The Owners of Riviera Apartments v Wembley Lakes Estate Pty Ltd

[2009] WASC 37

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   THE OWNERS OF RIVIERA APARTMENTS -v- WEMBLEY LAKES ESTATE PTY LTD [2009] WASC 37

CORAM:   MASTER SANDERSON

HEARD:   27 JANUARY 2009

DELIVERED          :   26 FEBRUARY 2009

FILE NO/S:   CIV 1236 of 2002

BETWEEN:   THE OWNERS OF RIVIERA APARTMENTS (STRATA PLAN 35851)

Plaintiff

AND

WEMBLEY LAKES ESTATE PTY LTD (ACN 062 410 922)
First Defendant

PETER JOHN WILSON
Second Defendant

Catchwords:

Practice and procedure - Matter entered onto Inactive Cases List - No notice from principal registrar matter on list - Judgment entered - Effect of irregularity on judgment

Legislation:

Nil

Result:

Application to set aside judgment dismissed

Category:    A

Representation:

Counsel:

Plaintiff:     Dr P R MacMillan

First Defendant              :     Mr D K Barker

Second Defendant         :     Mr B D Campbell

Solicitors:

Plaintiff:     Kitto & Kitto

First Defendant              :     Chalmers Legal Studio

Second Defendant         :     Mony de Kerloy

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

Brealey v Board of Management Royal Perth Hospital [1999] WASCA 158; (1999) 21 WAR 79

Metroinvest Ansalt v Commerical Union Assurance Co Ltd [1985] 2 All ER 318; [1985] 1 WLR 513

Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd (2007) WASCA 257

1. MASTER SANDERSON: By notice dated 2 November 2007, Registrar Rimmer summoned the parties to a hearing to show cause why this matter should not be placed on the Inactive Cases List. At a hearing on 17 December 2007 the matter was placed on the Inactive Cases List. No steps were taken to have the case removed from the list and, pursuant to O 29A r 21(1) of the Rules of the Supreme Court 1971 (WA), on 17 June 2008 the action was 'taken to have been dismissed for want of prosecution'. The plaintiff now seeks to reinstate the action. Before dealing with the nature of the application itself, it is necessary to say something about the facts of the case.

2. On 25 October 2006 the parties went to a mediation in this court.  There is a difference between the plaintiff and the defendants as to whether or not the case was settled at that mediation.  It is the plaintiff's position that the action itself was settled and that the settlement was to be embodied in a deed.  It is the defendants' position that the action was settled subject to preparation of a deed.  In other words, unless and until a deed of settlement was drawn up and signed by the parties there was no settlement.  It is unnecessary for me to resolve the dispute between the parties as to the terms of the settlement.  It is enough for present purposes if I note that there is such a dispute.

3. When the parties attended before Registrar Rimmer, consequent upon the show cause notice, counsel for the plaintiff consented to the matter being placed on the Inactive Cases List.  This seems to be rather strange; but there is no doubt as to the fact of the consent - see the affidavit of Johnson Grey Kitto sworn 27 October 2008 and filed in support of this application.  It would appear that counsel for the plaintiff anticipated that the necessary deed would be drawn and engrossed prior to the expiration of the six month time limit.  As it turned out, that optimism was ill‑founded. 

4. After a matter is placed on the Inactive Cases List, the court is to take certain steps. Order 29A r 19(1), as at the date the order was made putting this case on the Inactive Cases List, read as follows:

   (1)When an order is made under rule 17, or an order made under rule 18 takes effect, or a case is to be taken to be inactive under rule 18A, the Principal Registrar must -

   (a)put the case on the Inactive Cases List; and

   (b)give all parties to the case written notice that the case is on the Inactive Cases List.

5. (This rule was amended as of 22 February 2008.  The amendment is to (1)(b) and adds the words 'and of the effect of rule 21'.  What is relevant in this application is that the principal registrar was required to give notice.  There was no stipulation in the rules as to what that notice ought contain.)

6. It is common ground that no such notice was given. As is the practice in registrars' chambers, at the conclusion of the hearing an order was generated by the registrar's associate and provided to each counsel. This is the engrossed order. It is often referred to as the 'purple slip' - a reference to the colour of the paper on which the order is generated. It was submitted on behalf of the defendants that this order was the notice required by O 29A r 19(1)(b).

7. That is clearly not the case. 

8. Order 29A r 17(4) of the rules anticipates that at the hearing of a show cause notice the registrar may place a case on the Inactive Cases List. If such an order were made other than in registrars' chambers it would be up to one or other of the parties to extract that order in the usual way. However the registrars, for the convenience of the parties, provide a copy of the order on the spot. No extraction of the order is necessary. But that fact remains that the 'purple slip' is, or is tantamount to, an extracted order.

