes:
(a) Documents received by the defendant from Farm Tender in relation to any sale of hay from the plaintiff to the defendant; and
(b) Documents sent by or on behalf of the defendant to Farm Tender in relation to any sale of hay from the plaintiff to the defendant.
24My 11 July 2022 orders also adjourned the pre-trial directions hearing to 18 July 2022.
25On 14 July 2022, an affidavit of Kyle McCabe dated 14 July 2022 was filed on behalf of the defendant. Mr McCabe was at the time a senior associate in the employ of Turner Freeman. The affidavit purported to be filed pursuant to paragraph 1 of my 11 July 2022 orders. Paragraph 5 of that affidavit contained a table enumerating 10 further documents, which was preceded by Mr McCabe deposing: “I am informed and verily believe that the only documents in the possession, custody or power of the defendant in relation to the classes of documents referred to in Order 1(a)(i) and (ii) are the following documents”.
26I interrupt the procedural chronology here to note that Mr McCabe’s affidavit was unorthodox in that it was an affidavit of documents sworn by a solicitor on behalf of his client on the basis of information and belief. Mr Elias submitted, correctly in my view, that this was unsatisfactory. He said it was a further example of the highly inadequate way in which the defendant’s discovery had been managed from the beginning. However, he disavowed reliance upon this as a factor relevant to the Court’s exercise of its discretion to set aside the self-executing order.
27When the matter came back before me on 18 July 2022, the defendant’s counsel applied for an order setting aside paragraph 3 of the June Orders. The defendant relied in this regard upon an affidavit of Mr McCabe dated 18 July 2022, to which I will return later in these reasons. Mr Elias informed me that the plaintiff wished to put on affidavit material in response. He also said that the plaintiff considered there to be further deficiencies in the defendant’s discovery, notwithstanding Mr McCabe’s 14 July 2022 affidavit, and that the plaintiff was likely to make an application for further orders in relation to the defendant’s discovery.
28It was clear in those circumstances that the trial could not proceed on 26 July 2022. Accordingly, I made orders on 18 July 2022 refixing the matter for trial on 17 May 2023, adjourning the defendant’s application to 23 August 2022, and requiring the plaintiff to file any RID in respect of discovery or other interlocutory issues with a view to any such RID also being heard on 23 August 2022.
29As contemplated by my 18 July 2022 orders, the plaintiff filed an RID dated 1 August 2022 in which it sought orders for particular discovery pursuant to r29.08 in respect of 4 identified categories of documents.
30The two applications came on for hearing before me on 23 August 2022. Mr Wiggins was counsel appearing for the defendant that day. Part way through the oral submissions of Mr Elias, Mr Wiggins sought an adjournment of the hearing on the basis that, in light of Mr Elias’s submissions, he perceived there to be a potential conflict between his client and his instructing solicitors, Turner Freeman. The plaintiff neither consented to nor opposed the adjournment. The hearing was ultimately adjourned to 26 September 2022. (I interpolate here that, at the 13 October 2022 hearing, counsel then appearing for the defendant, Mr Hogan, disavowed the existence of any conflict and did not pursue this issue further.)
31When the matter was called on for hearing on 26 September 2022, there was no appearance for the defendant and, consequently, I adjourned the hearing to 13 October 2022. The Court was subsequently advised, by a letter from Mr Armando Gardiman AM, the Managing Partner of Turner Freeman, that the defendant’s failure to appear was the result of an error or oversight by Turner Freeman.
32The two applications came back on for hearing before me on 13 October 2022. I heard comprehensive oral submissions that day from Mr Elias on behalf of the plaintiff and Mr Hogan on behalf of the defendant.
The defendant’s application
33The defendant accepts that its failure to file its affidavit by the time specified in paragraph 2 of the June Orders had the consequence that its defence was struck out by the operation of paragraph 3 of those orders.
34Mr Hogan submitted, and I accept, that the Court has the power pursuant to r24.06 of the Rules to set aside a self-executing order.[1] The general principles applicable to an application such as the present were not in dispute and are not in doubt. They were set out by the Court of Appeal in Jorgensen v Slater & Gordon Pty Ltd[2] (citations omitted):
[1] Jorgensen v Slater & Gordon Pty Ltd [2008] VSCA 110 at [7].
[2] [2008] VSCA 110 at [9]-[11].
“The court has a wide discretion to relieve a party of the consequences of non-compliance with a self-executing order. The governing consideration, as in every aspect of practice and procedure, is what justice requires. As Burt CJ said in Link Blocks Pty Ltd v Fullin, all the circumstances must be weighed in the balance and
‘one must not … lose sight of the fact that the justice spoken of is an even-handed justice to [both sides].’
The power to relieve must be exercised with care. As Roskill LJ said in Samuels v Linzi Dresses Limited, it is a power
‘which should be exercised cautiously and with due regard to the necessity for maintaining the principle that orders are made to be complied with and not to be ignored.’
We respectfully agree with what was said by Newnes J in the Western Australia Supreme Court in MTQ Holdings Pty Ltd v Lynch, as follows:
‘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 [that] order came about by the same sort of inattention or laxity that caused the order to be made in the first place.’
We would also adopt what Newnes J said regarding the considerations which should ordinarily be brought to bear in considering the exercise of this discretion. The court should have regard at least to the following matters:
(a) the circumstances in which the self-executing order was made;
(b) the reasons for non-compliance with it;
(c) the prejudice to the defaulting party if relief were not granted; and
(d) the prejudice to the innocent party if relief were granted.”
35These principles were reiterated by the Court of Appeal in Brakatselos v ABL Nominees Pty Ltd[3] and were applied relatively recently in this Court by Judge Cosgrave in Du v Ivy Real Estate Pty Ltd[4]. Before turning to consider the application of the principles, it is necessary to refer to certain parts of the affidavit material.
[3] [2012] VSCA 231; (2012) 36 VR 490 at [40].
[4] [2021] VCC 154.
36The first affidavit filed by the defendant was that of Mr McCabe, dated 18 July 2022. That affidavit simply deposed to the communications which passed between the parties on 20 and 22 June 2022, to which I have already referred. It contained nothing which explained the defendant’s default in making discovery prior to 10 June 2022. It also contained nothing which explained the defendant’s failure to comply with the self-executing order by 20 June 2022. As to the absence from Mr Bennett’s 22 June 2022 affidavit of the documents subsequently identified in Mr McCabe’s 14 July 2022 discovery affidavit, Mr McCabe deposed that:
(a) He was notified by DVR on 4 July 2022 that further documents were yet to be produced and that “This was the first time I was informed by the plaintiff that these documents were in issue”. This was a reference to the 4 July 2022 letter to which I have referred in paragraph 21 above; and
(b) After receiving the 4 July 2022 letter, Mr McCabe contacted Mr Bennett and was advised that the email address belonging to Rachel Scott had not been used for some time, but that she had been contacted to access it. The documents in question were then provided to Mr McCabe and he swore the 14 July 2022 discovery affidavit referring to them.
