FEDERAL COURT OF AUSTRALIA Welsh v Digilin Pty Ltd (ACN 078 278 449) [2008] FCAFC 149 PRACTICE AND PROCEDURE – interlocutory decision of single judge – guillotine order under O 35A r 3(1)(c) Federal Court Rules dismissing proceedings in event of non-payment of taxed interlocutory costs by appellant – whether judge erred in exercise of discretion under O 35A r 3(1)(c) – whether possible impecuniosity of appellant precludes dismissal of proceedings in such circumstances Held: appeal dismissed – primary judge properly exercised discretion in O 35A r 3(1)(c) – justice between the parties is paramount Federal Court Rules O 35A r 3(1) Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2004] FCA 1718 cited Cox v Journeaux (No 2) (1935) 52 CLR 713 cited Gao v Zhang (2005) 14 VR 380 considered Graham v Sutton, Carden & Co [1897] 2 Ch 367 cited Hadkinson v Hadkinson (1952) P 285 cited Hines v Birkbeck College (No 2) [1992] 1 Ch 33 cited House v R (1936) 55 CLR 499 cited In re Payne. Randle v Payne (1883) 23 Ch D 288 cited In re Wickham. Marony v Taylor (1887) 35 Ch D 272 cited Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 cited Morton v Palmer (1882) 9 QBD 89 cited Phillip Morris Ltd v Attorney-General for the State of Victoria (2006) 14 VR 538 cited Thames Investment & Securities Plc v Benjamin (1984) 1 WLR 1381 cited Welsh v Digilin Pty Ltd [2007] FCA 2064 affirmed Welsh v Digilin Pty Ltd [2008] FCA 78 cited Wu v Avin Operations Pty Ltd [2006] FCA 36 cited JAMES ANGUS WELSH v DIGILIN PTY LTD (ACN 078 278 449), DIGILIN HOLDINGS PTY LTD (ACN 010 581 058), JONATHON DAVIS and LORELLE TAYLOR QUD 2 OF 2008 TAMBERLIN, GREENWOOD AND COLLIER JJ 19 AUGUST 2008 BRISBANE (VIA VIDEO LINK TO SYDNEY) IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD 2 OF 2008 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JAMES ANGUS WELSH Appellant AND: DIGILIN PTY LTD (ACN 078 278 449) First Respondent DIGILIN HOLDINGS PTY LTD (ACN 010 581 058) Second Respondent JONATHON DAVIS Third Respondent LORELLE TAYLOR Fourth Respondent JUDGES: TAMBERLIN, GREENWOOD AND COLLIER JJ DATE OF ORDER: 19 AUGUST 2008 WHERE MADE: BRISBANE (VIA VIDEO LINK TO SYDNEY) THE COURT ORDERS THAT: 1. The appeal be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD 2 OF 2008 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JAMES ANGUS WELSH Appellant AND: DIGILIN PTY LTD (ACN 078 278 449) First Respondent DIGILIN HOLDINGS PTY LTD (ACN 010 581 058) Second Respondent JONATHON DAVIS Third Respondent LORELLE TAYLOR Fourth Respondent JUDGES: TAMBERLIN, GREENWOOD AND COLLIER JJ DATE: 19 AUGUST 2008 PLACE: BRISBANE (VIA VIDEO LINK TO SYDNEY) REASONS FOR JUDGMENT THE COURT 1 This is an appeal from the decision of Dowsett J of 14 December 2007 (Welsh v Digilin Pty Ltd [2007] FCA 2064) in which his Honour ordered that: · paragraph 21 of the order made on 22 December 2006 be amended by deleting the amount of $20,000 and inserting, in lieu thereof, the amount of $68,609.41. · unless, on or before 29 February 2008, the applicant pays to the respondents the sum of $68,609.41, the proceedings are to stand dismissed. · the applicant pay the respondents' costs of the motion and the hearing of 14 December 2007. Background 2 The proceedings the subject of this appeal have been on foot for almost three years. Relevant background facts appear in the judgments of Dowsett J (Welsh [2007] FCA 2064) and Collier J (Welsh v Digilin Pty Ltd [2008] FCA 78), and may be summarised as follows: · The substantive application in these proceedings was filed in 2005, although the claims of the appellant relate to events occurring from the mid 1990s. · The matter was set down for trial before Dowsett J in April 2006, however the trial dates were vacated after the appellant indicated that he intended to raise new issues in the proceedings. · The matter was re-listed for trial before the primary judge in October 2006, however the appellant indicated that amendment to the statement of claim would be required. The trial dates were again vacated. · On 22 December 2006 by consent of the parties the primary judge ordered the appellant to pay costs of the respondents, including costs thrown away by reason of the vacation of the trial. His Honour also ordered that, in view of the history of the matter, the proceedings be stayed pending payment by the appellant of $20,000 on account of costs, and that the respondents be at liberty to apply for additional stays as the costs orders became quantified by assessment or taxation. As his Honour explained: This may have been an inelegant way of saying that the respondents could apply to increase the amount to be paid as the costs were assessed or taxed. The bills have now been assessed. The total is, as I understand it, $68,609.41, including the costs of the figure. I do not understand there to be any challenge to that figure. (Welsh [2007] FCA 2064 at [4]) · The matter was again listed for trial in December 2007. · No costs ordered by the primary judge were paid by the appellant to the respondents. On 22 November 2007 the respondents filed a notice of motion moving for orders that the substantive application be dismissed pursuant to O 35A r 3(1) Federal Court Rules. · The appellant's solicitor, Mr Boaz Ben Yani, filed an affidavit on 13 December 2007 deposing in summary that: - the appellant had suffered financial hardship; - apart from his claim the appellant's only asset was a car worth approximately $4,000; - the appellant's net income was approximately $728 per week; - the appellant intended to lodge a claim against his previous counsel for professional negligence; and - the appellant had approached a litigation funder to assist him in payment of $20,000 towards the respondents' costs, which sum the appellant believed he would be able to obtain by the end of February 2008. 