New South Wales Court of Appeal CITATION : Wilson v Kochate Pty Limited t/as Caradon Ski Park [2003] NSWCA 25 HEARING DATE(S) : 13/02/03 JUDGMENT DATE : 13 February 2003 JUDGMENT OF : Stein JA at 38; Hodgson JA at 39; Ipp JA at 1 DECISION : (1) Appeal upheld (2) Set aside orders made by Boyd-Boland DCJ on 24 October 2001 and on 2 May 2002 (3) Claimant to file Notice of Appeal as regards the current proceedings (4) Reinstate the District Court proceedings on the basis that no expert report is to be filed by the claimant that is not in response to any expert report filed by the opponent, unless the District Court gives leave for the filing of such report (5) Claimant's solicitors to pay the costs of the hearings on 24 October 2001 and 2 May 2002 on an indemnity basis. These costs are to be paid forthwith and opponent is entitled to have costs assessed forthwith (6) Opponent to pay the costs of the appeal. Opponent should have a Suitors Fund Certificate if otherwise entitled. CATCHWORDS : PRACTICE AND PROCEDURE - District Court Rules, Pt 1 r 7A - Application to set aside a Preliminary Dismissal Order - Court must balance the prejudice between parties so as to do justice between parties - Regard to be had to actual prejudice suffered by claimant if application dismissed, and the actual prejudice that would be suffered by the opponent if application upheld - Gross carelessness of solicitor for claimant can be taken into account, but is not determinative in whether to set aside order - Expiration of limitation period was actual prejudice to opponent - Reinstatement of claim was not relevant prejudice to opponent - Absence of insurance cover was not relevant prejudice to opponent - Overall delay could not be said to prejudice opponent in the absence of evidence - Whether Preliminary Dismissal Order can be set aside only on court's own motion - Whether Preliminary Dismissal Order was so set aside. ND Erhard v Bhatia [2002] NSWCA 388 CASES CITED : Weston v Howell [1999] NSWCA 411 Howell v Weston [2001] NSWCA 174 PARTIES : Carol Margaret Wilson (Claimant) Kochate Pty Limited t/as Caradon Ski Park (Opponent) FILE NUMBER(S) : CA 40482/02 COUNSEL : I Wales SC/A Fernon (Claimant) S Galitsky (Opponent) SOLICITORS : Colin Daley Quinn (Claimant) Grech Partners (Opponent) LOWER COURT District Court JURISDICTION : LOWER COURT DC 9567/00 FILE NUMBER(S) : LOWER COURT Boyd-Boland DCJ JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40842/02 DC 9567/00 STEIN JA HODGSON JA IPP JA Thursday 13 February 2003 CAROL MARGARET WILSON v KOCHATE PTY LIMITED T/AS CARADON SKI PARK Judgment 1 IPP JA: This is an application for leave to appeal and appeal which have been heard concurrently. The judgment under challenge is that of Boyd-Boland DCJ who dismissed an application by the claimant under Pt 1 r 7A of the District Court Rules to set aside an order made by the learned judge on 24 October 2001 dismissing an action brought by the claimant against the opponent. 2 By the action the claimant claimed damages from the respondent for personal injury suffered by the claimant on 29 November 1997, allegedly by reason of the opponent's negligence. The statement of claim alleged that at approximately 11.25pm on that date, the claimant, while walking from a toilet block within the opponent's ski park to her caravan, lost her footing and fell heavily to the ground. The particulars of negligence in the statement of claim alleged amongst other things a failure on the part of the opponent to provide adequate lighting within the ski park and a failure to provide lighting at the caravan site. 3 The claimant's statement of claim was filed on 28 November 2000, immediately prior to the expiry of the limitation period. On 2 May 2001, the matter came before the District Court for a case management review and this led to a status conference on 4 July 2001. On 8 August 2001, a directions hearing took place with both the claimant and the opponent being represented. The claimant was not ready to proceed on that date and the matter was adjourned until 24 October 2001 to enable the claimant to show cause why the action should not be dismissed. On 24 October 2001, there was no appearance on behalf of the claimant and Boyd-Boland DCJ dismissed her claim. 4 By virtue of Pt 1 r 7A(5) of the District Court Rules, a party to proceedings in respect of which a preliminary dismissal order has been made may within the period of twenty-eight days after the making of the order apply to the Court to set aside that order. The first step taken by the claimant to set aside the order of 24 October 2001 was on 5 February 2002 when the claimant filed a notice of motion seeking to have the matter reinstated. The matter came before Boyd-Boland DCJ on 2 May 2002 by which time the claimant had filed an amended notice of motion seeking, firstly, an order extending the time for the filing of the earlier notice of motion and, secondly, an order under Pt 1 r 7A setting aside the order of 24 October 2001 dismissing the proceedings. 