South v Mark Hay Real Estate Pty Ltd in its Personal Capacity and in its Capacity as trustee of the Mark Hay Trust - [2011] WADC 44

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: SOUTH -v- MARK HAY REAL ESTATE PTY LTD in its PERSONAL CAPACITY and in its CAPACITY as TRUSTEE of the MARK HAY TRUST [2011] WADC 44

CORAM: PRINCIPAL REGISTRAR GETHING

HEARD: 23 FEBRUARY 2011

DELIVERED : 25 MARCH 2011

FILE NO/S: CIV 866 of 2007

BETWEEN: DARREN BRUCE SOUTH
First Plaintiff
FIONA LOUISE SOUTH
Second Plaintiff
AND
MARK HAY REAL ESTATE PTY LTD in its PERSONAL CAPACITY and in its CAPACITY as TRUSTEE of the MARK HAY TRUST
First Defendant
ELMBRIDGE PTY LTD
Second Defendant
DAVID EMES
Third Defendant

Catchwords:

Practice and procedure - Judgment following springing order - Application to set aside and extend time for compliance

Legislation:

Nil

Result:

Application allowed on terms

Representation:

Counsel:

First Plaintiff                :     Mr P Mendelow
Second Plaintiff            :     Mr P Mendelow
First Defendant             :     Mr T Clavey
Second Defendant         :     Mr J F Park
Third Defendant           :     Mr T Clavey

Solicitors:

First Plaintiff                :     Corboy Legal
Second Plaintiff            :     Corboy Legal
First Defendant             :     Clavey Legal
Second Defendant         :     Park Legal Solutions
Third Defendant           :     Clavey Legal

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

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Bailey v Marinoff (1971) 125 CLR 529
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133
FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Lashansky v Legal Practitioners Complaints Committee [2005] WASCA 217
Link Blocks (1981) Pty Ltd v Fullin [1986] WAR 187
Melville v East End Holdings Inc [2003] WASCA 133
MTQ Holdings Pty Ltd v Lynch [2007] WASC 49
Osgood v Wham [2007] WASCA 178
Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd [No 7] [2010] WASC 351
Samuels v Linzi Dresses Ltd [1981] QB 115
Sellars v Adelaide Petroleum NL (1994) 179 CLR 322
The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93
Whitaker v Paxad Pty Ltd [2009] WASC 47

PRINCIPAL REGISTRAR GETHING:

Application

By application dated 20 December 2010 the plaintiffs sought orders setting aside the judgment entered against them on 1 September 2010 for non‑compliance with orders I made on 28 July 2010, and extending the time for compliance with those orders. The orders related to the provision of further and better discovery. There was an attempt at compliance, but at a hearing on 1 September 2010 I determined that the compliance was inadequate and, accordingly, judgment was entered in the terms of a springing order made on 28 July 2010. In summary terms, the plaintiffs argue that because of their combined medical conditions throughout 2010 they did not have the effective capacity to progress the action by complying with the springing order made.
In support of the application, the plaintiffs filed an affidavit of their solicitor, Robert Corboy, dated 20 December 2010. The second named plaintiff, Fiona South, swore an affidavit in support dated 18 February 2011. The plaintiffs also filed an affidavit of Dr Daniel Morkell who is the first named plaintiff's psychiatrist. This affidavit was sworn on 15 February 2011. These two affidavits were not filed until 21 February 2011, two days before the 23 February 2011 hearing. A further affidavit of Mr Corboy was filed on the day of the hearing. The late filing of these affidavits was the subject of critical comment on behalf of the defendants. That comment was to the effect that the late filing of the affidavits was typical of the tardy way in which the plaintiffs have approached the litigation generally and consequently the court can have no confidence that the action will be conducted in a timely manner should it be allowed to proceed.
In opposition to the application, the first and third defendants filed an affidavit of Sarah Richards sworn 17 February 2011. Ms Richards is a lawyer employed by the solicitors for the first and third defendants. The second defendant filed an affidavit of Ryan Lennon, a law clerk employed by the solicitors for the second defendant, sworn 18 February 2011.
At the close of argument, I advised counsel that I proposed to look at the entirety of the file in order to place the application in its full case management context. I invited the plaintiffs and then the defendants to provide written submissions. I also invited the parties to provide written submissions on the plaintiffs' claim for loss of opportunity to make a profit on the purchase and sale or retention of an alternate unit. The plaintiffs filed submissions dated 1 March 2011. The second defendant filed submissions dated 14 March 2011. The first and third defendants filed further submissions dated 21 March 2011.

Factual background

The action concerns a contract entered into by the plaintiffs on 16 September 2002 to purchase an apartment 'off the plan', being Apartment 108 in the 'Statton on Murray' development. The plaintiffs allege that they were misled about quality of the views from the apartment.
The first defendant was the real estate agent for the development. The second defendant was the developer. The third defendant was the representative of the first defendant whom the plaintiffs dealt with.
At some stage between November 2004 and January 2005 the plaintiffs advised the defendants that they would not be proceeding to settlement under the contract, considered the contract to be at an end and required the return of their deposit.
The deposit was paid for by way of a deposit bond. The second defendant required the plaintiffs to settle. When they did not, they called on the bond holder, QBE Trade Credit Ltd (QBE), to pay the bond. QBE subsequently required the plaintiffs to reimburse it for the bond. The plaintiffs ended up paying QBE $36,300 for the bond, together with $3,335.15 by way of costs. The plaintiffs claim this amount together with a further $385 in costs paid to the defendants.
The plaintiffs also claim for the loss of the opportunity to make a profit on an alternate property they say they would have purchased but for the misleading conduct.

