New South Wales Court of Appeal CITATION : Zhao v Posa & Ors [2004] NSWCA 184 HEARING DATE(S) : 7 June 2004 JUDGMENT DATE : 21 June 2004 JUDGMENT OF : Giles JA at 1; Tobias JA at 65; Cripps AJA at 66 DECISION : (1) Extend the time for applying for leave to appeal against the order made on 16 June 2003 to 7 June 2004. (2) Grant leave to appeal from the order made on 16 June 2003 and direct that the notice of appeal be filed within ten days. (3) Appeal allowed. (4) Set aside the orders dismissing the proceedings and that the plaintiff pay the defendants' costs made on 16 June 2003. (5) Extend the time for applying for leave to appeal against the order made on 18 July 2003 to 7 June 2004. (6) Refuse leave to appeal from the order made on 18 July 2003. (7) Order that the plaintiff pay the defendants' costs of the directions hearing on 16 June 2003 and the application heard on 18 July 2003. (8) No order as to the costs of the leave application and the appeals. (9) Opponents to have certificates under the Suitors Fund Act. (10) (a) Order that Ms Mary Nguyen repay to Mr Yuan Lin Zhao the costs payable by the plaintiff pursuant to order 7 and any costs payable by the plaintiff to the defendants with respect to the notice of motion filed on 25 July 2003; (b) Disallow the costs between Ms Mary Nguyen and Mr Yuan Lin Zhao referable to the directions hearing on 16 June 2003, the application heard on 17 July 2003, the notice of motion filed on 25 July 2003, and the leave applications and the appeal. CATCHWORDS : District Court - plaintiff in default - show cause hearing - plaintiff's lawyer detained elsewhere - dismissal on application of defendants pursuant to Pt 18 r 3 of the Rules - plaintiff not on notice of dismissal on application of defendants, as distinct from on court's own motion - difference in consequences - former dismissal not reversible on application under Pt 1 r 7A of Rules - latter dismissal is reversible - denial of procedural fairness. D Bamforth v Betcke [2003] NSWCA 116; CASES CITED : Howell v Weston [2001] NSWCA 174; Weston v Howell [1999] NSWCA 411; Wilson v Kochate Pty Ltd [2003] NSWCA 25. Yuan Lin Zhao - Claimant PARTIES : George Morris Posa - First Opponent Morris Victor Posa - Second Opponent George Posa (Senior) - Third Opponent FILE NUMBER(S) : CA 40964/03 G B Hall QC & R Hanlon - Claimant COUNSEL : I D Cullen - First and Third Opponents R A Cavanagh - Second Opponent Brydens Law Office, Liverpool - Claimant SOLICITORS : J Sciglitano & Co, Guildford - First and Third Opponents Curwood & Partners - Second Opponent LOWER COURT District Court JURISDICTION : LOWER COURT DC 3409/02 FILE NUMBER(S) : LOWER COURT Bowden ADCJ JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40964/03 DC 3409/02 GILES JA TOBIAS JA CRIPPS AJA Monday 21 June 2004 ZHAO v POSA & ORS Judgment 1 GILES JA: On 7 May 2002 the claimant commenced proceedings in the District Court, claiming damages for alleged assault and battery by the opponents on 25 December 1999. On 16 June 2003 Bowden ADCJ ordered that the proceedings be dismissed pursuant to Pt 18 r 3(1) of the District Court Rules. On 18 July 2003 the judge dismissed an application made under Pt 1 r 7A(5) of the Rules to set aside the order of 16 June 2003. The claimant applied for leave to appeal from the judge's decisions, with accompanying applications for extensions of time within which to apply for leave to appeal. The applications were heard on full submissions so that, if leave to appeal were granted, the appeal could be determined without a further hearing. The Rules 2 Part 18 r 3(1) of the Rules ("rule 3(1)") provides - "3(1) Where a plaintiff makes default in complying with any order or direction as to the conduct of the proceedings, or does not prosecute the proceedings with due dispatch, the Court may, on application by any party or of its own motion, dismiss the proceedings or make such other order as the Court thinks fit." 3 Part 1 r 7A of the Rules ('rule 7A") includes power to set aside a "preliminary dismissal order". An order dismissing proceedings pursuant to Pt 18 r 3(1) may be, but is not necessarily, a preliminary dismissal order within rule 7A. Rule 7A provides - "7A (1) In this rule: 'preliminary dismissal order ' means an 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 the proceedings. (2) The Court is not to make a preliminary dismissal order in respect of any proceedings unless it is satisfied that the parties to the proceedings have been appropriately notified that the order may be made. (3) A preliminary dismissal order does not have effect: (a) if an application is not made under subrule (5) -- until a period of 28 days has elapsed after the making of the order; or (b) if an application is made under subrule (5) -- unless the Court confirms the order under subrule (6) or (7). (4) The Court may, at the time it makes a preliminary dismissal order or subsequently, make such other orders as it thinks fit to ensure that any party to the proceedings in respect of which the dismissal order is made is appropriately notifed of the making or consequences of the order. (5) Any party to proceedings in respect of which a preliminary dismissal order is made may, within the period of 28 days after the making of the order, apply to the Court to set aside the order. (6) On any such application, the Court may set aside the preliminary dismissal order or confirm the order as it thinks fit. (7) The Court may, if it thinks fit, confirm a preliminary dismissal order if: (a) the party who has made an application to have the order set aside does not appear at the hearing of the application; or (b) an application to set aside the order is withdrawn or otherwise not proceeded with." 4 The two rules operate within the case management regime of Practice Note No 33 ("PN33"), issued under s 68A of the District Court Act 1973 and by s 161(7) taken to be a statutory rule. 5 PN33's stated objectives include expeditious preparation of actions by the parties, with notice that "the Court will dismiss actions or strike out defences where parties do not meet time standards, timetables or comply with Court orders" (para 3.2). It includes - "3.3.1 To enable the Court to meet its objectives set out above it will be necessary to insist on strict compliance with time standards, timetables and Court orders. In the event of failure to comply the Court will give parties a proper opportunity to be heard as to the reason, however, in the absence of special circumstances non-compliance is likely to result in cases being dismissed, defences being struck out or cross-claims being dismissed. It could also result in the Court refusing to make orders for the joining of parties, amendment of pleadings and for other interlocutory orders which would result in a case not fitting into the Court time standards." 