5 Boyd-Boland DCJ extended time for the making of the application but dismissed the application. 6 His Honour rightly recognised that in determining the application before him he had to balance "the issue of doing justice between the parties." He commenced this exercise by examining the conduct of the claimant's solicitors. He found that there was "an obvious and significant lack of forensic diligence in the way in which the matter was conducted on behalf of the client between 8 August and 24 October 2001 and this lack of diligence continued after 24 October 2001. He said that this lack of diligence amounted to "an almost total disregard for the Court's rules which are promulgated for the purpose of ensuring the efficient management of civil actions in this Court." He concluded that no reasonable explanation had been given for what amounted to a "total disregard of the procedural requirements of this Court". 7 Boyd-Boland DCJ appears to have regarded the claimant's negligent conduct of the case and the order for dismissal he made on 24 October 2001, by themselves, as constituting prejudice to the opponent. 8 His Honour said that "additional prejudice" was created because "upon the expiry of the time limited for an application to set aside my order, [the opponent] was entitled to assume [the claimant] had abandoned her action." He went on to say: "To proceed now to destroy that assumption, some five months later by reinstating the claim, obviously creates an insurmountable prejudice to this uninsured defendant, reimposing upon it a potential for a liability that it was reasonably entitled to assume had ceased to exist". 9 Boyd-Boland DCJ also took into account, as a form of prejudice, the fact that the opponent's public liability insurer had suffered a "collapse" and the opponent had had to meet its own legal costs and could become personally liable if any settlement or judgment resulted. 10 Next, Boyd-Boland DCJ took into account it was possible that, should the case proceed, the claimant might serve an expert's report "the result of which could be that [the opponent] is called upon to meet that evidence, whatever it is, some five years or more after the event." Apparently, by reason of the dismissal of the matter, the opponent had not arranged for any independent medical assessment of the claimant. 11 His Honour inferred, further, that had the claimant been represented on 24 October 2001 she would have been unable to accept a hearing date as she intended to file an expert's report but was not in a position to do so. His Honour concluded that this was a further reason for the proceedings to be dismissed. 12 The learned judge concluded: "I must weigh the prejudice to [the opponent] with the primary focus being on whether a fair trial is possible. The totality of the prejudice resulting from reinstatement after the dismissal order and then again after the expiry of the time limited for making a reinstatement application, with its attendant consequences to [the opponent] prevents justice being done between the parties." 13 In my opinion his Honour was entirely justified in making the comments he did about the conduct of the claimant's lawyers. The excuse given by the claimant's solicitor for not arranging for the claimant to be legally represented at the "show cause" hearing on 24 October 2001 was that he was under the wrong impression that counsel would attend that hearing. Plainly his Honour concluded that the evidence before him was not sufficient to establish that there were reasonable grounds for the solicitor assuming that counsel would attend Court on the opponent's behalf on that date. 14 The solicitor made no attempt to discuss the matter beforehand with the barrister concerned and seems to have paid no regard to his client's interests in this respect. The next relevant act on the part of the solicitor was only on 21 December 2001 when he communicated with the opponent's solicitor and was told that that claimant's action had been dismissed on 24 October 2001. 15 It is extraordinary that the solicitor did nothing about finding out from counsel, who he supposed had attended the hearing on 24 October, what in fact had happened on the day. Despite the fact that the solicitor learnt on 21 December that the action had been dismissed, he did nothing about the matter until late January. He said he was absent from his office on Christmas vacation between 21 December 2001 and 8 January 2002. He went on holiday knowing that his client's action had been dismissed through his own neglect and did nothing further about the matter until he returned in late January 2002. 