History of the action

The action was commenced in May 2007.
The action was due to have been entered for trial on 16 October 2007. A notice of default was issued on 17 October 2007 requiring the action to be entered for trial by 1 November 2007. This did not occur and the case was made inactive.
In the background it appears that the plaintiffs and the defendants were negotiating about amendments to the statement of claim (see generally the affidavit dated 14 May 2008 sworn by Mr Clavey). The plaintiffs filed an amended statement of claim on 21 February 2008.
By application filed 22 April 2008, the plaintiffs sought to have the action removed from the inactive list. The plaintiffs asserted that due to a court error the default notice had not been served on the plaintiffs. The court allowed the application at a hearing on 8 May 2008. The entry for trial milestone was reset to 31 July 2008.
On 6 May 2008 the plaintiffs obtained a default judgment against the first and third defendants for their failure to file defences. By application dated 14 May 2008, the first and third defendants sought to have this judgment set aside. The basis for the failure to file the defences appears from the affidavits in support to have been a belief that the action was still inactive, compounded by the failure of counsel for the first and third defendant to attend the 8 May 2008 hearing due to an administrative error.
On 7 July 2008 the court set aside the default judgments and ordered the plaintiffs to pay the first and third defendants' costs to be taxed if not agreed. Those costs were subsequently agreed at $7,500. The entry for trial milestone was extended to 7 October 2008.
The action was not entered for trial by 7 October 2008. On 8 October 2008 a second notice of default was issued, requiring the action to be entered for trial by 23 October 2008.
On 21 October 2008 the plaintiffs filed an affidavit of discovery by Mr South and the notice of Entry for trial.
A pre‑trial conference was listed for 5 November 2008 but evidently did not proceed because there were outstanding interlocutory issues.
The action was listed for a directions hearing on 25 November 2008. At the directions hearing a registrar made an order that by 5 December 2008 the plaintiffs file and serve a further affidavit of discovery 'identifying each of the documents over which they assert a claim for legal professional privilege, the date on which each document was created and the facts upon which the plaintiffs rely to claim legal professional privilege'. Affidavits in these terms were filed on 23 January 2009. The parties were further directed to file and serve any application for further and better discovery by 24 December 2008.
Nothing further occurred in the action until June 2009 when the court wrote to the parties advising that a directions hearing had been listed for 1 July 2009. This was listed by the court of its own motion as part of its ongoing case management oversight. At this hearing I ordered any party wishing to make an application for further and better discovery to file and serve the application by 8 July 2009 and listed a further directions hearing on 15 July 2009.
By application filed 1 July 2009 the first and third defendants sought orders for specific discovery. By application filed 8 July 2009 the plaintiffs also sought orders for further and better discovery. The second defendant also filed an application on 8 July 2009.
Each of these applications were listed for a special appointment on 2 September 2009. The critical order made for present purposes on 2 September 2009 was an order for specific discovery against the plaintiffs. The affidavits providing this discovery had to be filed by 14 October 2009. The documents the subject of the specific discovery affidavit were:
(a)The plaintiffs' application for finance pre-approval to RAMS;
(b)The letter of finance pre-approval from RAMS;
(c)The income statement letter from the plaintiffs' accountant;
(d)The plaintiffs' taxation returns for 2002/03, 2003/04 and 2004/05;
(e)The loan contracts for the 5 properties owned by the plaintiffs for the period April 2003 to 30 December 2004;
(f)All communications and correspondence with the Office of State Revenue regarding the question of stamping of the contract prior to settlement;
(g)All documents relating to alternative investments that the plaintiffs say they would and could have pursued;
(h)All bank statements for all bank accounts operated by the plaintiffs or either of them which contain balances as at 16 September 2002;
(i)All loan applications, loan approval, loan pre-approval and loan rejection documents and any documents relating to the plaintiffs' proposed purchase of the Lot the subject of these proceedings including but not limited to those made to Royal & Sun Alliance, RAMS and QBE as referred to in the firstnamed plaintiff's letter dated 1 May 2003 to the first defendant;
(j)All applications and responses to those applications, for deposit bonds or bank guarantees relating to the plaintiffs' proposed purchase of the Lot the subject of these proceedings including but not limited to those made to Royal & Sun Alliance, RAMS and QBE as referred to in the firstnamed plaintiff's letter dated 1 May 2003 to the first defendant;
The plaintiffs each filed and served affidavits in support on 3 November 2009.
The action was listed for a further directions hearing on 16 December 2009. By letter dated 15 December 2009, the court was provided with a medical certificate to the effect that Mr South would be unfit for work between 14 December 2009 and 14 February 2010. The directions hearing was thus vacated and rescheduled to 17 February 2010.
There was no appearance for the plaintiffs at the hearing on 17 February 2010. I made orders that 'within 21 days of service of this order the second plaintiff serve on the first defendant and the second defendant a copy of each document set out in Part 1 of the First Schedule to her affidavit of further discovery sworn 3 November 2009'. The directions hearing was adjourned to 24 March 2010.
At the 24 March 2010 directions hearing I listed the action for a special appointment pre‑trial conference on 9 June 2010.
There was no appearance by the plaintiffs at the special appointment pre‑trial conference on 9 June 2010. The registrar listed the action for a directions hearing on 22 June 2010.
At the 22 June 2010 directions hearing Mr South appeared. I relisted the special appointment pre‑trial conference for 12 October 2010 and listed a directions hearing for 14 July 2010.
At the 14 July 2010 directions hearing there was no appearance for the plaintiffs. The potential for expert evidence was raised. I adjourned the directions hearing to 28 July 2010 with a direction for any party wishing to adduce expert evidence at trial to file an application for expert evidence orders by 21 July 2010. The court extracted the order and served a copy of it on all parties.
By application field 14 July 2010 the second defendant sought further and better discovery.
At the directions hearing on 28 July 2010 there was no appearance for the plaintiffs. I made the following orders:
1.unless the Plaintiffs give discovery on oath of the following documents or classes of documents identified with reference to each of the Plaintiffs' affidavits of discovery sworn on 2 November 2009:
(a)the missing page 3 of document numbered 15;
(b)the missing page 14 of Annexure A to document numbered 20a;
(c)the pages apparently missing from the: 'Summary Specification Statement' in document 20a;
(d)documents numbered 23 to 26 without redaction;
(e)page '001' of document number 37;
(f)copies of the letters dated 8 April and 26 May 2003 from the Plaintiffs to RAMS that are referred to in document number 14;
(g)each of the letters referred to in document numbered 30, and any responses to those letters;
(h)the facsimile from the Firstnamed Plaintiff to Sharon Tyerman and the 'original application form' both referred to in document numbered 33;
(i)the 'letter today' from 'Sharon Tyerman' and the 'letter from the developer' referred to in document numbered 35;
(j)page numbers 4 and 6 of discovered document 6; and
(k)A complete copy of document numbered 11.
within 21 days of service of this order on the Plaintiffs, the statement of claim be struck out, the action be dismissed and judgment be entered for the Defendants with costs.
2.unless the Plaintiffs give discovery on oath of the following documents or classes of documents:
(a)documents in satisfaction of Order 1(f) of the Court's Orders of 2 September 2009;
(b)'all loan applications, loan approvals, loan pre-approval and loan rejection documents and any documents relating to the Plaintiffs' proposed purchase of the Lot the subject of these proceedings including but not limited to those made to Royal & Sun Alliance, RAMS and QBE as referred to in the firstnamed Plaintiffs' letter dated 1 May 2003 to the First Defendant' in accordance with Order 1(i) of the Court's Orders of 2 September 2009;
(c)'all applications and responses to those applications, for deposit bonds, or bank guarantees relating to the Plaintiffs' proposed purchase of the Lot the subject of these proceedings including but not limited to those made to Royal & Sun Alliance, RAMS and QBE as referred to in the Firstnamed Plaintiff's letter dated 1 May 2003 to the First named Defendant' in accordance with Order 1(j) of the Court's Orders of 2 September 2009;
(d)the Secondnamed Plaintiff's 2004 and 2005 tax returns in accordance with Order 1(d) of the Court's Orders of 2 September 2009;
(e)the letter from 'South Legal' to John Cowan Project Marketing (in which the Plaintiffs purport to have a claim for legal professional privilege),
within 21 days of service of this order on the Plaintiffs, the statement of claim be struck out, the action be dismissed and judgment be entered for the Defendants with costs.
I also made costs orders in favour of the defendants and listed the action for further directions on 1 September 2010.
On 23 August 2010 the plaintiffs filed an application seeking to discharge the orders made on 28 July 2010. The same day each plaintiff also filed and served an affidavit in purported compliance with the orders made on 28 July 2010. The substance of each affidavit is as follows:
1(a)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
1(b)the plaintiffs refer to and repat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
1(c)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
1(d)this order is incapable of being complied with due to the Privacy Act 1998 and on the basis that the request goes beyond the orders made by Deputy Registrar Kingsley made 2 September 2009;
1(e)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
1(f)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
1(g)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
1(h)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
1(i)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
1(j)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
1(k)the 'complete copy' of this document is contained in the two plastic sleeves; one marked document 11, and the second without numbering. The plaintiffs otherwise refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
2(a)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
2(b)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
2(c)the plaintiffs refer to and repeat paragraphs 3, and/or 4 and/or 5 of the Affidavits of Darren Bruce South, and Fiona Louise South, both dated and sworn on 3 November 2009;
2(d)this item was missed due to a misunderstanding of Order (d) of Deputy Registrar Kingsley made on 2 September 2009 (Order 1(d)). The second named plaintiff discovered her income tax assessment for the financial years ending 30 June 2004 and 30 June 2005; rather than her income tax returns for those periods. Those two additional documents will be shortly provided;
2(e)this document is subject to a claim for legal professional privilege, and the directions of the Court are required as to how this document should be handled.