6 Each of the court's lists has a judge allocated to control its management (para 4.1), and "[t]he emphasis is on compelling efficient progress of actions through the system" (para 4.2). The requirements for proceedings in the general list, into which the claimant's proceedings fell, include a timetable served with the statement of claim setting out "all necessary steps which the parties need to take to prepare the case for hearing together with a date on which each step must be completed" (para 5.4). Management is by a pre-trial conference appointed three months after the filing of the statement of claim (para 5.5.1) and a status conference appointed seven months after the filing of the statement of claim (para 5.8.1). 7 At the status conference the parties must be ready to take a hearing date, which "would generally be allocated within 1 to 2 months of the Status Conference" (para 5.8.1), and - "5.8.2 Adjournments will usually not be granted. If any party is not ready to take such a date then the case will be referred immediately to the List Judge to show cause why the Statement of Claim or any cross claim, should not be dismissed or any defence struck out. Parties should expect that they will be required to show cause on the day of the Status Conference or soon thereafter." 8 Showing cause may also arise in guillotine fashion - "5.8.5 In addition to the above matters the Court's Plans specifically provide that: 5.8.5.1 Any case which has not been allocated a hearing date within 18 months of the initiation of the proceedings in the Court, not counting any time in the not ready list, will be listed before a Judge of the Court to show cause why the case should not be dismissed for want of prosecution or any defence struck out or any cross claim dismissed. 5.8.5.2 Any case which has not been allocated a hearing date within 2 years of the initiation of the proceedings in the Court, not counting any time in the not ready list, can be expected to be dismissed unless a Judge of the Court has extended the time for allocation of a hearing date within the 2 year period." 9 The two rules operate within the case management regime in that, if a plaintiff makes default in complying with an order or direction made or given at a pre-trial conference and as a result is not ready to take a hearing date, the plaintiff has to show cause why the statement of claim should not be dismissed; this can bring dismissal pursuant to rule 3(1); and if the dismissal is by a preliminary dismissal order, there can be application under rule 7A to set aside the order. The order of 16 June 2003 10 In the statement of claim the claimant alleged the assault and battery, and that in consequence he suffered "severe injuries particulars of which are provided in the Part 9 Rule 27 Statement of Particulars filed herewith". He claimed damages, interest and costs, all unspecified. 11 The statement of particulars listed as "Injuries" hurts to various parts of the body and shock, and as "Disabilities" a number of physical, psychiatric, and economic consequences. It said under "Out-of-pocket expenses" that they would be advised. It said under "loss of income" that the value of the claimant's labour on the open labour market had been permanently diminished, and that he could not earn average adult weekly earnings "and claims wage loss accordingly", but without further specification. It said that medical reports of Dr Robertson dated 30 May 2001 and Dr Chapman dated 17 January 2001 were served. 12 It seems that the statement of claim was not accompanied by a timetable. The proceedings were listed for the pre-trial conference on 7 August 2002. A timetable was then agreed and ordered - "1. Plaintiff to serve on Defendant all medical evidence in his possession on which he intends to rely on at the hearing/arbitration by 11 December, 2002. 2. Plaintiff to serve on the Defendant any expert reports in his possession on which he intends to rely at the hearing by 11 December, 2002. 3. Plaintiff to serve any additional medical or other experts [sic] reports on which he intends to rely on at the hearing by 28 days prior to the hearing/arbitration. 4. Plaintiff to serve final Part 9 Particulars by 11 December, 2002. 5. Defendant to serve primary medical reports in its possession by 28 days prior to the hearing/arbitration. 6. Plaintiff to respond on request for further and better particulars by 6 September, 2002. 7. All cross claims to be filed by 11 December, 2002." 