SMEC Australia Pty Limited v GOLDPATH Holdings Pty Limited

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: SMEC AUSTRALIA PTY LIMITED -v- GOLDPATH HOLDINGS PTY LIMITED [2009] WADC 179

CORAM: PRINCIPAL REGISTRAR GETHING

HEARD: 11 NOVEMBER 2009

DELIVERED : Delivered Extemporaneously on 11 NOVEMBER 2009 typed from tape and edited by the Principal Registrar

FILE NO/S: CIV 1620 of 2008

BETWEEN: SMEC AUSTRALIA PTY LIMITED (ACN 065 475 149)
Plaintiff
AND
GOLDPATH HOLDINGS PTY LIMITED (ACN 73 683 588 518)
Defendant

Catchwords:

Springing order - Leave to extend time to comply - Setting aside default judgment

Legislation:

Acts Interpretation Act 1901 (Cth) s 29
Australian Postal Corporation (Performance Standards) Regulations 1998 (Cth) Reg 6

Result:

Time for compliance extended - default judgment set aside

Representation:

Counsel:

Plaintiff: Mr N M Beech
Defendant: Dr P R MacMillan

Solicitors:

Plaintiff: Mallesons Stephen Jaques
Defendant: S E Kawalsky

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

Aon Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14
Brocx v Hughes [2008] WASC 34
Citystart Pty Ltd v Deputy Commissioner of Taxation for the Commonwealth of Australia [2006] WASC 35
Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666
Melville v East End Holdings Inc [2003] WASCA 133
Samuels v Linzi Dresses Ltd [1981] QB 115
Skahill v Kestral Holdings Pty Ltd [2000] WASCA 185

PRINCIPAL REGISTRAR GETHING: The application before me is an application by the defendant for a declaration that the judgment entered on 29 July 2009 was entered irregularly. This judgment was entered pursuant to a springing order.
In the way in which the application has been argued before me, there is an alternate ground of the application that, if I am not of the view that the judgment was entered irregularly, the time for compliance with the springing order ought to be extended under Rules of the Supreme Court 1971 (WA) ("RSC") O 3 r 5.
The order the subject of the application was made by me on 8 July 2009. It is in the following terms:
"unless within 14 days of service of this order on its registered office the defendant file and serve a notice of appointment of solicitor in the action complying with RSC Order 12 Rule 1(2);
(a) the defendant's defence and counterclaim herein be struck out;
(b) there be judgment for the plaintiff in the amount of $140,243.80 together with interest at cost to be taxed if not agreed, and
(c) the defendant's counterclaim be dismissed."
Rules of the Supreme Court O 12 r 1(2) relevantly provides:
"Except as expressly provided by any Act, the defendant to such an action which is a body corporate may not enter an appearance in the action or defend it otherwise than a practitioner."
The springing order was made in the context of orders made on 18 June 2009, granting the defendant's previous solicitors leave to cease acting upon compliance with RSC O 8 r 7.
There are essentially two issues for determination. The first is whether or not the plaintiff has complied with the service provisions of the springing order. If the service provisions have not been complied with, the judgment should be set aside as being irregular. The second is, if it has, whether or not the judgment ought to be effectively undone by extending the time for compliance with the underlying springing order.

Was the springing order validly served?