At the hearing on 1 September 2010 the defendants asserted that the springing order made on 28 July 2010 had not been complied with and that, as a consequence, judgment had been self executing. I accepted this submission. Specifically, I ruled that:
(a)the fact that the affidavits were not in the form of Form 17 to the Rules of the Supreme Court 1971 (WA) (RSC) was an instance of non‑compliance;
(b)the fact that the income taxation returns for the years ending 30 June 2004 and 2005 had not been tendered for inspection was an instance of non-compliance;
(c)the objection based on the Privacy Act 1988 (Cth) was not a reason for failing to comply with the order of 28 July 2010;
(d)the repeated references back to the affidavits of discovery sworn in November 2009 was an instance of non-compliance.
I further declined to recall the orders and extend the time for compliance on the ground that I was not persuaded that I had a discretion to do so, and that, even if I did, I would not have exercised it in favour of the plaintiffs.
The defendants extracted the judgment. The second defendant has lodged a bill of costs.
The hearing before me on 23 February 2011 was the 22nd scheduled hearing to date. Including the documents filed for the hearing, over 130 documents have been filed or generated by the court in relation to this matter.

Discretion to set aside the judgment

The plaintiffs contend that the court has the discretionary power to extend the time for compliance with a self-executing order and that it should be exercised in the circumstances of this case. The power is said to be in RSC O 3 r 5 which is in the following terms:
5.Extension etc. of time
(1)The Court may, on such terms as it thinks just, by order extend or abridge the period within which a person is required or authorised by these Rules, or by any judgment, order, or direction, to do any act in any proceedings.
(2)The Court may extend any such period as is referred to in paragraph (1) although the application for extension is not made until after the expiration of that period.
(3)The period within which a person is required by these Rules, or by any order or direction, to serve, file or amend any pleading or other document may be extended by consent (given in writing) without an order of the Court being made for that purpose.
The second defendant submitted that the court does not have any power to set aside the judgment given in this case. In support of this submission, counsel referred to the decision of the High Court in Bailey v Marinoff (1971) 125 CLR 529. In that case, the New South Wales Court of Appeal made a springing order on the filing and service of the appeal book. The appeal book was filed in time, but not served until a few days later. The court purported to make an order extending the time for filing and service to the date on which service occurred. The High Court, by majority, held that it did not have the power to do so.
Barwick CJ stated the general principle in the following terms (530):
Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed.
The other members of the majority, Menzies, Owen and Walsh JJ, expressed similar views (531 - 532, 533, and 537 respectively).
In Lashansky v Legal Practitioners Complaints Committee [2005] WASCA 217, the court (Wheeler, JA, McLure JA and Miller JA) relied on the decision in Bailey as authority for the following general proposition [124]:
The general principle is, in our view, clear. In the absence of any statutory indication to the contrary, and subject to certain exceptions which we shortly discuss, a line of authority binding on this Court establishes that intermediate courts of appeal have no power to recall or vary perfected orders.
The decision in Lashansky was not concerned with self executing orders of the kind presently under consideration.
The second authority referred to was the decision in FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268. In that case, a self-executing order had been made in relation to the provision of security for costs and certain particulars. The order was expressed in terms that compliance had to occur 'on or prior to 30 May 1986'. On 30 May, the plaintiffs unsuccessfully applied for an extension of time to comply. Later that same day the plaintiffs furnished the requisite security and filed a document containing the particulars sought. The defendants contented that the particulars provided were defective. The judge at first instance agreed, and held that as the springing order had not been complied with, by virtue of its self-executing nature, the proceedings had been effectively terminated, and the court had no power to extend time. On appeal, the Court of Appeal held that assuming non‑compliance, there was a power to extend.
The High Court held that there was a power to extend. The decision in Bailey was effectively distinguished on the basis that there had subsequently been enacted an express power to extend time being pt 2 r 3 of the Supreme Court Rules 1970 (NSW). The decision was also distinguished on the basis that it was concerned with an appeal, a point which is evident in the statement of the proposition derived from that decision in Lashansky.
The facts under consideration in the decision in FAI are very close to the facts of the current application. In each case, a self-executing order was made, there was an attempt to comply, and the court ruled that the attempt to comply was insufficient. RSC O 3 r 5 is in substantially similar terms to the rule under consideration in FAI.
In Osgood v Wham [2007] WASCA 178, EM Heenan AJA accepted that decision in FAI is authority for the proposition that an extension of the time to comply with an original order may be made and granted even after a judgment has been entered upon proof of default ([45], also [1]). The decision in Melville v East End Holdings Inc [2003] WASCA 133, at [16] - [17], [41] is to like effect.
I accept that that the court has a discretionary power to extend the time to comply with a self-executing order even after judgment has been entered for non‑compliance.

Relevant law – exercise of discretion

The power in RSC O 3 r 5 is remedial and confers a broad power to relieve against injustice: Melville [17]; Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd [No 7] [2010] WASC 351 [4]. The governing consideration is what the interests of justice require, weighing all the circumstances in the balance: Link Blocks (1981) Pty Ltd v Fullin [1986] WAR 187 [190]; Rapid Metal [3]. Or put slightly differently, the key question is: 'what does justice, in all notions or sense of it that are relevant, require in the circumstances of this case?': The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93 [103]; Osgood [55]. As EM Heenan AJA observed in Osgood, 'it may well be fundamental to the interests of justice that parties comply with court orders… [h]owever, it is as fundamental to the interests of justice that a meritorious claim should be brought on for trial' [67].
In looking at what the interests of justice require, the court is to have regard to the principles and objects of case flow management set out in RSC O 1 r 4A and O 1 r 4B: Melville [17]; Rapid Metals [4]. The power is to 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: FAI (283); Osgood [80]; Samuels v Linzi Dresses Ltd [1981] QB 115, 126 ‑ 127; Rapid Metals [5]; MTQ Holdings Pty Ltd v Lynch [2007] WASC 49 [14].
The authorities identify five factors which the court will normally have regard to in the exercise of the discretion:
(a)the circumstances in which the springing order came to be made;
(b)the reason for non-compliance with the springing order;
(c)the prejudice to the defaulting party if time were not extended;
(d)whether the defaulting party has a reasonably arguable case on the merits, there being no point in resuscitating a case that is devoid of merit; and
(e)the prejudice to the other parties if the time is extended.
See generally: Osgood v Wham [72]; MTQ [56] ‑ [57]; Rapid Metals [5].
In particular, where the materials before the court reveal a good arguable case, this should be considered as a positive, rather than a neutral, factor in the determination of whether or not an extension of time should be granted and the default judgment set aside: Osgood [40], [1].
It is instructive to consider the factual scenario in Osgood in order to get a sense of how the relevant principles ought to be applied. In that case, the plaintiff's claim was for damages arising out of the defendant's failure to examine, diagnose and treat her condition of diabetic retinopathy. The plaintiff alleged that as a result of the defendant's breach of duty she lost all the sight in her left eye and suffered significant reduced vision in her right eye.
The springing order in question was for the plaintiff to file and serve the report of an ophthalmic surgeon. The date for compliance under the initial order was 21 July 2004. The springing order was made on 25 August 2004, for compliance by 22 October 2004. In the interim, the plaintiff's solicitors had received a report, but were of the view that a further report was required. Judgment was entered on 26 October 2004. The report was not served until 8 April 2005. A significant reason for delay was delays in obtaining legal aid funding for the cost of the expert's reports.
EM Heenan AJA (with whom Wheeler JA agreed) accepted that there was no intentional delay or other improper conduct on behalf of the appellant's legal advisers and that a full explanation had been provided on the event during the period of in question ([60], [61], [73] ‑ [79]). After examining some of the expert evidence in the action, EM Heenan AJA stated ([40] ‑ [41]):
To observe, as the learned Judge did, at [22], that '[o]n the face of it I cannot conclude that the plaintiff's action is hopeless. In my view the merits of the claim weigh neither one way nor the other in this application', is a significant underestimation of the apparent strength of the appellant's case, at least on the limited materials before his Honour. In my view these materials should be regarded as revealing a good arguable case which, having regard to the severity of the appellant's condition and its consequences, should have been regarded as a positive, rather than a neutral, factor in the determination of whether or not an extension of time should be granted and the default judgment set aside.
The appellant's claim is a serious one with far-reaching consequences for her future. It could not possibly be characterised as trivial, insubstantial or speculative, and it is clear that there is some significant professional opinion in the field of ophthalmic science which supports her allegations. No doubt the respondent has other significant evidence which supports his denial of liability, but it is both the function and the obligation of the court in which such an action is brought to determine such a claim upon the merits, except in exceptional cases…The materials before the learned Judge were more than enough to demonstrate that the appellant had a serious and arguable claim for relief for a grave disability. That itself is a strong indication pointing towards her entitlement to have her claim adjudicated on the merits according to law. Such an entitlement is never, however, absolute. If a party fails, to a significant degree, to comply with orders of the court, with no explanation adequate to the particular circumstances and sufficient to counterbalance the effect of such non-compliance, that party might have to endure the eventual dismissal of the proceedings. But, unless the justification is convincing, every consideration of policy favours the determination of serious claims upon their merits.
There was no specific prejudice to the respondents [(68)]. As the root cause of the delay had been removed (being the provision of the expert's reports), there was nothing to suggest that the appellant would not comply with subsequent court orders and proceed expeditiously. The court extended the time for compliance.