13 The proceedings came before a Registrar for the status conference on 11 December 2002. According to the report to his principal by Mr Graeme Fernie, the city agent for the claimant's solicitor Ms Mary Nguyen - "As requested, we advised the Registrar that the plaintiff is not ready to proceed to Arbitration as there are particulars outstanding to the second defendant and as there are further medical appointments arranged for the plaintiff in January. We explained to the court that the delay was because you had been awaiting notes from the Brain Injury Unit which were needed by your medico-legal doctors. We thus sought, that the matter be listed for Directions Hearing in January after those appointments have taken place. Mr Monaghan advised the Registrar that the second defendant was ready, and that Mr Sciglitano had indicated that the first and third defendants were also ready. Mr Monaghan was agreeable to a date being granted in February for Directions Hearing. Orders were made as follows: 1. Plaintiff to provide outstanding particulars to the second defendant within twenty-one (21) days; 2. List for Directions Hearing on 5 February 2003 at 11 am – Plaintiff to show Cause [notice enclosed]" 14 I will return to the notice enclosed with Mr Fernie's letter ("the show cause notice"). The claimant was in default of the orders made at the pre-trial conference and was not ready to take a hearing date, and a referral to show cause as described in para 5.8.2 of PN33 was made. 15 The directions hearing on 5 February 2003 was before Bowden ADCJ. According to Mr Fernie's report - "As requested, we informed the Court that you were ready subject to the completion of the service of your medical case, for which we sought a late. [sic] Although not part of your instructions, we consented on your behalf to late service of any defendant medicals in reply. The Judge stated that he would not set the matter down although the other parties were happy enough to do so. Orders were made as follows: 1. Plaintiff to complete service of all reports within 6 weeks 2. Adjourn 'Show Cause' to 22//4/03 at 3.00 pm 3. Note – breach of Practice Note 33 and no Affidavit filed 4. Plaintiff to pay defendant's [sic] costs of today and from today to date when plaintiff files Affidavit deposing that all reports have been served." 16 The breach of PN33 was at least that the reports from the January 2003 medical appointments had not been served, although particulars were in fact also outstanding. The reference to filing an affidavit came from the show cause notice, which said that at least five days before the directions hearing the solicitor for the party in default should file and serve an affidavit "setting out the reasons for failure to comply with the timetable and/or Practice Note 33". 17 The directions hearing on 22 April 2003 was held before the Registrar. Ms Karen Edgerton, the paralegal apparently conducting the proceedings on the claimant's behalf under the supervision of Ms Mary Nguyen, had sworn an affidavit on 14 March 2003 deposing to service of reports of Dr Giblin dated 3 February 2003 and Dr Anthony dated 5 February on 27 February 2003 and reports of Dr Scoppa dated 8 March 2003, Dr Giblin dated 12 March 2003 and Dr Coffey dated 25 February 2003 and 4 March 2003 on 14 March 2000, and saying that a scan was to be performed and Drs Giblin and Coffey would be asked to provide addenda to their reports. That affidavit had presumably been filed and served. Reports of Dr Chapman dated 6 March 2000 and 14 June 2000 had been served on 26 March 2003, and various scans and x-rays taken in March 2003 and a report of Dr Robertson had been served on 15 April 2003. Ms Edgerton had sworn an affidavit on 15 April 2003 saying that the radiology had been served and Dr Giblin and Coffey had been asked for their further reports on the radiology, although saying nothing of the reports served since her earlier affidavit. By mistake, the affidavit had not been filed; whether it had been served did not appear. Particulars were still outstanding. 18 According to Mr Fernie's report - "As requested, we informed the court that you were ready, and could serve two short reports of a refresher nature. The defendants stated that the plaintiff had still not provided an Affidavit explaining his delay, and had still yet to file an Affidavit stating that all reports had been served. They further stated that they wished to reply to our awaited reports. Orders were made as follows: 1. Note – plaintiff still in default. 2. 'Show Cause' adjourned to 16/6/03 at 10.00 am 3. Note – previous costs order still in effect." 19 On 16 June 2003 the directions hearing was again before Bowden ADCJ. The claimant had served reports of Dr Giblin dated 14 May 2003 and Dr Robertson dated 19 May 2003 on 30 May 2003, a report of Dr Scoppa dated 2 June 2003 on 5 June 2003, and a report of Dr Coffey dated 22 April 2003 on 13 June 2003. A report of Dr Robertson dated 14 June 2003 was served on 16 June 2003, but it is not clear whether it was served prior to the directions hearing. Ms Edgerton had sworn an affidavit on 13 June 2003 in which she said that particulars had been provided on 5 June 2003 and that reports of Drs Coffey and Robertson commenting on the radiology would be to hand on 20 June 2003. The fate of the addendum from Dr Giblin was not explained, and the particulars provided on 5 June 2003 had not included particulars of out-of-pocket expenses. Ms Edgerton also said that arrangements had been made for the claimant to be examined by the opponent's doctors. This affidavit had been served, but had not been filed: it was sent to Mr Fernie for him to hand up at the directions hearing. We were told that the service was by fax late on Friday 13 June 2003, and it is not clear that the affidavit was known to the opponents' lawyers appearing on 16 June 2003. 20 There was no appearance for the claimant when the proceedings were called a little after 10 am on 16 June 2003. Unknown to the judge and those appearing for the opponents, Mr Fernie had been detained in another court. He had telephoned his secretary, Ms Mandy Nguyen, and had arranged for her to attend the court to advise that he would probably be late, but as Ms Nguyen arrived the order was being made. She did not make her attendance known to the judge, but reported to Mr Fernie when he thereafter arrived. 