Meyers v Martin[1997] QDC 187

BETWEEN:

AND

REASONS FOR JUDGMENT - JUDGE WOLFE

Delivered the 11th day of July 1997

BETWEEN:

AND

REASONS FOR JUDGMENT - JUDGE WOLFE

Delivered the 11th day of July 1997

The appellants are the defendants in an action commenced in May 1996 against them by the respondent, their former accountant. Pursuant to orders made by the Stipendiary Magistrate on 28 January 1997, judgment was entered in the Petrie Magistrates Court in the sum of $34,104.39 against the appellants.

The appellants now appeal from these orders by which, in effect, the Magistrate gave judgment for the respondent in the amount claimed by him in the action. The orders complained of were made at the hearing of the respondent's application for directions. The respondent's application did not specify the orders or directions sought, other than that the application was for:

The course of the action

The respondent's plaint and summons claims $30,144.00 for the balance of fees said to be outstanding in respect of accounting, financial and management services rendered by him to the appellants between January 1995 and March 1996, and interest and costs. By their entry of appearance, defence and counterclaim, filed about 30 May 1996, the appellants admitted or alleged they had engaged the respondent to provide them with those accounting services which they particularised in the defence, that the respondent “would bill the monthly fees of $1,000 per month plus out of pockets including travelling”, that the appellants had paid the respondent $2,000 on account of fees for consulting, and that the appellants terminated the retainer on 31 March 1996. Pleading an implied term of the retainer, the appellants also alleged that the respondent, negligently and in breach of his contractual duty, had failed to carry out some of those services, that failure also being particularised in the defence. They pleaded that as result of such negligence or breach of contractual duty they had suffered loss and damage full particulars of which could not then be particularised. Although not clearly pleaded the respondent understood that the appellants claimed that loss or damage (not exceeding the Court's jurisdiction) by way of set-off. The appellants also pleaded a set-off against the respondent's claim in respect of timber and other materials provided by the appellants to the respondent, in the amount of $2,891.57. The appellants counterclaimed for damages for breach of negligence and did not counterclaim for damages for breach of contract or breach of contractual duty. As to the co-extensive contractual and tortious duties of care, see e.g., Hawkins v Clayton (1988) 164 CLR 539 at 585, per Deane J).

On 2 July 1996 the accountant issued a notice requiring discovery on oath and requested further and better particulars of the defence and counterclaim, in effect of the allegations of the accountant's failure to provide the relevant services, of the loss and damage allegedly suffered, and of the set off. Apparently neither the further and better particulars, nor discovery, was forthcoming. On 4 October 1996 the accountant brought an application for orders in respect thereof. Consequently, on 5 November 1996, the Magistrate ordered that the appellants, within 28 days from the service of the orders, deliver “bull and complete answers” to the request for further and better particulars, and further that the appellants “furnish a list of the documents (or make and file an affidavit of documents) which are or have been in their possession, custody or power relating to the matters in question in this proceeding.”, The orders were taken out on 14 November and posted to the appellants' solicitors on 15 November. The appellants did not comply with these orders in the time allowed.

One of the appellants was to swear in an affidavit filed in this court that he did “to the best of my ability and knowledge give everything relevant to the case for the representation of my defence by my solicitors” and that “I personally, have not at any time withheld any information from the respondent in respect to the claim”. Although the respondent made discovery, it seems the appellants' solicitors had not attempted to inspect his documents. However by a letter dated 17 December 1996, the appellants' solicitors advised the accountant's solicitors that they had prepared further and better particulars and an affidavit of documents in draft and would provide the final documents on 18 December 1996. They did not.