Circumstances of the springing order

The orders made on 28 July 2010 had their genesis in the orders made on 2 September 2009. These orders were made after a contested application at which the plaintiffs were represented by counsel. Paragraph 1 of the orders on 28 July were documents referred to in documents that were discovered or otherwise arose out of the documents discovered. Paragraph 2 relates to specific non‑compliance with the order of 14 October 2009.
At the directions hearing on 17 February 2010 I had to make a specific order for inspection of the documents discovered in the 3 November 2009 affidavit.
I have summarised my reasons for decision on 1 September 2010 in [34] above.
The substance of the affidavits filed on 23 August 2010 as set out in [33] above, in the face of a specific and detailed order for further and better discovery, does not demonstrate a genuine attempt to comply with the orders.
By the time of the 28 July 2010 orders being made the action had already been beset by delays which on my review of the file seem fairly attributable to the plaintiffs. The plaintiffs appear to have taken an inordinate length of time to finalise their amended statement of claim, which was ultimately filed on 21 February 2008, some four months after the entry for trial milestone was breached. No steps were taken in the action between January 2009 and June 2009 when the court initiated a case management hearing. Since the beginning of 2010 there were a number of hearings at which the plaintiffs were not represented. Although it appears that there were medical reasons for this occurring, nonetheless, it was within the power of the plaintiffs to have engaged a lawyer or counsel for these hearings.
The plaintiff's approach to compliance generally is also seen in the notice of entry for trial filed 21 October 2008. In this document the plaintiffs' solicitors, then Mr South's firm, certified that: 'The plaintiffs have complied with District Court Rules 2005 rule 45C'. District Court Rules 2005 (DCR 2005) r 45C provides that a plaintiff must file and serve particulars of damages within 60 days of filing the first defence (r 45C(1)). Rule 45C(4) relevantly provides that: 'If the case is not a personal injuries action, the particulars of damages must set out in detail any amount of money claimed, the justification for claiming it, and how it is calculated'. No particulars had been filed as at the date on which this certification was made. Neither could it be argued that the particulars in the amended statement of claim were sufficient as in par 15(vi) it states the further particulars will be provided. Significantly, no particulars were provided as to the loss of opportunity claim in par 30.

Reasons for non-compliance generally

In her affidavit, Mrs South deposes that at the time she swore the 23 August affidavit, she was not aware that it did not comply with RSC O 26 (par 45). She believed that the affidavit was in accordance with what was required by the court and was similar to the affidavits prepared by Mr South on two previous occasions.
Mrs South deposes that Mr South filed an affidavit in support of their application, filed 23 August 2010, to extend the time for compliance with the orders made on 28 July 2010. The affidavit is Annexure FLS 11 to her affidavit. The court record is to the effect that this affidavit was not filed.
Significantly, Mrs South in her affidavit sets out a substantive response to the orders made on 28 July 2010. The following table summarises her evidence in relation to each of the paragraphs of that order:

PAR	DOCUMENTS REQUIRED	PLAINTIFFS' EVIDENCE – 18 FEBRUARY 2011 AFFIDAVIT
1(a)	The missing page 3 of document numbered 15	Explanation provided to the effect that this page does not exist – par 63
1(b)	The missing page 14 of Annexure A to document numbered 20a	Annexed to the affidavit
1(c)	The pages apparently missing from the: 'Summary Specification Statement' in document 20a	No able to locate any missing pages – par 65
1(d)	Documents numbered 23 to 26 without redaction	Annexed to the affidavit
1(e)	Page '001' of document number 37	Believes document is cover page to fax and is unable to locate – par 66
1(f)	Copies of the letters dated 8 April and 26 May 2003 from the Plaintiffs to RAMS that are referred to in document number 14	Unable to locate - par 67
1(g)	Each of the letters referred to in document numbered 30, and any responses to those letters	Unable to locate – par 68
1(h)	The facsimile from the first named plaintiff to Sharon Tyerman and the 'original application form' both referred to in document numbered 33	Unable to locate – par 69
1(i)	The 'letter today' from 'Sharon Tyerman' and the 'letter from the developer' referred to in document numbered 35	Unable to locate – par 70
1(j)	Page numbers 4 and 6 of discovered document 6	Attached to affidavit
1(k)	A complete copy of document numbered 11	Unable to locate – par 72

2(a)	Documents in satisfaction of Order 1(f) of the Court's Orders of 2 September 2009	No response
2(b)	All loan applications, loan approvals, loan pre-approval and loan rejection documents and any documents relating to the plaintiffs' proposed purchase of the Lot the subject of these proceedings including but not limited to those made to Royal & Sun Alliance, RAMS and QBE as referred to in the first named plaintiffs' letter dated 1 May 2003 to the first defendant in accordance with Order 1(i) of the court's orders of 2 September 2009	No response
2(c)	All applications and responses to those applications, for deposit bonds, or bank guarantees relating to the Plaintiffs' proposed purchase of the Lot the subject of these proceedings including but not limited to those made to Royal & Sun Alliance, RAMS and QBE as referred to in the first named plaintiff's letter dated 1 May 2003 to the first named defendant in accordance with Order 1(j) of the court's orders of 2 September 2009	No response
2(d)	The second named plaintiff's 2004 and 2005 tax returns in accordance with Order 1(d) of the court's orders of 2 September 2009	Annexed to the affidavit of 18 February 2011
2(e)	The letter from 'South Legal' to John Cowan Project Marketing (in which the plaintiffs' purport to have a claim for legal professional privilege)	No response

Two observations can be made about this table. The first is that had Mrs South filed an affidavit in terms par 58 to par 72 of her affidavit of 18 February 2011, then it would have been open for me to have found at the hearing on 1 September 2010 that there had been a genuine attempt at compliance. The second is that, even now, there has been no attempt to comply with par 2(a), par 2(b), par 2(c) and par 2(e) of the orders of 28 July 2010.

Reasons for non-compliance - Medical evidence for Mr South

The plaintiffs' position in relation to the impact of their respective medical conditions on the action is set out in par 19 of Mr Corboy's first affidavit as follows:
I verily believe the first and second plaintiffs, due to medical illness, have together lacked the legal, physical or mental ability or capacity to promptly conduct the plaintiffs' case, which has caused a springing order to be sprung in circumstances which were beyond the control of the plaintiffs and disallowed these proceedings to be determined upon their merits.