3 The primary judge observed that, in the absence of any evidence as to the nature of the cause of action against his previous counsel, the proposed claim by the appellant against counsel was of little relevance. Further, it appeared that the claim against counsel and the approach to the litigation funder had occurred only shortly before the hearing, and more detail concerning the appellant's efforts might have been expected if the appellant was genuinely trying to advance the matter (Welsh [2007] FCA 2064 at [6]). 4 In light of these facts his Honour was of the view that the appellant should not be allowed to continue to prosecute the proceedings against the respondents until such time as he paid the costs ordered as a result of his conduct in connection with the scheduled hearings in April and October 2006 (Welsh [2007] FCA 2064 at [6]). In reaching this view, his Honour took into consideration: · the fact that it will, as a general proposition, be inappropriate to prevent a party from litigating a claim to resolution simply because he or she is impecunious; and · notwithstanding this principle, fairness between the parties must be the primary consideration, and the conduct of a party may lead to an order which effectively prevents continuation of the proceedings. 5 His Honour found: [10] In this case the applicant seems to have encountered serious difficulty in formulating his claim. He has, to some extent and in very general terms, sought to blame his previous counsel for that. I am not willing to act on the basis that such difficulty was necessarily attributable to counsel. That is one possibility, but not the only one. That the applicant has experienced difficulty in formulating his claim does not encourage confidence in its merits. On the other hand it does not exclude the possibility that it is a meritorious claim. The difficulties which he has experienced have caused the respondents to incur considerable costs which ought not to have been incurred, and which they ought not to have to pay. They have, however, paid, or are liable to pay, a considerable amount of money, no doubt at least $68,000, and probably significantly more. They, or their lawyers, are out of pocket to that extent. That may not be a compelling consideration in cases where there is reason to hope that the proceedings will be quickly resolved. The history of this matter offers no cause for such optimism, even if the stay is lifted. The applicant's failure to pay the specified sum, and so lift the stay, has resulted in this matter not having progressed since December 2006, further demonstrating that the case is unlikely to be resolved quickly. This is all the more reason, in my view, for steps being taken to ensure, as far as possible, that the respondents are not out of pocket. [11] Although there is considerable merit in the respondents' application, I am minded to give the applicant one further chance to regularise the proceedings. I order that para 21 of the order made on 22 December 2006 be amended by deleting the amount of $20,000 and inserting, in lieu thereof, the amount of $68,609.41. I further order that unless, on or before 29 February 2008, the applicant pays to the respondents the sum of $68,609.41, these proceedings are to stand dismissed. The applicant is to pay the respondents' costs of the motion and the hearing today. 6 On 18 February 2008 Collier J ordered that leave to appeal be granted from the decision of his Honour (Welsh [2008] FCA 78). Grounds of Appeal 7 The grounds of appeal before this Court are as follows: 1. The learned primary judge erred in finding that the circumstances of the case justified making an order the effect of which was to cause the application to be dismissed if the Appellant did not pay the Respondents $68,609.41 on or before 29 February 2008. 2. The learned primary judge erred in making the said order in circumstances where the evidence before him was that the Appellant was relevantly impecunious and would not be able to make the said payment on or before 29 February 2008. 