21 The transcript of what occurred before the judge reads - "No appearance of or for the Plaintiff Mr Cullen for the first and third Defendants Miss Carr for the second Defendant HIS HONOUR: Anyone for the plaintiff, has that been called, number seven? Yuan Lin Zhao. COURT OFFICER: I've called him your Honour, nobody for the plaintiff. CULLEN: Your Honour this is the third show cause, the orders haven't been complied with. Still there are a number of outstanding medicals or documents not served. There are particulars still outstanding. And there's apparently as of 30 May going to be an application for leave to amend the statement of claim to claim exemplary damages and aggravated damages. We'd ask that it be dismissed. HIS HONOUR: Miss Carr? CARR: Your Honour we'd also ask that it be dismissed. HIS HONOUR: Yes, no appearance by or on behalf of the plaintiff. On 5 February it was noted that the plaintiff was in breach of practice note 33. There's no explanation been provided. Orders were made in relation to the service of documents and some consequential orders then made. There's no compliance with that. The matter came before the court on 22 April where it was so noted. Matter comes before the court today. There is no appearance of the plaintiff and the evidence of the defendants is that the orders previously made have still not been complied with. There is an affidavit of Mr Karly of 6 June, the solicitor for the second defendant. FOR JUDGMENT SEE SEPARATE TRANSCRIPT." 22 What Mr Cullen told the judge about non-compliance was strictly correct, even if Ms Edgerton's affidavit of 13 June 2003 was known to those appearing for the opponents, in that the reports of Drs Coffey and Robertson and the particulars of out-of-pocket expenses were outstanding. Although it was not in an affidavit, the claimants had written on 30 May 2003 to the first opponent, and presumably the other opponents, to "put you on notice that at the hearing of this matter, we shall seek leave to amend the Ordinary Statement of Claim, in addition to ordinary damages, exemplary and aggravated damages against each of the three defendants [sic]". The "affidavit of Mr Karly of 6 June" to which the judge referred was an affidavit of Mr William Cowley, the solicitor for the second opponent, sworn on 6 June 2003 saying that the claimant had not attended two medical appointments with the defendant's doctors in 2002, that the claimant's solicitors said they had no record of being told of the appointments, and that further appointments had been made for 17 June 2003 and 18 July 2003. 23 The judgment was in these terms - "HIS HONOUR: The defendants make application that the matter be dismissed for non prosecution. The plaintiff is in a position at the present time that he has been required to show cause as to why the action should not be dismissed so he is well and truly aware of the nature of the orders that could be made, or may be made on this occasion. In those circumstances I dispense with the need for the filing of a notice of motion by the defendants in respect of their application, and on the defendants' application I dismiss the proceedings pursuant to part 18. The plaintiff to pay the defendants' costs. The first defendant to notify the plaintiff within three days." The order of 18 July 2003 24 On 27 June 2003 the claimant filed a notice of motion applying for an order that "[p]ursuant to Section 1.7A of the District Court Rules 1973 the Court set aside the order of Acting Judge Bowden of 16 June, 2003 to dismiss the proceedings". The application was supported by affidavits of Ms Mary Nguyen, Mr Fernie and Ms Mandy Nguyen. The affidavits of Mr Fernie and Ms Mandy Nguyen explained the circumstances of the non-appearance. The affidavit of Ms Mary Nguyen said only that neither she nor her assistants had received a phone call advising that the claimant was unrepresented at the directions hearing on 16 June 2003. The application was not supported by evidence directed to explaining away earlier defaults or describing the claimant's present state of readiness for a hearing. 25 At the hearing of the application on 18 July 2003 Mr Fernie appeared for the claimant. He referred the judge to the three affidavits. An affidavit apparently of Mr Joseph Sciglitano, the solicitor for the first and third opponents, which was not in the appeal papers but was referred to in the transcript next set out, was also read. 26 The opponents' positions were explained to the judge as - "SCIGLITANO: The motion is opposed your Honour not so much on the issues that Mr Fernie raises that he was late to appear before your Honour on the last occasion, it's opposed on the basis that the matter should remain struck out due to the non-compliance by the plaintiff to the timetable in any event and I do have a short affidavit to hand up outlining some of the matters where we say the plaintiff has not - HIS HONOUR: I wish that members of the legal profession would understand that matters in this Court are not and have not for several years been struck out. Pleadings may be struck out but actions are not struck out, they are dismissed or they are adjourned to another date. This action is dismissed. SCIGLITANO: Yes your Honour. HIS HONOUR: And there is, as the Court of Appeal has found in Weston v Howell, an extraordinary difference between striking a matter out and dismissing it and this action is dismissed and you say that it should stay dismissed apart from anything else because the plaintiff is still in default with the timetable? SCIGLITANO: Indeed your Honour and the affidavit I can indicate your Honour is late because there has still been material served by the plaintiff within the last week and it was served as late as last evening so the affidavit reflects the position as of last night. COWLEY: I'm in the same position as Mr Sciglitano your Honour." 27 The judge's reference to Weston v Howell [1999] NSWCA 411 was pertinent for more than a difference between striking a matter out and dismissing it. As will be seen, on the authority of that case the judge held that he had no power under rule 7A to set aside the order of 16 June 2003. The case does not seem to have been known to any of the parties' representatives. 28 In his reasons the judge said, after recounting some of the earlier history of the proceedings - "On 16 June the matter was before the court. There was no appearance for the plaintiff. No cause had been shown and the matter was dismissed. The affidavits filed by the plaintiff on this occasion show the reason for the non-appearance and might be taken to have excused the non appearance of someone on behalf of the plaintiff, that being an unfortunate happenstance. There is nothing put before me to indicate what the plaintiff would have been able to show the court on 16 June as to the then present status of the matter and why the action should not be dismissed." 