37The second affidavit filed by the defendant was that of Mr Bennett dated 15 August 2022. Much of this affidavit dealt with the plaintiff’s discovery application. However, Mr Bennett also deposed that he had provided Turner Freeman with “all documents to be discovered” on 19 June 2022 and that “My solicitors did not ask me to provide an affidavit to the Court regarding the adequacy of discovery prior to 20 June 2022 and I did not know that such an affidavit was required prior to that date”. I assume that the affidavit to which Mr Bennett was there referring was the affidavit of documents. This evidence is concerning in circumstances where a self-executing order had been made on 10 June 2022 with a deadline of 4.00pm on 20 June 2022. It is also difficult to reconcile with numerous communications from Turner Freeman to DVR in the period between the 28 March 2022 orders and the June Orders.
38It is also relevant to note that:
(a) Mr Bennett deposed at paragraph 10 that he was contacted by Mr McCabe on 4 July 2022 and asked to review the email address owned by Rachel Scott. Mr Bennett and Ms Scott sat in Mr Bennett’s office and reviewed emails to and from that address. Relevant documents were then forwarded to Mr McCabe and produced on 14 July 2022. (I note here that Mr Elias submitted that this evidence suggested that Mr Bennett had been left by Turner Freeman to perform this task on his own with Ms Scott, and that this was consistent with what appeared to be a general lack of adequate supervision by Turner Freeman of the defendant’s discovery process. There seems to me to be some force in this submission.)
(b) Mr Bennett deposed at paragraph 11(ii) that Ms Scott “did not have a significant role in the company”, that she “was directed to print all incoming correspondence and attachments, which were then handed to me”, and that she “was not responsible for approving, managing or paying invoices”.
39The third affidavit filed by the defendant was that of Mr Bennett dated 12 October 2022. Much of this affidavit dealt with the plaintiff’s discovery application. However, it also contained further reference to the role of Ms Scott, in respect of whom it stated at paragraph 9:
“At paragraph 12(f) of the affidavit [of Mr Hart dated 1 August 2022] Rachel Scott is referred to as the defendant’s accounts receivable supervisor. Rachel Scott is my son Jack’s fiancé. To my knowledge she has never been an employee of the defendant. We had a very poor internet connection at the farm. Rachel used her private email address in order to assist us with various aspects of the business. She had IT expertise beyond ours and she assisted us to set up our social media platforms.”
40The other significant part of Mr Bennett’s 12 October 2022 affidavit is paragraph 12, which stated: “On each occasion that I was asked by Kyle McCabe to provide him with either information or documents I complied within a day or two of the request being made”. It is unfortunate that this evidence is expressed in general terms rather than dealing specifically with each occasion in question. That said, read with Mr Bennett’s 15 August 2022 affidavit and my observations about that affidavit in paragraph 37 above, this evidence seems to me to raise significant questions about the conduct of Turner Freeman, including the veracity of some of their communications with DVR. It is also consistent with the proposition that the defendant’s non-compliance with Court orders was the fault of Turner Freeman rather than the defendant itself.
41The final affidavit filed by the defendant was that of Mr Gardiman dated 12 October 2022. Paragraphs 1 to 5 of that affidavit stated:
“1. I am the Managing Partner of the Law Firm Turner Freeman and have assumed the care and conduct of this matter on behalf of the defendant.
2. The solicitor with the prior carriage of this matter Kyle McCabe, was a Senior Associate employed by the Firm at its Penrith Office.
3. I have during the course of acquainting myself with the matter looked at the Court documents and in particular the Orders of the Court including the Orders of 15 October 2021 requiring discovery by each party by 15 November 2021, the extension to the Order made for discovery on 28 March 2022 and the further extension of 10 June 2022.
4. As Kyle McCabe has left the Firm I am not in a position to enquire of him as to why it is that he failed to repeatedly comply with the Orders of the Court.
5. I am an experienced solicitor having appeared for litigants in most of the Courts of the State of New South Wales, the Federal Court of Australia and the High Court of Australia. Compliance with Court Orders is a paramount duty of a solicitor to the Court. In this matter I cannot put forward a cogent explanation as to why Kyle McCabe failed to comply with the Orders. All that I can do is offer a sincere apology to the Court for his repeated failures and indicate to the Court that I have now taken over the care and conduct of the matter and that in the event that the Court exercises its discretion and allows the defendant to defend the matter that all further Orders of the Court will be complied with.”
42Although Mr Gardiman’s evidence is general in nature rather than descending to the detail of each specific instance of non-compliance, it makes clear that the position of the defendant’s own solicitors is that they, rather than the defendant itself, were responsible for the defendant’s non-compliance with the Court’s orders. This is a matter upon which Mr Hogan placed considerable emphasis and to which I will later return.
43The plaintiff filed two affidavits. The affidavit of Mr Hart dated 11 July 2022 dealt with the background to the making of the June Orders and the defendant’s failure to comply with those orders. I will refer to these matters later when I address the first and second Jorgensen factors. Mr Hart’s affidavit also dealt with Mr Bennett’s failure to include all relevant documents in his 22 June 2022 affidavit and in that regard was primarily directed to the plaintiff’s 11 July 2022 application for particular discovery.
44The affidavit of Mr Hart dated 1 August 2022 was sworn in support of the plaintiff’s 1 August 2022 RID seeking orders for particular discovery. For present purposes, it is relevant to note that Mr Hart deposed at paragraph 12(f) that he was informed and believed that the plaintiff emailed its invoices to Rachel Scott and that at all relevant times Ms Scott was the defendant’s Accounts Receivable Supervisor. Mr Hart exhibited a copy of Ms Scott’s LinkedIn profile, which described her “Experience” as including “Accounts Receivable Supervisor” of the defendant between August 2013 and October 2021.
45I will turn now to each of the 4 factors identified by the Court of Appeal in the passage from Jorgensen set out in paragraph 34 above.
First Jorgensen factor
46The first factor identified in Jorgensen is the circumstances in which the self-executing order was made. I made the self-executing order in response to the plaintiff’s RID dated 1 June 2022, which was filed on 3 June 2022 as a result of the defendant’s default in making discovery.
47Notwithstanding that the defendant had joined with the plaintiff on 25 March 2022 in seeking the 28 March 2022 orders by consent, it had already breached those orders within a week of the orders being made. The following communications then passed between the parties in relation to the defendant’s failure to make discovery by 1 April 2022:
(a) On 27 April 2022, DVR sent an email to Turner Freeman regarding arrangements for the mediation which was proposed to take place on 24 May 2022. That email also referred to my 28 March 2022 orders and requested a copy of the defendant’s discovery as a matter of urgency. It does not appear that there was any response to this email.