3. The learned primary judge erred in finding that: a. The Appellant had difficulty in formulating his claim where the evidence before the court indicated that this was not the case; b. The history of the matter was such that there was no cause for hope that it will be quickly resolved where the evidence before the court was that: i. There had been (prior to the imposition of the stay) no periods of inactivity on the part of the Appellant; and ii. The Appellant had exhibited no difficulties in funding the prosecution of the claim (as opposed to the payment of a costs order of $68,609.41 to the Respondents) 4. The learned primary judge erred in making the said order by taking into account factors which were irrelevant to the exercise of his discretion, namely that: a. Having found that the Appellant had had difficulty in formulating his claim, that this did not encourage confidence in its merits, particularly in circumstances where: i. His Honour had given leave to the Appellant to file and serve a proposed second amended statement of claim on 1 November 2006 and this had been done on 29 November 2006 ii. The Respondents had been given the opportunity to object to the new pleading iii. The matter had been listed for a hearing on 7 December 2006 as to whether the Appellant should have leave to file and serve the proposed pleading as an 'actual' pleading iv. Further consideration was given to this point during a hearing on 18 December 2006 and v. The Respondent did not object to the filing and serving of the new pleading and leave was given (subject to the stay) 5. The learned primary judge erred in considering that a "quick resolution" of the matter was a factor to be taken into account as a promised expediency in the future of the case was not a factor which was relevant to the exercise of a discretion to dismiss for want of prosecution. 6. Having referred to the decision of Gao v Zhang (2005) 14 VR 380, particularly at [15], and, having indicated his agreement with the sentiments expressed therein, the learned primary judge erred by not applying those sentiments in that he formed the view that the circumstances of this case were sufficiently serious to justify an order the effect of which would be to dismiss the action, where those circumstances did not bear the hallmarks of the conduct of the unsuccessful litigant in Gao v Zhang. 7. The learned primary judge erred in law by failing to take into account relevant considerations, namely that: a. The Appellant was an impecunious natural person who should not be precluded from prosecuting the matter by reason of his impecuniosity b. The evidence before the court on the application for dismissal for want of prosecution was that the Respondent's conduct had given rise to the said impecuniosity c. The matter was well advanced d. The difficulties with the Appellant's pleading had been cured by the filing and serving of the proposed second amended statement of claim e. The matter had been on foot for less than two years when his Honour ordered that it be stayed f. The proceeding had been prosecuted diligently by the Appellant prior to the imposition of the stay. 8 The appellant seeks the following orders from the Court: 1. the Appeal be allowed. 2. the judgment of Dowsett J dated 14 December 2007 be set aside. 3. the motion filed by the respondents on 22 November 2007 be dismissed with costs. 4. no further stay of the proceeding should be granted pending payment of taxed costs. 5. the respondents pay the Appellant's costs of this Appeal. 6. further or other relief. Consideration 9 The grounds of appeal raised by the appellant in these proceedings give rise to three key issues for determination by this Court. They are: · the nature of the power conferred by O 35A r 3(1) Federal Court Rules to stay or dismiss proceedings for failure to take steps previously ordered by the Court; · issues a judge may properly take into consideration in deciding whether to make an order pursuant to O 35A r 3(1); and · more specifically, whether pursuant to O 35A r 3(1) the Court may order that proceedings be stayed or dismissed in the event of non-payment of costs previously ordered in interlocutory proceedings in the same matter, where the evidence before the Court demonstrates possible impecuniosity of the party in default. 10 We shall consider each issue in turn. Power conferred by Order 35A rule 3(1) 11 Order 35A r 3(1) provides as follows: If an applicant is in default, the Court may order that: (a) the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the applicant; or (b) a step in the proceeding be taken within the time limited in the order; or (c) the proceeding be stayed or dismissed, as to whole or any part of the relief claimed by the applicant, if the applicant does not take a step ordered by the Court in the proceeding in the time limited in the order. 12 As explained earlier in this judgment, his Honour ordered that, in default of payment by the appellant to the respondents of the sum of $68,609.41 on or before 29 February 2008, the proceedings were to stand dismissed. This order fell squarely within O 35A r 3(1)(c), and is in the nature of a "guillotine" order (Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388). The power conferred by this rule is discretionary, and, as observed by Wilcox and Gummow JJ in Lenijamar in relation to a precursor to this rule: the power given by the rule is conditional on one circumstance only: the failure of a party to comply with an order of the Court directing that party to take a step in the proceeding. There is no requirement of intentional default or contumelious conduct, although the attitude of the applicant to the default and the Court's judgment as to whether or not the applicant genuinely wishes the matter to go to trial within a reasonable period will usually be important factors in weighing the proper exercise of the