In submissions, counsel for the plaintiffs refined this submission in relation to the first named plaintiff, Mr South, by submitting that he lacked the capacity to appreciate that he did not have the capacity to appropriately conduct the proceedings.
The starting point in considering the medical evidence in relation to the first plaintiff is a certificate of a Dr James Setiawan dated 3 August 2010. That certificate provides:
Mr South suffers from a severe debilitating illness that often requires him to be hospitalised at short notice.
Mr South was medically unfit to attend Court on 14 July 2010 and 28 July 2010.
Dr Morkell deposes that he has been treating Mr South since 2002 for a 'complicated post traumatic stress disorder with secondary major depressive disorder' (par 8). Under his care, Mr South has been admitted to Perth Clinic on four occasions since December 2009 being: 15 December 2009 to 12 February 2010; 27 April 2010 to 7 May 2010; 13 July 2010 to 16 July 2010; and 19 November to 25 November 2010. From January 2010, Dr Morekell 'approved a combination of high dose medication for Mr South's condition, which is well above normally prescribed levels' (par 10). His opinion is that 'Mr South's symptomatology over the past twelve months, inclusive of the months of July, August and September 2010, has had a dramatic effect on his functioning, focus and memory as well as his ability to coordinate activities' (par 11). Dr Morkell provided a report dated 23 November 2010 to this effect which is also in evidence before me.
Dr Morkell provided a further opinion dated 22 February 2011 that Mr South 'is not fit to provide evidence in the present proceeding'. This was an email sent by him to Mr Corboy, and is annexed to his second affidavit.
Mrs South in her affidavit repeats and reiterates some of the chronology reported by Dr Morkell. In par 39 to par 53 of her affidavit, Mrs South sets out the relevant circumstances after 28 July 2010. She deposes that on or about 23 August 2010 she and Mr South attended upon a justice of the peace and swore the affidavits filed in this action dated 23 August 2010. She goes on to despose that it was not until November 2010 that Mr South said words to the effect that the District Court had ordered their action to be dismissed and judgment entered in favour of the defendants as a result of non‑compliance with the orders made on 28 July 2010. She deposes that this 'was the first time I had heard of a springing order … I was deeply shocked to learn of that matter' (par 50).
Mrs South then deposes that in or about November 2010 Mr South displayed further symptoms which caused her to be concerned for his health. She discussed her concerns with Mr South and it was agreed that they should contact Dr Morkell to make an appointment. On or about 15 November 2010 Mr South was admitted to hospital under the care of Dr Morkell.
There are two relevant issues that arise in relation to Mr South's medical condition. The first is its impact on efforts made to comply with the orders made on 28 July 2010. The second relates to his failure to give evidence in relation to the present proceedings.
In relation to the first, the thrust of the defendants' submissions is two‑fold. The first is that the medical evidence does not support the conclusions sought to be drawn by the plaintiffs' lawyers in their submissions to me. The medical evidence as to the impact of Mr South's illness on his ability is that it has impacted on his 'functioning, focus and memory as well as his ability to coordinate activities'. The medical evidence before me is insufficient to support the contention as set out in Mr Corboy's affidavit, that Mr South lacked the legal, physical or mental ability or capacity to properly conduct the plaintiffs' claim.
The evidence does establish that from time to time he was admitted to hospital under the care of his psychiatrist. It is reasonable to infer that during the period when he was so admitted, he was not capable of undertaking any activities in relation to this action (though he appears to have sent at least one letter from his hospital bed).
The second part to the defendants' submission is that if one looks at the level of participation of the first plaintiff in the action at or around July and August 2010, it is not immediately apparent that his illness has impaired his ability to function. In this regard, particular weight was placed on a letter dated Tuesday, 17 August 2010 from Mr South to the defendants. The letter appears as an annexure to Ms Richards' affidavit. The submission made in relation to the 17 August letter was that it demonstrates on its face that Mr South was able to think through the tactical issues arising in the litigation as at that date and to articulate a rational response to them.
The defendants also place weight on the fact that Mr South appeared at the hearing on 1 September 2010 and argued that the affidavits filed on 23 August 2010 were in compliance with the orders made on 28 July 2010. Counsel invited me to take into account the fact that at that hearing, Mr South appeared competent and able to make the submissions that he wanted to make. For present purposes, the only point I take into account from the hearing on 1 September is that my observations of Mr South on that occasion were not such as to give rise to a concern that he was medically unfit to present the arguments which he sought to present, such as would have warranted an adjournment on that day.
In submissions on behalf of the plaintiffs, counsel drew my attention to the difference in quality and sophistication between the drafting of the affidavits filed on 23 August 2010 with other affidavits filed by the plaintiffs in the action. Counsel drew this to my attention as an example of the impact of Mr South's medical condition on his capacity.
In the present application, the onus is on the plaintiffs to provide sufficient evidence to me to demonstrate that Mr South's medical condition was an operative cause of his failure to comply with the orders made on 28 July 2010. In order to do so, it was incumbent on the plaintiffs to provide detailed medical opinion evidence as to the impact of Mr South's illness on his ability to make sound tactical judgments. The apparently cogency of the 17 August 2010 letter means that a general opinion as to Mr South's capacity is insufficient. Specifically, there needed to be evidence as to how a person with the capacity to write a letter along the lines of the 17 August letter could, at the same time, have a significantly impaired tactical judgment.
The second issue to which Mr South's illness is relevant is his failure to provide an affidavit in the present proceedings. In relation to this, Mrs South deposes that because of the issues set out in her affidavit she is concerned about Mr South's ability to provide reliable evidence in support of the application. In her conversations with Mr South since November 2010 he has expressed to her that he has high levels of anxiety about the current proceedings and about losing their home (par 84 – par 85). I interpose here to observe that in my experience of plaintiffs in pre-trial conferences, it is not uncommon for them to be highly anxious about the outcome of proceedings and in fear of losing their home. Many of these plaintiffs have psychological conditions. However, they nonetheless attend court and participate to the best of their ability. Mrs South goes on to depose that she has grave concerns at the present time, being 18 February 2011 when the affidavit was sworn, as to Mr South's functioning, focus and memory. She says she has been advised by her solicitor that it would not be appropriate for him to swear an affidavit in support of this application.
The plaintiffs had approximately two months in which to prepare an affidavit of Mr South. In order for the argument that Mr South's mental condition prevented him from swearing an affidavit in the action to have weight, the evidence would need to be to the effect that at no stage during this two month period was Mr South of a medical condition sufficient for him to provide an affidavit in the proceedings. In order for him to have provided an affidavit, he would have needed to have spent an hour or so instructing his solicitor and then perhaps on one or more occasions afterwards, spent some time reviewing the draft affidavit. Much of the affidavit could have been drafted from the material in the correspondence passing between the parties and the court documents filed. The process of drafting the affidavit would have taken perhaps four one hour sessions over this two month period.
The evidence in relation to Mr South's medical condition as to giving evidence in the current proceedings is the short and supplementary opinion of Dr Morkell. In order for that opinion to have any weight, it needed to go into sufficient detail to found a submission that at no time during this two month period was Mr South able to spend the four or so hours, on two or more occasions, required to instruct, review and swear an affidavit for use in these proceedings. That evidence is not before me. Accordingly, I place little weight on the explanation given as to why Mr South did not provide an affidavit for the purposes of these proceedings.

Reasons for non-compliance - Medical evidence for Mrs South

In her affidavit, Mrs South deposes to having fallen pregnant in November 2009. There were certain complications in her pregnancy between February 2010 and March 2010. In March 2010 she was diagnosed with hypertension by her obstetrician, Dr Katherine Harris, who prescribed intermittent bed rest.
She deposes that on or about 17 June 2010 she attended the rooms of Dr Harris for a consultation at which she discussed the expected arrival of her baby, which was due 6 August 2010. At this consultation, she spoke to Dr Harris about the litigation. Dr Harris said to her words to the effect that because of the complications arising during her pregnancy, stressful events such as attending court should be avoided. Dr Harris provided a letter dated 17 June 2010 which is in the following terms:
Mrs Fiona South of 4 Rae Place, Hillarys will be unavailable for court attendance for the months of July, August and September 2010 due to the delivery of her babe under caesarean section. Fiona intends to breast feed her babe.
Mrs South then goes on to depose that on or about 29 June 2010, due to complications with the pregnancy, she was admitted to hospital under the care of Dr Harris. Her baby was delivered prematurely by emergency caesarean section. At a post-operative review on or about 10 August 2010, Dr Harris advised her with words to the effect that during her convalescence she was to refrain from activities that were not essential to her wellbeing and that of her baby and her family (see generally par 20 ‑ par 34).
She then deposes that in the months of July to November 2010 her ability to attend to day to day tasks was limited as she was recuperating from the emergency caesarean section and caring for her new baby.

