The Grand Lodge of Western Australian Freemasons Homes for the Aged (Incorporated) v Fresh Fields Aged Care Pty Ltd

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: THE GRAND LODGE OF WESTERN AUSTRALIAN FREEMASONS HOMES FOR THE AGED (INCORPORATED) -v- FRESH FIELDS AGED CARE PTY LTD [2004] WADC 107

CORAM: DEPUTY REGISTRAR HEWITT

HEARD: 20 MAY 2004

DELIVERED : 3 JUNE 2004

FILE NO/S: CIV 1956 of 2003

BETWEEN: THE GRAND LODGE OF WESTERN AUSTRALIAN FREEMASONS HOMES FOR THE AGED (INCORPORATED)
Plaintiff
AND
FRESH FIELDS AGED CARE PTY LTD (ACN 063 959 759)
Defendant

Catchwords:

Practice and procedure - Western Australia - Application for judgment based on springing order- Whether court can extend the time for an order made by consent under a contractual arrangement

Legislation:

Nil

Result:

Application for judgment dismissed
Time for compliance extended

Representation:

Counsel:

Plaintiff: Mr M Morgan
Defendant: Ms M Futaesaku

Solicitors:

Plaintiff: Murfett & Co
Defendant: Corrs Chambers Westgarth

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

Four Oaks Enterprises Pty Ltd v Clark (No 2) [2003] TASSC 70
RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd 18 FCR 389
Siebe Gorman & Co Ltd v Pneupack Ltd [1982] 1 All ER 377

Case(s) also cited:

BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Helicopter Sales (Aust) Pty Ltd v Rotor Work Pty Ltd (1974) 132 CLR 1