discretion. There is no requirement of "inordinate and inexcusable delay" on the part of the applicant or the matter. There is no requirement of prejudice to the respondent, although the existence of prejudice is also likely to be significant. (Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 395-396) 13 Their Honours continued: The discretion...is unconfined, except for the condition of non-compliance with a direction... (T)wo situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period and cases - whatever the applicant's state of mind or resources - in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. (Lenijamar (1990) 27 FCR at 396) 14 In our view these comments apply with equal force to the discretion which the Court is presently required to exercise under O 35A r 3(1) (cf Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2004] FCA 1718 at [23] and Wu v Avin Operations Pty Ltd [2006] FCA 36 at [48]-[51]). 15 In this case Dowsett J, who had been the docket judge throughout the history of this matter, formed the view that by 14 December 2007 the litigation was in a parlous state (Welsh [2007] FCA 2064 at [6]). His Honour ordered that the appellant have one further chance to regularise the proceedings before the proceedings would stand dismissed. The appellant was in default of an interlocutory order to pay costs to the respondents, which order had been made with the consent of the appellant. In making the order on 14 December 2007, his Honour exercised judicial discretion. His Honour took into consideration the principle that a litigant should not be denied its day in court only because of impecuniosity, but on balance considered that fairness to the parties justified the making of an order dismissing the proceedings in the event that the outstanding costs were not paid. 16 As a general proposition, to be successful on an appeal with respect to the exercise of a discretion the appellant must show error in the application of the relevant principles, the taking into account of an extraneous consideration, or the failure to take into account a relevant consideration in order to establish that there has been an error of law: House v R (1936) 55 CLR 499. 17 In summary, the appellant has submitted that the trial judge, in exercising his discretion pursuant to O 35A r 3(1) and ordering that the proceedings be dismissed in the event of non-payment of outstanding costs by the appellant: · failed to take into account the appellant's impecuniosity; · erred in finding that the appellant had had difficulty in formulating his claim, and in taking this issue into account; · erred in finding that confidence in the appellant's claim was not encouraged; · erred in finding that the respondents were prejudiced by the conduct of the appellant; · erred in finding that there was little cause for hope that the matter would be quickly resolved, and in taking this issue into account; and · erred in finding that the circumstances of the case were sufficiently serious to justify an order to dismiss the action, contrary to principles articulated in Gao (2005) 14 VR 380. 18 In view of the complexity of issues raised in relation to Gao (2005) 14 VR 380, we will consider those issues separately later in this judgment. Issues relevant to exercise of discretion 19 It is not desirable nor necessary to attempt to identify all issues relevant to the exercise of discretion pursuant to O 35A r 3(1). Each case must be considered on its merits. 20 In these proceedings, in relation to the appellant's claims of impecuniosity, the evidence before the docket judge as to the impecuniosity of the appellant was not supported by any documentation other than the affidavit of his solicitor asserting that the appellant had limited assets (apart from his claim) and a net income of approximately $728 per week. Although the appellant's solicitor deposed that the appellant was seeking litigation funding no details were provided to his Honour, or indeed to this Court. The appellant submitted that he would suffer substantial injustice should his Honour's orders remain, however there is no compelling evidence of the appellant's impecuniosity or as to whether the appellant is or is not able to fund his own prosecution of the matter to trial. In any event, even assuming that the appellant suffers financial difficulties, the orders of Dowsett J of 14 December 2007 did not preclude the appellant from conducting the litigation, which had already been stayed for 12 months because of the non-payment of $20,000 previously ordered. 21 Second, in light of the history of this matter it was open to his Honour to find that the appellant did have difficulty in formulating his claim. While we accept the appellant's submission that amendment to pleadings is not uncommon in litigation, in this case: · the statement of claim had been through three significant amendments entailing addition of parties and both addition and abandonment of claims; · on the application of the appellant the trial dates had been vacated on three separate occasions during the previous twelve months; · the primary judge had made twelve orders in relation to this matter prior to 14 December 2007 including payment of costs to the respondents for costs thrown away; and · the assertion of the appellant that his difficulties could be laid at the feet of his previous counsel remained just that - an assertion. 