Reasons for non-compliance – summary

The medical evidence in relation to Mrs South does not support the proposition advanced in Mr Corboy's affidavit that she lacked the 'legal, physical or mental ability or capacity to properly conduct the plaintiffs' case' (par 19). The limit of the evidence is that she was not able to physically attend court during July, August and September 2010.
The medical evidence in relation to Mr South goes some way towards supporting the proposition that he lacked the 'legal, physical or mental ability or capacity to properly conduct the plaintiffs' case' (par 19).
Looking at the evidence as a whole, one gets the sense that Mr South was endeavouring to shield Mrs South from the work required to conduct the litigation and the ultimate dismissal of the proceedings on 1 September 2010. Given the complications surrounding the birth of their new baby, this was an understandable thing to have done. However, the fact that it may have been understandable as between the two of them, is not sufficient to absolve them from their responsibility of giving attention to the litigation which they had commenced.
The only reason given for the plaintiffs' failure to file an affidavit attempting to comply with the order made on 28 July 2010 setting out the information ultimately provided in Mrs South's affidavit of 18 February 2011 is the medical condition of Mr South. The submission advanced by counsel for the plaintiffs that Mr South's medical condition was such that he was not able to appreciate that he needed the assistance of a lawyer is not supported by the evidence.
The issue that remains is whether, to the extent that the interests of justice may require giving the plaintiffs some latitude in response to their respective medical conditions, that is sufficient to warrant the judgment being set aside by an extension of time to comply, given the other factors I am obliged to consider.

Prejudice to the plaintiffs if time is not extended

The prejudice to the plaintiffs if time is not extended is that the judgment remains, including the liability for costs. The second defendant's bill of costs for the action is for approximately $52,000. Mrs South deposes that her advice is that this should tax out to between $20,000 and $30,000 and that the first and third defendants' taxed costs are likely to be of the same order of magnitude (par 77).
Mrs South deposes that the plaintiffs do not have sufficient money to satisfy a costs order in these amounts and that, to do so, they would have to sell their house (par 78). However, the plaintiffs did not place before the court a full statement of their assets and liabilities.

Merits of the plaintiffs' claim – misleading conduct

As I have noted, the case law directs me to consider the merits of the plaintiff's claim on the basis that there is no point in resuscitating a case that is devoid of merit.
The plaintiffs' pleaded case is that the unit they were to purchase would have 'unique and extensive river views' (amended statement of claim filed 21 February 2008, par 9). The representations to this effect were said to be misleading because on completion the relevant apartment, Apartment 108, was found to have 'only insignificant glimpses from the balcony' (par 11).
The second defendant admits that Apartment 108 does not have extensive river views (par 11(a), defence filed 15 June 2007). The first and third defendants go further and plead that the plaintiffs knew that Apartment 108 would not have extensive or unique river views (par 10.5, defence filed 10 July 2008).
In the evidence before me, the plaintiffs relied on two bases to establish that they have a reasonably arguable case on the merits. Both are contained in Mrs South's affidavit.
Mrs South deposes that at or about the time of entering into the agreement to purchase Apartment 108, Mr South had shown her various documents in the form of brochures and photographs of the proposed apartment. She deposes that one of the brochures described 'sweeping views of Perth, Swan River, Kings Park, North Bridge [sic] and the Darling Ranges'. This, she says, was one of the principal reasons she agreed to enter into the agreement to purchase the apartment (par 10).
The brochure is annexed to her affidavit. When one looks to the brochure, it contains a representation that the apartments in the development, known as 'The Statton on Murray' would have: 'Sweeping views of Perth, Swan River, Kings Park, Northbridge and the Darling Ranges from your own private balcony/s'. It is evident from the remainder the brochure that this is not a representation to the effect that every apartment would have all these views, which effectively would be a 360 degree panorama.
The brochure does not contain a representation to the effect that Apartment 108 would have 'unique and extensive river views'.
The defendants submitted that Apartment 108 was never going to have unique and extensive river views as it is in the north eastern corner of the development. Counsel invited me to take judicial notice of the fact that an apartment on the north eastern corner of a building in Murray Street in Perth is not going to be facing the Swan River. Rather it was always going to have views of Northbridge and, axiomatically, the north eastern part of the Perth metropolitan area going through to the Darling Ranges.
Counsel for the plaintiffs submitted that in a misleading conduct case it is not necessary for the exact representation to be proved. Rather, what is important is the tenor of the representation.
In the present case, the description of the view from the apartment is of critical significance. If Apartment 108 has sweeping views of one or more of Perth, Swan River, Kings Park, Northbridge and the Darling Ranges, then it is as described in the brochure. I am not persuaded that the plaintiffs have a good arguable case based on the brochure annexed to Mrs South's affidavit.
The second basis on which it is asserted that the plaintiffs have a reasonably arguable case on the merits relates to a photograph taken of the advertising board (Advertising Board) considered by the plaintiffs when considering purchasing the apartment. In the amended statement of claim, the plaintiffs allege that a representation was made to them that the views from Apartment 108 would be substantially the same as those contained on the Advertising Board, which was in the first defendant's conference room (par 9(f)).
Mrs South in her affidavit annexes an affidavit sworn by Mr South in the action on 8 July 2010 in support of an application for further and better discovery. Annexure DBS2 to Mr South's affidavit is a photograph of the Advertising Board.
In the 8 July 2010 affidavit, Mr South confirms that Annexure DBS2 is a photograph of the Advertising Board referred to in par 9(f) of the amended statement of claim (par 13). Mr South deposes that the Advertising Board 'formed the basis of the discussions that I had at the time with the third defendant, about the nature and extent of the river views that will be obtained from Apartment 108 upon completion' (par 13).
The view depicted in this photograph (Annexure DBS2) is of the Swan River appearing in between the major buildings of the Perth skyline. It is difficult to see the basis on which a court could conclude that the river views set out in the Advertising Board are 'unique and extensive'. However, the specific allegation in relation to the Advertising Board was that upon completion, the river views from Apartment 108 would be substantially the same as those contained in the Advertising Board.
The photograph which is Annexure DBS2 needs to be seen with a further photograph which is in the materials in the court file. In an affidavit filed 7 July 2008 Mr South annexes a further photograph, Annexure DBS1 to that affidavit. This is a photograph of the view from Apartment 108 taken by Mr South in November 2004. The key difference between the view in Annexure DBS1 and Annexure DBS2 is that in Annexure DBS2 some of the river can be seen through the buildings in the Perth CBD. In Annexure DBS1 none of the river can be seen. Significantly, both photographs appear to be taken in the same direction, meaning that the photo on the Advertising Board may be seen as a good indication of the view to be expected from Apartment 108.
Leaving aside the question of description used in the views of Apartment 108, it seems to me that if the plaintiffs can establish that they relied on the Advertising Board (Annexure DBS2), and that the actual view from Apartment 108 is as in Annexure DBS1, then they have a reasonably arguable case for misleading conduct.

Merits of the plaintiffs' claim – quantum

The plaintiffs' claim for damages has two main components. The first component relates to an amount of approximately $40,000 which relates to the deposit bond forfeited by reason of the plaintiffs not proceeding with the sale. If the plaintiffs are able to establish misleading conduct, then it seems reasonably arguable that they are entitled to be compensated for the amount paid in relation to the deposit bond.