On 14 January 1997 the accountant's solicitors filed the application for directions, pursuant to which the orders appealed from were made. This application was served under cover of the accountant's solicitors' letter of 15 January 1997, together with an affidavit of the accountant and the affidavit of one of his solicitors, Peter David Lohrisch. The letter of 15 January 1997 advised the appellant's solicitors that the accountant's solicitors would be applying to the Court on 28 January for judgment against the appellants. Mr Lohrisch's affidavit stated:

On about 23 January 1997, under cover of a letter date 22 January, the appellants' solicitors sent to the accountant's solicitors, by facsimile, a draft affidavit of documents and further and better particulars of the defence and counterclaim. The letter advised that a copy of the executed affidavit of documents would be faxed as soon as it was executed, but the solicitors had been unable to obtain further and better particular of the loss and damage. It also advised that the appellants' then accountant had been on holidays since prior to Christmas but would return on 28 January 1997, and that the solicitors would endeavour to obtain those particulars as soon as possible on his return. They suggested the respondent's application for 28 January be withdrawn and asked the respondent's solicitors to advise of their instructions regarding this suggestion.

There was no response until 28 January when the respondent's solicitors advised by facsimile that they “would proceed to judgment” that day.

Accordingly the Magistrate, later on 28 January 1997, ordered the appellants “be debarred from defending the proceedings altogether”, and that final judgment be entered against the appellants for the sum of $29,594.50 (that is, without allowing for the set-off pleaded) and interest of $2,836.14 together with the respondent's costs of $1,673.75. It seems the final judgment sum took into account the moneys that the appellants pleaded they had paid in respect of the retainer, but was not reduced by the amount of the set-off claimed for goods sold and delivered. On 30 January 1997 the respondent delivered his reply to the appellant's counterclaim and the parties agree that the counterclaim is still on foot. Judgment on the plaint was entered on 20 February 1997. An order was made by McLauchlan D.C.J. on 21 April 1997 staying execution of the judgment pending the outcome of this appeal.

Grounds of Appeal

The appellants, in essence, contend firstly, that the Magistrate's decision was in breach of the rules of natural justice because they were not given sufficient opportunity to prepare or present evidence at the hearing to oppose judgment being entered against them. Secondly, they submitted that the Magistrate erred in law failing to take into account relevant considerations, that there was no or insufficient evidence or other material to justify the making of the decision and, in particular, to demonstrate the insufficiency of particulars delivered to the respondent and thirdly, that he erred in law and wrongfully exercised his discretion to both hear the application and to enter judgment in favour of the respondent because the written application served on the appellants sought directions only and that the respondent's application for directions did not comply with the rules.

Procedure on failure to comply with the procedural orders

From at least 15 November 1996, the appellants' solicitors were on notice that failure to comply with the orders of 5 November 1996 would result in the respondent's applying to the court pursuant to Rules 97 and 171 for an order that judgment be entered against the appellants and that they be barred from defending the action.

Rule 97 of the Magistrates Courts Rules provides for procedure on default of delivery of further particulars ordered by a court. The party interested in having the particulars delivered may apply, relevantly, for an order that final judgment be entered against the party so making default for the amount claimed and costs, or for such other judgment or order as to the payment of costs as may be just. It also provides that on the hearing of the application the court “may make an order accordingly or may make such other order as may be necessary to do complete justice between the parties and, in each case, with or without costs”. The rule suggests that judgment in the action is not the only course open on such default, for Rule 97(4) provides, without limiting anything contained in those rules, that a party who, in the opinion of a Court, fails to comply with an order of a Court to deliver further particulars, if successful in the action, may be deprived by the court of the whole or part of the party's costs.

Although Rule 97(2) provides that any judgment entered under an order of a court so made may be set aside or varied by a court within seven clear days from such entry, I was persuaded by the appellant's counsel, Miss Downes, that in these circumstances such a course would not necessarily have been the most appropriate and the better and less expensive course was to appeal at the one time from all orders made. The rules under which the orders were made for non-compliance with the discovery order do not contain a power to set aside the orders so made and consequently judgment entered pursuant to those orders is not a default judgment, see: Nixon v Phelan & Son [1960] VR 94, and as those orders operate to strike out the defence the party so affected must appeal against it, cf where there is non-compliance with a self-executing order and the party seeks an extension of time to comply with the terms of the order: KGK Constructions Pty Ltd v. East Coast Earthmoving Pty Ltd [1984] 2 Qd.R 40, FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268; Drabsch v AMP Fire & General Insurance Co Ltd [1991] 2 Qd R 614; Castlemaine Perkins v Megadja and Muller (SC no. 1984 of 1987, unreported, Williams J, 22 February 1990).