9. Order 29A r 19(1)(b) is something entirely different. It requires that the principal registrar give written notice that the case is on the Inactive Cases List. The clear intent of the rule is that this should be a separate notice. There is no warrant for assuming that the provision of a copy of the order made is the written notice referred to in the rule.

10. There is an additional difficulty with the defendants' submission. The notice is to be given by the principal registrar. There is no reference to the principal registrar in the definitions found in O 1 r 4. 'Registrar' is defined to include the principal registrar but that is of no significance. In s 4 of the Supreme Court Act 1935 (WA) the 'Principal Registrar' is said to mean 'the Principal Registrar of the Supreme Court appointed under the provisions of this Act, and includes a duly appointed acting Principal Registrar'. So then, the notice must be under the hand of the principal registrar. Under O 67 r 2 any act 'of a ministerial nature' can be done by another officer of the court. Even assuming that the giving of the required notice is a ministerial act, the provision of an order not purporting to be a notice required by the rules cannot, in my view, by said to be in compliance with the rules.

11. The failure of the court to give notice amounts to an irregularity.  The question then is whether or not this irregularity is sufficient to warrant setting aside the deemed dismissal of this action.

12. There is some difference of opinion in this court as to the proper approach to be adopted to O 2 r 2(1).  What is clear is that the non‑compliance with the rules does not render any judgment which has been entered a nullity.  That, I think, emerges clearly from the decision of the Court of Appeal in Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd (2007) WASCA 257 [48] ‑ [49]. In the Pilbara Infrastructure case, the Court of Appeal was dealing with a situation where a court officer had stamped a memorandum of appearance with the wrong action number.  The court held that this was an irregularity.  In one sense it was the oversight of the court officer which was the problem.  Thus it is proper here, I think, to regard the failure of the court to give the requisite notice under the rule was an irregularity.

13. In the Pilbara Infrastructure decision the Court of Appeal said:

    There is Australian authority suggesting that O 2 r 1(1) has the effect that a first reading might suggest. That is, that by operation of the rule and without any order of the court, the irregularity shall not nullify the proceedings or any step taken in the proceedings, or any document therein [50].

14. The court then went on to refer to the English decision of Metroinvest Ansalt v Commerical Union Assurance Co Ltd [1985] 2 All ER 318; [1985] 1 WLR 513, where Cumming‑Bruce LJ said:

    As I construe Order 2 rule 1, from the moment a step in proceedings is tainted by irregularity through failure to comply with the rules, the irregular step or document remains irregular inter partes until the matter has been brought before the court and the court has decided in which way to exercise the jurisdiction conferred by Order 2 rule 1(2) [520].

15. In Brealey v Board of Management Royal Perth Hospital [1999] WASCA 158; (1999) 21 WAR 79 the Full Court said that Cumming‑Bruce LJ's view about O 2 r 1 was correct but without any discussion of the question.

16. It would seem then that in this State there is full court approval of the decision in Metroinvest.  But based upon the views expressed by the Court of Appeal in Pilbara Infrastructure there must be considerable doubt as to whether the Metroinvest decision should be followed.  There is Australian authority favouring a different approach.

17. In this case, it may be that a different outcome arises depending on which approach is adopted.  If Metroinvest is followed then there was an irregularity and until that irregularity was corrected by an application on the part of the defendants the judgment could not stand.  It must be regarded as irregular.  If Metroinvest is not correct then the judgment would stand and, until the plaintiff obtains an order, the judgment would hold.  To put the matter that way is not to suggest that it is simply a question of who should issue any application.  If Metroinvest is to be followed then the judgment is irregular and should be set aside.  In other words, the plaintiff is entitled to the order that it seeks and no further consideration of the merits is required.  On the other hand, if the judgment is to stand then the plaintiff must bring itself within the provisions of O 2 r 2(1), that is to say it must satisfy the court that the application has been made within a reasonable time.  It is also necessary to take the matter further because the power to set aside the judgment is discretionary.  That discretion is unfettered but must be exercised judicially.  That necessarily requires a consideration of all of the circumstances which led to the judgment being entered.

18. In my view, the correct approach is the approach adopted in other Australian jurisdictions and assume that a step taken in the proceedings is valid despite a prior irregularity.  In other words, in this case, to accept that the judgment entered is regular.  To adopt the Metroinvest approach is, in my view, to introduce a note of uncertainty into litigation generally which is both unnecessary and unwarranted.

19. The question then is whether or not this judgment ought be set aside based upon irregularity.  The first question to enliven jurisdiction is to ascertain whether or not any step has been taken 'within a reasonable time'.  The judgment was entered 17 June 2008.  The application to set aside the judgment was brought on 28 October 2008, some four months later.  What then is the explanation for this delay? 

20. The plaintiff's position on this issue is set out in par 20 ‑ 29 of Mr Kittos' affidavit.  On 20 June 2008 Mr Barker, a solicitor for the first defendant, contacted the plaintiff's solicitor.  Mr Barker effectively said that in his view the action was at an end and, as no settlement agreement had been reached, the matter could go no further.  A further telephone discussion took place on 23 June 2008 discussing the settlement and the effect of the order for dismissal.  No agreement was reached. 