The second amount claimed is in relation to a claim for loss of opportunity. That plea is set out in par 30 of the amended statement of claim in the following terms:
30.Further and, or alternatively,
(a)the plaintiffs repeat the matters in paragraph 5 hereof;
(b)had the defendants not engaged in Contraventions, the plaintiffs would have invested a sum between $360,000.00 to $380,000.00 ('Investment Sum') in the type of investment pleaded in paragraph 5 hereof, alternatively, another investment property ('Alternative Investment')
(c)by reason of the Contraventions, the plaintiffs, during the period from September 2002, lost the opportunity to have invested the Investment Sum in Alternative Investment, which they otherwise would have done;
(d)had the plaintiffs utilized the Investment Sum to have purchased an Alternative Investment, that property would have substantially increased in value in the period September 2002 to the date of trial, further and better particulars of increase will be provided by way of expert evidence prior to trial;
(e)the plaintiffs accordingly claim damages for the loss of opportunity to invest the Investment Sum in an Alternative Investment and the loss of opportunity to have benefitted from the capital appreciation thereof between September 2002 and the date of trial.
Paragraph 5 provides:
In or about the middle of 2002, the plaintiffs wished to purchase an existing inner-city strata-titled high rise apartment, or an 'off the plan' high rise apartment yet to be constructed in the inner city; with unique, expansive or extensive river views.
There is case law to the effect that in an action pursuant to the former Trade Practices Act 1974 (Cth) s 52 (now the Competition and Consumer Act 2010 (Cth) – Australian Consumer Law s 18) damages can be recovered for the loss of an opportunity to make a profit on an alternative transaction that would have been entered into but for the reliance on the misleading conduct. An example is the decision of Blaxell J in Whitaker v Paxad Pty Ltd [2009] WASC 47. The plaintiff's case is summarised in the following terms ([104] ‑ [105]):
It is the plaintiffs' case that but for the misleading or deceptive conduct, they would have purchased a house property other than that at 36 Brookton Highway, Kelmscott. They would have purchased that other property in or about March 2002 for about $235,000, and it would have been situated in the Huntingdale, Orange Grove, Wattle Grove, or Kelmscott areas. They claim damages for the capital gain that would have accrued on such a property between 1 March 2002 and 1 January 2005, when they actually acquired a substitute property (or alternatively the loss of opportunity to obtain such capital gain).
For the purpose of quantifying this aspect of their claim, the plaintiffs have led expert evidence as to the relevant valuations of a sample property in Huntingdale which the plaintiffs would have hypothetically purchased if they had not proceeded with the purchase of 36 Brookton Highway, Kelmscott. Based on this evidence, they claim to have sustained the loss of a gain of $67,000 in the value of an alternative property. From this sum they have deducted the costs of mortgage payments that would have been made in respect of the alternative property less the actual rent that they paid during the same period. The net sum thus arrived at is $63,392.
This submission was accepted by Justice Blaxell, who found ([129] ‑ [133]):
The evidence also establishes (what in any event is a notorious fact) that between February 2002 when the plaintiffs purchased the Kelmscott property, and January 2005 when they once again acquired a house, there was a significant increase in property values generally. I am satisfied that but for Mr Hoad's misleading or deceptive conduct, the plaintiffs would have purchased a house property other than 36 Brookton Highway, Kelmscott, that the price of that property would have been approximately $235,000, and that there would have been a significant appreciation in the value of that property by January 2005. It follows that the plaintiffs have lost the opportunity to acquire a capital gain.
This loss directly flows from Mr Hoad's conduct, but there are obvious difficulties in making a precise assessment of the quantum of the same. In my view, the only feasible approach to assessment is to adopt the plaintiffs' suggested method of determining the increase in value of a hypothetical property that the plaintiffs would have purchased but for that conduct.
By way of quantifying this aspect of their claim, the plaintiffs have called evidence from their two valuers (Messrs Cooper and Elsbury) in accordance with the report which is exhibit 18. This report details actual sales (up to 5 July 2004) of properties in the suburb of Huntingdale which had the same characteristics as the house that the plaintiffs were seeking at the time they first met Mr Hoad. From these sales, the valuers have identified the house at 10 Pilot Road, Huntingdale (the hypothetical property) as being the closest to the relevant characteristics.
The hypothetical property sold on 17 February 2002 for $210,000 (which is lower than the approximate $235,000 that the plaintiffs were willing to pay). It is the evidence of the valuers that as at 1 January 2005, the market value of the hypothetical property had increased to $270,000 (viz. an increase of $60,000 or approximately 28.5%). On this basis, the plaintiffs submit that their lost opportunity of a capital gain can be valued at $67,000 (viz. 28.5% of $235,000). From this figure, appropriate adjustments have been made for the mortgage interest they would have incurred less the rental that they actually paid over the relevant period. The net figure thus arrived at is $63,392.
In my opinion, the methodology adopted by the valuers in identifying the hypothetical property is reasonable and appropriate in all of the circumstances. I accept their evidence as to the market value of that property on 1 January 2005. I also find that the alternative property that the plaintiffs would have actually purchased but for Mr Hoad's conduct, would have had a similar proportionate rise in value.
The approach adopted by Blaxell J was approved in Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 [119].
In order for the plaintiffs to be able to establish an entitlement to damages for loss of opportunity, they would have to establish, 'on the balance of probabilities, that but for the contravening conduct of the defendant[s] an alternative investment would have been acquired which carried a prospect of a profit greater than that achieved from the investment which was acquired': Computer Accounting and Tax [108], citing Sellars v Adelaide Petroleum NL (1994) 179 CLR 322, 368. To do this, the plaintiffs will need to lead evidence to the following effect:
(a)that as at or around September 2002 they had the financial capacity to borrow sufficient funds to purchase an inner city high rise apartment of the type pleaded in par 5;
(b)that the plaintiffs were unable to proceed to purchase an alternate property by reason of the misleading conduct;
(c)identifying a hypothetical property that the plaintiffs would have purchased but for the misleading conduct – this would need to be a property matching the description in par 5 of a value of $360,000 to $380,000 as pleaded in par 30;
(d)expert evidence as to the increase in value of the hypothetical property over the asserted time period;
(e)evidence as to the rental income received and expenses the plaintiffs would have paid over the asserted time period so as to determine the net value of the opportunity lost.
There is no evidence in relation to this claim in any of the affidavit evidence filed by the plaintiffs in support of the application nor in any other affidavits currently on the court file. There is not even any evidence that the plaintiffs had the financial ability to purchase an alternate investment property. In submissions filed after the hearing, the plaintiffs annexed a copy of a discovered document being a deposit slip for an apartment at another development. In the absence of a proper evidential foundation for this document, I have placed no reliance on it.
The second defendant in its supplementary submissions drew my attention to the affidavit of Simon Wright, a director of the second defendant, sworn 8 July 2009. In that affidavit Mr Wright annexed correspondence between the plaintiffs and the second defendant evidencing the difficulties that the plaintiffs were having securing finance for the purchase of Apartment 108. Although the sale contract was entered into in September 2002, and the deposit due within 14 days thereafter, the deposit bond was not obtained until June 2003 (par 8). There is thus a real issue as to whether the plaintiffs had the capacity to purchase Apartment 108 or an equivalent apartment as described in par 5 of the statement of claim. The submissions also note that the decisions in Computer Accounting and Tax and Whitaker were both instances where the property in question had actually been purchased by the plaintiff.
On the evidence I have before me, I am not persuaded that the plaintiffs have a good arguable case for opportunity costs.
I note here a further deficiency in the manner in which the plaintiffs have conducted this action. In the notice of entry for trial the plaintiffs' solicitor, Mr South's firm, certified that: 'Subject to the defendants giving discovery and inspection, the matter is ready for trial'. Paragraph 30 of the amended statement of claim foreshadows expert evidence (see [112] above). At no stage have the plaintiffs sought leave to adduce expert evidence at the trial. There is no evidence before me to the effect that expert evidence has been exchanged. In order to maintain a claim for loss of opportunity it is clear that there must be expert evidence. This statement in the notice of entry for trial is patently incorrect.
Be that as it may, for present purposes it is sufficient that I conclude that a claim of this kind is able to be made.

