Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd [No 5] - [2009] WASC 194

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RAPID METAL DEVELOPMENTS (AUSTRALIA) PTY LTD -v- ANDERSON FORMRITE PTY LTD [No 5] [2009] WASC 194

CORAM: LE MIERE J

HEARD: 10 JULY 2009

DELIVERED : 13 JULY 2009

PUBLISHED : 16 JULY 2009

FILE NO/S: CIV 2446 of 2002
Consolidated with CIV 1955 of 2002 by Orders dated 16 December 2002

BETWEEN: RAPID METAL DEVELOPMENTS (AUSTRALIA) PTY LTD (ACN 004 304 447)
Plaintiff
AND
ANDERSON FORMRITE PTY LTD (ACN 097 507 652)
First Defendant
WARREN PERRY ANDERSON
Second Defendant

FILE NO/S :CIV 1955 of 2002

BETWEEN :RAPID METAL DEVELOPMENTS (AUSTRALIA) PTY LTD (ACN 004 304 114)
Plaintiff
AND
WARREN PERRY ANDERSON
Defendant

Catchwords:

Practice and procedure - Failure to comply with order to serve witness statements - Whether springing order should be made - Inherent jurisdiction of the court - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B, O 27 r 8

Result:

Application granted

Category: B

Representation:

CIV 2446 of 2002

Consolidated with CIV 1955 of 2002 by Orders dated 16 December 2002

Counsel:

Plaintiff:     Ms M Van Der Kwast
First Defendant              :     No appearance
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Dwyer Durack
First Defendant              :     No appearance
Second Defendant         :     No appearance

CIV 1955 of 2002

Counsel:

Plaintiff: Ms M Van Der Kwast
Defendant: No appearance

Solicitors:

Plaintiff: Dwyer Durack
Defendant: No appearance

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

CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345
Grey v Zaratell Pty Ltd as Trustee for C and A Family Trust [2004] WASC 37
J & J Products v Ken Gray & Co (Unreported, WASCA, Library No 960219, 24 April 1996)
Mariotti v Wanneroo North Pty Ltd [2008] WASCA 243
Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398

LE MIERE J:

Introduction

The plaintiff has applied for a springing order that the second defendant's defence be struck out and judgment be entered for the plaintiff if the second defendant does not within seven days serve the plaintiff with witness statements or written notice stating that the second defendant does not propose to call any witnesses at the trial.
This action is listed for trial for four weeks commencing on 27 July 2009. On 27 February 2009 Hasluck J made a number of orders including pre‑trial directions. The pre‑trial directions included:
By 5 June 2009 the parties will provide each other with signed and dated written instruments of the proposed evidence‑in‑chief of each witness (save expert witnesses) to be called by them on any issue upon which they carry the burden of proof [4].
On 21 May 2009 Hasluck J varied that order by extending to 12 June 2009 the time by which the parties were to provide to each other the instrument of the proposed evidence referred to. At the same time Hasluck J ordered the first defendant to file and serve further and better answers verified by affidavit to certain interrogatories.
The first defendant failed to comply with the order that it file and serve further and better answers to the interrogatories. On 10 June 2009 Hasluck J made a springing order, that is an order that unless within 14 days the first defendant file and serve the further and better answers to interrogatories the first defendant's defence and counterclaim be struck out and judgment be entered for the plaintiff for the relief sought in its statement of claim. On 10 June 2009 Hasluck J further ordered that the matter be listed for further directions on 3 July 2009. On 26 June 2009 the first defendant filed an affidavit sworn by the second defendant providing further and better answers to the plaintiff's interrogatories in purported compliance with the order of Hasluck J. However, the first defendant failed to provide further and better answers to some of the interrogatories which it had been ordered to answer.
On 3 July 2009 the matter came on before me for further directions. There was no appearance by, or on behalf of, either defendant. At that time, on the motion of the plaintiff, I ordered that the order of Hasluck J on 10 June 2009 be varied by substituting $3,034,688.57 for $3,183,986.60 in the springing order made by his Honour on that date. The plaintiff moved for a further springing order that judgment be entered against the first defendant unless within seven days the first defendant served its witness statements on the plaintiff. I declined to determine the plaintiff's application on that date because there was a mistake in the minute of proposed orders served on the defendants which might have misled the second defendant as to the order being sought against him. I ordered that the matter be adjourned to 10 July for the plaintiff to serve on the second defendant a minute of the orders it proposed together with notice of the hearing on 10 July.
On 9 July 2009 the plaintiff entered judgment against the first defendant for failure to comply with the order of Hasluck J made 10 June 2009.
The second defendant has not served any witness statements upon the plaintiff. The matter came on for further hearing before me on 10 July. There was no appearance by, or on behalf of, the second defendant. The plaintiff now seeks a springing order in the following terms:
Unless within 7 days of service of these orders the second defendant does serve the plaintiff with signed and dated written statements of the proposed evidence in chief of each witness (save expert witnesses) to be called by him on any issue on which he carries the burden of proof, or alternatively does within that time serve upon the plaintiff written notice stating that the second defendant does not propose to call any witnesses as to any issue on which he carries the burden of proof, then the second defendant's defence be struck out and judgment be entered for the plaintiff against the second defendant in the sum of $3,034,688.57 together with interest thereon pursuant to the Trade Account at the rate of 1.5% per month as from 30 May 2002 and costs on a solicitor/client basis.