29 His Honour recorded the competing positions before him, for the claimant that all reports had been served and for the opponents that a medical report had just been served "which opened up a new area of treatment". There does not seem to have been evidence of that, but the judge must have been told of it and it was acknowledged before us that on 17 July 2003 the claimant served a report of Dr Robertson dated 2 December 2002. 30 The judge said that the Pt 27 r 9 particulars were "rudimentary" and that the service of the report suggested that they would need amendment. He said that it seemed to be conceded that particulars of out-of-pocket expenses had not been provided, as was the case. 31 The judge did not develop this apparent dissatisfaction with the claimant's state of preparation. He said - "The outstanding difficulty that I have in relation to this matter though is that on 16 June the action was dismissed on the defendants' application under Part 18. The decision of the Court of Appeal in Weston v Howell makes it clear that there is then no power in this Court to make any further order. Perhaps I should not have done it but that is what I did. The only way in which this Court has power to set aside a dismissal order is under Part 1 Rule 7A – indeed that is what the plaintiff's application is. A preliminary dismissal order is defined in subrule 1 of Part 1 Rule 7A as: 'An 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 the proceedings.' There was an application by the defendant to dismiss the proceedings and that was acceded to. Again Weston v Howell makes it quite clear that, even by consent, I would not have power to set aside that order. There is no consent forthcoming in any event so I do not even have to consider that. The notice of motion will have to be dismissed as being beyond the power of the Court." Appeal 32 On 25 July 2003 the claimant filed a holding appeal, confusingly stating that - "The proceedings appealed from were heard on 18 July, 2003 and decided on 18 July, 2003. The appellant appeals from the decision of Bowden J to strike out matter number 3409 of 2002 in the Sydney District Court." 33 On the same day the claimant filed in the District Court a further notice of motion applying for an order that the order of 16 June 2003 be set aside pursuant to rule 7A. The notice of motion was returnable on 1 August 2003. According to Ms Mary Nguyen, counsel advised that the application "should be withdrawn pending the appeal", and it was withdrawn. 34 According to Ms Edgerton, different counsel advised that "my Holding Appeal was insufficient as I should also have sought appeal against decision of 16 June 2003". Counsel drafted documents and said that she should "contact the Court of Appeal to confirm the correct procedure". On contacting the Registrar, Ms Edgerton was told that leave to appeal was needed. By then, the claimant was out of time to apply for leave to appeal. 35 A summons for leave to appeal was filed on 31 October 2003. It extended to both decisions of 9 June 2003 and 17 July 2003, but did not include an application for extension of time in relation to the order of 18 July 2003. An amended summons was prepared and was included in the appeal papers, although it does not seem to have been filed. Leave to amend and to file the amended summons was granted at the hearing of these applications. The order of 16 June 2003 was a preliminary dismissal order 36 In Weston v Howell the defendant applied by notice of motion for the dismissal of proceedings for want of prosecution. On 6 October 1998 the proceedings were dismissed pursuant to rule 3(1). On the plaintiff's application, on 6 April 1999 an order was made discharging the dismissal order. The defendant appealed from the order of 6 April 1999. 37 At that time Pt 18 r 3 read - "3(1) Where a plaintiff makes default in complying with any order or direction as to the conduct of the proceedings, or does not prosecute the proceedings with due dispatch, the Court may, on application by any party or of its own motion, dismiss the proceedings or make such other order as the Court thinks fit. (2) Where proceedings are dismissed under subrule (1), rules 7 and 8 apply as though the dismissal were a discontinuance. (3) The Court may not make an order under subrule (1) without giving the plaintiff a reasonable opportunity to be heard. (4) The Court may, on application by any party, set aside an order that is made on the Court's own motion under subrule (1)." 38 Stein JA noted (at [5]) that it was common ground "that there is no provision for the reinstatement of proceedings dismissed for want of prosecution other than in the circumstances of the court acting on its own motion under Rule 3". His Honour did not accept the plaintiff's submission that the dismissal order had in truth been made on the court's own motion, and accordingly the order of 6 April 1999 was itself set aside. Meagher and Fitzgerald JJA relevantly agreed with Stein JA. 39 In Howell v Weston [2001] NSWCA 174 the plaintiff then appealed from the dismissal order of 6 October 1998. Powell and Hodgson JJA recited the absence of power to set aside the dismissal order as part of the history, without comment (at [27] and [56] respectively). Beazley JA said that "[t]here is no express power in the District Court for that court to restore the proceedings" (at [48]), but questioned whether there may have been an inherent jurisdiction to set aside an order made where the defect was such that there had been no valid trial at all. 40 With effect on 1 September 2000, subrules (2), (3) and (4) of Pt 18 r 3 were deleted and rule 7A was added to the Rules. 