LeMass v DeVere (No 2)[2010] QSC 140

SUPREME COURT OF QUEENSLAND

[1] On 12 January 2010 I ordered:

“1.That by 29 January 2010, the defendants serve on the plaintiff a list of the documents in the possession or under the control of the defendants which are directly relevant to work in progress, fees billed and fees recovered and all other financial data in respect of each of the client matters current as at 2 July 2007 and referred to in exhibit WLL1 to the affidavit of the plaintiff filed on 9 October 2009.”

I published my reasons for making that order.[1] 

[2] On 4 March 2010, in consequence of a complaint by the plaintiff that the defendants had not complied with my order, this matter was listed for a case management review.  At the review, there was an appearance for the second defendant, which by that time had been put into voluntary administration (it has since gone into liquidation).  The first defendant was represented by counsel.  Counsel for the plaintiff complained about the defendant’s non-compliance with the order and indicated that it was intending to seek orders consequent upon that default (including by an application that the first defendant be punished for contempt). However, noting the complication arising from the second defendant having been put into administration, counsel for the plaintiff sought directions for the purpose of bringing the foreshadowed applications.  Counsel for the first defendant at this review sought to make an oral application to extend the time for compliance with the order of 12 January 2010 and also sought to file and read an affidavit by his instructing solicitor which was said to demonstrate the steps which had been taken to comply with the order.  I declined to permit the first defendant to proceed in that way, saying that I thought I would “have to try and find some time to devote proper attention to this matter”.  After hearing further submissions from counsel for the parties, the outcome of the review was that I made the following direction:

“Any application by any party arising out of or in respect of the orders made on 12 January 2010 shall be filed and served by 18 March 2010 and listed for hearing in the Applications List on a date to be agreed by counsel in the weeks commencing 29 March 2010 or 5 April 2010.”

Those weeks were chosen because I was listed to sit in the Applications jurisdiction during that period.  It is clear from the transcript of that review that this direction encompassed both the foreshadowed applications by the plaintiff and the first defendant’s application for an extension of time. 

[3] As events transpired, the applications which were filed by the parties came before me in the Applications List on 9 April 2010.  The applications before me on that day were:

(a)an application by the plaintiff for interlocutory judgment against the first defendant with damages to be assessed or an account of profits taken, this application being premised on the first defendant’s failure to comply with the orders of 12 January 2010;

(b)an application by the plaintiff for the first defendant to be punished for contempt for his alleged failure to comply with the order of 12 January 2010;

(c)an application by the first defendant for an extension of time for compliance with the order of 12 January 2010.

[4] The second defendant had been ordered to be wound up on 25 March 2010.  The liquidator instructed a solicitor to appear before me on 9 April 2010 for the purpose of consenting to an order dismissing an application which the plaintiff had filed seeking leave to proceed against the company under administration.  After that order was made, there being no leave to proceed against the second defendant in liquidation, the second defendant was not further represented at the hearing on 9 April 2010. 

[5] Counsel for the plaintiff and the first defendant agreed that it was appropriate in the circumstances to deal first with the first defendant’s application for an extension of time.  Evidence and submissions on that application were heard.  The plaintiff’s applications were then adjourned to a date to be fixed, pending determination of the first defendant’s application. 

[6] No evidence was adduced from the first defendant himself in support of his application.  Rather, the affidavits relied on were sworn by Ms Chrysilla Stockwin who, in her affidavit sworn on 4 March 2010, described herself as “a partner of Stockwin de Vere, the firm acting for the First defendant”.  In her second affidavit, sworn on 8 April 2010, she said that she was “a director and principal of SDV Pty Ltd trading as Stockwin de Vere, the incorporated legal practice acting for the First Defendant”.  Ms Stockwin was cross-examined before me.  She said that, while she was the sole director of the incorporated legal practice conducted by SDV Pty Ltd, the first defendant held 95 per cent of the issued capital in the company.  Despite this corporate ownership, and perhaps a little curiously, Ms Stockwin deposed in her second affidavit that:

“[The first defendant] has asked Stockwin deVere and myself to act on his behalf in this litigation.  He has not played an active day to day role in the work required and I would not have expected him to do so as he was the client of Stockwin deVere.”