(b) On 13 May 2022, DVR sent a letter to Turner Freeman, again referring to my 28 March 2022 orders, the 1 April 2022 discovery deadline, and the defendant’s failure to make discovery. The letter requested that the defendant attend to discovery as a matter of urgency, and noted in this context that the parties had agreed to conduct the mediation on 24 May 2022.
(c) By email dated 16 May 2022, a Monday, Mr McCabe responded to the 13 May 2022 letter. That email stated: “Apologies for not returning you [sic] calls from earlier – I’ve had a family emergency come up and am trying to work from home. We expect to serve affidavits and provide documents to you by the end of the week.”
(d) On 20 May 2022, a Friday, DVR sent another letter to Turner Freeman at 1.05pm by email, noting that the defendant’s affidavit of documents and its discoverable documents had still not been received. The letter stated that, as the matter was scheduled for mediation on Tuesday 24 May 2022, the plaintiff required the affidavit and documents by 4.00pm that day.
(e) At 1.29pm on 20 May 2022, Mr McCabe responded, stating:
“I am out of the office due to a family emergency today. I will have our client’s affidavit finalised over the weekend, and a draft of the affidavit will be sent to you on Monday morning.
I had sincerely hoped to have the affidavit evidence finalised this afternoon, however that will not now be possible.
I do not suspect there will be anything surprising or controversial in our client’s evidence, and I would be hopeful the matter can be resolved on a commercial basis next Tuesday.”
(f) Consistent with Mr McCabe’s 20 May 2022 email, and contrary to the indication given in his 16 May 2022 email, the defendant did not provide its affidavit or documents by the end of the week commencing 16 May 2022.
(g) Contrary to the indication given in Mr McCabe’s 20 May 2022 email, no draft of the defendant’s affidavit of documents was provided on the morning of Monday 23 May 2022 or, indeed, prior to the mediation which took place the following day. Consequently, the mediation took place on 24 May 2022 without the defendant having made any discovery whatsoever.
(h) On 24 May 2022, apparently following an unsuccessful mediation, DVR wrote again to Turner Freeman. Amongst other things, that letter referred to my 28 March 2022 orders and stated:
“As raised in previous correspondence, the defendant has failed to comply with the order despite the urgency of doing so in order to conduct the mediation. In good faith we proceeded with the mediation on the basis that you advised us that the defendant’s discovery would be provided to us before the mediation. That did not occur.”
The letter concluded by requesting the defendant’s affidavit and discovered documents by 12 noon on Monday 29 May 2022.
(i) The material before me does not suggest that there was any response to the abovementioned 24 May 2022 letter. Nor did the defendant make discovery.
48The plaintiff then filed its RID dated 1 June 2022 on 3 June 2022 which, as I have already described, led to the June Orders.
49The preceding discussion reveals that, insofar as is relevant to the first factor identified in Jorgensen, the self-executing order was made in circumstances where:
(a) for a period of over 2 months, the defendant was in breach of the Court’s 28 March 2022 order requiring it to make discovery by 1 April 2022;
(b) only one week prior to that 1 April 2022 deadline for discovery, the defendant had by consent sought the orders which I made on 28 March 2022 imposing that deadline;
(c) DVR were required repeatedly to follow up Turner Freeman in relation to the defendant’s discovery;
(d) Turner Freeman gave multiple indications as to the impending provision of the defendant’s discovery, none of which were fulfilled;
(e) as I observed in paragraph 40 above, Mr Bennett’s affidavit evidence raises doubts about the veracity of some of Turner Freeman’s communications to DVR;
(f) on a number of occasions, Turner Freeman failed to respond at all to correspondence from DVR;
(g) the mediation took place on 24 May 2022 without any discovery at all from the defendant, notwithstanding prior indications from Turner Freeman that discovery would be given before the mediation. Accordingly, it is likely that the mediation lacked utility and that the proceeding will need to go to mediation again before trial; and
(h) Turner Freeman failed to respond to the Court’s request that it advise the Court of the defendant’s position in relation to the plaintiff’s RID.
50None of the affidavit material relied upon by the defendant sought to provide any specific explanation or excuse for the defendant’s breach of the Court’s 28 March 2022 orders by failing to provide discovery by 1 April 2022. Nor did that material seek to provide any specific explanation or excuse for the defendant’s dilatory and discourteous conduct in relation to discovery between 28 March 2022 and the making of the self-executing order on 10 June 2022.
51The only attempt made on behalf of the defendant to address these circumstances is the somewhat general evidence of Mr Gardiman and Mr Bennett. Mr Gardiman’s evidence was to the effect that his firm, and more specifically Mr McCabe, was responsible for all of the defendant’s non-compliance with the Court’s orders. Mr Hogan submitted that Mr Gardiman was not in a position to provide any further detail in relation to the non-compliance, that Mr Gardiman puts the blame squarely at Mr McCabe’s feet, and that Mr McCabe had “dropped the ball”. Mr Bennett’s evidence, to which I have referred in paragraphs 37 and 40 above, suggests that he was not asked by Turner Freeman to provide discoverable documents or make a discovery affidavit at any time prior to the June Orders being made.
52Accordingly, for the purposes of the first Jorgensen factor, I conclude that the self-executing order was made in circumstances where Turner Freeman had been responsible for a quite regrettable and unsatisfactory lack of diligence and courtesy in relation to the defendant’s discovery obligations, the principal features of which I have set out in paragraph 49 above. No explanation or excuse whatsoever has been provided for Turner Freeman’s failings in that regard.
53For completeness, I note that Mr Hogan sought to rely upon the fact that both parties, not just the defendant, had failed to comply with Judge Burchell’s initial discovery order for a period of months. However, the plaintiff had made its discovery some months prior to the making of the self-executing order on 10 June 2022 and, indeed, several weeks prior to the 28 March 2022 orders. Accordingly, I consider this historical fact to be of no relevance in relation to the first Jorgensen factor.
Second Jorgensen factor
54The second Jorgensen factor involves consideration of the reasons for the defendant’s non-compliance with the self-executing order. In relation to this factor, the Court of Appeal in Jorgensen said (citations omitted):[5]
“As to the reasons for non-compliance, it is of the first importance to ascertain whether the failure to comply was wilful, that is, was reflective of deliberate disregard of, or indifference to, the court’s order. As Browne-Wilkinson VC said in Re Jokai Tea Holdings Limited:
‘The court should not be astute to find excuses for such failure since obedience to orders of the court is the foundation on which its authority is founded. But, if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed’.”
[5] [2008] VSCA 110 at [12].
55Mr Elias contended that there were two respects in which the defendant failed to comply with the self-executing order. The first was by serving its affidavit of documents two days late, on 22 June 2022 at 3.14pm, notwithstanding that the documents themselves had been served within time at 1.18pm on 20 June 2022.
