New South Wales Court of Appeal CITATION : Iovanescu v McDermott [2004] NSWCA 106 HEARING DATE(S) : 17 March 2004 JUDGMENT DATE : 5 April 2004 JUDGMENT OF : Sheller JA at 1; Young CJ in Eq at 2; Windeyer J at 8 DECISION : Leave to appeal granted. Appeal allowed CATCHWORDS : LIMITATION OF ACTION - extension of time - exercise of discretion by court - claim for extension of time to seek rescission of dismissal of case involving extensive delays - no adequate explanation for delay - appeal from District Court allowed LEGISLATION CITED : District Court Rules Pt 1, r5 Pt 3 r1, Pt 3 r2, Pt12 r4C, Pt26, r4B Suitors Fund Act 1951 Falconer v Laird [2003] NSWCA 114 CASES CITED : Holt v Wynter (2000) 49 NSWLR 128 Salido v Nominal Defendant (1993) 32 NSWLR 524 State of Queensland & anor v J L Holdings Pty Limited (1997) 189 CLR 146 PARTIES : Teodore Iovanescu (Appellant) Stephen McDermott (Respondent) FILE NUMBER(S) : CA CA 40570 OF 2003 COUNSEL : Mr P J Deakin QC with him Mr M Vesper (Appellant) Mr P J Doherty SC with him Mr R Grace (Respondent) SOLICITORS : Sparke Helmore (Appellant) Maurice May & Co (Respondent) LOWER COURT District Court JURISDICTION : LOWER COURT 4827 of 1993 FILE NUMBER(S) : LOWER COURT Nicholson DCJ JUDICIAL OFFICER : - 8 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40570/03 SHELLER JA, YOUNG CJ in Eq WINDEYER J MONDAY 5 APRIL 2004 TEODORE IOVANESCU v STEPHEN MCDERMOTT Judgment 1 SHELLER JA; I agree with Windeyer J. 2 YOUNG CJ in Eq: I also agree with Windeyer J but I wish to add a few remarks of my own. 3 Mr Doherty SC almost used the phrase "merely a matter of case management" as some sort of mantra which would excuse all non-compliances with the court rules. 4 It is true, as has been said many times over, that the rules must be the servant and not the master, in litigation. 5 However, the authorities, when properly examined, do not stop there, but actually make it clear that prima facie the rules must be observed and that a person who seeks dispensation from them, particularly because of delay, must show good reason why such dispensation should be granted and must endeavour to explain away his or her apparent blameworthiness in connection with the total delay involved. 6 In the present case, it is true that unless the decision of the District Court Judge stands, the opponent would be prejudiced by not having his claim heard on the merits. However, that is not the only matter to consider. 7 As there has been no explanation of the delay, it is inevitable that the appeal must be allowed with costs. 8 WINDEYER J The opponent, McDermott, was injured in a motor vehicle accident on 2 June 1992. He commenced District Court proceedings against the claimant for damages for his injuries on 27 September 1993. On 29 March 1994 the matter was stood out of the Motor Vehicle List in the District Court as no praecipe for trial had been filed. It was automatically restored when the claimant's solicitor filed a defence on 19 April 1994. It was struck out of that list again on 27 September 1994, pursuant to the then Pt26 r4B because it seems it was not being satisfactorily progressed by the plaintiff in that Court. Strike out is of course different from dismissal. 9 Pt12 r4C applies to this action as it was commenced before 1 January 1996. No praecipe for trial was filed before 1 January 1998 so that pursuant to Pt12 r4C(2) the action was deemed to be dismissed. Pt12 r4C(4) gave the Court discretion to rescind the dismissal if application were made before 1 July 1998. No application was made. 10 On 21 June 2002 a motion seeking inappropriate relief – namely an order to rescind the deemed dismissal - was filed. It came on for hearing before Judge Nicholson. He considered it misconceived and gave leave to file an amended motion. This was done on 8 November 2002, the plaintiff claiming an extension of time for the statement of claim to restore it to the list. The relief was sought under Pt3 r2 and Pt1 r5 although what would have been appropriate was to seek an order under Pt3 r1 extending the time expiring on 30 June 1998 beyond that date. I find it difficult to see how Pt1 r5 could assist as compliance was not required unless relief was sought. In any event it is accepted that notwithstanding the somewhat inelegant language which was used an extension of time was sought in which to file the praecipe beyond 30 June 1998 to some future date. His Honour granted the extension of time for filing the application to rescind the dismissal and having done so rescinded the dismissal. It is from these orders that the claimant seeks leave to appeal. Leave is necessary as the decision appealed from is an interlocutory decision. As the claimant has an arguable case I would grant leave and move straight away to the substantive appeal on the grounds set out in the draft notice of appeal. Both sides accepted that the application for leave and the appeal should be dealt with together. It will be necessary for the appellant to file a notice of appeal. For convenience I will now refer to the parties as appellant and respondent. 