Legal principles

Order 27 r 8 of the Rules of the Supreme Court 1971 (WA) provide that if a party fails to comply with an order to answer interrogatories or to give discovery of or to produce documents then the court 'may make such order as it thinks just including an order … that the defence be struck out and that judgment be entered accordingly'. There is no rule that if a party fails to comply with an order to serve witness statements then an order may be made that the defence be struck out and that judgment be entered accordingly.
The plaintiff relies upon the court's inherent jurisdiction or power. The court has inherent power to prevent its processes being abused and the corresponding power to protect their integrity once they are set in motion: CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345, 391.
Order 1 r 4B provides that actions are:
… to be managed and supervised in accordance with a system of positive case flow management with the objects of:
(a)promoting the just determination of litigation;
(b)disposing efficiently of the business of the court;
(c)maximising the efficient use of available judicial and administrative resources; and
(d)facilitating the timely disposal of business at a cost affordable by parties.
In Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 Dawson, Gaudron and McHugh JJ said that 'case management is not an end in itself … [T]he ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim' (154). However, that does not mean that case management principles can be ignored. As was explained in The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398, the 'effect of O 1 r 4A is that the court takes its own positive steps to require parties to conduct litigation with proper expedition' and 'O 1 r 4B introduces management and supervision of litigation by the court to the extent that its resources permit in accordance with a system of positive case flow management' [94].
The court has power to strike out a defence or order summary dismissal of an action for failure to comply with an order or orders of the court: Mariotti v Wanneroo North Pty Ltd [2008] WASCA 243, [55] where Steytler P went on to say that in J & J Products v Ken Gray & Co (Unreported, WASCA, Library No 960219, 24 April 1996) the court (Kennedy ACJ, with whom Pidgeon and Ipp JJ agreed) endorsed the proposition that orders of the court must be obeyed and that a litigant who deliberately, and without proper excuse, disobeys an order is not allowed to proceed [55]. Steytler P said that repeated deliberate failures to obey the court's orders and to comply with its processes might amount to circumstances warranting an order to dismiss an action or a defence, as the case may be [56]. At [59] Steytler P referred to the inherent or implied power which every court must have to prevent its own processes being used to bring about injustice.
The second defendant has not disobeyed the order made by Hasluck J on 27 February 2009 in relation to witness statements. The effect of the second defendant not serving any witness statements on the plaintiff by the time specified in the order as subsequently amended is that the second defendant may not adduce evidence in chief from a witness on any issue upon which he carries the burden of proof.
The second defendant may defend the plaintiff's action without adducing any evidence. In effect, the second defendant may put the plaintiff to proof of its case. The order made on 27 February 2009 does not preclude the second defendant from doing so without serving any witness statements on the plaintiff. It is not necessary to maintain the authority of the court to preclude the second defendant from defending the action at trial by putting the plaintiff to proof of its case.
Counsel for the plaintiff submitted that its case is relatively simple. The plaintiff agreed with the first defendant that the first defendant would open a Trade Account with the plaintiff so that the plaintiff would provide the defendant with credit with respect to the hire and purchase of equipment provided by the plaintiff from time to time. The Trade Account included a written deed of guarantee and indemnity by which the second defendant agreed to guarantee the debts and obligations of the first defendant to the plaintiff. The plaintiff says that the first defendant is indebted to it under the Trade Account and the second defendant is liable as guarantor. The second defendant by his defence denies the plaintiff's claim against him.