[7] The fact that the first defendant chooses to be represented in this litigation by his own law firm is, in the first instance, a matter for him, and does not of itself have consequences which are directly relevant to the outcome of the present application.  The fact, however, that he is represented by his own firm does not absolve him of the necessity to be properly engaged in the litigation in his capacity as a “client”.  So, for example, the first defendant is not relieved of the undertaking which he is implied to have given to the Court and to the other parties to proceed in an expeditious way[2] merely because he casts himself in the character of a “client” of his own law firm. 

[8] In her affidavit sworn on 4 March 2010, Ms Stockwin said that she was swearing the affidavit in support of an application for extension and to:

“a.Explain the significance of the Open Practice database and the reports it generates in that context;

b.Explain the volume of documents and information that has had to be examined to comply with the Orders;

c.Set out the extensive work that has been conducted to comply with the Orders made on 12 January 2010; and

d.Explain the effect of the Second Defendant being placed into administration on 18 February 2010 by enclosing letters sent to the Plaintiff in that regard.”

[9] She then described at some length the Open Practice computer system used by both “LeMass Solicitors” and “de Vere Lawyers” (the two firms relevant to the dispute in the principal proceeding) which recorded each firm’s financial data as well as information regarding the status of files and work in progress (WIP).  She gave details of the various reports and ledgers kept in the system.  She described a “Matter Transaction Report” produced by the system, which she said was a “collation of all information from the various ledgers holding information of a particular matter”, and that a “Matter Transaction Report” was the second defendant’s “official record of each of the items of relevance to the Claim”. 

[10] Ms Stockwin contended:

“The effect of the Order required the Respondents to collate documents relating to work in progress, fees billed and fees recovered and all other financial data for each of the 897 matters in the List of Matters.  We had initially thought that we would be able to retrieve most of the documents and information needed from OP.  That turned out to be an incorrect assumption for the reasons discussed below.”

[11] She then described the work which she and other staff members did in collating information, leading to a supplementary list of documents being delivered to the plaintiff under cover of a letter from Ms Stockwin dated 29 January 2010.  That letter stated:

“We refer to the Orders made by Daubney J on 12 January 2009.

We enclose a Supplementary List of Documents dated 29 January 2010.  You will observe that it is 23 pages long and discloses 513 documents.

The orders required the defendants to disclose, amongst other things, fees billed in respect of each of the client matters current as at 2 July 2007 and referred to in ex WLL1 to the affidavit of the plaintiff filed 9.10.09.  That wording encompasses a large number of documents.

The list does include a substantial number of invoices but it not complete in this respect.  We have devoted considerable resources to endeavouring to comply with His Honour’s order.  However, in the limited time frame in question we have not been able to complete the list insofar as this class of documents is concerned.

We estimate that it may take us a further four weeks to identify and collate all invoices.  There could potentially be up to 2,682 invoices based on an estimated three invoices for each of 894 matters.

We do not apprehend that provision of the outstanding documents within this time frame will cause your client detriment.  That is because the key information on the invoices has been supplied to your client already.  The client matter balances reports that have been given to you disclose the fact of each invoice, the date it was raised and the sum invoiced.  They also disclose payments received from each client.

Next Friday the Brisbane office from which this matter is run is relocating.  This, regrettably, will disrupt and impede our capacity to attend to this task for a short period commencing next Friday.  The Sanctuary Cove office is relocating latter (sic) in the month.

We respectfully request your client to agree to the time for compliance with His Honour’s order to be extended until 26 February 2010 and refrain from filing any further Application to allow us an opportunity to fully comply with the Order by 2 March 2010.”

[12] In her affidavit sworn on 4 March 2010, Ms Stockwin said:

“18.The List subsequently sent to the Applicant’s solicitor on 29 January 2010 did not record all invoices and receipts collated to date as there was simply insufficient time to record these on the List by that date.  The personnel involved all devoted as much time was humanly possible given other commitments and work and the amount of hours that were available in the days between 12 and 29 January 2010.