The consequences of failing to comply with a discovery order are set out in Rule 171(1) which relevantly provides:

Consequently, an application such as that envisaged by Rule 6 requires that the orders sought be set out in the application, that is, as is specified in form 89 in schedule 1, that the applicant “state precisely the nature of the order sought”. Finally, Rule 290 (4) provides that any party in an action making an application in chambers may include in the one application all matters upon which the party then desires the order or directions of the court, but it then provides:

The hearing on 28 January

On 28 January 1997 the respondent's application for directions came on for hearing before the Magistrate. The respondent's solicitor advised the Magistrate that the accountant's application was one for directions following the failure to comply with the orders for discovery and further and better particulars and, pursuant to the orders sought in Mr Lohrisch's affidavit, that the court direct judgment be entered for the respondent's claim. However the appellant's solicitor asked for an order striking out the respondent's application, on the grounds that it did not comply with requirements of Rule 289 which, she submitted, were mandatory. The application certainly did not state with any precision, or at all, that the applicants sought the orders which were ultimately made by the Magistrate on 28 January, although Mr Lohrisch's affidavit did expressly state that those orders would be sought. The application did not refer to Mr Lohrisch's affidavit. Secondly, the application was entitled “Application for Directions”. It did not refer to any particular rule and on its face may as well have been an application for directions of the type envisaged by Rule 95, cf. r. 101 of the District Courts Rules, Body v Means [1973] Q L 274, as one under Rule 6.

Other rules, e.g. Rules 8, 99, 310 and 311, confer a wide discretion to amend or to give relief notwithstanding non-compliance with the rules or the forms. The respondent did not seek to amend the application nor, unless the Magistrate's intimation that the forms could be varied amounted to such, was leave given to amend the application pursuant to Rule 99. Rule 99 allows the Court to amend any defect or error at any stage of the proceedings, upon or without an application for that purpose. However compliance with the rules is not necessarily essential as Rules 6, 8 and 10 indicate that non-compliance is not fatal. Rule 8 provides:

This suggest that when satisfied of non-compliance, the Court must, as a result, make some determination in respect of such non-compliance. Rule 10 provides that the rules “shall be so construed as to secure the just, speedy, and inexpensive determination of any proceeding.” Secondly, Rules 310 and 311 relevantly provide that where a party is required to give notice according to a form in schedule, it is sufficient if the notice given complies substantially with the form and “notwithstanding anything to the contrary in these rules, any variance [from the forms], not being in the matter of substance shall not affect the validity or regularity of the proceedings”. Although a liberal construction may be given to what amounts to a procedural irregularity, this irregularity was not waived by the appellants, cf Order 93 r. 18, of the RSC; M & M Civil Engineering Pty Ltd v. Sunshine Coast Turf Club [1987] 2 Qd.R. 401.

However, Rule 104 provides that no process or proceedings of the court shall be set aside on account of any “verbal or technical error or mistake only” and the court may decide what are such errors or mistakes, which are defined by r. 104(2) as those “which have not a tendency to misinform or mislead the opposite party”. The respondent argued that such was the error, if there be one, of having failed to specify the orders sought, cf Order 93 r. 17 of the RSC, Perez v. Transfield (Qld) Pty Ltd [1979] Qd.R 444; Luka Brewery v. Grundmann [1985] 2 Qd.R 204.

The Magistrate appears to have been satisfied that an application under Rule 6 may be brought in the form contemplated by Rule 289.