16 The gross carelessness of the claimant's solicitor and his blatant disregard for the Rules of Court are serious matters which were rightly taken into account by his Honour in determining the application. But it has to be borne in mind that conduct of that kind is not determinative. This his Honour recognised in saying that his task was to balance the prejudice between the parties so as to do justice between them. While the conduct of the solicitor was a factor to be taken into account in doing justice between the parties, due regard had to be given to the actual prejudice that would be suffered by the claimant were the application to be dismissed, and the actual prejudice that would be suffered by the opponent were the application to be upheld. 17 The prejudice that would be suffered by the claimant were the application to be dismissed is obvious. The limitation period has expired and she would not be able to recommence proceedings. She would lose her claim, without being heard on the merits. 18 It is not so easy to determine the prejudice that would be suffered by the opponent were the application to be granted. This issue is the nub of this appeal and in my view the learned judge made several errors in this regard. 19 The learned judge wrongly regarded the claimant's solicitor's negligence and the order for dismissal made on 24 October 2001, without more, as constituting prejudice to the opponent. I reiterate, while the conduct of the claimant's solicitor is relevant to the issue of doing justice between the parties, it does not on its own constitute prejudice to the opponent. Further, the mere fact that the order of 24 October was made does not constitute prejudice to the opponent. 20 His Honour said that "additional prejudice" was created because: "Upon the expiry of the time limited for an application to set aside my order, [the opponent] was entitled to assume [the claimant] had abandoned her action." The delay between the expiry of the twenty-eight day period after 24 October and the filing of the notice of motion on the claimant's behalf on 5 February 2002 was just over two months. During this period the opponent made no attempt to inform the claimant of what had occurred on 24 October. 21 It is to be borne in mind, however, that, even though the notice of motion of 5 February seems to have been defective and was subsequently amended, the opponent was thereby put on notice that the claimant was seeking to have the dismissal order set aside. Moreover, there was no overt act on the part of the claimant that could have led to the opponent assuming that the action had been abandoned. The opponent must have suspected that the claimant's omission to attend court on 24 October 2001 was due to inadvertence on her part, and that inadvertence might have persisted. As I later mention, the opponent's solicitors made no attempt to inform the claimant's solicitors of what had occurred on 25 October 2001. The receipt of the notice of motion could hardly have come as a surprise to the opponent. 22 His Honour concluded that the opponent's failure between 24 October 2001 and 5 February 2002 to stake steps to have the order set aside entitled the opponent to assume that she had abandoned her action. I do not agree. I do not regard the expiry of only two months or so in the particular circumstances as sufficiently long to give rise to that inference. I consider his Honour was wrong in this respect. 23 I do not regard the mere reinstatement of the claim as relevant prejudice to the opponent. The effect of any successful application for dismissal of an action will be that the action will be reinstated and the potential liability of the defendant will continue. The disappointment and inconvenience that will inevitably result do not, in law, constitute relevant prejudice. 24 On the evidence before his Honour, the fact that the opponent was uninsured was not relevant prejudice. The delay caused by the claimant's failure to comply with the Rules of Court and to bring her application in good time had no bearing on the ability of the opponent to meet the potential liability by insurance cover. In the particular circumstances of this case his Honour erred in regarding the absence of insurance cover as prejudice to the opponent. 25 I do not regard the omission of the opponent to arrange for any independent medical assessment of the claimant as being relevant to prejudice. That is because there was no evidence that, should the dismissal of the action be set aside, the opponent would not be able to arrange for appropriate independent medical assessment at some reasonable time in the future. In other words there was nothing to suggest that the delay prejudiced the opponent in this respect. 