In relation to the first issue, the plaintiff filed an affidavit of service of one Sarah McAllister on 29 July 2009. Ms McAllister's affidavit exhibited an extract from the ASIC database which identified the defendant's registered office. Ms McAllister deposes that she placed the order and a covering letter addressed to the defendant's registered office in a mailbox at 2 pm on 10 July 2009, being a Friday.
The evidence as to receipt is set out in an affidavit of the director of the defendant, one Daniel Joseph Avila. Mr Avila's affidavit annexes a letter from a firm of accountants by the name of LGA Solutions which appears to be the entity that controls the address which is the defendant's registered office.
Leaving aside the question of whether or not this evidence is hearsay in its status, the evidence is to the effect that an employee of LGA Solutions checked the mailbox on or shortly after 1 pm on Monday, 13 July. The letter from the defendant's solicitors wasn't in the mail box then.
The employee then checked it on the morning of Tuesday, 14 July at 8.30 am, and the letter was there. It was shortly afterwards brought to the attention of Mr Avila, in particular by email at 10.36 am on Tuesday, 14 July 2009.
The plaintiff's argument is that it has been validly served in compliance with the order pursuant to Corporations Act 2001 (Cth) ("CA") s 109X.
In relation to service of a document of this kind, it is relevant to consider the decision in Skahill v Kestral Holdings Pty Ltd [2000] WASCA 185. In that decision, the court comprising Owen and Heenan JJ gave some general guidance as to what is required in relation to springing orders. Their Honours state (at par 14):
"Actual, and not merely constructive, knowledge of such an order is necessary on the part of the person against whom it is made. Subject to what we say later, a party will have 'actual knowledge' of the order if it is served at the address for service."
Their Honours then set out certain general principles relating to the making of springing orders (at par 18).
"1.If the party against whom the order is made is present in Court, personally or by solicitor or counsel, when the order is made, the party can be taken to have had actual knowledge of the making of the order and of its terms and no special steps need be taken by a party seeking to enforce the order. In those circumstances there is no objection to the order being framed so that compliance is required by a specified date.
2.If the party against whom the order is made is not present in Court, personally or by solicitor or counsel, when the order is made, the order ought normally to be framed so that the party is required to comply within a specified number of days after the order has been served on the party.
3.In a case to which the preceding paragraph applies, the onus is on the party seeking to rely on the order to serve the order on the party against whom it is made. It should not be left to the Court to bring the orders to the notice of the defaulting party. Where the defaulting party is represented by solicitors and has an address for service that complies with the Rules, service at the address for service in accordance with O 72 r 5 normally would be sufficient. Where the litigant is unrepresented, actual personal service normally would be required."
One of the issues raised in the present case is whether or not the way in which the order was complied with complies with the decision in Skahill (supra). To my mind, this raises two sub‑issues. The first is whether or not the order on its face was complied with; the second is whether or not the order was complied with in a way that satisfies the principles in Skahill.
The application before me is obviously not an appeal from the making of the order on 8 July 2009. All I am concerned with is whether or not there has been compliance. In terms of service of documents on corporations, RSC O 72 r 3 provides:
"Personal service of a document on a body corporate may, in cases for which provision is not otherwise made by any Act, be effected by serving it in accordance with Rule 2 on the mayor, president or other head officer of the body, or on the chief executive officer, clerk, treasurer, manager, secretary or other similar officer thereof."
The reference in RSC O 72 r 3 is not exhaustive. That then allows scope for the operation of CA s 109X. For present purposes, CA s 109X relevantly provides:
"For the purposes of any law, a document may be served on a company by: (a) leaving it at, or posting it to, the company's registered office …"
In terms of the date of receipt, the CA is to be interpreted in accordance with the Acts Interpretation Act 1901 (Cth) ("CAIA"): CA s 5C(2). CAIA relevantly deals with the issue of date of service at s 29. Section 29(1) provides:
"Where an Act authorizes or requires any document to be served by post, whether the expression 'serve' or the expression 'give' or 'send' or any other expression is used, then unless the contrary intention appears the service shall be deemed to be effected by properly addressing, prepaying and posting the document as a letter, and unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of post."
In relation to the ordinary course of post, Master Newnes (as his Honour then was) in Citystart Pty Ltd v Deputy Commissioner of Taxation for the Commonwealth of Australia [2006] WASC 35 stated (at par 14):
"It was submitted that the 'ordinary course of post' is not concerned with particular idiosyncrasies or special arrangements relating to a particular addressee; it is concerned with the general delivery practices of the postal service as determined by the postal service, for which practices the Post Office Regulations determine when mail 'shall, as a general rule, be delivered'. Bowman v Durham Holdings Pty Ltd (1973) 131 CLR 8; Kemp v Wanklyn [1894] 1 QB 583. Regulation 6(2) of the Australian Postal Corporation (Performance Standards) Regulations 1998 (Cth), establishes that the ordinary course of delivery to Cannington from the Perth metropolitan area is the next business day. That is also supported by the delivery standards published by Australia Post, a copy of which was put in evidence."
In the present case, I do not have a copy of the delivery standards in evidence. However, having reviewed the Australian Postal Corporation (Performance Standards) Regulations 1998 (Cth), in particular reg 6, I am satisfied for the purposes of the present case that in the ordinary course of post, a letter will be delivered from the Perth CBD to the defendant's registered office in Osborne Park the next business day after posting.
If that timetable is taken through, then in the ordinary course of post, the letter would be deemed to have been delivered on Monday, 13 July 2009. It would then follow that the 14 days expired on 27 July 2009. As I understand it, that was not in contest between the parties. The defendant's notice of appointment of solicitor was filed on 28 July 2009.
The defendant then submitted that "the contrary" had been proved for the purposes of CAIA s 29. In my view, the best that can be proven is that the relevant mail was not delivered before 1 pm on 13 July, but that it was delivered at some stage before 8.30 am on 14 July. The defendant has not proven, for the purposes of CAIA s 29, "the contrary" so as to displace the deemed position.
The defendant's primary submission was that service should not be deemed to be effected until it had been actually received by the defendant. For that purpose, this was accepted as being the point in time where the secretary of the accounting firm which controlled the defendant's registered office received the document in a sense of taking it from the mail box to the operational area of the practice.
In my view, the service of the order on the registered office in the manner deposed by Ms McAllister in her affidavit complies with par 1 of the order made on 8 July. The order does not specify the mode of service. Therefore, service pursuant to the CA s 109X was a valid mode of service. That mode of service incorporates the timing issues in the CAIA s 29(1).
That is sufficient to dispose of the question of whether or not the judgment was irregular.
However, it is worthwhile pointing out that the mode of service, in my view, complies with the decision in Skahill.
In my view, actual service for a corporation is subject to a different set of rules than for an individual. The rules for actual service on a corporation are set out in the CA. Actual service on a corporation allows for both service on a person (a director or external administrator) and service on a place (being the registered office).
The policy underpinning the requirement for a registered office in the CA is, among other things, to provide a certain facility for, or certain place at which, service of documents may be effected. So in any event, service of a document at the registered office of a company constitutes actual service of a document on a corporation.
In looking at the whole issue of actual service in the context of corporations, it is to be taken into account that a corporation is of itself an abstract and artificial construct. To say that actual service occurs at the point in time where a secretary of a third party service provider who controls the nominated registered office opens the document is just a different sort of artificiality to the artificiality of receiving it at the mail box of the registered office. The CA makes it clear that service can be effected without the document being brought to the attention of those who are the directing mind and will of the corporation.