22 We do not accept the appellant's submission that any basis for suggesting that the appellant had difficulty in formulating his claim disappeared when the appellant in fact formulated his claim and filed and served a fourth amended statement of claim (described as the "Second Amended Statement of Claim"). The context for this event must be considered, as it clearly was by the docket judge. 23 Third, his Honour's comments as to the difficulty the appellant had experienced in formulating his claim was a relevant consideration to take into account in deciding whether to exercise the discretion conferred by O 35A r 3(1) in light of the prejudice the respondents had already suffered. While nominally the respondents had been compensated for costs thrown away as a result of previous adjournments, the failure of the appellant to pay those costs, and the improbability of the appellant being able to pay any further costs awarded should his difficulty in formulating his claim continue, were factors relevant to his Honour's decision. 24 Fourth, it was open to his Honour to observe that, because the appellant had experienced difficulty in formulating his claim, confidence in the merits of the claim was not encouraged. However his Honour stated the position no higher than this. Indeed, his Honour continued: On the other hand it does not exclude the possibility that it is a meritorious claim. (Welsh [2007] FCA 2064 at [10]) 25 The appellant's submission that his Honour was in error in "finding" that the appellant's case lacked merit does not represent his Honour's discussion of this issue. 26 Fifth, while the appellant submitted that there was no evidence before his Honour to the effect that the respondents were prejudiced in their ability to conduct their business because of the costs they had incurred arising out of the litigation expenses, whether or not the respondents were so prejudiced was not decisive in these circumstances. The respondents had clearly suffered prejudice from the conduct of the appellant. As his Honour observed, the conduct of the appellant had caused the respondents to incur considerable costs which ought not to have been incurred, and which they ought not to have to pay. This prejudice was, in fact, compounded by the fact that the appellant had failed to pay those costs which had been ordered and, if the respondents were successful, it appeared unlikely that the appellant would be able to pay the respondents any additional costs incurred. 27 Sixth, contrary to the submissions of the appellant, there were facts before his Honour supporting a finding that there was little cause for hope that the matter would be quickly resolved. This included that: · the matter had been on foot for over two years as at December 2007; · it had been stayed for twelve months because the appellant had not satisfied a costs order against it; · a significant number of directions had been made in the matter with which there had been substantial non-compliance by the appellant; and · the appellant was apparently seeking litigation funding in order to prosecute his claim. 28 Given the ongoing prejudice to the respondents arising from the appellant's failure to pay outstanding costs, the question of whether the matter would proceed to a final hearing within a reasonable time was a relevant consideration in the circumstances of this case. Failure to pay costs awarded in interlocutory proceedings: Gao v Zhang 29 Finally, the appellant submitted that the primary judge erred in his application of the principles in Gao (2005) 14 VR 380. In particular the appellant submitted his Honour erred in forming the view that the circumstances of this case were sufficiently serious to justify an order the effect of which would be to dismiss the action, where those circumstances did not bear the hallmarks of the conduct of the unsuccessful litigant in Gao (2005) 14 VR 380. In relation to this submission we make the following observations: · Although an order allowing the respondents to tax their costs prior to trial is relatively unusual, it was clear that the primary judge was concerned about the prejudice suffered by the respondents as a result of the appellant's conduct. We also note that the orders allowing taxation were not appealed. · Reported cases where the Court has ordered permanent stay or dismissal of proceedings in the event of failure to pay costs arising from interlocutory orders are few and far between. Gao (2005) 14 VR 380 is an example. Principles applicable to dismissal of proceedings generally for failure to pay outstanding costs (including costs awarded on an interlocutory basis) were also considered by the Victorian Court of Appeal in Phillip Morris Ltd v Attorney-General for the State of Victoria (2006) 14 VR 538. · It is clear that much of the authority which exists in relation to the issue of dismissal for non-payment of costs confirms the general principle that where an application for particular relief is dismissed with costs, the appellant is not allowed to apply again for identical or equivalent relief if it has not paid the costs of the