An application for directions

Rule 6 of the Magistrates Courts Rules (cf rule 4 of the DCR and Order 93 r. 22 of the RSC) does not give a Court a mandate to ignore the provisions of the rules, nor avoid giving a party a fair opportunity to make submissions when the opposing party seeks peremptory or default judgment. The application did not specify the orders sought, but it did seek directions. Rules of courts commonly make provision for directions and, depending upon the particular rules, the purpose of a summons or application for directions such as that under Rule 95, rule 101 of the DCR r O. 20 of the RSC, will be to facilitate the progress of an action by settling matters pertaining to its hearing and not its peremptory termination, see, Body v Means [1973] Q L 274; Exell v. Exell [1984] VR 1, where such a rule providing for the giving of directions was considered. The issue there was whether the court had the power to make self-executing or guillotine orders on a summons for directions, and it was said, at pp 6-7 that it was clear that the purpose of the rule was -:

The power under Rule 6

Although couched in wide terms, the Court's discretion to give directions under Rule 6 is predicated upon there being no form of procedure prescribed by the Rules and in that case for consideration to be given to the Rules of the District Court. These rules were not mentioned. Nor does it appear from the transcript of argument and reasons that any regard whatsoever was had to those rules. The Magistrate proceeded as though, once satisfied that the appellants had failed to comply with the orders for particulars and discovery within the time allowed and that those orders were not guillotine orders, then nothing more need or could be considered or done by him other than he declare the appellants be debarred from defending and that he order final judgment be entered against them.

A party is entitled to assume that the rules will be given effect, particularly mandatory provisions such as those in Rule 289. The accountant's solicitors did not give notice that they would ask the Magistrate to amend the application or to exercise his discretion in any other way to negate the effect of non-compliance with that rule. It is not to the point that the solicitor's affidavit and their facsimile of 28 January had indicated they would be seeking judgment. In turning to consider whether or not the respondent's application was a “valid” application, he decided that there did not seem to him to be “any real problem with the application itself”. The directions sought were not mentioned in the application, but he thought as the directions sought were the orders sought in the affidavit, that the affidavit “expands” the directions sought and, curiously, that that was “covered” by Rule 289(4). The Magistrate indicated he could not see that any other directions could have been asked for unless the respondent had wished to be amenable and asked for an adjournment. However it was open to him to make a self-executing or guillotine order if he was satisfied that the particulars requested had not been supplied or that proper discovery had not been made, see: Castlemaine Perkins v Megadja and Muller (SC no. 1984 of 1987, unreported, Williams J, 22 February 1990). The Magistrate felt the forms could be varied, and concluded:

The respondent's solicitors letters of 15 January and 28 January and Mr Lohrisch's affidavit did indicate they would be seeking judgment. But Rule 289(4) does not contemplate compliance with that rule by those means in circumstances where the application does not refer to the affidavit or to Rule 6. Rule 104 is then relevant in ascertaining whether the failure to specify the orders should militate against the judgment being set aside if that failure be only a “technical error” as defined under Rule 104(2). But the Magistrate did not decide that the failure to comply with Rule 189 was a technical error or mistake. Nor did he amend or allow an amendment of the application. Consequently it seems to me that the judgment was obtained irregularly and should be set aside, see: Vosmaer v Spinks [1964] QWN 36. However I shall also proceed on the basis that the judgment was regularly obtained. The appellants satisfied me that they have a good defence on the merits and have satisfactorily explained their failure to comply with the orders in the time allowed, see: Rosing v Ben Shemesh [1960] VR 173, and for further reasons, explained below, the appeal should be allowed and the judgment should be set aside.

The further and better particulars and the list of documents

The Magistrate decided that the appellants had failed to comply with the orders for discovery and for further and better particulars. He had before him the appellants' solicitor's affidavit exhibiting the further and better particulars and the draft affidavit of documents which had been delivered to the respondent's solicitors on about 23 January 1997. Under this affidavit, the appellants' solicitor explained her letter of 17 December 1996 had been sent when the affidavit of documents and the further and better particulars had been prepared in draft, that she had then anticipated the final documents on 18 December 1996, but on attempting to contact the appellant's new accountants to obtain further details, she ascertained that those accountants were absent on holidays and she was unable to complete the further and better particulars. This provided an explanation for the absence of those particulars. At the hearing of the appeal, it was suggested that the explanation was not a reasonable one because the time for compliance with the earlier order had elapsed when she ascertained the new accountant's unavailability. The material before the Magistrate showed the orders were sent under cover of a letter dated 15 November 1996. Assuming the orders were posted that day then in the ordinary course of post, the earliest date on which they would have been received was 18 November 1996, see s. 39A(1)(b) of the Acts Interpretation Act 1954.