Should the time for compliance be extended?

The second issue is whether or not the time for compliance ought to be extended. In relation to the application of RSC O 3 r 5 to springing orders, the Full Court comprising Hasluck and Pullin JJ in Melville v East End Holdings Inc [2003] WASCA 133 stated (at par 16 - 17):
"16.By O 3 r 5 of the Rules of the Supreme Court, the Court may, on such terms as it thinks just, by order extend or abridge the time within which a person is required by any order to do any act in any proceedings. The Court may extend any such period, although the application for extension is not made until after the expiration of that period.
17.It has been held that this rule provides authority to extend the time for compliance with a springing order, even after judgment has been entered by its automatic operation. The rule is remedial and confers a broad power upon the court to relieve against injustice: FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268. It has also been held that the principles and objects of case flow management which are contained in O 1 r 4A and O 1 r 4B of the Rules of the Supreme Court must now be taken into consideration: Seaman Civil Procedure at par 3.5.1."
The relevant legal principles are conveniently summarised in the judgment of Johnson J in Brocx v Hughes [2008] WASC 34. Her Honour states (at par 32):
The general factors to be taken into account when exercising the discretion to set aside a judgment entered as a result of non-compliance with a springing order are set out in the judgment of Master Newnes in MTQ Holding Pty Ltd v Lynch [2007] WASC 49 [55] as follows:
(1) the circumstances in which the springing order came to be made;
(2) the reason for non-compliance with the springing order;
(3) the prejudice to the defaulting party if time is not extended;
(4) the prejudice to the other party if the time were extended."
Her Honour earlier accepted the view taken by Roskill LJ in Samuels v Linzi Dresses Ltd [1981] QB 115 at 126-127, that the power to extend time where there is a self executing order is a power to be exercised cautiously, lest it undermine the principle that orders are to be complied with rather than ignored. Her Honour also referred to the decision of Auld LJ in Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666 at 1676 that a springing order is by nature intended to mark the end of the line for a party who has failed to comply with it and any previous orders of the court.
In applying these factors to the facts of the present case, the circumstances in which the springing order came to be made were that the defendant's previous solicitors had been taken off the record and there had been no attendance by new solicitors (nor any other representative) at a subsequent directions hearing. The orders were made to test whether or not the defendant was genuinely going to continue to defend the proceedings.
The reason for non-compliance with the springing order appears to be a difference of views between the defendant's current solicitor and the plaintiff's solicitor as to when the date for compliance arose. The relevant memorandum of appearance was filed on 28 July 2009. The extension sought is only one day.
The prejudice to the defaulting party if time is not extended is that it will not be able to pursue its claim. Its defence is set out in the affidavit of Mr Avila. The plaintiff did not make any submissions in relation to the merits of the defence.
In terms of the prejudice to the plaintiff if the time were extended, it seems to me that that prejudice falls within two broad categories. The first broad category is the cost incurred in proceeding to execute the judgment following the point in time at which the judgment was obtained. The second is the general delay in the progress of the action.
In relation to delay, the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14, has emphasised the concern with which modern courts view delays in the conduct of litigation. In particular, Heydon J sets out in some detail the impact of delay in the resolution of commercial disputes, commenting that commercial litigation has significant claims to expendition (at par 137):
"… Those claims rest on the idea that a failure to resolve commercial disputes speedily is injurious to commerce, and hence injurious to the public interest… Commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible, whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case that is because it is important that both the claimants and those resisting claims are able to order their affairs. How they order their affairs affects how their creditors, their debtors, their suppliers, their customers, their employees, and, in the case of companies, their actual and potential shareholders, order their affairs. The courts are thus an important aspect of the institutional framework of commerce. The efficiency or inefficiency of the courts has a bearing on the health or sickness of commerce."
The majority also stated that it is now generally accepted that "justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes on litigants": Aon (supra) at par 100. Moreover, it was also accepted that "it is not just personal litigants who feel this stress. Corporations and those who work in them are also subject to the pressures of litigation": Aon at par 100.
It seems to me that what I am called to do under the authorities is effectively balance the risk of injustice, but following Aon, to balance it in the light of the possible impact of the decision on public confidence in the justice system.
It seems to me that the balancing exercise in the present case is best done by extending the time for compliance with paragraph 1 of the orders made on 8 July 2009, to 28 July 2009. Rules of the Supreme Court O 3 r 5 makes it clear that court can make that order, and can do so on conditions that it thinks just.
It seems to me that the first condition is that the defendant pay the plaintiff's costs incurred in execution between 29 July 2009 and 4 September 2009, being the date on which the present chamber summons was filed.
It seems to me that it was entirely open to the defendant to have made the chambers application a lot earlier than 4 September. Had it done so, this would have been a clear flag to the plaintiff to defer proceeding with enforcement of the judgment. As it was, the plaintiff was in the position of not knowing whether or not the defendant would carry out the intention expressed by its solicitors, of applying to have the judgment set aside.

In that context, it was entirely reasonable, in my view, for the plaintiff to have proceeded to execute judgment until such time as an application was actually filed and served. The appropriate order is for the defendant to pay the plaintiff's costs incurred in executing the judgment dated 29 July 2009 from the period 29 July 2009 to 4 September 2009.
Those costs should be taxed and paid within 21 days of taxation.
The second issue is the issue of delay. It seems to me that the issue of delay is appropriately dealt with by listing this matter for trial as soon as practicable, together with close case management. In this way, the overall delays to finalisation as they impact on the plaintiff can be minimised. I will hear from counsel in terms of timing.
The orders I propose to make will set a timetable for every remaining step in the action to be taken, including progress through to trial. In setting a trial date, I will allow sufficient time for any further interlocutory steps to be taken.
For these reasons, the application to set aside the judgment for irregularity is declined. The application to extend the time for compliance is granted. I will hear from counsel in relation to the terms of the final orders.

[2009] WADC 179

11/11/2009