previous application (see for example Cave J in Morton v Palmer (1882) 9 QBD 89 at 92 and In re Payne. Randle v Payne (1883) 23 Ch D 288, and more recently Thames Investment & Securities Plc v Benjamin (1984) 1 WLR 1381). The cases have traditionally differentiated between this situation and circumstances where costs awarded on an interlocutory basis earlier in the same proceedings have not been paid: Hines v Birkbeck College (No 2) [1992] 1 Ch 33 at 46, Phillip Morris (2006) 14 VR 583. · Historically the Courts considered that mere non-payment of costs awarded on an interlocutory basis was not sufficient to justify an order to stay proceedings (Graham v Sutton, Carden & Co [1897] 2 Ch 367) however they also recognised that each case must be considered on its merits. So for example where a plaintiff acted vexatiously towards a defendant in the course of the proceedings, the action could be stayed pending payment of costs ordered against the plaintiff (in re Wickham. Marony v Taylor (1887) 35 Ch D 272, Graham v Sutton, Carden & Co [1897] 2 Ch 367, cf Denning LJ in Hadkinson v Hadkinson (1952) P 285 at 297). 30 In Gao (2005) 14 VR 380 the Victorian Court of Appeal (Ormiston JA, Vincent JA agreeing) described the exercise of judicial power to dismiss proceedings in the event of failure to pay interlocutory costs as "drastic" and "draconian" (at 386). The Court continued that, unless the object of the order was merely to provide a temporary stay to force a wealthy, or at least not impecunious, but recalcitrant litigant to pay awards of costs which that party is well able to pay, the power should be treated as one which will have the effect of bringing to an end litigation without the benefit of a trial to which a litigant is ordinarily entitled. The reason for making such an order must therefore be serious and essentially the only practical way to ensure justice between the parties (at 385). Their Honours also considered that there must be seen to have been some conduct on the part of the party in default which falls for condemnation, such as harassment of, or unfair dealing with, the opposite party, which in one way or another is exacerbated by a deliberate or regular refusal to pay the consequential costs of those applications (at 386). 31 While the traditional approach of the courts to this issue is helpful, it is important not to lose sight of the fact that the judicial discretion vested by O 35A r 3(1) is unconditional. It is not the role of the appeal court to intervene in discretion properly exercised or without legal error. The analysis in Gao (2005) 14 VR 380, while both learned and helpful in considering the issues before this Court, does not in our view prescribe a standard of conduct which must be satisfied by a defaulting litigant before the primary judge can consider whether to make an order pursuant to O 35A r 3(1). There is no need for the defaulting litigant to have engaged in contumelious conduct in the nature of harassment or unfair dealing before the discretion of the judge conferred by O 35A r 3(1) is enlivened. Conclusion 32 It is not in dispute that the paramount principle as described by Dixon J in Cox v Journeaux (No 2) (1935) 52 CLR 713 at 720 is that a claim honestly made by a suitor for judicial relief must be investigated and decided in the manner appointed. However, that principle also recognises that it may be appropriate to bring such proceedings to a close when they would amount to an abuse of jurisdiction or, more relevantly in this case, they would clearly inflict unnecessary injustice upon the opposite party (Cox (1935) 52 CLR at 720 cf Lenijamar (1990) 27 FCR 388 at 396). 33 In these proceedings there may be merit - as yet untested - in the appellant's claims; further, such evidence as exists indicates that the appellant suffers financial difficulties which may have prevented him satisfying outstanding costs orders against him. However the primary judge balanced these factors against the prejudice suffered by the respondents by the incurring of substantial and unnecessary costs, the fact that the appellant recognised this prejudice by conceding the award of costs against him, the ongoing difficulties the appellant had had in formulating a proper claim over a substantial period of time, and his Honour's view that an early resolution of the proceedings, after several years in which little advancement had been made, was not likely. While we endorse the view of the Court of Appeal in Gao (2005) 14 VR 380 that an order of this kind because of failure to pay interlocutory costs is not to be treated as an everyday occurrence (at 385), in this case the primary judge considered that the interests of justice favoured the orders made. We cannot identify any errors of the primary judge in reaching this decision. 34 In our view the appeal should be dismissed. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Tamberlin, Greenwood and Collier. Associate: Dated: 18 August 2008 Counsel for the Appellant: Ms C Heyworth-Smith with Ms H Blattman (as pupil) Solicitor for the Appellant: Efron & Associates Counsel for the Respondents: Mr A Crowe SC and Mr M Ambrose Solicitor for the Respondents: ClarkeKann Date of Hearing: 9 May 2008 Date of Judgment: 19 August 2008