26 I also consider that his Honour erred in holding that, had the claimant in fact appeared at the "show cause" hearing on 24 October 2001, the proceedings would have been dismissed in any event. This conclusion of the judge was based on his assumption that the claimant wished to file an expert's report on liability. I am satisfied that, on the evidence, that assumption was not justified. The claimant's solicitor stated in an affidavit that was before his Honour that, but for his oversight in missing the hearing on 24 October 2001, on that date he would have been in a position to accept a hearing date for the trial. In his affidavit he repeated that he was ready to accept a hearing date and said: "The plaintiff's case is prepared and ready to proceed". The written submissions of counsel for the claimant that were before the judge on 2 May 2002 stated: "The defendant submits that the plaintiff cannot be ready because the expert's report … has not been served. As presently instructed, it is not intended to rely on such a report at any ultimate hearing. If the plaintiff later seeks to amend its position in relation to that, whether the Court permits it to do so, must be considered in the light of the circumstances that then exist". 27 Accordingly, the judge erred in his finding that, had the claimant appeared at the "show cause" hearing on 24 October 2001, her action would have been dismissed in any event. 28 Mr Galitsky, who appeared on behalf of the opponent in the proceedings before this Court, submitted that the overall delay was likely to cause the opponent prejudice. In this regard, it is to be noted that the opponent's solicitors made no attempt to communicate with the claimant's solicitors between 24 October 2001 and 5 February 2002 and made no attempt to advise the claimant's solicitors that the action had been dismissed in their absence. It was not until 21 December 2001, when the claimant's solicitor phoned the opponent's solicitors, that they told him that the action had been dismissed. One would expect that, as a matter of common professional courtesy, the opponent's solicitors would have advised the claimant's solicitors, shortly after 24 October 2001, that the claimant's claim had been dismissed on that date. Until 21 December 2001, no such advice was given. The opponent's solicitors remained silent. This conduct bears to a degree on the responsibility for the delay between 24 October and 21 December. In any event, the opponent's main argument that prejudice was caused by delay must fail by reason of absence of evidence. There is nothing in the material that supports this contention to any, or any significant extent. There is simply no evidence that the overall delay would prejudice the opponent in the conduct of the trial. 29 Despite the fact that his Honour referred to the primary focus as being whether the delay would prejudice a fair trial, he made no mention of any consideration relevant to this issue. This question was simply not examined. On the material there is nothing to establish that a trial of the claimant's cause of action would not be fair. 30 Finally, as to his Honour's reasons concerning prejudice, while he referred to prejudice to the opponent, he made no mention of prejudice to the claimant. In Erhard v Bhatia [2002] NSWCA 388 Heydon JA said: "Even if it is assumed, as the defendant's argument contends, that complete justice to the party in default may not necessarily be the paramount consideration, justice to the party in default is at least a relevant consideration even in Pt 18 r 3 cases." There is nothing in his Honour's reasons that indicates that he gave consideration to this aspect of the balancing exercise. 31 In the circumstances, I consider that the grounds on which his Honour relied for determining that the delay had caused the opponent prejudice were without substance. Accordingly, in my opinion, he erred in his discretion in dismissing the claimant's application. 32 The respondent filed a notice of contention submitting that upon a true construction of Pt 1 r 7A(1) of the District Court Rules, his Honour should have held that the order made on 24 October 2001 dismissing the proceedings was not a "preliminary dismissal order". 33 A preliminary dismissal order is defined by Pt 1 Rule 7A(1) as: "[A]n order made by the Court dismissing proceedings other than an order dismissing proceedings after there has been a trial or hearing on the merits of the case or an application to dismiss proceedings." 