The second defendant further alleges set‑offs and counterclaims. In [69] of his defence the second defendant pleads that 'if, and to the extent that the plaintiff's claim succeeds, the first defendant and/or the second defendant is entitled to set‑off the amounts and loss and damage referred to in [43] and/or [58] and/or [61] and/or [63] in satisfaction of the plaintiff's claim'. In [70] the second defendant pleads further, or alternatively, that he relies upon the set‑off of the first defendant in diminution of any liability it has under the alleged guarantee. In [71] the second defendant pleads that by reason of the matters pleaded in [9] ‑ [68] the first defendant has a counterclaim against the plaintiff for damages for breach of agreements and for other causes of action. In [72] the second defendant pleads that he relies upon the counterclaims of the first defendant in diminution of any liability it has under the alleged guarantee.
Those set‑offs and counterclaims are affirmative claims by the defendants. They cannot be made out without evidence being adduced to establish the facts upon which they are based. The defendants have not filed any witness statements in support of those claims. It would be an abuse of the processes of this court for the second defendant to advance those claims at trial if he fails to comply with the orders of the court to serve written statements of the proposed evidence in chief of each witness to be called by the defendants on the issues upon which they carry the burden of proof, which include the issues raised by the second defendant in his set‑offs and counterclaims.
The plaintiff has been and continues to be seriously prejudiced in preparing its case in answer to the second defendant's set‑offs and counterclaims by the failure of the second defendant to serve witness statements in support of his claims. In the circumstances of this case a springing order should be made in relation to the second defendant's pleaded set‑offs and counterclaims.
The remaining question is whether a springing order should be made in relation to the second defendant's defence of the plaintiff's claim. I have come to the conclusion that having regard to the principles of case management and the interests of justice the court should make a springing order.
The second defendant has not complied with the pre‑trial directions made by Hasluck J on 27 February 2009. The second defendant has not complied with the pre‑trial directions in relation to the preparation of a book of documents to be tendered and used at trial, which is described in the pre‑trial directions as the document bundle. The second defendant has not served any witness statements in accordance with the pre‑trial directions. The second defendant did not appear at the hearing before Hasluck J on 10 June 2009 nor at either of the hearings before me on 3 July 2009 and 10 July 2009. In the circumstances I infer that the second defendant no longer intends to defend the claim against him and does not intend to defend the plaintiff's claim at the trial of this action. The failure of the first defendant to comply with orders of the court has prejudiced the plaintiff in the preparation of its case for trial. The failure of the second defendant to attend the court hearings and to participate in the preparation of the case for trial in accordance with the pre‑trial directions has disadvantaged the plaintiff in its preparation for trial. If the plaintiff is required to complete its preparation for trial including arranging for the presence of witnesses, including experts, at the trial then it will be obliged to incur further expense. If the plaintiff is required to proceed to prove its case at trial that will require the plaintiff to incur further expense and the use of judicial resources. That would be a waste of the resources of the plaintiff and of the court if the second defendant no longer defends the claim against him.
The order sought by the plaintiff is in substantially the same terms as the order made by Pullin J in Grey v Zaratell Pty Ltd as Trustee for C and A Family Trust [2004] WASC 37. The order proposed by the plaintiff is that the second defendant's defence will be struck out and judgment entered for the plaintiff only if the second defendant fails within seven days to serve relevant witness statements or to give to the plaintiff a notice that he does not intend to serve witness statements. That is, if the second defendant wishes to defend the claim against him without serving witness statements he only has to give a notice to the plaintiff that he does not intend to serve witness statements and he will be able to defend the action against him at trial.
For those reasons I will make the springing order in the form sought by the plaintiff.