Prior to the hearing, the only response to these particulars was that contained in the respondent's solicitor's facsimile of 28 January, the somewhat ambiguous: “our client contests the matters raised in your client's further and better particulars”. But on the appeal, and to some extent before the Magistrate, the particulars were said to be deficient in their failure to give proper particulars of accountant's alleged negligence, that is the manner in which accounting services supplied were below the standard agreed, and of the loss and damage alleged to have been suffered by the appellants. The appellants also provided proper particulars of the set-off claimed in respect of goods sold and delivered. The particulars provided contained material facts concerning the appellants' allegation that the accounting services provided were deficient, as was requested, and they identified the items under which loss and damage would be quantified -- the cost of rectifying the appellants' books and of amending the tax returns for the business and the partners of the business and any penalties on additional tax payable as a result of the accountant's negligence -- and stating that full particulars of the penalties were not then available but would be provided on receipt. The particulars provided were in my view the particulars of the defence and counterclaim “necessary” to ensure the litigation be conducted fairly and without surprise, see: The King v Associated Northern Collieries [1910] 11 CLR 738 at 740, cf O. 22 r. 1 of the RSC, rule 102 of the DCR. The respondent, on appeal, submitted that the grounds of defence to the respondent's claim were not pleaded, and apart from the set-off in respect of goods sold and delivered, particulars of loss and damage were crucial as allegedly the respondent would be entitled to judgment to the extent that the respondent's claim exceeded that of the appellants. But where judgment is sought on alleged admissions in a defence, the facts in question must be “clearly pleaded and as clearly admitted”, see: Ash v Hutchinson & Co (Publishers) Ltd [1936] Ch 489 at 503 per Lord Greene; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129, and see Dare v Pulham (1982) 148 CLR 658. This was not a clear case for such summary determination. Secondly, it may be accepted that in an action based on contract, not only should it be clearly pleaded whether the claim arises under a term of the contract relied on and how the claim arises thereunder as appears to have been done in this case, or whether the claims is for damages for breach of contract. If the claim is for breach, the relevant terms of the contract should be pleaded together with full particulars of the breach or breaches alleged and the nature and extent of the loss and damage alleged to have been occasioned thereby, see: J Jacob and I S Goldrein, Pleadings: Principles and Practice, 1990, at 81. The appellants did not counterclaim for damages for breach of contract, they claimed by way of set off that they had suffered loss and damage as a result of the respondent's breach of contractual duty and negligence. The respondent's submission as to the inadequacy of particulars for loss and damage was misconceived for the appellants provided the best particulars then available. In determining the sufficiency of the particulars the Magistrate failed to take into account that at that stage the court was concerned with “the raising of issues, and not with their merits” (cf Commonwealth v Verwayen (1990) 170 CLR 394 at 456, 464 per Dawson J).

The respondent's solicitors had received the unsworn affidavit, and hence a list of documents, some days before the hearing of their application for directions. Where a court is satisfied from admissions in the pleadings or other documents before the court that discovery is incomplete or that the discovering party has misconceived the nature of his case, the court will usually order a further and better affidavit or list of documents: Mulley v Manifold (1959) 103 CLR 341, 342-344; Jones v Montevideo Gas Co (1879-1880) 5 QBD 556, 559; British Association of Glass Bottle Manufacturers v Nettlefold [1912] 1 KB 369; [1912] AC 709; (cf Rule 167(1) of the MCR; rule 191 of the DCR). But the respondent gave no notice to the appellants he they would specifically challenge the sufficiency of the list. Among the documents discovered by the appellants were correspondence between the parties, tax returns and books of account for the periods ended 30 June 1995 and 1996 and some invoices, copies of which appear to have been annexed to the particulars. The list or unsworn affidavit did not further identify the returns and books of account, but these documents seem to me to relate to issues raised in the defence and the counterclaim. However it was submitted on the respondent's behalf that the appellants had failed to comply with the order for discovery as no documents relevant to the counterclaim for negligence or breach of contract “seemed to have been listed”. Plainly this was not correct.