DEPUTY REGISTRAR HEWITT: In this matter two chamber summonses require determination those being the plaintiff's summons for judgment filed on 20 April 2004 and the defendant's application to extend time for compliance with a springing order filed 27 April 2004.
In order to understand these applications and my decision it is necessary for me to give a reasonably detailed account of the nature of the action and its progress through the Court to this stage.
The plaintiff owned and operated a home for the aged known as the Howard Solomon Aged Care Village until by an agreement between the parties the plaintiff appointed the defendant as a manager of those premises. Amongst the terms upon which the defendant was appointed manager were terms that the defendant would offer employment to all of the plaintiff's employees then working in the village and would pay to the defendant a sum of money representing the accumulated entitlements of those employees in the nature of accrued annual leave and the like. There were further terms that upon the determination of the relationship between the plaintiff and the defendant would re‑transfer such of the funds as then remained in its hands back to the plaintiff and the plaintiff would offer employment to all of the defendant's employees working in the aged care village at the date of re‑transfer.
The plaintiff paid a sum of money to the defendant pursuant to the agreement I have recited but the defendant upon the re‑transfer of the village has failed to pay a sum of money representing employee entitlements. It is for that money that the plaintiff sues.
By way of defence the defendant alleges that certain works which were undertaken to the premises during the course of its management were works for which the plaintiff bore responsibility for payment and that it is entitled to set off the cost of those works against the sum claimed by the plaintiff. Although I have described the matters raised by the defendant as a set‑off in truth they were raised by the defendant as a counterclaim and the defendant did not plead a set‑off relying upon those facts. Ultimately, that situation prompted the plaintiff to bring a summary judgment application in which was sought an extension of the time within which to apply for summary judgment and a judgment against the defendant. There was also coupled with that application an alternative application that certain of the paragraphs in the defence be struck out.
That summary judgment application was heard by me on 5 February 2004 and I dismissed the application and granted the defendant unconditional leave to defend. I also struck out par 10 and par 11 of the defence and counterclaim and granted the defendant leave to amend. The opportunity to amend was not availed of which is rather surprising given the glaring deficiency of the defence in failing to plead the counterclaim as a set‑off but in any event that situation persisted notwithstanding the expiry of the original time period fixed for amendments and notwithstanding the expiry of a subsequent time period fixed for amendments.
The failure of the defendant to reinstate the struck out paragraphs in any form meant that the total of the counterclaim was some $15,000 less than the total of the plaintiff's claim. The plaintiff in correspondence invited the defendant to either amend its defence and counterclaim in a manner which would provide a defence to what I might describe as the gap, or alternatively, pay to the plaintiff the sum of money to which no defence had been offered. That invitation was not acted upon and ultimately the plaintiff by summons dated 18 March 2004 applied for a judgment for the difference between the balance of the defendant's counterclaim and the plaintiff's claim that being a sum of some $15,504.84 together with interest on that sum.
That matter came before the Court on 30 March 2004 by which time the plaintiff and the defendant had reached an agreement the terms of which were that the defendant would not attempt to reinstate the portions of its counterclaim which had been struck out, that it would pay the sum of $15,504.84 plus interest to the plaintiff and would attend chambers on the return of the plaintiff's application and move for orders in terms of a Minute of Consent Orders agreed between the parties and signed by each of them dated 30 March 2004. Amongst the orders which were agreed to in the Minute was an order that the defendant have leave within 14 days to file and serve an amended defence and counterclaim. There was contained within that aspect of the Minute a reference to par 10 and par 11 of the defence which had been struck out to the effect that such amended defence and counterclaim would not attempt to reinstate a claim along the lines of that which had already been struck out.
The order was expressed to be a springing order such that in default judgment was to be given for the remainder of the plaintiff's claim together with interest and costs. Notwithstanding the importance of doing so the defendant's solicitors neglected to file an amended defence and counterclaim within the time stipulated and that has now produced the two applications with which I am concerned today, namely an application by the plaintiff for a judgment based upon the breach of the springing order, and an application by the defendant for an extension of the time fixed within the springing order. Although there has been a long history of negotiation between the plaintiff and the defendant and that might have possibly excused the defendant to some degree in its failure to heed earlier opportunities to amend its defence there is nothing much in the way of an excuse which is offered in respect of this failure. The fact of the matter as appears from the affidavit in support of the application to extend the time is that the matter was simply overlooked. Approximately eight days after the expiration of the relevant time a document was filed, however, plainly the filing of that document did not satisfy the terms of the consent order and prima facie the plaintiff is entitled to a judgment based upon the breach of the order by the defendant.
The issues which I must decide are:
1.Were the arrangements which led to the making of the consent order a contract between the parties.
2.If a contract did exist between the parties can the Court interfere with the contractual arrangements so created by extending the time for compliance with the order and if so,
3.should the Court in the circumstances interfere.
As to the first portion of the matter there certainly were characteristics of the arrangements which were entered which smack of a contractual nature. The primary document which sets out the terms of the arrangements reached between the parties is a letter from the plaintiff's solicitors to the defendant's solicitors dated and faxed 29 March 2004. The relevant portions of that letter are as follows:
"1.As proposed by Mr McLean (and subsequently discussed with Ms Futaesaku), we are willing to settle the plaintiff's applications for judgment for part of claim ("the Applications") on the following terms:
1.1The defendant agrees to pay to us $17,131.74 ("the Sum"), being the amount of the difference between our respective client's claims ($15,504.84) plus interest of $1,626.90, within 7 days by way of bank cheque;
1.2You attend at the hearing of the Applications listed for 10.00 am Tuesday 30 March 2004, and obtain orders in terms of the Minute without our having to appear at same; and
1.3Upon compliance with paragraph 1.1 and 1.2 above, we shall provide you with a minute of consent orders agreeing that the Applications be dismissed with no further order as to costs.
2.Unless we receive confirmation that the defendant agrees to the above by 9.00 am Tuesday 30 March 2004:
2.1Our consent to the Minute is withdrawn; and
2.2We shall attend at the hearing of the Applications and seek orders in terms of the minute of proposed orders dated 29 March 2004 (provided to your earlier today), including the costs of appearance."