56Mr Elias submitted that the defendant had not adequately explained the reasons for this non-compliance and that it remained unclear where the fault lay as between the defendant and Turner Freeman. He submitted that Mr Gardiman’s affidavit did not clearly say that the defaults were Mr McCabe’s fault, and that there was no specific evidence from Mr Bennett to the effect that Turner Freeman were not actively pursuing him to provide the defendant’s discoverable documents.
57Mr Hogan in his oral submissions conceded that the defendant could provide no specific explanation or excuse for the lateness of the affidavit and that Mr McCabe should have provided such an explanation. Mr Hogan also referred to Mr Gardiman’s evidence that, by reason of Mr McCabe’s departure from the firm, he was not in a position to identify specifically why the Court’s orders had not been complied with.
58The only specific evidence as to the reasons for the lateness of the affidavit is the evidence from Mr Bennett’s August affidavit which I have described in paragraph 37 above. The Court has been provided with no explanation as to why Turner Freeman did not ask Mr Bennett for an affidavit of documents prior to 20 June 2022. Further, read with the contents of paragraph 12 of Mr Bennett’s October affidavit to which I have referred in paragraph 40 above, Mr Bennett’s August affidavit suggests that he was only asked by Turner Freeman to provide them with the defendant’s discoverable documents on 17 or 18 June 2022. All of this is troubling in circumstances where the defendant, with its discovery already months overdue, was faced with the impending operation of a self-executing order at 4.00pm on 20 June 2022. It suggests a serious dereliction of duty on the part of Turner Freeman, which is reinforced by Mr Garidiman’s evidence, discussed at paragraphs 41-43 above, to the effect that the failure of the defendant to comply with the self-executing order was the fault of Turner Freeman rather than the defendant itself.
59Based on the evidence to which I have referred, I consider there to be a sufficient basis for concluding that the defendant’s late service of its affidavit of documents on 22 June 2022 was due to failings on the part of Turner Freeman rather than the defendant itself. Having regard to that evidence, I do not accept Mr Elias’s submission that it was not apparent where the fault lay as between the defendant itself and Turner Freeman, although I do accept that the evidence filed on behalf of the defendant in relation to these matters could have been more specific.
60The evidence provides no explanation or excuse for Turner Freeman’s failings in this regard. Mr Hogan conceded as much.
61The second respect in which Mr Elias contended that the defendant had breached the self-executing order was by serving an affidavit of documents which was deficient in two ways.
62First, although Mr Bennett’s 22 June 2022 affidavit enumerated only 11 documents, Mr Elias contended that 4 of those documents were obviously irrelevant to the proceeding. Having been taken to those documents by Mr Elias, I accept the correctness of this contention.
63Secondly, and more significantly, Mr Elias contended that the defendant failed to discover in Mr Bennett’s affidavit a number of documents which were clearly central to the issues in the proceeding. He submitted that the defendant’s failure initially to discover these documents created a false impression that the defendant had not dealt with Farm Tender in relation to the sale of hay by the plaintiff and that the documentary material therefore supported the defendant’s case and undermined the plaintiff’s case. He also submitted that the documents discovered on 14 July 2022 were generally supportive of the plaintiff’s case and harmful to the defendant’s case, and thus clearly fell within the discovery categories contained in my 28 March 2022 orders and thus the June Orders.
64I agree with the plaintiff’s position that the discovery made by the defendant on 22 June 2022 should have included the documents subsequently discovered by the defendant on 14 July 2022. I note that Mr Hogan did not disagree with that position.
65Mr Elias therefore submitted that the June Orders were not ultimately complied with until 14 July 2022. Thus, the defendant did not miss the self-executing order deadline by a mere 2 days, but rather, by several weeks. Mr Elias further submitted that Mr Bennett’s 22 June 2022 affidavit was the product of “the same sort of inattention or laxity that caused the [self-executing] order to be made in the first place” (see paragraph 34 above), not only because of its lateness, but also because it included irrelevant documents and excluded relevant documents.
66A threshold question arises as to whether the deficiencies in the 22 June 2022 affidavit, as opposed to its lateness, are capable of constituting a breach of the self-executing order. There is no doubt that, in attempting to comply with the June Orders, the defendant was required to act in good faith and in a manner which was not “illusory”.[6] But beyond those hurdle requirements, the question of compliance with the self-executing order does not, in my view, invite consideration of the sufficiency of the discovery contained in the affidavit in question. If it were otherwise, there might well be fertile ground for debate about whether or not the event triggering the operation of the self-executing order had occurred, resulting in an undesirable need for further adjudication to resolve that issue.[7]
[6] See Khan v The Age Company Pty Ltd [2019] VSC 839 at [25]; Ridge Lane Pty Ltd v Gadzhis [2007] VSC 212 at [36], [39]-[41].
[7] See Ridge Lane Pty Ltd v Gadzhis [2007] VSC 212 at [27], [40].
67Mr Elias submitted that the 22 June 2022 affidavit fell so far short of meeting the requirements of the June Orders that it could not be said to have been made in good faith. He also relied in this regard upon the late provision of the documents to Mr McCabe by Mr Bennett on 19 June 2022, the apparent lack of guidance given by Mr McCabe to Mr Bennett in relation to the defendant’s discovery obligations, the inclusion in the affidavit of obviously irrelevant documents which suggested that there had been no, or an inadequate, “filtering process”, and the absence of documents from the affidavit which were clearly critical and went to the heart of the pleaded case. These shortcomings, submitted Mr Elias, needed to be considered in the context of what he contended was an inadequate explanation by the defendant for the failure to include the critical documents in the 22 June 2022 affidavit. Mr Elias also contended that all of the critical documents discovered belatedly on 14 July 2022 were from the email address of Ms Scott and that, irrespective of the apparent lack of clarity in the affidavit material as to her precise role (as to which, see paragraphs 38(b), 39 and 44 above), she was clearly acting as the defendant’s agent and all of the relevant documents in her email inbox should have been discovered on 22 June 2022.
68Mr Hogan relied upon two principal matters in resisting the allegation that Mr Bennett’s 22 June 2022 affidavit failed to satisfy the good faith requirement. First, he said that the documents omitted from the 22 June 2022 affidavit all fell within the same class, namely, documents which had come from Farm Tender and been sent to Ms Scott. Although Mr Hogan accepted that these documents should have been discovered on 22 June 2022, he submitted that their omission from that affidavit was inadvertent and could be explained by Ms Scott’s informal role with the defendant and the use of her private email address to send and receive the documents.
69Secondly, Mr Hogan submitted that the continuing nature of the discovery obligation contemplates that parties may from time to time find documents which they had not previously discovered. Because of this, the belated provision of documents in a subsequent affidavit cannot be said to be indicative of a lack of good faith and also militates against shutting a defendant out from defending the proceeding.