19.It was only after a substantial amount of work had been done to identify the invoices that it became apparent that not all invoices on each file were recoverable from OP because either the invoices were too old or they were not recorded electronically.  That meant that towards the end of the period between 12 and 29 January 2010 we realised that it was unlikely we would be able to comply with the Order but we did our best to try and do so.”

[13] As I have said, in this affidavit Ms Stockwin set out some details of the work which she and other staff members undertook and said that after 29 January 2010 she and other staff members identified files which needed to be retrieved from the firm’s storage facility, ordered the retrieval of those files, obtained those files, reviewed the files, and itemised them on a further supplementary list of documents.  She said this necessitated a review of some 897 files which had been retrieved from storage, and described the time taken in identifying the relevant files in the boxes delivered from storage, the work in reviewing those files, and preparation of the supplementary list of documents.

[14] In the meantime, the plaintiff’s solicitors had, on 3 February 2010, written to the first defendant’s solicitors in the following terms:

“We refer to your facsimile dated 29 January 2010, which was received at our office outside of business hours, at 5:42pm on that date.

Our client does not agree to the proposed extension of time to comply with the orders of Justice Daubney. We are instructed to make the following observations:

1.At the time the orders were made, the defendants had been on clear notice for over two months that Daubney J was likely to make orders to the effect of those which were made.  Anyone present at the hearing of the application could have been in no doubt that this was, at least, a very strong possibility.

2.Despite that, it appears the defendants took no steps, either to be in a position to comply with the orders when they were made, or even to assess the length of time that it would take to comply.

3.The defendants were represented by counsel at the time the orders were made (on 12 January 2010).  There was no suggestion by the defendants’ counsel on that day to the effect the defendants could not (or would not, as the case may be) comply with the order within the time stipulated.

4.Clearly, the defendants must have been aware, well prior to 5:52pm on the last day for compliance (29 January 2010), that they would not be in a position to comply with the order and therefore be in contempt of the court.  It cannot seriously be imagined that, up until 18 minutes before 6.00 pm on the due date, the defendants confidently expected to comply with the order that evening, and then suddenly discovered that they needed another 4 weeks.  Notwithstanding that situation, the defendants neither made an application under r.7 of the Uniform Civil Procedure Rules 1999 to enlarge the time for compliance, nor sought our client’s consent to an extension of time within which the defendants could comply with the order.

5.Your letter, taken with the incomplete supplementary list, indicates to us that – even with the extension of time which has been sought – the defendants intend to remain in contempt of the order, by failing and refusing to disclose the following categories of documents:

a.Financial records which show write-offs.

b.Account Reconciliations.

c.Bank reconciliations.

d.Financial data or records which reveal (including the calculation of) the amount owed to the plaintiff or each client file and either written off with or without the plaintiff’s consent or banked to the defendants.

We formally place you on notice that such documents plainly fall within the ambit of his Honour’s order, and that the failure to disclose them has already placed the defendants in contempt.

Notwithstanding that our client does not agree to an extension of time, our client is prepared to “stay its hand” for the time being, so that the defendants have every opportunity to purge their contempt, and just as long as they claim to need in order to do so.  Accordingly, our clients will not approach the court until after 4pm on 26 February 2010.

In the event your clients have not fully and comprehensively purged their contempt of his Honour’s order by that date (and by 4pm), we anticipate that we will be instructed to file a further application seeking, amongst other things:

(1) To commit the first defendant to prison for contempt.

(2) To strike out the defendants’ defence.

(3) To enter judgment for the plaintiff.

In addition, were that situation to arise, we consider that it would be our duty – especially in light of the remarks made by Daubney J. on the hearing of the application – to bring to the attention of the Legal Services Commission the fact that a solicitor of the Supreme Court of Queensland remains in contumelious non-compliance with an order of the court.

We reserve our client’s right to produce this letter on any application to the court, in respect of the relief sought as well as the question of costs.”

