Re Fuji Restaurants Pty Ltd v the Port of Melbourne Authority [1991] FCA 249 (13 June 1991)

FEDERAL COURT OF AUSTRALIA

Re: FUJI RESTAURANTS PTY LTD
And: THE PORT OF MELBOURNE AUTHORITY
No. V G10 of 1986
FED No. 323
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY
GENERAL DIVISION
Heerey J.(1)

CATCHWORDS

Practice and Procedure - application for summary dismissal of proceeding under O.10 r.7 Federal Court Rules - whether pre-conditions of exercise of power under O.10 r.7 satisfied - whether continuing default a pre-ondition - inherent or incidental power of the Federal Court to dismiss a proceeding for want of prosecution - whether excluded by O.10 r.7 - principles underlying exercise of discretion - claim by respondent against applicant in another court

Federal Court Rules: O.10 r.7

Allen v Sir Alfred McAlpine and Sons Ltd (1968) 2 QB 229

Attorney-General v De Keyser's Royal Hotel Ltd [1920] UKHL 1; (1920) AC 508

Birkett v James (1978) AC 297

Commonwealth v Verwayen (1990) 64 ALJR 540

Duncan v Lowenthal (1969) VR 180

Lenijamar Pty Ltd v AGC (Advances) Ltd (1991) ATPR p 41-082

Zimmer Orthopaedic Ltd v Zimmer Manufacturing Co (1968) 2 All ER 309

HEARING

MELBOURNE
13:6:1991

Counsel for the Applicant: Mr J.H. Karkar QC with Ms E.A. Strong

Solicitors for the Applicant: Mallesons Stephen Jaques

Counsel for the Defendant: Mr J.R. Dixon

Solicitors for the Defendant: Ken Beruldsen and Associates

DECISION

In the mid 1980s a World Trade Centre was erected by the banks of the Yarra River. It is a large complex of buildings intended to be used for trade exhibitions, conventions and the like. It was constructed by the respondent, the Port of Melbourne Authority ("PMA").

2. The applicant, Fuji Restaurants Pty Ltd ("Fuji"), wished to lease premises at the Centre in order to conduct a Japanese restaurant. It obtained a lease and went into possession, but the venture was not a success. On 17 January 1986 Fuji commenced a proceeding in this Court against PMA alleging conduct in breach of s.52 of the Trade Practices Act 1974 together with associated common law claims. The case has yet to come to trial. PMA now seek an order that Fuji's claim be dismissed for want of prosecution. At the moment, that familiar label will suffice to identify the nature of the application. However, as will appear, the precise basis on which it is made assumes some importance. PMA also complains about certain further and better particulars delivered by Fuji. Fuji, if successful in resisting PMA's dismissal application, seeks leave to interrogate.

3. I shall now briefly summarise the history of the matter. That history involves two themes. We are concerned with dealings between Fuji and PMA, both before and after the commencement of proceedings, and also relations between Fuji and two firms of solicitors and an accountant who were engaged to provide professional assistance for Fuji in its claim.
History

4. In January and February 1983 Fuji, acting through its principal Mr Djura Mijic, engaged in negotiations with PMA's letting agent, K. Gardner and Lang Pty Ltd. In the course of those negotiations the agent allegedly made representations to Fuji. These representations are said to have related to the date upon which the Centre would be completed, the number of people who would be working and visiting there, the number of food outlets which would be permitted, the presence of business companies and in particular Japanese companies at the Centre and the number of customers Fuji could expect at its restaurant.

5. In April 1984 Fuji executed a lease and went into possession. It commenced operations in August 1984, even though there was a continuing delay in the completion of the Centre. The business operated at a loss and negotiations took place with a view to obtaining rental concessions. No agreement was reached and in October 1985 notice to quit was served. Fuji retained Godfrey Stewart and Co as its solicitors. Following some negotiations between its solicitors and the solicitors for PMA, Fuji vacated the premises in December 1985. On 5 December 1985 PMA issued proceedings in the County Court at Melbourne against Fuji claiming $33,036.03 for unpaid rent, cleaning and carparking fees. A summons for final judgment was issued on 30 December 1985 and the hearing of that summons was subsequently adjourned to 11 March 1986.