70Neither party referred me during the hearing to any authority in which the precise content of the “good faith” requirement had been considered. Accordingly, at the conclusion of the 13 October 2022 hearing, I asked counsel to seek to identify any such authorities and to provide them to my chambers by 4.00pm on 17 October 2022. Counsel duly advised on 17 October 2022 that the only authority which they had been able to identify was the decision of Vickery J in ACN 092 675 164 (in liq) v National Builders Group Pty Ltd.[8]
[8] [2014] VSC 530 at [6]-[19] and [51]-[53]. Counsel noted that there was an appeal from this decision (National Builders Group IP Holdings Pty Ltd v ACN 092 675 164 Pty Ltd (in liq) [2015] VSCA 260), but that the observations made by Vickery J on the point of present interest were not disturbed on appeal.
71In ACN 092 675 164, the defendants each had filed an affidavit within the time prescribed by a self-executing order, but the plaintiffs submitted that those affidavits omitted so many significant documents that they did not amount to a good faith attempt to comply with the order. Vickery J observed[9] that the determination of the good faith question and also the further question of whether it would be unjust in the circumstances to give effect to the self-executing order, “may involve judgments as to a variety of factors, including for example, the degree to which the non-compliance may have arisen from circumstances beyond the control of the allegedly defaulting party”. His Honour held[10] that the discovery of each defendant was “significantly deficient by reference to the categories of documents” required to be discovered and that “the deficiencies were of such a magnitude” that each defendant’s affidavit of documents did not constitute a good faith attempt to provide the information required by the self-executing order. Accordingly, the self-executing order had not been complied with. I note that Vickery J reached that conclusion notwithstanding his finding[11] that the director of the first defendant, who had sworn its affidavit of documents, “had a limited and inadequate knowledge of his discovery obligations in conducting litigation on behalf of the First Defendant company. He was dependent on his solicitor to advise him of the requirements”. Ultimately, however, his Honour concluded that the self-executing order should be set aside.
[9] [2014] VSC 530 at [10(b)].
[10] [2014] VSC 530 at [43], [47], [52]-[53].
[11] [2014] VSC 530 at [49].
72There are a number of further authorities which also shed some light on the good faith requirement. In Ridge Lane Pty Ltd v Gadzhis, a self-executing order required the first defendant to file and serve an affidavit listing and reconciling certain payments and borrowings and listing related documents. Hargrave J accepted[12] that “there are material respects in which the lists and reconciliations provided by Mr Gadzhis are incomplete and contain conflicting information.” However, his Honour went on to conclude that, on balance:
“the affidavits and supporting documentation constitute a good faith attempt to list and reconcile the relevant information and documents. In reaching this conclusion, I have given consideration to the likely causes of the delay and inability of Mr Gadzhis to provide all of the information which he was ordered to provide. Based on the evidence as a whole, I infer that the delay and inability has most likely been caused by incompetence on the part of his lawyers, and poor record keeping, and not by a deliberate attempt to withhold information from the plaintiffs and the Court.”
[12] [2007] VSC 212 at [41].
73In Smith, In the Matter of Barron Entertainment Ltd (in liq) v Barron, French J held[13] that a defence filed in response to a self-executing order did not amount to an attempt in good faith to plead to the statement of claim, because “[i]t was plainly conceived as a ‘holding defence’ that is an attempt to defeat the operation of the self-executing order and to obtain more time for the preparation of the real defence in these proceedings.”
[13] [2004] FCA 1596; (2004) 139 FCR 566 at [36]. See also at [42].
74Finally, in Deppro Pty Ltd v Daly, the applicants took issue with the adequacy of the respondents’ discovery in response to a self-executing order. Nicholson J, having earlier referred to authorities concerning the good faith requirement, was not satisfied that the respondents’ lists failed as a matter of substance to comply with the order. His Honour concluded[14] that “[e]ach list discovers documents and no exception is taken to what has been discovered.” He further concluded[15] that the alleged deficiencies in discovery were “clearly open to argument” and that the issue of relevance had been reasonably disputed by the respondents in relation to a number of categories. I note that each of those aspects of Deppro may be contrasted with the present case.
[14] [2006] FCA 1727 at [46].
[15] [2006] FCA 1727 at [47].
75In the present case, there was no suggestion that there were any circumstances beyond the defendant’s control which led to the deficient discovery in Mr Bennett’s 22 June 2022 affidavit. The defendant’s failure to discover the documents in question in Mr Bennett’s affidavit was the subject of Mr McCabe’s 18 July 2022 affidavit. His attempt to excuse that failure appears to be based on the absence of any request by the plaintiff for discovery of such documents prior to 4 July 2022. I consider this to be unconvincing. It is clear that at least some of the documents discovered on 14 July 2022 were centrally relevant to the issues in the proceeding. Indeed, one such document is the Sales Confirmation, which is alleged to form part of the contract on which the plaintiff sues and the existence of which the defendant denies. Another is the email under cover of which that document was sent by Farm Tender to the defendant. It was not for DVR to inform Turner Freeman that such documents were “in issue” in the proceeding. That is a matter which should have been apparent to Turner Freeman. Further, it is apparent from the affidavit evidence that Ms Scott’s email address had played a substantial role in the defendant’s business communications, including in relation to invoices, but that no attempt at all was made to review her email account for the purposes of the defendant’s initial discovery.
76In addition to the matters relied upon by Mr Elias, which I have set out in paragraph 67 above, I note that schedule 2 of Mr Bennett’s discovery affidavit further suggests that a careless and unthinking approach was taken to the defendant’s discovery. That schedule purports to set out the documents which the defendant “had, but no longer has, in its possession custody or power”. Schedule 2 identified those documents as “The originals of documents described as copy letters innumerate [sic] in Part 1 Schedule 1”. However, part 1 of schedule 1 does not contain any document described as a copy letter, thus rendering schedule 2 meaningless.
77All of these matters lead me to accept the plaintiff’s contention that the discovery made by the defendant on 22 June 2022 was not a good faith attempt to comply with the self-executing order.
78I do not accept that the contrary position is supported by the two submissions of Mr Hogan which I set out in paragraphs 68-69 above. The first of those submissions may have had greater force if the defendant’s discovery had otherwise been carried out in a satisfactory manner. For example, if Mr Bennett had been asked by Turner Freeman to provide his documents earlier rather than at the eleventh hour, and/or if the discovery exercise had been supervised properly by Turner Freeman, it may well be that the inadvertent omission of the documents in question would not have occurred. That is particularly so in circumstances where those documents were centrally relevant and where, as I have already said, Ms Scott’s email address had played a substantial role in the defendant’s business communications.