The appellants, in my view, had made discovery. That was not the occasion for querying the sufficiency of the list of documents. If that was to be done, directions should have been made for a time when that could be argued or for a further order limiting the time for discovery. Secondly, the particulars were not deficient at that stage. However five months had elapsed between the giving of the notices requiring discovery and requesting particulars and the making of the earlier orders, and the documents were not provided until about five weeks after the time limited by those orders had elapsed. The Magistrate seemed of the view that such a time frame called for an extremely punitive order.

The failure to comply with an order for discovery or particulars

The transcript of the proceedings reveals that the Magistrate was concerned that the appellants had disobeyed an order of that court and that the “defendant has done the wrong thing all the way along the line”. However he also found that the relief sought was not set out in the application (T.5); he seemed to accept the accountant's solicitors' submission that it was “very hard” on the accountant to have to wait for payment until the Australian Tax Office had made a decision and, which was not sworn to, that in effect that facts were such that the loss in respect of tax or penalties was not in issue (T.8). In determining that the appellants had not complied with those orders, the learned Magistrate did not find that discovery was incomplete. Although comments made suggest he accepted, without expressly so finding, that the particulars provided of loss and damage were insufficient, his finding of failure to comply was predicated essentially on the appellant's failure to comply with the orders within the time ordered. The Magistrate noted that the orders for particulars and discovery had not been guillotine orders. He suggested there was a “certain” remedy for failure to comply with an order for discovery against a defendant where there was not a guillotine order, the remedy pursuant to Rule 171 being that the defendant be debarred from defending or allowed to defend only on such terms as the Court thought fit. He said as the accountant had asked for directions and there had not been a guillotine order, then he would direct, pursuant to Rule 171 that the defendants be debarred from defending the proceedings. He went on to consider non-compliance with an order for particulars under Rule 97 and the orders which might be applied for where there is non-compliance with such an order, observing that “pursuant to Rule 6 I could direct that judgment be issued”.

The powers conferred on the Court to strike out the defence (Rule 97 cf rule 103 of the DCR) or to debar the defendant from defending (Rule 171 cf rule 195 of the DCR) are discretionary. The innocent party is not entitled as of right to the orders sought and made. The practice of many courts is to exercise the power to strike out an action or defence only if the offending party has intentionally flouted the rules. It was not the case that the respondent would suffer prejudice which could not be cured by an order for costs in the event the appellants were given a longer period within which to comply with the orders made, see, for example, Douglas v John Fairfax & Sons Ltd [1983] 3 NSWLR 126.

such orders as may be just

It seemed to be assumed that as the orders made on 5 November were not self-executing or guillotine orders, the accountant then needed to bring an application for directions. Self-executing orders are not uncommonly made by courts when a party has failed to comply with an earlier order for discover or for particulars. The accountant's solicitors may have been dilatory, but the list of documents ordered was provided before 28 January, together with some of the particulars sought. The solicitor had attempted to explain why the particulars of loss and damage had not been forthcoming, and had given what seemed to be a reasonable explanation for that failure. Even where a party has breached a self-executing order, the court must decide the consequences of that failure, and the relevant issue is whether that failure was intentional or contumelious: cf In re Jokai Tea Holdings Ltd (Note) [1992] 1 WLR 1196 at 1203; Andrew v Baradom Holdings Pty Ltd (1995) 36 NSWLR 700. The accountant's solicitors had not, prior to the hearing, advised the appellant's solicitors of the respects in which they challenged the list of documents nor whether the particulars provided were inadequate. It was open to the Magistrate at least to direct that any challenge to the sufficiency of the list be set down for hearing on another date.