41 Rule 7A is differently structured from the subrules of Pt 18 r 3 which it replaced. It restricts its application by the definition of "preliminary dismissal order", so that it only applies to an interlocutory order or an order not made "on an application to dismiss the proceedings". Its application may not be limited to orders dismissing proceedings pursuant to rule 3(1), but by these last words it is restricted to orders made of the court's own motion as distinct from on the application of a party. That is why there is the express requirement of due notice to the parties to the proceedings in rule 7A(2), the equivalent of the previous Pt 18 r 3(3), with the restriction by the words "on an application to dismiss the proceedings" being the equivalent of the previous Pt 18 r 3(4). An order dismissing proceedings made on the application of a party is not a preliminary dismissal order within rule 7A, and the absence of express power identified in Weston v Howell is continued. 42 In Wilson v Kochate Pty Ltd [2003] NSWCA 25 at [33]-[35], decided upon rule 7A, it seems to have been assumed that an order dismissing proceedings made on the application of a party would not be a preliminary dismissal order. There had been neither an application by notice of motion nor an oral application, and it was held that the dismissal had been of the court's own motion and was a preliminary dismissal order. 43 Part 16 rule 1 of the Rules provides that an application shall be made by motion, and by Pt 16 r 2 only where notice of the motion has been filed and served. The opponents had not filed or served notices of motion applying for an order dismissing the proceedings. The claimant's proceedings were before the court on 16 June 2003 on an adjourned referral to show cause as described in para 5.8.2 of PN33. They were not before the court for an application made by a party. 44 The opponents could nonetheless apply without filing and serving a notice of motion if compliance with the Rules was dispensed with, see Pt 1 r 5(2) and Pt 16 r 2(2)(d). They orally applied for the proceedings to be dismissed, by explicit applications. They did not simply concur with dismissal foreshadowed by the judge. The judge did not purport to dismiss the proceedings on the court's own motion, but did so expressly on the opponents' applications and for that purpose dispensed with the need for a notice of motion. The order of 16 June 2003 was not a preliminary dismissal order. There was no error in the order of 17 July 2003 45 The claimant's application on 17 July 2003 was, by the notice of motion, an application for an order pursuant to rule 7A. There was no suggestion that Mr Fernie applied on any other basis. Since the order of 16 June 2003 was not a preliminary dismissal order, the judge was correct in holding that he had no power to set it aside pursuant to rule 7A. 46 In this Court submissions were made as to setting aside the order pursuant to Pt 31 r 12A of the Rules or in the exercise of an inherent jurisdiction. The judge was not asked to act upon either basis. It is unnecessary to express a view, and not appropriate to do so when the submissions were less than full, on the availability of either source of power. There was error in the order of 16 June 2003 47 In Wilson v Kochate Pty Ltd the preliminary dismissal order was made at a directions hearing in the absence of an appearance by the plaintiff. The plaintiff's application to set the order aside was dismissed. On appeal it was held that there had been error in various respects in dismissing the plaintiff's application. In the course of his reasons Ipp JA, with whom Stein JA agreed, said - "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." 48 Hodgson JA also agreed, and added - "39. … 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." 49 The show cause procedure within the case management regime is, as PN33 demonstrates, part of the court's resolve to ensure that actions progress efficiently and expeditiously. The court intervenes, and does not leave the course of the proceedings to one or even all of the parties. 50 A plaintiff (or other party) in default will be conscious of possible dismissal on the court's initiative, warned by para 5.8.2 of PN33. A show cause notice such as that passed on through Mr Fernie will emphasise that consciousness. It tells the plaintiff that the proceedings have been listed for him "to show cause why the action should not be dismissed for want of prosecution", and that an affidavit explaining his default has to be filed. But it addresses all the parties, including by the note - " Matters Listed To Show Cause Please Note: All parties are reminded that this is now a very serious matter and the following orders of the court must be complied with: This matter is listed to show cause why the statement of claim or cross claims or any defences thereto should not be dismissed for want of prosecution. Submissions Any party who wishes the Court to consider any submissions (either supporting or opposing dismissal) must put them in writing and they must be filed and served at least five (5) days prior to the date allocated to show cause. Generally, any submissions not received prior to the show cause date will not be accepted or considered by the Directions Judge." 51 The case management function of the directions hearing on 16 June 2003, and in particular the direction in the show cause notice that any party, not just the party in default, file and serve any submissions for the court to consider, put the claimant on notice of an order dismissing the proceedings on the court's own motion. The dictate of rule 7A(2) was satisfied. It did not put the claimant on notice of an order dismissing the proceedings on the opponents' applications. To the contrary. On 5 February 2003 the opponents had been content to take a date for hearing despite medical reports and particulars being outstanding. On 22 April 2003 their stances appear to have been mild, and they had not filed and served any submissions five days prior to 16 June 2003, in support of dismissal or at all. Assuming Mr Cowley's affidavit of 6 June 2003 had been served, it envisaged the proceedings continuing with attendance at the medical appointments on 17 June 2003 and 18 July 2003. 