79The second submission, taken to its logical conclusion, amounts in effect to a proposition that, because of the ongoing nature of the discovery obligation, a failure to provide a fulsome discovery affidavit will rarely if ever amount to a failure to act in good faith. Such a proposition is not supported by the authorities. Further, I note that the late discovery of the critical documents in this case did not occur as a result of any unilateral action by the defendant in seeking to comply with its ongoing discovery obligations. Rather, that subsequent discovery occurred only because DVR challenged the adequacy of the defendant’s initial discovery in correspondence and then obtained a particular discovery order from the Court on 11 July 2022.
80Accordingly, I consider the position to be:
(a) The defendant failed to file any affidavit within the time required by the June Orders;
(b) The affidavit filed 2 days late, on 22 June 2022, did not constitute a good faith attempt to comply with the June Orders and thus the orders were not complied with on 22 June 2022;
(c) It was not until 14 July 2022, when Mr McCabe’s discovery affidavit was filed on behalf of the defendant, that the June Orders were complied with;
(d) The defendant therefore was some 24 days late, rather than only 2 days late, in complying with the June Orders; and
(e) For the purposes of the second Jorgensen factor, it is relevant to consider the reasons for the defendant’s failure to comply with the self-executing order until 14 July 2022.
81As to paragraph 80(e) above, I have referred in paragraph 75 above to the absence of a cogent explanation for the failure to discover the documents in question in the 22 June 2022 affidavit. The affidavit evidence does not clearly indicate who was at fault in relation to this failure, although taken overall, I accept Mr Elias’s submission that the evidence conveys a lack of adequate involvement and supervision by Turner Freeman in the process of the defendant’s discovery. I have already made reference to one aspect of this in paragraph 38 above. It may be that the defendant omitted to inform Turner Freeman in the first instance about the existence of Ms Scott’s email address. But in circumstances where that email address had played a substantial role in the defendant’s business communications, and where at least some of the documents in question were central to the issues in this proceeding, it is difficult to imagine that the existence of Ms Scott’s email account would not have come to light earlier if Turner Freeman had made appropriate and timely inquiries of their client.[16]
[16] See eg Bolitho v Banksia Securities Ltd (No 18) [2021] VSC 666 at [1378]-[1380].
82I do not consider the evidence to support a conclusion that the defendant’s non-compliance with the self-executing order, in either of the two regards relied upon by Mr Elias, was wilful or contumelious. Rather, it seems to me that it was due to a failure on the part of Turner Freeman to ensure that timely steps were taken to ensure that the defendant’s discovery obligations were fulfilled and a failure by Turner Freeman adequately to supervise the defendant’s discovery process. Having regard to those failures, I am of the view that the defendant’s failure to comply with the self-executing order was reflective of indifference to that order, in the sense referred to by the Court of Appeal in Jorgensen,[17] by Turner Freeman.Further, it seems to me that this is a case where the non-compliance with the self-executing order came about by the same sort of inattention or laxity on the part of Turner Freeman that caused the order to be made in the first place (see paragraph 34 above).
Third Jorgensen factor
[17] [2008] VSCA 110 at [12].
83The third Jorgensen factor is prejudice to the defendant. Mr Hogan submitted that it was relevant to the question of prejudice that the defendant had a tenable defence to the claim, in the sense of a defence which would survive any strikeout application. I did not understand Mr Elias to contend otherwise, and I proceed upon that basis.
84The prejudice identified by Mr Hogan was that, in the event that the defendant’s tenable defence is not in effect reinstated by the self-executing order being set aside, the defendant faces the prospect of a judgment requiring it to pay the debt of $233,850.04 alleged by the plaintiff, plus interest and costs.
85Mr Elias accepted that there would be prejudice to the defendant of the kind identified by Mr Hogan. He submitted that this was simply the prejudice flowing from the operation of the self-executing order on its terms and that such prejudice will always be present on an application of this nature. He relied on the fact that circumstances had not changed since the self-executing order, in the sense that nothing had occurred which would result in the defendant suffering prejudice above and beyond the very prejudice which was contemplated at the time that the self-executing order was made.
86Clearly enough, as the authorities indicate, the consequences of a self-executing order can be severe. In Brakatselos, Redlich JA (with whom Davies AJA agreed) noted[18] that the applicants primarily relied upon “the prejudice to them in being shut out of their defence”. Redlich JA later returned to this topic, stating:[19]
“Plainly enough the applicants risked a great prejudice if these proceedings were undefended. While the seriousness of the consequences flowing from non-compliance with a court order may in some circumstances affect how severely the court should treat that non-compliance, it will not of itself excuse such disobedience. The nature of the non-compliance may be so serious that its consequences cannot be mitigated. That outcome is even more likely where no satisfactory explanation is provided for the non-compliance. Failure to comply with a self-executing order which will result in the proceedings becoming undefended and where no adequate explanation for the failure to comply is provided falls into this category. So to say is to recognise that a litigant who disregards the dire natural consequences of disobedience to a court order does so at their peril.”
[18] [2012] VSCA 231; (2012) 36 VR 490 at [39].
[19] [2012] VSCA 231; (2012) 36 VR 490 at [43].
87Nettle JA (with whom Davies AJA also agreed) in Brakatselos said this in relation to the question of prejudice to the defaulting party:[20]
“Given that the purpose of a self-executing order is to ensure timely compliance with a procedural requirement, and that the means of achieving it are the threat of dire consequences of failure, it would significantly undermine the utility of self-executing orders and more generally cast doubt on the integrity of the processes of the court if a party who chose not to comply in time with a self-executing order could expect to be relieved from the consequences simply by demonstrating that he has since complied with the requirement and that, if the breach is not excused, he will suffer the consequences which it was intended he should suffer if he failed to comply within time.
Of course there are exceptions and inevitably each case will turn on its own facts and circumstances. Prejudice is obviously a most relevant consideration and in this case it looms large. But in the end it is a question for the exercise of discretion …”
[20] [2012] VSCA 231; (2012) 36 VR 490 at [54]-[55].
88I accept that the consequences for the defendant in the present case would be severe. It would be unable to contest liability to the plaintiff on the bases set out in the defence and would consequently be exposed to a judgment debt of $233,850.04 plus interest and costs. However, I also recognise, consistent with the passages from Brakatselos which I have set out above, that that prejudice is the very prejudice which the self-executing order contemplated in the event that the defendant failed to comply with it. The question of prejudice is a matter to which I will return later in considering the question of whether, as some of the authorities have expressed it,[21] the sins of the solicitor should be visited upon the client.
Fourth Jorgensen factor
[21] See, eg, Lord v Australian Safeway Stores Pty Ltd [1996] 1 VR 614 at 621.