11 In a discretionary decision on whether or not a time period should be extended it is necessary for the court to consider first whether an adequate explanation has been given for the delay and failure to comply with the time requirements and second whether it is possible for there to be a fair trial or whether in this case the defendant has been prejudiced by the delay so that it would not be possible for a fair trial to take place now. 12 So far as prejudice is concerned the trial judge said that the relevant rule under which the statutory dismissal took place was part of the case management armoury of the court. He then set out various passages from State of Queensland & another v J L Holdings Pty Limited (1997) 189 CLR 146 which are well known and which need not be reproduced, but which in essence state that case management is not an end to itself but is an aid to the administration of justice and that case management procedures do not overcome the requirement of ensuring a fair trial. It is a mistake to regard the decision in that case as a sort of gospel in all indulgence applications; it is important to remember it was relevant to amendment. I think that the judge may have given unnecessary weight to some of the expressions there. Nevertheless I think it right to say that he was considering the passages he set out and applying them to the case before him to determine whether or not a fair trial could be held at this late stage, namely twelve years after the accident date. The learned judge differentiated between extensions of time in limitations matters and the extension of time sought by the plaintiff before him in a way which has been attacked by the appellant but which nevertheless I think is correct. In the limitation cases the proposed defendant may have had no notice whatsoever of the claims sought to be brought by a proposed plaintiff. In the instant case the appellant/defendant was well aware of the respondent's claim and to some extent no doubt regarded it as a matter of good fortune that it had been dismissed in accordance with the rule. However His Honour fell into error when he went on to say in paragraph 19 of his judgment: 19. Nor is the exercise of the discretion about protecting the Respondent from injustice of a stale claim. The claims were not stale when filed in 1993. and in paragraph 46 of that judgment: 46. From what has already been said, it is obvious the extent of the delay is a delay dating from the operation of Part 12 Rule 4C. The effect of Part 12 Rule 4C(1) was to deem the Statement of Claim dismissed for failure to file a Praecipe for Trial on 1 January 1998. The opportunity to retain [sic] a recision [sic] of this dismissal pursuant to subrule (4) of 4C was lost by 1 July 1998. That does not mean the slow pace of the prosecution of this matter prior to its deemed dismissal is irrelevant but its relevance goes to the worthiness of the Applicant for consideration of an indulgence by the Court and as some possible indicator of the Applicant's potential conduct in future if the application be granted. 13 In Falconer v Laird [2003] NSWCA 114 this Court in considering a claim for rescission of a deemed dismissal said at paragraph 80: [80] …As with the extension of a limitation period (see Brisbane South Regional Health Authority v Taylor at 554-6 per McHugh J), the whole period of delay must be considered, and it is erroneous to put aside prejudice prior to Pt12 r4C coming into effect. 14 Delay during the earlier period would be relevant on two matters. First a significant delay during that period might prejudice the chance of a fair trial at a later stage, and secondly the plaintiff's claim for an indulgence should be considered bearing in mind the warnings which the plaintiff must have had by having the matter struck out of the call-over list on two occasions. 15 Counsel for the appellant argued there must be some presumptive prejudice in a case where it is clear there would be a question as to the extent to which the respondent's problems and complaints were caused by the motor vehicle accident rather than by the nature of his work before and after the accident. His Honour addressed this position in paragraph 35 of his judgment, but in a manner which failed to address properly the question of total delay and the difficulties of conducting a trial twelve years after the event. 16 I turn now to the explanation as to whether or not there was a proper explanation for delay. Counsel for the respondent argued that as there was no statutory requirement for an explanation, no explanation was required. That is not correct. It is always a question bearing upon the exercise of discretion in a claim for extension of time: Salido v Nominal Defendant (1993) 32 NSWLR 524 at 533, 539 and 541; Holt v Wynter (2000) 49 NSWLR 128 at 136. That is because it goes to the question of whether it is just and fair to grant the indulgence sought, namely an extension of time to apply to rescind the dismissal. It cannot just be a question of prejudice and ability to have a fair trial. If that were the position and everything else could be sorted out by appropriate costs orders then the accepted requirements for case management would go out the window. Hence the principles of case management assume that the parties will comply with rules or give proper reasons for failure to do so. 17 As far as can be gleaned from the evidence the delays in this matter appear to have been caused by the inability of the plaintiff to provide the details of