The Magistrate, of course, was exercising a discretion. Nonetheless it is one to be exercised judicially. It is well settled that “particular caution” should be exercised “in reviewing decisions pertaining to practice and procedure”, see: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 per Gibbs CJ, Aickin, Wilson and Brennan JJ. In Adam P Brown Male their Honours approved the well-known statement of Jordan CJ in Re In Will of Gilbert (1946) 56 Sr (NSW) 318 at 323 which distinguished between an exercise of discretion on a point of practice or procedure, on the one hand, and an exercise of discretion which determines substantive rights, on the other. The restrain to which an appellate court should submit itself is less stringent where the exercise of the discretion is determinative of legal rights than it is where the discretion relates only to points of practice and procedure which do not determine any substantive rights of the parties.

In this case such an exercise of the discretion had the capacity to affect substantive rights as distinct from procedural ones. Although appellate courts will always be slow to interfere with rulings or decisions made by a court in the exercise of its discretion, it is nonetheless their duty to do so if they are of the opinion that the discretion has miscarried and injustice has resulted.

The rules of court relied upon by the respondent do not provide only for dismissal of an action or barring or striking out a defence as the consequence of a failure to comply with a procedural order or direction. The rules of the Supreme Court and the District Court may be usefully compared with those of the Magistrates Courts. Under rule 103 the District Court may order final judgment against a defaulting defendant or may “make such other order as may be necessary to do complete justice between the parties” (cf O. 31 r. 17 of the RSC). The principles applicable to the exercise of the Supreme Court's inherent jurisdiction to dismiss an action for want of prosecution (see Birkett v James [1978] AC 297; Dempsey v Dorber [1990] 1 Qd R 418) are relevant to an application to dismiss pursuant to O. 31 r. 17, see: Bruce Pie & Sons Pty Ltd v Mainwaring [1987] 1 Qd R 304. Relevantly the party applying must show that the default has been “intentional and contumelious, e.g., disobedience to a peremptory order of the Court or conduct amounting to an abuse of process of the Court”, see Birkett v James at 318, per Lord Diplock.

Obviously non-compliance with such an order is an important factor in considering the appropriate decision which should be made on any consequential application. Usually even a self-executing or guillotine order is not made unless there has been continuing default, or at least default of an order or direction fixing the time in which a procedural step must be completed. Otherwise it would be rare indeed that a failure to comply with a procedural order or direction such as that of the appellants, would amount, in the words of Bryson J in Andrew v Baradom Holdings Pty Ltd [1995] 36 NSWLR 700 at 705, to “contumacy or intentional defiance or disregard of the court's orders”.

The power conferred by the Magistrates Courts Rules to strike out a defence for non-compliance with an order for particulars or to debar a defendant from defending and order judgment be entered for non-compliance with a discovery order, may also be compared with powers contained in the Federal Court Rules for dealing with the failure of a party to comply with an order directing that a party take a step in a proceeding. The power conferred by O. 10 r. 7 of the FCR was considered by the Full Federal Court (Wilcox, Pincus and Gummow JJ) in Lenijamar Pty Ltd v AGC (Advances) Limited (1990) 27 FCR 388 noting, at 394, that cases such as Birkett v James provided little assistance, relying as they did on a variety of factual situations and a “miscellany of Rules of Court” and that the Federal Court had its own system of case management. Order 10 r. 7 confers wide powers which include the making of orders that the proceeding be stayed or dismissed or for judgment against the party in default, as well as the power to make any other or directions and specify such consequences for non-compliance with the order “as the Court thinks just”; cf Rules 6(3), 10, 97,171 and 290(4) of the MCR. The Full Court noted there that the exercise of the power was not conditioned by there being intentional default, contumelious conduct or inexcusably delay - merely the failure to comply with an order directing the party take a step in the proceeding. But, as Wilcox and Gummow JJ said, at 396-7, the attitude of the party to the default and the Court's judgment as to whether or not that party genuinely wished the matter to go to trial within a reasonable period would usually be important factors in weighing the proper exercise of the discretion conferred by the rule; secondly the rules must be administered “sensibly and with an appreciation of the fact that some delays are unavoidable, and unpredictable, by even the most conscientious parties and their lawyers, and of the likely serious consequences to the applicant of the staying or dismissing a claim”; and thirdly, without limiting the circumstances under which the rule might be sought to be used -