89The fourth Jorgensen factor is prejudice to the innocent party if the relief sought is granted. Mr Elias accepted that there was no evidence of specific prejudice to the plaintiff. He submitted that, as a direct result of the defendant’s non-compliance, the trial listed for 26 July 2022 had to be adjourned to May 2023. Thus, if the defence is reinstated, the plaintiff will have to wait until the outcome of the May 2023 trial before it is able to obtain the money for which it sues. If the defence is not reinstated, the plaintiff will instead obtain that money imminently, by way of a judgment in default of defence. I do not consider this to be relevant prejudice. Further, as Mr Hogan submitted, the 26 July 2022 trial date was at least partly imperilled by the failure of both parties, not just the defendant, to provide discovery by 15 November 2021 as required by Judge Burchell’s 15 October 2021 orders.
90Mr Elias also referred to the significant costs which the plaintiff had incurred in attempting to procure proper discovery by the defendant over a lengthy period, as well as the likely wasted costs of the mediation. He accepted, however, that any such costs could be addressed by an appropriate order. He submitted in this regard that any reinstatement of the defence should be on terms that the plaintiff is compensated for its wasted costs. I agree with that submission.
91In my view, no significant or irreparable prejudice would be suffered by the plaintiff in the event that the self-executing order were set aside. The proceeding is currently listed for trial on 17 May 2023. Setting aside the self-executing order will not have any effect upon that trial date. This is not a situation like that which confronted Pagone J in ABL Nominees Pty Ltd v Brakatselos,[22] where setting aside the self-executing order would have required an imminent trial date to be vacated. Nor is this a case where there is any suggestion that there has been a loss of critical records, or the loss of a critical witness, in the period after the operation of the self-executing order.[23] It is not, in the words of Redlich JA in Brakatselos (see paragraph 86 above), a case where “the nature of the non-compliance [is] so serious that its consequences cannot be mitigated”.
Alleged factual parallels with Jorgensen
[22] [2012] VSC 265 at [11]-[12].
[23] Cf Du v Ivy Real Estate Pty Ltd [2021] VCC 154 at [29].
92In addition to his submissions directed to the 4 specific factors identified in Jorgensen, Mr Hogan sought to draw parallels between certain features of the present case and the facts in Jorgensen. Given that the Court of Appeal ultimately concluded that the interests of justice required that Mr Jorgensen be relieved from the consequences of his non-compliance with a self-executing order, Mr Hogan contended that these parallels should incline the Court toward the same outcome in the present case.
93First, Mr Hogan noted that the Court of Appeal had granted Mr Jorgensen relief notwithstanding the Court’s introductory observation[24] that “The appellant, Alan Jorgensen, is a serial defaulter”. It was implicit in Mr Hogan’s submission that the defendant does not fit this description. However, having regard to the history of the conduct of this matter on behalf of the defendant which I have set out earlier in these reasons, I do not accept that this aspect of Jorgensen assists the defendant.
[24] [2008] VSCA 110 at [1].
94Secondly, Mr Hogan submitted that Turner Freeman’s conduct in emailing the plaintiff on 20 June 2022 and foreshadowing the imminent filing of the affidavit of documents was similar to the conduct of Mr Jorgensen in emailing the respondent on the final day for compliance and foreshadowing that compliance was imminent. The Court of Appeal held[25] in this regard that it was relevant that Mr Jorgensen “was clearly cognisant of his non-compliance and was assuring [the respondent] that the position would be rectified in the near future.” I do not consider this to assist the defendant. It is, in my view, a relatively minor matter. In any event, as matters transpired, the 22 June 2022 affidavit of documents, which the 20 June 2022 email foreshadowed, was deficient and this was not rectified until 14 July 2022.
[25] [2008] VSCA 110 at [18].
95Thirdly, Mr Hogan relied upon this passage from the Court of Appeal’s reasons:[26]
“Critically, in our view, the conduct of Mr Jorgensen in the seven day period fixed by the court for compliance did not reflect either deliberate disregard of or indifference to the court’s order. On the contrary, Mr Jorgensen took active steps to secure fresh legal representation for the purposes of having the draft appeal index completed, as he had told the court on 31 March he would do. He cannot, in our view, be criticised for having directed some of his time and energy towards immediately pressing court commitments in which (as the representative of his companies) he was unavoidably involved.”
[26] [2008] VSCA 110 at [30].
96Mr Hogan contended that, like Mr Jorgensen, Turner Freeman did take action between the date of the self-executing order (10 June 2022) and the date fixed for compliance (20 June 2022). Mr Hogan relied in this regard upon the fact that, on 20 June 2022, Turner Freeman emailed the plaintiff’s solicitors copies of the defendant’s discovered documents, in advance of the affidavit being provided out of time on 22 June 2022. This, he submitted, demonstrated an attempt by the defendant to comply with the self-executing order. I do not accept this submission. There is minimal evidence about the activities of Ms Geake or Mr McCabe of Turner Freeman between 10 and 20 June 2022. Such evidence as there is, suggests an unsatisfactory state of affairs in which Turner Freeman left it until the last minute to obtain the discovered documents from Mr Bennett and left it until even later to procure from Mr Bennett an affidavit identifying those documents. Furthermore, when that affidavit was procured and filed, it contained patently irrelevant documents and omitted patently relevant documents. There is in my view a stark contrast between what occurred in the present case and the activities of Mr Jorgensen to which the Court of Appeal referred.[27]
[27] [2008] VSCA 110 at [20]-[22].
97In summary, I do not consider the defendant’s reliance upon the abovementioned aspects of Jorgensen to assist its position.
Civil Procedure Act considerations
98In Brakatselos, after referring to the applicants’ failure to provide a satisfactory reason for disobeying the self-executing order, Redlich JA stated:[28]
“Moreover, in addition to the absence of a satisfactory explanation there were other considerations which bore upon the exercise of the discretion to refuse to set aside a self-executing order. Sections 25 and 26 of the Civil Procedure Act 2010 impose overarching obligations on the parties and their legal representatives to act promptly, minimise delay and disclose the existence of documents. Section 28 specifically provides that the Court may take account of any contravention of these overarching obligations in exercising any power.”
[28] [2012] VSCA 231; (2012) 36 VR 490 at [45].
99Mr Elias submitted that the defendant’s conduct over a period of many months had been unsatisfactory and inadequately explained. Amongst other things, it had resulted in the July 2022 trial being vacated and the mediation being of limited utility at best. Mr Elias submitted that the defendant had breached its obligations under ss25 and 26 of the Civil Procedure Act 2010 (Vic), which it had not taken seriously. The particular matters relied upon by Mr Elias in this regard were the defendant’s initial failure to make discovery by 1 April 2022 as required by my 28 March 2022 orders, the defendant’s failure thereafter to make discovery before the mediation and its failure on a number of instances to respond to the plaintiff’s correspondence, the late filing of Mr Bennett’s discovery affidavit on 22 June 2022 in breach of the June Orders, and the absence from that affidavit of the centrally relevant documents discovered on 14 July 2022.