[15] The second defendant was placed into voluntary administration on 18 February 2010.  Ms Stockwin says that she had not anticipated that this would occur when she wrote her letter of 29 January 2010.  On 22 February 2010 she wrote to the plaintiff’s solicitor advising of the fact that the second defendant had been placed into administration and that she had sought the administrator’s consent to accessing the second defendant’s documents for the purposes of meeting the first defendant’s disclosure obligations.  She followed that with a letter dated 26 February 2010 advising that the administrator’s consent to accessing the documents had not yet been received and saying that “as a result of the administration and the administrator’s need to consider their position, it may not be possible to disclose all of the classes of documents required by the order of Daubney J today”.  She advised that she had asked the administrator to provide urgent consent to access to the documents and stated that she “will revert as soon as we hear anything from them in that regard”, and asked that the plaintiff take no steps adverse to the interests of the defendants until these issues had been resolved.

[16] On 2 March 2010, Ms Stockwin wrote to the plaintiff’s solicitors, explaining again the difficulties which had been encountered by reason of the second defendant having been placed into administration.  She sought the plaintiff’s consent to a 30 day extension of the orders made on 12 January 2010, and said that she would be serving affidavit material which would be relied on for the purposes of the review which had, by then, been set for 4 March 2010.

[17] In her affidavit sworn on 8 April 2010, Ms Stockwin gave considerably more detail about the work which had been undertaken with a view to complying with the order of 12 January 2010, describing in much more detail the particular staff members who performed particular tasks, meetings that she had with those staff members and actions taken as a consequence of those meetings.  She said, in effect, that one of the outcomes of these inquiries and work being undertaken by her and her staff members was that it became apparent that not all of the invoices and receipts required to be disclosed pursuant to the order of 12 January 2010 could be generated simply by reference to the computer system, but that it would be necessary to have regard to the hard copies of files.  She said that on 20 January 2010 she was informed by one of her staff members that “not all invoices and receipts could be generated from” the computer system, and that she immediately asked this staff member “to start ordering files from archives for those matters which we could not obtain invoices for”.

[18] The fact that Ms Stockwin became aware of this fact on 20 January 2010, some four weeks before the appointment of administrators to the second defendant, was one of the focuses of cross-examination before me.  Ultimately, Ms Stockwin was forced to concede under cross-examination that there was no reason why the actual obtaining of the files (which ultimately occurred in March, after access was granted by the administrators), the physical review of the files and the preparation of a list of documents could not have been done in January 2010. 

[19] In her affidavit, Ms Stockwin described the steps which led to the delivery of what she describes as a “draft list” in late January 2010, and details of the discussions that she had during February and the actions which were undertaken ultimately to retrieve the boxes of files for the purposes of review and extraction of documents.

[20] The upshot of all this was the service on the plaintiff of a further supplementary list of documents on behalf of the first defendant on 15 March 2010.

[21] On 17 March 2010, the plaintiff’s solicitors wrote to the first defendant’s solicitors complaining about the lack of compliance with the order of 12 January 2010, and asserting, amongst other things, that even the latest purported disclosure was “plainly incomplete” and “not in a proper form”. 

[22] There was then further correspondence between the parties, of varying degrees of acrimony, leading to the hearing of the application for an extension of time, with which I must now deal.

[23] The imposition of the time frame imposed in the order of 12 January 2010 was, clearly enough, an exercise in case management. 

[24] Case management is a means to an end, not an end in itself.  There are various tools and techniques available to a managing judge.  Not the least of these is the ability to require the parties to comply with the time limits set by the judge for the completion of identified steps in the proceeding.  At a procedural level, this is done to give the parties a framework within which they can properly observe the requirements of UCPR r 5 to proceed expeditiously.  The discipline of framing timetables also necessarily calls for an inquiry into the proper and necessary steps which need to be included under the timetable.  Appropriate early interrogation by a managing judge as to the necessity for and relevance of interlocutory steps proposed by parties often has the salutary effect of requiring the parties to focus on the central real issues, leading them to discard peripheral or unnecessary matters, and thereby achieve greater expedition, efficiency and cost-effectiveness.  Timetabling also, obviously, prevents a matter from drifting aimlessly, and requires practitioners and clients to devote proper attention and resources to completion of the required steps.