Prejudice to the other parties if time is extended

The prejudice to the defendants if the time is extended is the further time and cost of the resolution of this matter.
The impact of delay on the parties to litigation was the subject of comments by the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175. 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 upon litigants': Aon [100]. 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 [100]. In the words of Justice Heydon, commercial litigation has significant claims to expedition (Aon [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 second defendant's bill of costs for the action to date is over $50,000. Ms Richards deposes that the first and third defendants' costs to date are approximately $26,651.
In [61], [62] and [121] above I set out some concerns I have in relation to the conduct of the action generally by the plaintiffs. These concerns give me little confidence that, in the absence of tight case management oversight, the plaintiffs will be willing or able to progress this action towards a trial at the earliest opportunity in a cost effective manner.
The first and third defendants raised the issue of proportionality. Ms Richards in her affidavit deposed to that, should the application be successful, the first and third defendants will be facing legal costs of just under $50,000 to progress the action through to a four day trial. There is no amount provided for expert evidence in the estimate provided, so this amount should be regarded as conservative. She states her belief that the future costs of the proceedings are wholly disproportionate to the amount in dispute. In their submissions, the first and third defendants asserted that the extent of their liability was $3,719.15, which would be subject to a claim for contribution from the second defendant. It seems to me that it is arguable that if the first and third defendants engaged in misleading conduct, that they may be liable for a least the deposit and expenses paid. Be that as it may, the issues of proportionality are just as significant for damages of this level.
This issue of proportionality has been given greater significance by a recent amendments to the RSC. In 2010, the RSC were amended to strengthen the weight to be given to proportionality in the management of cases. Specifically, RSC O 1 r 4B is now in the following terms:
4B.System of case flow management
(1)Actions, causes and matters in the Court will, to the extent that the resources of the Court permit, 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; and
(b)disposing efficiently of the business of the Court; and
(c)maximising the efficient use of available judicial and administrative resources; and
(d)facilitating the timely disposal of business; and
(e)ensuring the procedure applicable, and the costs of the procedure to the parties and the State, are proportionate to the value, importance and complexity of the subject matter in dispute; and
(f)that the procedure applicable, and the costs of the procedure to the parties, are proportionate to the financial position of each party.
(2)These Rules are to be construed and applied and the processes and procedures of the Court conducted so as best to ensure the attainment of the objects referred to in paragraph (1).
In the present action, it is only the claim for loss of opportunity that would make a four or so day trial proportionate to the cost incurred to date and the costs likely to be incurred in the future.

Balancing the risks of injustice

The starting point seems to be the comment of EM Heenan AJA in Osgood that 'it is… fundamental to the interests of justice that a meritorious claim should be brought on for trial' [67]. The plaintiffs have at least an arguable claim that they were misled based on the difference in the views between the two photographs discussed in [110] above. They have an arguable claim for damages of around $40,000 and a potential claim for loss of opportunity which has not been quantified.
I am prepared to give some allowance to the difficult personal circumstances in which the plaintiffs found themselves in 2010.
On balance, it seems to me that the interests of justice require the plaintiffs to be given a one further opportunity to continue with the action. In Aon, the majority made it clear that all justice requires is that a party have the proper opportunity to present its case ([98], [102]). To date, the plaintiffs have had ample opportunity to present and progress their case. The final further opportunity thus needs to be on very strict terms.
One factor relied on by EM Heenan AJA in Osgood was that as the root cause of the delay, being the outstanding expert's report, had been dealt with, there is nothing to suggest that the appellant would not comply with orders in the future. In the present case, the root cause of the non‑compliance is said to be the medical condition of the first plaintiff. The application proceeded without evidence from the first plaintiff due to his medical condition. I have already made observations about the weight to be given to that argument. However, given that the plaintiff was not well enough to instruct his solicitor to prepare an affidavit over the two months preceding the hearing of this application, I have little confidence that the first plaintiff will comply with future orders. This raises the risk of future delay and non-compliance. This in turn exacerbates the concerns as to proportionality set out above. The conditions on which the judgment is to be set aside need to make it very clear that the action is to be progressed to trial as soon as is practicable.
There are two principles which underpin the suite of orders that I propose to make. The first is that, from a costs perspective, the defendants ought to be put in the position they would have been in had the plaintiffs complied with the orders made on 28 July 2010. To give effect to this, my preliminary view is that:
(a)the plaintiffs should pay the defendants' costs of the application;
(b)the cost should be assessed on an indemnity basis; and
(c)the costs should be payable before the judgment is set aside.
I express this as a preliminary view as I have not had the benefit of submissions from counsel on the issue of costs.
The second principle is that the defendants should not be required to incur any further costs unless and until it is clear that the plaintiffs have the intention and will to progress this matter to a trial in the course of the second half of this year. The judgment ought not be to set aside unless and until this is clear. I am prepared to suspend enforcement of the judgment, including the taxation of costs, until this occurs.
What I propose is in effect a reverse springing order. It seems to me that this form of order is required to both balance the risk of further injustice to the defendants and to 'facilitate the case being conducted and concluded efficiently, economically and expeditiously' DCR 2005 r 24(1). In particular, if the plaintiffs comply with seven conditions by 30 June 2011, the judgment will be set aside and the time for compliance with par 1 and par 2 of the orders made on 28 July 2010 will be extended. I add here that I will hear from counsel in settling the precise terms of the order.
The first is to pay the defendants' costs. An early taxation will be programmed. The costs order will be drafted so as to take effect regardless of whether the judgment is set aside.
The second is to retain solicitors, and not to act for themselves, while the conditions are being satisfied. By their own submission, Mr South does not have capacity to conduct the litigation as a lawyer. The instances of delay and non‑compliance identified in these reasons do not give me any confidence that without a solicitor the plaintiffs will be able to progress the action in a timely and efficient manner.
The third is to comply with par 1 and par 2 of the orders made on 28 July 2010 by filing an affidavit in the form of Form 17 to the RSC. This includes filing a certificate complying with RSC O 26 r 16A at the time of filing the affidavit.
The fourth is to ensure that the pleadings and particulars are in order for trial. The plaintiffs will be required to file and serve either a certificate complying with DCR 2005 rule 43(3a) or a minute of proposed amended or substituted statement of claim.

The fifth is that the plaintiffs also need to file and serve particulars complying with DCR 2005 r 45C, specifically addressing the loss of opportunity claim. This is to include the basis on which it is asserted that the plaintiffs had the financial capacity to complete the purchase of the property relied on to found the claim for a loss of opportunity and the basis on which the loss of opportunity is calculated.
The sixth is to serve expert evidence. It is clear that there will need to be expert valuation evidence on the loss of opportunity claim. There may also need to be expert evidence on whether the plaintiffs had the financial capacity to complete the purchase of the alternate property relied on to found the claim for loss of opportunity.
The seventh is to serve signed and dated witness statements. This is to ensure that the medical condition of Mr South cannot be used as a reason for further delay. As I have noted, I did not find the evidence as to why he was not able to give evidence in this application in any way compelling. In any event, I expect that trial counsel will not be in a position to either settle the statement of claim or file a certificate pursuant to DCR 2005 r 43(3a) without the benefit of signed proofs of evidence. Also, in the event that non-expert evidence is relied on as to the financial capacity of the plaintiffs (perhaps from their mortgage broker), this should be disclosed by witness statement as it is likely this evidence will need to be met with expert evidence from the defendants. The fuller form of these orders, including opportunities for objection, can be made at a later date.
There should be a directions hearing about seven days prior to the date on which compliance is required. If the plaintiffs wish me to rule on whether there has been compliance with a particular order, they will have the opportunity to file the relevant document prior to that hearing.
I propose to case manage the action to an early trial. The defendants can expect that I will make orders for the exchange of expert evidence and witness statements by their witnesses in due course.
There is one final dimension to the orders required to balance the risk of injustice in the longer term. From my review of the action, my sense is that the costs in this action are out of all proportion to the amount and significance of the issues in dispute. The costs between now and trial will exacerbate this issue. The parties ought to be given an opportunity to settle the action through mediation. Once it is clear that the action will proceed, there ought to be a mediation conference. By this time, the defendants will have seen the evidence that the plaintiffs will rely on at trial to establish the loss of opportunity claim.
I will circulate a minute of proposed orders with these reasons and then hear from counsel as to their final form.
If parties wish their unavailable dates to be taken into account for any of the hearings set out in the proposed orders, they should be in a position to advise me of their constraints at the hearing listed to settle the orders.