Conclusion

With due respect to the learned Magistrate I have come to the conclusion that he was in error in granting the relief sought in the supporting affidavit and in failing to dismiss or strike out the respondent's application. As properly construed, the rules required that the appropriate order would be one which would, in the relevant circumstances, do justice between the parties. The Magistrate quite properly had regard to the impact on the respondent of “waiting for his money”, but the Court must, in my view, by cautious to ensure that the rules and practices of the Court are used in aid of doing justice between the parties rather than become an inflexible barrier to its achievement, see: GSA Industries Pty Ltd v NT Gas Ltd ( 1990 24 NSWLR 710) per Kirby P at 714:

The reasons which the learned Magistrate gave in deciding to make the orders appeared to me to give little or no weight to the legitimate interests of the appellants while over-emphasising the potential prejudice to the respondent. At that stage of the action the only prejudice suffered by the respondent was that facing any other plaintiff who had been forced by a defendant's non-compliance with the rules and default in strict compliance an order of the court, that is delay in advancing the action and in reaching the day of reckoning when the court could determine the validity of his claim. Costs orders will provide some recompense, although rarely do they fully indemnify the party not in default. The loss to the appellants of the opportunity to present on its merits their defence including the set-off was a significant prejudice to them, but the reasoning of the learned Magistrate suggests that little or no weight was given to the prejudice which was likely to flow to the appellants.

Does this mean that the Magistrate was wrong in law or had failed to take relevant considerations into account so as to permit this Court to interfere with the Magistrate's discretion? The mere preference of the appellate court for a result different from that reached below does not authorise the disturbance of the decision appealed from, see: House v The King (1936) 55 CLR 499 at 502-3, 505; Norbis v Norbis (1985-85) 161 CLR 513 at 518-19. One has considerable sympathy for the Magistrate as he received little assistance from the solicitors who appeared before him, of whom I hasten to add Mr Lohrisch was not one, and further, in light of the busy lists which that court is expected to complete each day, the canon of construction imposed by Rule 10 requires ends (a just, speedy and inexpensive determination) which can be difficult to achieve. The discretion conferred by the various rules to which reference was made is a wide one, but in order “promote consistency in decision making and to diminish the risks of arbitrary and capricious adjudication” (see Pambula District Hospital v Herriman (1988) 14 NSWLR 387 at 400-402, per Kirby P), courts have developed guidelines or have itemised those considerations which should be borne in mind when deciding how a discretion should be exercised. Here the Court was asked to exercise a power analogous to that which is exercised in other courts on an application to strike out an action for want of prosecution (Birkett v James [1978] AC 297 at 326), similar to the power to strike out a defence under other rules of other courts, such as that of the Federal Court, where the power arises on non-compliance with a procedural order or direction, and in my view some of the matters which are relevant in those cases should have been considered. The appellants have shown that in refusing to strike out the accountant's application for directions and in making the orders sought by the respondent, the Magistrate acted upon a wrong principle, allowed extraneous or irrelevant matters to affect him, had mistaken the facts and did not take into account the material consideration that the appellants had purported to comply, by the time the matter came before him albeit their new accountant was unavailable during the summer holidays, with the substance of the orders made earlier: see Lewis v Utting ex parte Utting [1983] 1 Qd R 423, 425.

In effect a miscarriage of justice occurred because of (a) the erroneous ruling on the form of the application, (b) his acting on an assumption, in circumstances where it may be implied the appellants' notices of assessment would be amended by the Commissioner of Taxation, that the particulars of loss and damage were demonstrably insufficient, (c) by accepting the appellant's submissions which were not supported in any respect by material filed in support of the application, and so concluding, implicitly, that the appellants would not suffer any loss consequent on the amendment of assessments, (d) the erroneous assumption that the only appropriate exercise of his discretion, in circumstances where the orders breached had not be guillotine or peremptory orders and the respondent had not sought an adjournment, was to make the orders sought by the respondent, and (e) the failure to have regard to the guidelines or practice applicable to the exercise of a discretion whether or not to order judgment peremptorily against a defendant.

Accordingly, I would allow the appeal and order that the judgment be set aside. I will hear argument as to the form of order. Costs will follow the event.