[25] Case management, however, is not just about the parties themselves.  Judges are more aware than most that the courts, as a public resource, are not an unlimited commodity.  Time efficiencies resulting from the management of individual pieces of litigation mean ultimately that the court’s limited judicial and registry resources can also be applied efficiently.  The Chief Justice of Victoria has said extra-curially:[3]

“Judges do not like to see public money wasted because parties are unprepared, not ready or technology lets us down.  When that happens, judges, in my experience, will usually move things along and not stand for any prevarication, procrastination, obfuscation or incompetence.  However, there are constraints imposed on judges by rulings of the High Court and Appellate Courts.  Ultimately, a judge must see that justice is done.”

[26] Despite the fact that judicial case management is employed to achieve outcomes such as cost effectiveness and resource efficiency, it is not a sort of business management tool applied by judges.  When a judge directs that interlocutory steps are to be completed in accordance with a specified timetable, the judge is neither plotting the “Key Performance Indicators” for the litigation nor setting aspirational targets to be met by the parties.  The court ultimately has control of its own process.  The utilisation of the procedural powers for the purpose of case management is a manifestation of that control over the court’s process, with the object always being the administration of justice between the parties according to law.

[27] That is why in Blue Cross Properties (Toorak) Pty Ltd v Mackie & Staff Pty Ltd [2007] VSC 304, in which the legal representatives for a party had not attended a court-ordered mediation, Habersberger J said at [16]:

“It is not a matter of choice whether or not the steps set out in an interlocutory order are observed.  If an order cannot be complied with for some good reason then application should be made to the Court for variation of the order.  At the very least, the consent of the other parties to the variation, such as an extension of time, should first be sought.  Here, Elite’s solicitors did not advise the other parties that it would not be filing any expert report or that they would not be attending the mediation.  If solicitors cannot obtain instructions or funding from the client then they are entitled to file a notice that they have ceased to act.  But whilst they remain the solicitors on the record they are, in my opinion, required to comply with the orders of the Court even if they have no funding.  Thus, Elite’s solicitor should have attended the mediation, given that he had not applied for any exemption from attendance and had not even advised the other parties that he would not be attending.  On the contrary, he had participated in making the arrangements for the mediation.”

[28] In the present case, and notwithstanding criticisms levelled by the plaintiff in respect of, for example, the delay in seeking to retrieve documents from storage, I am satisfied that a significant amount of work was genuinely undertaken by the solicitors for the first defendant in an attempt to comply with the order made on 12 January 2010.  It is also clear that, even if not formalised by a variation to or extension of that order, there was a tacit arrangement between the parties which gave the first defendant a de facto extension of time until 28 February 2010.  It is, as I expressed to counsel for the first defendant in the course of argument, a matter of concern that it does not seem to have occurred to the solicitor for the first defendant when that de facto extension expired that she might need to apply to the Court to explain the circumstances and formally seek an extension.  The necessity to do so only seems to have emerged after the review on 4 March 2010 was fixed, that having been convened not at the request of the first defendant but after receipt of a complaint by the plaintiff about the first defendant’s non-compliance.

[29] If the first defendant had on (or, preferably, prior to) 28 February 2010 applied to me for an extension of time, and provided a good explanation for the necessity for the extension, I would almost certainly have granted it (assuming no insuperable prejudice to the plaintiff).  The present circumstances arise, regrettably, because of a failure to appreciate the necessity for these formalities to be attended to, not merely as matters of form but by reason, quite simply, of the fact that non-compliance with a Court order is a serious matter.

[30] The first defendant now says that compliance with the order was achieved by 16 March 2010 with the delivery of the further supplementary list of documents.  The plaintiff disputes that there has been proper compliance, saying that in many respects the list does not constitute proper disclosure but rather lists excuses for a large number of documents not being located.  That may be an argument for another day if the plaintiff properly challenges the first defendant’s disclosure and seeks, for example, orders under UCPR r 223(2).  But so far as compliance with the order of 12 January 2010 is concerned, the plaintiff can point to no prejudice which cannot be cured by an appropriate costs order if the first defendant were given the extension of time he seeks. 

[31] In the circumstances, and subject to hearing further from the parties on the question of the costs of this and the applications brought by the plaintiff as a consequence of the first defendant’s non-compliance, I propose making an order under UCPR r 7 extending time for compliance by the first defendant with the order of 12 January 2010 to 16 March 2010.