6. In the meantime, on 17 January 1986, the present proceeding was commenced in the Federal Court. The first directions hearing was on 28 February 1986. On that day Jenkinson J. ordered by consent:
1. Any request for further and better particulars of the

statement of claim be served within 14 days.
2. Any response to such a request be served within 28 days
after receipt.
3. The respondent file and serve its defence within 35 days.
4. Any request for further and better particulars of the
defence be served within 14 days of the date of service
of the defence.
5. Any response to such a request for particulars of the
defence be served within 28 days after delivery of the defence.
6. Each party give discovery within 65 days and inspection
within 14 days of discovery.
7. Directions hearing adjourned to 23 May 1986.
8. Costs reserved.
9. Liberty to apply on 7 days notice.

The order was taken out by Godfrey Stewart and Co and entered on 5 March.

7. On 24 March PMA's solicitors filed and served a request for further and better particulars of the statement of claim. This was of course 10 days outside the time fixed by Jenkinson J.'s order. I might add that a defence was filed and served on 20 May which was also outside the time fixed by his Honour's order (ie. 4 April). Apart from admissions that Fuji became a tenant of the premises, that it operated a restaurant there between August 1984 and November 1985 and that the tenancy was determined and the premises vacated in mid to late December 1985, the defence consisted of denials or non-admissions.

8. Meanwhile, on 27 March, against the opposition of PMA, the County Court ordered that PMA's claim for rent etc be stayed pending the resolution of the Federal Court proceedings. None of the amount claimed by PMA in the County Court proceedings has been paid and those proceedings remain on foot but subject to the stay.

9. I now turn to the request for further and better particulars, a response to which was not in fact provided by Fuji until 1 December 1989. Complaints as to that delay are at the forefront of PMA's case in the present application.

10. The request for further and better particulars was of the sort which would be expected from a respondent in a case of this nature. Basically it sought further detail as to the alleged representations and as to the damages claimed by Fuji. In this context I should note that the statement of claim itself pleaded the representations and warranties alleged and gave particulars in these terms:

Particulars
The representations and warranties were made and are to be
inferred from statements in writing contained in a brochure
entitled "World Trade Centre, Melbourne" published by the
respondent and promotional leasing documentation published and
distributed by the respondents (sic) said servant and agent,
K Gardner and Lang Pty Ltd. Further they are constituted by oral
statements, made by two employees/directors of the said K
Gardner and Lang Pty Ltd of whom (sic) was Chris Lang to Mr D
Mijic a director of the applicant.

11. There were also particulars as to loss and damage, but they were notably vague. They alleged that the business had been conducted at a loss of between $5,000 and $6,000 per month, not including rental and maintenance charges, and that "(h)ad the representations been true the business would have been conducted at a profit". No figure was specified. There was an allegation of loss of income profits and a loss of goodwill. Again no figures were given. There was an allegation of loss of "the large sums of capital being approximately $100,000 expended in fitting out". There were allegations of loss of earnings "by way of income or profit in respect of the said capital outlay that it would have earned had the representations been true". A claim was made for holding costs for storage of equipment because of delays in the building work and also general damages. It was said that "(f)ull particulars of the applicant's loss and damage will be provided prior to trial".

12. Mr Mijic, who swore an affidavit on behalf of Fuji, deposed that he was told on 27 March 1986 by Godfrey Stewart and Co that PMA had requested further and better particulars and that those were required by 28 April. Mr Mijic says that counsel who had advised him prior to the issue of proceedings had already anticipated such a request and had asked him to engage his accountants to prepare trading statements in respect of the operation of the restaurant. Fuji's accountant was a Mr Gordon Black who had a close working relationship with Godfrey Stewart and Co and was about to move into an adjacent office. When the need for further accounting work was raised by Fuji's counsel, Mr Mijic told Mr Peter Eilenberg of Godfrey Stewart and Co that Mr Black was already substantially behind with other work for him and suggested another accountant but Mr Eilenberg insisted that Mr Black was appropriate and that he would "get Black to hurry". Mr Eilenberg said that when Mr Black moved into the adjoining office he (Eilenberg) would be in a position to obtain ready and quick co-operation from him. At the time when Mr Eilenberg first advised Mr Mijic of the request for particulars he told him that he had spoken directly to Mr Black and asked that he prepare the necessary information. Because of this and because "of their close physical and professional relationship (Mr Mijic) was left in no doubt that they could and did liaise directly with each other in respect of (his) affairs". Mr Mijic attended several conferences with Mr Black and Mr Eilenberg in April 1986 after which he "understood that both Mr Black and Mr Eilenberg had the necessary information to complete the task of providing the particulars."

