Principles governing grant of leave to appeal from a discretionary order where the appeal proceeds as a hearing de novo, non compliance with discovery orders.Re Saeco Australia Pty Ltd [2010] VSC 161 (29 April 2010)

May 2, 2010 |

Making an application to re instate a proceeding which was struck out because of non compliance with court orders is often a grinding experience.  Such applications are generally made in the teeth of vigorous opposition notwithstanding the reluctance of courts to shut out litigants.  The issue in Re Saeco Australia Pty Ltd was whether leave was required on an appeal from the Associate Justice under Rule24.06 and the exercise of discretion.

FACTS

On 11 November 2008, Efthim AsJ dismissed theproceeding on the application of the first defendant (“SIG”) pursuant r 24.02 because of the failure of the plaintiffs to comply with orders of the Court for the discovery of documents.  On 2 December 2009 Efthim AsJ set aside order for dismissal on the plaintiffs’ application made pursuant to r 24.06.   SIG appealed the order made under r 24.06.

Leave required

The Plaintiff argued that SIG needed leave to appeal because the proceedings was under the Corporations Rules and rule 16.5(2) requires leave to appeal a decision of the Associate Justice.  Alternatively because it is a corporations matter even if the appeal was grounded under rule 77, a general right of appeal, because it was  Commercial Court matter leave was required under Rule 77.06(2.1). SIG argued that because the claim was dismissed there was no proceeding under the Corporations Act and the application was at large, hence no leave requirement.  A very technical argument.

Davies J found leave was required but not pursuant to Rule 16.5(2) but under Rule 77.-6(2.1).  The proceeding was a Corporations matter when dismissed.  When it was reinstated it was put back into the Corporations List.

Principles in granting leave

Davies J identified  the key principles in the exercise of discretion regarding the grant of leave as:

  1. whether in all the circumstances the decision from which the appeal is brought is attended with sufficient doubt to warrant it being reconsidered [7]
  2. the Court must be satisfied that there are reasons to grant leave and the Court must exercise its discretion judicially, even though it is not a discretion confined by particular criteria that must be satisfied [8].
  3. It is not a sufficient reason to grant leave that an appellate court may have exercised the discretion differently if the matter had come before it at first instance. An appellate court will not normally interfere with a discretionary decision unless the Court can identify some error in the exercise of discretion [8].
  4. Where some error in the exercise of discretion can be identified the question of injustice flowing from the order sought to be appealed will generally be an important consideration on the issue of grant of leave, particularly where, as here, the appeal is sought on an interlocutory order [7] & [8]

Davies J found there was no error in the exercise of discretion by Efthim AsJ.    The principles relating to an exercise of discretion to set aside judgment involving non compliance, are those set out in the Court of Appeal decision of Jorgensen v Slater and Gordon. At [14] Davies extracted part of the decision which stated:

The court has a wide discretion to relieve a party of the consequences of non-compliance with a self-executing order. The governing consideration, as in every aspect of practice and procedure, is what justice requires. As Burt CJ said in Link Blocks Pty Ltd v Fullin, all the circumstances must be weighed in the balance and one must not … lose sight of the fact that the justice spoken of is an even-handed justice to [both sides].

The power to relieve must be exercised with care. As Roskill LJ said in Samuels v Linzi Dresses Ltd, it is a power which should 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.

………..

We would also adopt what Newnes J said regarding the considerations which should ordinarily be brought to bear in considering the exercise of this discretion. The court should have regard at least to the following matters:

(a) the circumstances in which the self-executing order was made;

(b) the reasons for non-compliance with it;

(c) the prejudice to the defaulting party if relief were not granted; and

(d) the prejudice to the innocent party if relief were granted.

As to the reasons for non-compliance, it is of the first importance to ascertain whether the failure to comply was wilful, that is, was reflective of deliberate disregard of, or indifference to, the court’s order. As Browne-Wilkinson VC said in Re Jokai Tea Holdings Ltd:

The court should not be astute to find excuses for such failure since obedience to orders of the court is the foundation on which its authority is founded. But, if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed (references omitted).

Davies J focused on the phrase “what justice requires” in Jorgensen stating that the court should involve itself in a broader inquiry when considering the exercise of power under Rule 24.06, reinstating a proceeding [15]. The enquiry is broader than that involved in imposing sanction under Rule 24.02.  SIGs complaint about Efthim AsJ exercise of discretion was that he failed to take into account the time and effort SIG spent in trying to enforce the Plaintiff’s obligation with its discovery obligation, which would not be properly compensated by a costs order.  In that context SIG, not surprisingly, relied on Aon Risk Services Australia Ltd v Australian National University whose principles were applied in Heng v Wang.  In Heng GrayJ stated:

If the powers given by rules of court to give judgment against a defaulting party were never to be exercised, because of a supposed principle that judgment for a large sum of money should not be given without a trial, the grants of express powers by rules would be hollow. Case-management would be deprived of its only real sanction against a party who, while resisting a claim for a substantial sum of money, defaults persistently in complying with orders of a court. … There is no injustice in judgment for a large sum of money against [the appellants], having regard to [the second appellant’s] apparent determination not to comply with repeated orders requiring him to produce for inspection all of the appellants’ discoverable documents

Davies J found the  breaches were not flagrant and while the default resulted in a delay in the timely hearing of the proceeding it was not wilful and was not unduly disruptive of the Court processes.

CONCLUSION

Davies J undertakes a very concise analysis of the rules governing appeals from Associate Justices.  She also considers the grounds for the exercise of discretion.  It is clear from this and other recent decisions that Aon is having a profound effect on civil procedure, not only in relation to amendment to pleadings and adjournment applications but where the issue involves case management and court process.  It is hard to underestimate its continuing impact on civil litigation.

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