52 In my opinion, it was a denial of procedural fairness to accede to the opponents' applications made orally on 16 June 2003, and to dispense with the compliance with the Rules whereby the claimant would have had notice of the applications. The order of 16 June 2003 was a determinative order: the claimant would be statute barred from commencing fresh proceedings. Because made on the opponent's applications, it was not a preliminary dismissal order within rule 7A. It was not reversible, to use Hodgson JA's language in Wilson v Kochate Pty Ltd, pursuant to that rule. It may or may not have been reversible pursuant to Pt 31 r 12A or in the exercise of an inherent jurisdiction (although if not infected by want of procedural fairness it is not easy to see how the order could have been made irregularly, illegally or against good faith within Pt 31 r 12A or could have involved the abuse of the processes of the court necessary for exercise of an inherent jurisdiction). Even if it was arguably reversible otherwise than pursuant to rule 7A, it should not have been made without notice to the claimant that he was at risk of an irreversible order, and so at risk of dismissal without the last opportunity given by rule 7A to explain his default, put his house in order and persuade the court that the proceedings should be allowed to continue despite the default (see Bamforth v Betcke [2003] NSWCA 116 at [53]). The consequences of the error 53 The opponents submitted that the order of 16 June 2003 should be left in place because even if Mr Fernie had appeared, the judge would have made the same order of the court's own motion. That is not necessarily so. The remaining default was not gross, Mr Fernie's submissions may well have satisfied the judge that the proceedings could continue, and it is easy to see that the non-appearance itself may have been an element in the "non prosecution" to which the judge referred in his reasons. Let it be assumed, however, that the judge would have made the same order. The order would have been reversible. The order he in fact made can not be left in place, because it is an order of very different significance. 54 The opponents then submitted that this Court should re-exercise the judge's discretion, on the position as it stood in mid-2003, and in that re-exercise should order that the proceedings be dismissed. I do not think it should do so. 55 The discretion properly to be exercised was either a discretion in acting on the court's own motion, or a discretion in ruling on applications by the opponents after due notice of the applications to the claimant. The judge did not exercise either discretion, and this Court would not be re-exercising his discretion. 56 If this Court were to exercise the discretion of a court acting on the court's own motion, if the proceedings were dismissed the claimant should be entitled to apply pursuant to rule 7A for an order setting the dismissal order aside. Assuming this Court's order could be so framed that the District Court could set it aside, the present position would then hold sway rather than the position in mid-2003. If this Court were to exercise the discretion of a court ruling on applications by the opponents after due notice of the applications to the claimants, it would have to construct a hypothetical position on the assumption of due notice The reality is that any discretion should be exercised on the present position. Rather than the artificiality of a defeasible or hypothetical decision of this Court, in my opinion the reality should be accepted that if, upon reinstatement in the District Court, the proceedings should proceed to a hearing, that should occur. Perhaps the claimant benefits from the error on 16 June 2003, but it was an error in which the opponents participated. 57 In all the circumstances, I consider that the order of 16 June 2003 should be set aside and the proceedings remitted to the District Court. A further show cause directions hearing will no doubt occur, and the future of the proceedings will be determined by the judge before whom it is held. Extensions of time and leave to appeal 58 Despite the claimant's failure to apply within time for leave to appeal from the order of 17 July 2003, the opponents can have been in no doubt that the claimant intended to appeal. The delay was small, and no prejudice to the opponents has been shown. An extension of time to apply for leave to appeal from the order of 17 July 2003 should be granted. But there was no substance in the appeal, and in my opinion leave to appeal should be refused. 59 The opponents submitted that the claimant should not be granted an extension of time to apply for leave to appeal from the order of 16 June 2003, or leave to appea,l because he had chosen to apply to have the order set aside rather than immediately seek leave to appeal. Having failed in his chosen course, it was said, the claimant should not be permitted to fall back on the alternative course which he had passed over. 60 There would be more force in the submission if the claimant's chosen course had truly been available to him, so that the operative decision became that of 18 July 2003. It is evident that there was failure all round to appreciate the significance of application by the opponents. On 18 July 2003 the opponents did not seek to take advantage of the non-appearance, and were content to address the judge on the merits. They knew that the claimant was endeavouring to overcome the order of 16 June 2003, and no prejudice from delay in applying for leave to appeal has been shown. The effect of irreversible dismissal on the claimant could be profound. He was entitled to procedural fairness, and the need to ensure procedural fairness at show cause directions hearings, and mark the importance of making an order otherwise than on the court's own motion, makes this Court's decision of general significance. In all the circumstances, in my opinion an extension of time to apply for leave to appeal and leave to appeal should be granted. Costs 61 On 5 February 2003 an order was made in the District Court that the claimant pay the opponent's costs to the date of filing an affidavit stating that all reports had been served. There was no appeal in that respect, and the order stands. The order may have caught the costs of the directions hearing on 16 June 2003, although it is less evident that it caught the costs of the application heard on 18 July 2003. Whatever the position be, it seems that no other order was made for the costs of either occasion. 