Subsequent to that letter further arrangements were reached between the parties leading to the amendment of O 4 of the Minute of Consent Orders insofar as it related to costs and a representative of the defendant's solicitors attended court and moved for orders in terms of the Minute thus amended. Subsequently, the relevant sum was paid and in compliance with the terms of the agreement there was filed a subsequent Minute of Consent Orders dismissing the plaintiff's application for judgment. That Minute was filed on 16 April 2004 and approved by a Registrar of the Court on 20 April 2004.
I take the view that by the arrangements that I have described a contract was entered which entitled the plaintiff to the payment of the agreed sum independent of the success or otherwise of the action it was pursuing. It is argued that the contractual arrangements extended to and embraced the terms of the orders which were made by consent in the Minute. It is difficult to see why that should not be so and accordingly for the purposes of this application I accept that the making of orders in terms of Minute of Orders which was presented to the Court should be regarded as contractual requirements.
I therefore answer the first of the questions in the affirmative, namely that in my view the consent orders which were made on 30 March 2004 were in fact underpinned by a contract between the parties. The situation is therefore in my finding that contemplated as the second of the possibilities referred to in Siebe Gorman & Co Ltd v Pneupack Ltd [1982] 1 All ER 377. There was in my finding a real contract between the parties. The propositions of law stated by the English Court of Appeal (that such a contract can only be interfered with on usual contractual principles) however are not the last word on the matter and Australian authority has taken something of a different tack. In the case of RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd 18 FCR 389 the Federal Court held that the Court had an overriding power to control its own proceedings and could vary interlocutory orders even when made as a result of a binding contract. In the joint decision of Woodwood and Foster JJ, with which Jenkinson J agreed in a separate judgment it was stated:
"In our view, bearing in mind the significant factors we have identified, this argument cannot succeed. The consent order did give effect to a contract between the parties.
However, this is not the end of the matter. The Court has an overriding power to control its own proceedings. The existence of that inherent power of courts has long been recognised and acted upon. The power to fix and extend times within which interlocutory steps are to be taken is a most common manifestation of the general power. It is now made explicit in rules of court to be found in all relevant jurisdictions. The power is discretionary and is exercised with due regard to all relevant circumstances. If it be legally open to the parties to oust this jurisdiction by agreement, then such ouster could be effected only by clear and express terms in the agreement and court order.
This view receives support from the judgments of the Court of Appeal in Siebe Gorman. Denning MR said at 190; 381:
'As Eveleigh LJ said early on in this appeal, when people do not object to an order of this kind it is always on the terms that it is subject to the rules of court which enable an extension of time to be made.'"
Statements to like effect were contained in the decision of Four Oaks Enterprises Pty Ltd v Clark (No 2) [2003] TASSC 70 (11 August 2003). I therefore conclude that notwithstanding the fact that a binding contractual arrangement existed between the plaintiff and the defendant there is nonetheless a power in the Court to extend the time for compliance with the springing order created as a consequence of the implementation of that contractual arrangement.
I now turn to the final question, namely whether the Court should interfere and extend the time within which compliance with the order may be made. On that score I note that it must automatically follow that if I am not inclined to extend the time for compliance then the plaintiff should succeed in its application for a judgment.
In this case the plaintiff had already applied for a summary judgment and upon a consideration of the merits it was determined that the defendant had an arguable defence. To the extent that the matters which potentially might be pleaded as a set‑off gave rise to a claim somewhat short of the plaintiff's claim the matter has been settled between the parties and payment made. In truth the only amendment which the defendant needed to make to its defence in order to regularise it was to include a paragraph within the defence seeking to set‑off the counterclaim against the plaintiff's claim. All of the facts upon which the defendant relied had been brought forward and aired at the summary judgment application and the matter was purely one of a technicality such that it was necessary for the defendant to not only counterclaim in the action but to rely on the substance of that counterclaim as a set‑off and thereby a defence to the claim. Therefore, I conclude that the deficiencies is in the defendant's defence are of form rather than of substance.
Furthermore, the defendant's delay in bringing in a pleading was not extreme. The delay was approximately eight days. Another factor which I consider to be relevant is the fact that the failure to file the defence within the time fixed by the springing order was in no way the responsibility of the defendant but was due to the oversight of its solicitors. I further note that to the extent that the agreement between the parties required the defendant to make a cash payment to the plaintiff it has honoured its agreement.
It has been said in the cases that the Court would only interfere in circumstances such as this in special circumstances. What may or may not be special is not defined but must be determined in the context of each case individually. In the present case it seems to me that the situation is sufficiently out of the usual to justify its characterisation as special and to permit the Court to interfere. Accordingly, I take the view that it would be appropriate for the Court to extend the time for compliance with the springing order up to and including the date upon which an amended defence and counterclaim was filed thereby validating that pleading.
There is however another matter of concern which I raised with counsel during the course of argument in this matter. The plaintiff made concessions in regard to the costs of the application for judgment presumably in order to progress its claim against the defendant more rapidly. On the face of it the plaintiff's application for a partial judgment of some $15,000 was meritorious and the payment of that sum together with interest upon it by the defendant to the plaintiff underlines that point. The question is, is it fair that the defendant should have the time for compliance with the springing order extended and nonetheless receive the concession in regard to costs which was the quid pro quo for that order? In my view it would not be appropriate to allow that to happen. I therefore propose that in addition to extending the time for compliance with the springing order I shall also revoke the existing costs order which made costs in the cause and thereby potentially the defendant's (in the event that it won the action) and substitute for that order an order that the defendant pay the costs of the plaintiff's application for judgment.
Insofar as the costs of the present application is concerned I shall hear argument from counsel upon the delivery of these Reasons and make such orders as to me seem appropriate in the light of the arguments which are put before me.

[2004] WADC 107

3 June 2004