34 The opponent submitted that the only order to which Pt 1 r 7A(1) was subject was an order made by the Court of its own motion (as allowed for in Pt 18 r 3(1)). The opponent submitted that the claimant's action was dismissed on the application of the opponent itself, and the Court had no power to set aside the order dismissing the action. 35 On 24 October 2001 the claimant knew that it was required to show cause why the Court should not dismiss her claim; that is, at that stage she faced, potentially, a dismissal of the action on the Court's own motion. There was then no notice of motion of any form before the Court filed by the opponent indicating that it intended to apply for the dismissal of the claimant's claim. Indeed no such motion has ever been filed. Therefore, on 24 October 2001, the claimant had no notice of any application by the opponent for dismissal of her claim. The grant of an application for dismissal, without notice to the claimant, would have been a denial of natural justice. Moreover, the transcript of the proceedings shows that the opponent did not make an oral application for the dismissal of the claim. It seems to me to be beyond question that his Honour dismissed the claim of his own motion. Whether he should take this course was, on 24 October 2001, the only issue before the judge. In the circumstances the basis for the opponent's notice of contention falls away. 36 In the light of the conclusions to which I have come, I consider that this Court should exercise its discretion afresh: Erhard v Bhatia. 37 I propose the following orders: (a) The appeal be upheld. (b) The orders made by Boyd-Boland DCJ when he dismissed the claimant's action on 24 October 2001, and the orders he made thereafter on 2 May 2002, be set aside. (c) The claimant file a notice of appeal in regard to regard the current proceedings. (d) The District Court proceedings be reinstated on the basis that no expert report is to be filed by the claimant, that is not in response to any expert report filed by the opponent, unless the District Court gives leave for the filing of such report. (e) In the light of the gross neglect on the part of the claimant's solicitor, the claimant's solicitor to pay the costs of the hearings on 24 October 2001 and 2 May 2002 on an indemnity basis. These costs be paid forthwith upon assessment, the opponent being entitled to have the costs assessed forthwith. (f) The costs of the appeal to be paid by the opponent who should be entitled to a Suitors Fund Certificate. 38 STEIN JA: I agree with Justice Ipp and the orders which he proposes. 39 HODGSON JA: I agree. In my opinion there is a great difference between an order for dismissal of proceedings which is reversible and an order for dismissal of proceedings which is irreversible. This is illustrated by the previous case of Weston v Howell [1999] NSWCA 411 and Howell v Weston [2001] NSWCA 174. The claimant was on notice of the possibility of a reversible dismissal, but was not on notice of the possibility of an irreversible dismissal; and as stated by Ipp JA, this means that an order for irreversible dismissal would have been a denial of natural justice. 40 I would also comment that there may be cases in which the question of prejudice to a defendant is affected by the circumstance that a defendant is uninsured. For example, if a defendant shows that, having a reasonable belief that the plaintiff's claim was at an end, the defendant has changed position in a way that would be detrimental should the plaintiff's claim be reinstated, this may be a prejudice on which the defendant can rely, essentially because the defendant is uninsured. Normally, however, that would require particular evidence, and there was no such evidence in this case. I would therefore agree with Ipp JA that the question of insurance did not have any material relevance in this case. 41 Finally I would note that, in the second Howell v Weston decision, an order was made for the immediate payment of a sum of money on account of costs. In my opinion, that kind of order may be salutary in cases of procedural defaults by a party, so as to bring home to that party promptly the consequences of those procedural defaults, and also to give some immediate reimbursement of costs to the other side, without putting the other side to the necessity of having an immediate assessment of costs, and thus the necessity of two different assessments of costs, one occurring immediately and another at the conclusion of the proceedings. However, I agree with Ipp JA that in this case, an order permitting the immediate assessment of costs is an appropriate one. 42 STEIN JA: Accordingly, the orders of the Court will be as Ipp JA proposed. ********** Last Modified: 02/20/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.