62 The error in making the order of 16 June 2003 flowed from the claimant's non-appearance, although the opponents' applications to the judge contributed to the error. The application on 18 July 2003 was bound to fail. In the amended summons for leave to appeal the claimant accepted that he should pay the opponents' costs of the proceedings in the District Court on 16 June 2003 and 18 July 2003. If the order made on 5 February 2003 does not already have that effect, it should be so ordered. 63 The claimant has succeeded in substance on appeal, but only as to one of the decisions of which he complained and with much misdirected effort. In my opinion, a just disposition of costs is to leave the claimant and the opponents to pay their own costs of the leave applications and the appeal, with the opponents to have certificates under the Suitors Fund Act. The claimant's costs burden 64 The claimant's proceedings were thoroughly mismanaged by his lawyers. He should not have to bear costs referable to the directions hearing of 16 June 2003, the application heard on 17 July 2003, the withdrawn notice of motion filed on 25 July 2003, or the leave applications and the appeal. This was properly recognised, and counsel for the claimant said that his "instructing solicitors would not stand in the way of … being ordered to bear those costs". Orders 1. Extend the time for applying for leave to appeal against the order made on 16 June 2003 to 7 June 2004. 2. Grant leave to appeal from the order made on 16 June 2003 and direct that the notice of appeal be filed within ten days. 3. Appeal allowed. 4. Set aside the orders dismissing the proceedings and that the plaintiff pay the defendants' costs made on 16 June 2003. 5. Extend the time for applying for leave to appeal against the order made on 18 July 2003 to 7 June 2004. 6. Refuse leave to appeal from the order made on 18 July 2003. 7. Order that the plaintiff pay the defendants' costs of the directions hearing on 16 June 2003 and the application heard on 18 July 2003. 8. No order as to the costs of the leave applications and the appeals. 9. Opponents to have certificates under the Suitors Fund Act. 10. (a) Order that Ms Mary Nguyen repay to Mr Yuan Lin Zhao the costs payable by the plaintiff pursuant to order 7 and any costs payable by the plaintiff to the defendants with respect to the notice of motion filed on 25 July 2003; (b) Disallow the costs between Ms Mary Nguyen and Mr Yuan Lin Zhao referable to the directions hearing of 16 June 2003, the application heard on 17 July 2003, the notice of motion filed on 25 July 2003, and the leave applications and the appeal. 65 TOBIAS JA: I agree with Giles JA. 66 CRIPPS AJA: Giles JA has set out the relevant District Court Rules and Practice Notes and the history of the litigation. It is unnecessary for me to repeat them. 67 Had the order of dismissal made on 16 June 2003 been made pursuant to Part 1 rule 7A by the Court on its own motion the further application on 28 July 2003 should have been heard by the learned trial judge on the merits and not dismissed. However it is clear from the record that the order of dismissal was made pursuant to an application being made in that behalf by the opponents pursuant to Pt 18 r 3 of the Rules albeit at the invitation of the Court. That being so the application to set it aside pursuant to Pt 1 r 7A was incompetent and could not have resulted in the order the claimant wanted. 68 As Giles JA has pointed out the case was listed before the Court on 16 June as part of its case management regime. It had the power to dismiss the proceedings but if it did the defaulting party had an entitlement to have the decision reviewed if an application were made within twenty-eight days. As was pointed out in Wilson v Kochate Pty Ltd (1999) NSWCA 411 and Weston v Howell (2001) NSWCA 174 there is an ocean of difference between the consequences of dismissal by the Court of its own motion and dismissal by the Court on the motion of the opposing party. If it is dismissed by the Court of its own motion the Rules permit a discretionary review of the order pursuant to Pt 1 r 7A. If however the proceedings are dismissed on the motion of the defendant review is limited to matters set out in Pt 31 r 12A and, perhaps, in the inherent jurisdiction of the Court if there has been a denial of procedural fairness. Pt 31 r 12A provides: "A judgment or order of the Court in any proceedings made, on sufficient cause being shown, be set aside, on terms, by order of the Court, if the judgment was given or entered up, or the order was made, irregularly, illegally or against good faith." 69 In the present case there was a denial of procedural fairness because the proceedings were dismissed on the motion of the opponent without notice to the claimant. The learned trial judge was bound to dismiss the application made on 28 July 2003 because it was not made pursuant to Pt 31 r 12A nor was it an application to enliven the inherent jurisdiction of the Court to remedy an injustice. 70 However had an application been made under Pt 31 r 12A I am of the opinion that it would have succeeded because a denial of procedural fairness is relevantly an "irregularity" within the meaning of that Rule. 71 I do not think the order made on 16 June 2003 should be permitted to stand because it was made in breach of the rules of natural justice. Accordingly I am of the opinion that the orders, including costs orders, proposed by Giles JA should be made. ********** Last Modified: 06/28/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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