100Mr Elias submitted that, consistent with the abovementioned observations of Redlich JA in Brakatselos, the Court could take into account this conduct of the defendant in deciding whether or not to grant relief from the self-executing order. I accept that this is correct as a matter of principle.
101Mr Hogan submitted that, in having regard to any breaches by the defendant of the Civil Procedure Act in this context, the Court also needed to bear in mind that both parties, not just the defendant, had failed to provide their discovery by 15 November 2021 as initially ordered by Judge Burchell on 15 October 2021.
102Having regard to my findings in relation to the four Jorgensen factors, I do not consider the relevant Civil Procedure Act provisions to add materially to the analysis which I have already undertaken by reference to those factors. That is to say, the matters relied upon by Mr Elias in relation to the Civil Procedure Act provisions have already been taken into account and reflected in my conclusions in relation to the Jorgensen factors.
Conclusion regarding self-executing order
103As the Court of Appeal emphasised in Jorgensen, the governing consideration in determining an application such as the present is what justice requires in the circumstances. I have set out earlier what I consider to be relevant considerations in relation to each of the four factors identified in Jorgensen and in relation to the other matters relied upon by the parties.
104The present case is not an easy one. The conduct of the proceeding on behalf of the defendant has involved repeated non-compliance and has been far from satisfactory in a number of respects. The evidence relied upon by the defendant to explain these matters has been less specific and informative than it should have been. However, the prejudice to the defendant caused by the operation of the self-executing order is severe, and the prejudice to the plaintiff which would be caused by the setting aside of that order is minimal. I am also cognisant of the following observation made by Judge Cosgrave in Du v Ivy Real Estate Pty Ltd, which in my view applies mutatis mutandis to the striking out of a defence:[29]
“The 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.”
[29] [2021] VCC 154 at [15], citing the decision of the Court of Appeal in British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524 at [171].
105I do not consider the present case to satisfy these criteria. Moreover, and significantly, consideration needs to be given to the conduct of Turner Freeman in this matter, to which I have already referred at a number of junctures. A principal thrust of Mr Hogan’s submissions was that, to the extent that there had been failures and non-compliance by the defendant upon which the plaintiff relied, those failures were by Turner Freeman and, in particular, Mr McCabe. Mr Hogan submitted that the failings of Turner Freeman should not result in the Court penalising the defendant itself, which was in effect the corporate persona of Mr Bennett, a truck driver who would have relied heavily upon his solicitors for advice and assistance in this proceeding.
106Although Mr Hogan did not cite any authority in support of this submission, I consider the submission to be sound as a matter of legal principle. In considering the question of prejudice to the defaulting plaintiff in Du v Ivy Real Estate Pty Ltd, Judge Cosgrave addressed the defendant’s submission that it would be open to the plaintiff to sue his solicitor for any loss suffered in the event that the Court declined to set aside the order in question. His Honour stated:[30]
“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 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; Kostokanellis v Allen; Davies v Pagett.”
[30] [2021] VCC 154 at [28].
107In Kostokanellis v Allen,[31] the Full Court stated:
“… as long ago as 1938 Martin J, said in Collins Book Depot Pty Ltd v Bretherton [1938] VLR 40, at p 44; [1938] ALR 87, that: ‘In general, where default is due to the carelessness of a party’s solicitor, the party is not penalised to the extent of being shut out from litigating his claim or defence.’ This statement was referred to with approval by Jordan CJ, in Vacuum Oil Co Pty Ltd v Stockdale [(1942) 42 SR (NSW) 239] at p 243 and we ourselves think that it is correct.”
[31] [1974] VR 596 at 607. See also, more recently, Pavlovic v Punt Road Hostel Pty Ltd [2021] VCC 750 at [22]-[23].
108As I recorded above at paragraph 56, Mr Elias was critical about the lack of specificity in the affidavits as to the relative responsibility of Turner Freeman and the defendant. Whilst I accept that the evidence could have been more detailed and less general, I am satisfied upon consideration of the entirety of the evidence that the unsatisfactory conduct of this proceeding on the defendant’s part was largely, if not entirely, attributable to Turner Freeman, rather than the defendant itself. I have already referred to Turner Freeman’s various failings in my discussion of the four Jorgensen factors. I also consider it to be significant that the Managing Partner of Turner Freeman expressly accepted in his affidavit that one of his employee solicitors had failed repeatedly to comply with the Court’s orders. I also take into account that the defendant is a hay trading and carting business conducted in a rural location by Mr Bennett and his family and that Mr Bennett is likely to have been dependent, probably heavily, upon his solicitors for guidance in relation to this litigation.
109I do not consider it would be in the interests of justice to expose the defendant to a substantial monetary judgment, without the opportunity to present its defence at trial, in circumstances where its solicitors are principally to blame for the non-compliance which led to the making and operation of the self-executing order. That is particularly so in circumstances where the prejudice to the plaintiff of setting aside the self-executing order is minimal and can be addressed by the making of appropriate costs orders. I note in this regard that John Dixon J in Khan v The Age Company Pty Ltd[32] set aside a self-executing order against the plaintiff subject also to ordering that the plaintiff pay the defendants’ costs in respect of all the defendants’ attempts to obtain compliance with discovery, to be taxed on an indemnity basis and to be paid forthwith.
[32] [2019] VSC 839 at [33].
Plaintiff’s discovery application
110The parties agreed that I should make orders in the form sought by the plaintiff in its 1 August 2022 RID, save that I should make an additional order requiring the deponent to state what searches have been conducted and what inquiries made, and by whom, for the purposes of complying with paragraphs (a) and (b) of the plaintiff’s proposed orders. At the conclusion of the 13 October 2022 hearing, I raised with the parties whether I should make the order that day, requiring compliance by the defendant by 3 November 2022 as suggested by the parties, or whether I should defer making the order until I had delivered my reasons determining the defendant’s application. The parties agreed that I should defer making the order, if at all, until I had handed down my reasons determining the defendant’s application.
Next steps
111As I indicated to the parties at the conclusion of the 13 October 2022 hearing, I propose to give the parties a short time to digest these reasons, before re-listing the matter to deal with the question of costs and the orders required to give effect to these reasons and prepare the matter for trial.
112Subject to the making of appropriate costs orders to compensate the plaintiff, I propose to make orders setting aside the self-executing order made on 10 June 2022. Having regard to my conclusions regarding the culpability of Turner Freeman, the parties and Turner Freeman should be on notice that this may be a case in which it is appropriate that any costs order in the plaintiff’s favour be made against Turner Freeman pursuant to r63A.23 of the Rules, rather than against the defendant itself. I will hear submissions on that question when the matter is re-listed for hearing.
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