financial loss. Even if he were wrong in not considering total delay, His Honour considered, correctly I think, that the important times to look at delay were failure to file a praecipe prior to 1 January 1998 and the failure to seek a rescission of the dismissal order prior to 1 July 1998. His Honour referred to the changing places of employment of the respondent and went on to say that there was no evidence of any difficulties caused by this. He said that there was nothing in the evidence to suggest any warnings were sent to the respondent by his solicitors and he appears to have come to a conclusion on the basis of that statement that there was a failure to contact the respondent while he was in country New South Wales and in Victoria, which showed inefficiency on the part of the respondent's solicitors in 1997 and early 1998. As there was no evidence to show any such failure it is clear that this is a matter where His Honour's discretion may have miscarried being based on an unproved state of affairs. In paragraph 50 of his judgment in commenting that the evidence failed to address the requirements for action before 1 January 1998 and 1 July 1998, His Honour said "On the material before me I can only infer there was an oversight by the applicant's solicitors, firstly to warn him of the requirements of Pt12 r4C; next to advise him of the opportunity provided by Pt12 r4C(4)". There was no basis or foundation for this inference of His Honour. Nor was there any basis for the statement in paragraph 51 of the judgment that His Honour was satisfied that during the relevant period there was some, but little activity on the applicant's file by his solicitors. This seems to have been arrived at by dates of various medical reports in 1997. Upon drawing the inferences to which I have referred His Honour at paragraph 58 came to the conclusion that the respondent was less at fault than his solicitors, whose function it was to advise him and seek his instructions, and that the fact that the respondent was one of the parties whose rights would be affected by the outcome of the application before him, was something which must be kept in mind. In coming to these conclusions His Honour said at paragraph 61: Bearing in mind the findings I have made as to the absence of any unfair impact prejudice to the Respondent upon the fairness of a trial on quantum of damages, and bearing in mind that I have also found the principle fault in failing to file a Praecipe for Trial, rests with the Applicant's solicitors, and bearing in mind that I have found the principle fault in failing to seek a rescission of the deemed dismissal of this matter rests with the plaintiff's solicitors, I am of a view it is fair and just to both parties to grant the application (as amended if necessary). 18 The evidence given in the affidavit of the respondent's solicitor sworn 15 May 2003 is, I should state, contrary to the inference drawn by the judge. That evidence is to the effect that the plaintiff's claim included one for economic loss and it was not possible to get the matter back into the Motor Vehicle List or to file a praecipe or to apply for an extension of time until the claim could be got into order. It is clear from the evidence that there were difficulties in obtaining relevant taxation returns and that the respondent's taxation affairs were somewhat complicated. It is also clear on this evidence the respondent was made well aware by his solicitors that this material was necessary for the proper presentation of his claim and that only he could obtain it. It does not seem to have been considered that if the written material was not available from any source then the claim would have to proceed without it. That may or may not have been the fault of the solicitor, but it is clear that the plaintiff was intending to include a claim for economic loss as part of his damages. 19 It follows from this that in placing the blame for the most part on the solicitor, the learned District Court Judge was drawing inferences not available on the evidence and in fact contrary to the evidence. It follows from this I am of the view that the exercise of his discretion miscarried. This Court should therefore exercise the discretion itself. 20 While I would not necessarily conclude as His Honour did that there was not such prejudice to the appellant, by reason of the delay as would prevent a fair trial from taking place, I have come to the conclusion that as no proper explanation has been given for the delay apart from the problems of obtaining taxation returns and really no explanation has been given at all for the lack of action between 1999 and 2002, this is a case where in exercise of discretion an extension of time ought not to be granted as it would not be fair and just to do so. 21 The orders I propose are as follows: 1. Grant leave to appeal. 2. Subject to filing the notice of appeal within 14 days, appeal allowed. 3. Set aside the order of Nicholson DCJ of 23 May 2003 and in lieu thereof order that the amended notice of motion filed on 8 November 2002 be dismissed with costs. 4. Respondent to pay the costs of the appellant and have a certificate under the Suitors' Fund Act 1951 if qualified. ********** Last Modified: 11/09/2004 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.