13. The directions hearing had been adjourned to 23 May 1986. The matter was listed on that day before Sweeney J. but neither side appeared. The report of listing on the Court file records a direction that the Registrar enquire of the solicitors for the respective parties as to why there was no appearance. On 30 May PMA's solicitors wrote to the District Registrar apologising for their inadvertent failure to appear and advising that the applicant's solicitors would be contacting the District Registrar shortly to arrange for the action to be brought before the Court for further directions. On 6 June the Deputy District Registrar wrote to Godfrey Stewart and Co advising that he had been requested by the Court to make enquiries as to the non-appearance and enquiring if they wished the matter to be listed again for hearing in the future. A reply within 14 days was requested.

14. Mr Mijic was not aware of the non-appearance of both parties on 23 May. His own attendance had not been required. He deposes that it was his belief "that the proceeding was moving towards a hearing and (he) had provided all necessary instructions to Mr Eilenberg and Mr Black". Much later, when he obtained access to Godfrey Stewart and Co's file, he found the letter of 6 June from the Deputy District Registrar. On it appears in pencil the word "file", but no indication of any other action. In an itemised bill which he received from Godfrey Stewart and Co there is an entry "Receiving and filing letter from Federal Court as to adjourned mention". Nothing was done by Godfrey Stewart and Co to have the matter re-listed, nor did they tell their client what had happened.

15. On 11 June 1986 Mallesons on behalf of PMA wrote to Godfrey Stewart and Co requesting further and better particulars and a similar letter was sent on 11 July. Mr Mijic was not told about those requests. During the first half of 1986 he had been asked by Mr Eilenberg to provide information for the purpose of the particulars and he had given that information either to Mr Eilenberg or Mr Black. By the end of April 1986 he believed he had provided Mr Eilenberg and Mr Black with all necessary instructions.

16. In June and July 1986 there was correspondence between Mallesons and Godfrey Stewart and Co about the adequacy of PMA's discovery. Those matters were substantially resolved. Also Godfrey Stewart and Co provided copies of discovered documents.

17. The next chapter in the story is concerned with a dispute between Fuji and Godfrey Stewart and Co as to costs which ultimately led to that firm filing a notice of cessation to act on 2 December 1987.

18. In October 1985 Fuji had paid $2,000 on account of costs which would be incurred in the claim against PMA. The firm pointed out that further payments might be required as the action proceeded and that their present estimate was that a further $2,000 would be required when the matter had been fixed for hearing and an additional $3,000 immediately prior to the hearing and the briefing of counsel. Mr Mijic therefore believed that the $2,000 would last until the matter was fixed for hearing. But on 8 December 1986 he received a demand for a further $2,000 on account of disbursements. Mr Eilenberg apparently identified the completion of further and better particulars as the outstanding matter preventing the proceeding from progressing to a hearing, but Mr Eilenberg did not seek any further instructions from Mr Mijic or any assistance in pressing Mr Black to complete his tasks. Mr Mijic assumed his assistance was not regarded as necessary in view of the close relationship between Mr Black and Godfrey Stewart and Co. The dispute about costs continued on through 1987. At this time Mr Mijic could only have found the money with difficulty because of the losses sustained at the Centre. There were also other claims for costs by Godfrey Stewart and Co which were in dispute. In October 1987 Mr Eilenberg told Mr Mijic that he would cease to act and in December 1987 a final account was delivered. On 21 December 1987 Mr Mijic requested a detailed bill. In that letter Mr Mijic said:

"Let me say however at the outset that I wish to proceed with this
matter against the Port of Melbourne Authority based on your initial
advice that I had a good action against them. If that advice has
changed in the meantime, I would like to know why."