21. By letter dated 27 June 2008, Mr Barker confirmed the first defendant's position and, in the last paragraph of his letter, offered to 'accept the deed as submitted or stand by the termination …'  Mr Kitto was not entirely sure what was meant by this letter.  On 10 July 2008 he emailed Mr Barker and Mr Campbell (solicitor for the second defendant) advising the plaintiff would execute the last draft settlement deed subject to one amendment.  On 5 August 2008 Mr Barker sent a fax to Mr Kitto advising that the first defendant regard the settlement agreement as being terminated and the matter at any end.

22. By letter of 26 August 2008, the second defendant's solicitor advised that the second defendant was prepared to honour the settlement agreement provided the first defendant and the plaintiff settled, or that the second defendant was released from all liability.

23. Mr Kitto says that between August and October 2008 the plaintiff held two meetings of its council of owners and took further advice on available remedies.  Mr Kitto notes that, given the identity of the plaintiff, consultation with a number of owners was required and that consultation process resulted in some delay.

24. In all the circumstances, I am not satisfied that an application was brought within a reasonable time.  Faced with dismissal of the action it was to be expected that the plaintiff would have acted promptly.  It was necessary for the plaintiff's solicitors to take instruction - of that there can be no doubt.  I am also prepared to accept that, given the identity of the plaintiff, consultation with a number of members would take some time.  It may also have been prudent to continue negotiations with the defendants' solicitors.  But taking even the most benign view of these matters, it is difficult to see why it should have taken more than four months to bring this application.  It could have been brought almost immediately.  If further discussions between the solicitors were required or if detailed instructions from the plaintiff was necessary then programming orders could have been crafted which would have allowed for these matters to take place.  But in my view, four months of largely unexplained delay is too long and is not reasonable.  I am therefore not satisfied that the discretion provided for in O 2 r 2(1) is enlivened.

25. Lest I be wrong in that conclusion I should also say that even if the discretion is enlivened I would not exercise it in the plaintiff's favour in this case. There are a number of reasons for reaching that conclusion. First, the failure of the court to send notice to the parties was not productive of any confusion. Counsel for the plaintiff consented to the order putting the matter on the Inactive Cases List. Under O 29A r 19(2) as soon as the solicitor receives notice from the court that the matter is on the Inactive Cases List he or she is required to notify the client. It may be that in this case no notice was given to the client. That would be surprising given that the plaintiff's solicitor consented to the matter being put on the list. However there is no evidence one way or the other on this point. Were it the case that as a consequence of no notice being given by the court the client had not been notified and had therefore suffered a prejudice as a consequence of the failure of the court to produce the notice then the circumstances might be different. But as the evidence stands at present, there is nothing to suggest that the failure of the court to deliver the notice had any effect on the plaintiff's position.

26. Second, there is the fact that the case was placed on the list by consent.  It is reasonable to assume that counsel for the plaintiff had some good reason for consenting to such an order.  Having consented and being aware of the consequences of being on the list it seems to me that there is no warrant to protect the plaintiff from the consequences of being on the list. 

27. Thirdly, the plaintiff has approached this matter in a dilatory fashion.  This matter went to mediation on 25 October 2006.  Any loose ends in relation to the settlement should have been tidied up soon after.  The first draft of a settlement deed was available by 7 November 2006.  The parties then discussed various amendments to the deed.  By 14 February 2007 Mr Barker, the first defendant's solicitor, suggested further conferral or a relisting of the mediation.  But nothing was resolved.  There were sporadic attempts throughout the rest of 2007 to resolve the matter but as at the date the show cause notice was issued resolution had not been achieved.  After the matter was placed on the Inactive Cases List, no significant steps were taken by the plaintiff to resolve the impasse over the deed.  As the deadline of 17 June 2008 approached no steps were taken by the plaintiff to have the matter removed from the Inactive Cases List to protect its position.  There is no real explanation provided by the plaintiff as to why the issues between the parties could not have been finally resolved.

28. Finally it is the plaintiff's position that a concluded agreement was reached at mediation and that the agreement is enforceable.  If that is so then the failure to revive this action will not adversely effect the plaintiff's position.  It can seek to enforce the mediation agreement.  I appreciate that a failure to set aside this judgment effectively removes what might be described as the plaintiff's 'fallback position'.  That is to say, if the plaintiff is wrong and no settlement was reached at the mediation then it cannot now argue the merits of this action.  While I accept that is a prejudice, it is not a prejudice which is so severe as to warrant exercising a discretion in the plaintiffs favour.

29. For all these reasons I am satisfied that the application to set aside the judgment ought be dismissed.  The plaintiff ought pay the defendants' costs of the application including the reserved costs.