19. Godfrey Stewart and Co gave no indication then, or at any other time, that their advice had changed. Further arguments continued with Godfrey Stewart and Co and in March 1988 Mr Mijic complained to the Law Institute but without success.

20. On 15 February, 10 March and 6 July 1988 Mr Mijic wrote letters to Mr Black seeking to ascertain whether he had in fact liaised with Godfrey Stewart and Co in the preparation of the further and better particulars and to ascertain what accounting work remained outstanding. He also had several telephone conversations with Mr Black. Finally on 27 July 1988 Mr Black wrote promising to complete the financial statements for the Fuji business by 10 August. But that promise was not kept.

21. On 8 April 1988 Godfrey Stewart and Co issued a default summons claiming some $11,700 against Fuji and Mr Mijic. About this time Mr Mijic instructed Ken Beruldsen and Associates to act for him. Mr Beruldsen promised to get the Federal Court proceeding moving again, but was unable to obtain the file from Godfrey Stewart and Co until 29 August 1988 because that firm was exercising its lien for costs. The Magistrates' Court proceeding was settled on 16 August 1988 for $10,000 all in.

22. Mr Beruldsen then made telephone calls to Mr Black chasing up the completion of the accounting work, and made threats to report Mr Black to the Tax and Corporate Affairs Offices and to issue a writ to recover Fuji's documents. On 20 September 1988 Mr Black told Mr Beruldsen that he had completed the work but by 28 October Mr Mijic had still not received it. He spoke to Mr Beruldsen and was told that the latter had made further attempts to contact Mr Black. However it appears that nothing was done until May 1989 when, on further urging from Mr Mijic, Mr Beruldsen renewed his efforts. On 6 June Mr Beruldsen served a notice of change of practitioner and advised Mallesons of his intent to brief counsel to draw the further and better particulars "at an early date".

23. Finally the financial statements were produced by Mr Black on 28 July 1989. Mr Beruldsen then told Mr Mijic he would brief counsel to settle the further and better particulars. Counsel was not in fact briefed until 27 October. On 16 November Mr Beruldsen wrote to counsel requesting urgent attention to the matter. Mr Mijic conferred with counsel concerning the further particulars on 21 November and they were completed by counsel and served on 1 December 1989.

24. On 20 July 1990 Ken Beruldsen and Associates served interrogatories on Mallesons who replied on 20 August pointing out that leave was required.

25. In September 1990 there was an exchange of correspondence between Mr Beruldsen and Mallesons relating to the relisting of the case in the directions list. Mallesons took the position that their client could not consider the terms of the consent order proposed by Mr Beruldsen because they were ambiguous. The draft orders apparently referred to the reinstatement of the "application of Fuji" which had been struck out. According to the affidavit sworn by the solicitor at Mallesons handling the matter, as far as that firm was aware "no application of Fuji had ever been struck out. It was also not clear if the reference was to the application dated 16 January 1986 in these proceedings or to some other application that may have been made by notice of motion in these proceedings".

26. In March 1991 Fuji's solicitors arranged for the matter to be re-listed and on 5 April 1991 Jenkinson J. made orders by consent giving directions for various notices of motions, namely motions by PMA for the striking out of the further and better particulars and for dismissing the proceeding for want of prosecution and by Fuji for leave to interrogate. Those foreshadowed notices of motion were in fact filed on 19 April 1991.
PMA's Notice of Motion
By its notice dated 19 April 1991 PMA sought the following orders:

"1. That the proceeding be dismissed for want of
prosecution on the grounds that:
(a) by reason of its non-compliance or delay in
complying with the order of the Court made
28 February 1986 the applicant has been or is
unwilling or unable to have the proceeding
ready for trial within a acceptable period;
(b) the applicant's non-compliance with the order
made 28 February 1986 is a continuing default which
has caused and continues to cause unnecessary
prejudice and delay to the respondent;
(c) the delay of the applicant in complying with
the order made 28 February 1986 or its
non-compliance therewith was and is persistent
and inexcusable;
(d) the non-compliance or delay of the applicant in
complying with the order 28 February 1986 has
impaired and continues to impair the ability of
the respondent to prepare for trial and has
affected adversely and unacceptably the quality
of any such trial.
2. Alternatively, that the proceeding be dismissed by
reason of the non-compliance of the applicant with the
order of the Court made 28 February 1986 directing the
applicant to respond to a request for further and
better particulars of the Statement of Claim within 28
days after receipt of the request.
3. Alternatively, that the Statement of Claim,
alternatively paragraph 10 thereof, be struck out on
the ground that the purported further and better
particulars of paragraph 10 of the Statement of Claim
dated 1 December 1989 are:
(a) embarrassing;
(b) an abuse of the process of the Court;
(c) new allegations that relate to conduct engaged
in more than three years prior to the filing
and service of the particulars of the statement
of claim which are statute barred."

Orders for costs were also sought.
Lenijamar

27. On 20 December 1990 a Full Court consisting of Wilcox, Pincus and Gummow JJ. delivered judgment in Lenijamar Pty Ltd v AGC (Advances) Ltd [1991] HCA 7; (1991) ATPR 52,280. Although there has been a substantial body of reported authority in Australia and England concerning applications to dismiss for want of prosecution, Lenijamar wipes the slate clean for the Federal Court. As their Honours point out, the rules and practice of the Federal Court have features which make the previous decisions of marginal relevance. It will be necessary to refer to substantial portions of the judgments. Wilcox and Gummow JJ. delivered a joint judgment. At p 52,286, after noting that several English authorities had been referred to, notably Birkett v James (1978) AC 297 and Allen v Sir Alfred McAlpine and Sons Ltd (1968) 2 QB 229, their Honours said:

"They turned upon a miscellany of Rules of Court, depending upon
the nature of the case and the Division of the High Court of
Judicature in which the case was brought. They afford little
assistance to us. This Court has its own rules relating to the
summary dismissal of proceedings. It is to them that we must look.
Moreover, this Court has a system of case management which is
different from the procedures adopted in any of the Divisions of
the High Court of Judicature. The critical significance of a case
management system was pointed out by Lord Griffiths, with whom the
other four members of the House of Lords agreed, in Department of
Transport v Chris Smaller (Transport) Ltd (1989) AC 1197 at p 1207.
Dealing with a submission that inordinate and inexcusable delay
after the expiration of the limitation period should be a ground
for striking out an action as a deterrent to other dilatory
plaintiffs, even though a fair trial was still possible, Lord
Griffiths expressed his scepticism that such a course "would
produce any greater impact on delay in litigation than the present
principles". He went on:
"I believe that a far more radical approach is required to
tackle the problems of delay in the litigation process than
driving an individual plaintiff away from the courts when
his culpable delay has caused no injustice to his opponent.
I, for my part, recommend a radical overhaul of the whole
civil procedural process and the introduction of court
controlled case management techniques designed to ensure
that once a litigant has entered the litigation process his
case proceeds in accordance with a time table as prescribed
by Rules of Court or as modified by a judge..."
In this Court, there is just such a system. From that circumstance
we extract two propositions. First, the fundamental differences in
procedure render inapplicable most, if not all, of the principles
evolved by the English courts in relation to their own procedures.
Secondly, the existence of a case management system within this
Court is the backdrop against which the relevant rules must be
considered and (52,287) applied. That the Court follows the case
management approach is well known to the legal profession. The
practice was adopted immediately upon the establishment of the
Court in 1977. It was, at that time, a radical innovation in
Australian superior courts; and was recognised as such. It is
reasonable to suppose that all litigious solicitors and all
barristers are aware that if they choose this Court for the
litigation of a claim - and, these days, there is a choice in
matters arising under s.52 of the Trade Practices Act - they go to
a Court which seeks to minimise the delays of litigation by issuing
procedural directions to the parties which they are expected to
observe. In return, the Court does its best to provide to the
parties an early hearing date.
Order 10 of the Federal Court Rules is the foundation of the
Court's case management system. It deals with directions hearings.
Rules 1 and 2 confer wide powers on a Judge conducting a directions
hearing which are unnecessary to list. They include power to issue
orders with respect to discovery and inspection of documents: see
rule 1(2)(a)(i). If a party fails to appear, the Court may none
the less deal with the matter: see rule 3. Interlocutory orders
may be made: see rules 4-6. Rule 7 deals with the procedure on
default. It provides:
"7(1) Where a party fails to comply with an order of the Court
directing that party to take a step in the proceeding,
any other party may move the Court on notice -
(a) if the party in default is an applicant - for an
order that the proceeding be stayed or dismissed
as to the whole or any part of the relief claimed
by him in the proceeding;
(b) if the party in default is a respondent - for
judgment or an order against him;
or
(c) for an order that the step in the proceeding be
taken within the time limited in that order.
(2) The Court may make an order of the kind
mentioned in sub-rule (1) or any other order or
may give such directions, and specify such
consequences for non-compliance with the order,
as the Court thinks just.
(3) This rule does not limit the powers of the Court to
punish for contempt."
It is to be noted that the power given by this rule is conditioned
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 conferred by the rule. There is no
requirement of "inordinate and inexcusable delay" on the part of
the applicant or the applicant's lawyers, although any such delay
is likely to be a significant matter. There is no requirement of
prejudice to the respondent, although the existence of prejudice is
also likely to be significant. And it must be remembered that, in
almost every case, delay adversely affects the quality of the trial
and is an additional burden upon the parties.....
The observations which we have just made about the scope of Order
10 rule 7 are not intended to convey the impression that any
failure to comply with a procedural direction will appropriately
result in the dismissal of the proceeding. On the contrary, the
rules must be administered sensibly and with an appreciation both
of the fact that some delays are unavoidable, and unpredictable, by
even the most conscientious parties and their lawyers, and of the
likely serious consequences to an applicant of staying or
dismissing a claim; compare the approach taken to non-compliance
with time limitations in respect of appeals in Van Reesema v
Giameos (1979) 27 ALR 525. We would not wish our observations to
cause respondents to apply for dismissal of proceedings simply
because there has been a non-compliance with a direction by the
applicant, even though it does not cause or indicate a continuing
problem in preparing the matter for an early trial.
(52,288) The discretion conferred by Order 10 rule 7 is unconfined,
except for the condition of non-compliance with a direction. As it
is impossible to foresee all of the circumstances under which the
rule might be sought to be used, it is undesirable to make any
exhaustive statement of the circumstances under which the power
granted by the rule will appropriately be exercised. We will not
attempt to do so. But two 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. Although the history of the matter will always be
relevant, it is more likely to be decisive in the first of these
two situations. Even though the most recent non-compliance may be
minor, the cumulative effect of an applicant's defaults may be such
as to satisfy the Judge that the applicant is either subjectively
unwilling to co-operate or, for some reason, is unable to do so.
Such a conclusion would not readily be reached; but, where it was,
fairness to the respondent would normally require the summary
dismissal of the proceeding.
In the second of the two situations we postulate, a significant
continuing default, it does not really matter whether there have
been earlier omissions to comply with the Court's direction. Ex
hypothesi the default is continuing and is imposing an unacceptable
burden on the respondent. But the continuance of the
non-compliance is of the essence of this situation. If, when the
Court looks at the matter, the direction has already been complied
with, the defaulting applicant may be ordered to pay any wasted
costs; but it would be difficult to justify the dismissal of the
proceeding solely because of that default."

Their Honours then referred to the facts of the case before them and continued (at p 52,288):

".....the gist of the case against the appellants was their failure
to comply with the Court's directions concerning discovery of their
own documents. That failure was clearly established. But, by the
time that the motion came on for hearing, the documents were all
available for inspection and the respondent's solicitors were aware
of that fact. So far as the evidence establishes, there was no
continuing non- compliance, in relation to the appellants'
discovery, when the order for dismissal was made. His Honour's
order cannot be justified on this ground; that is, the second of
the two situations identified above.
In fairness to Spender J, we add that he did not attempt to do so.
His Honour did not make any finding that there was a continuing
non-compliance or base his decision on that ground. As is
indicated in the passage from his reasons which we set out above,
Spender J based his order upon the history of the matter, what he
called "the persistent and inexcusable tardiness or default
demonstrated by the events prompting the three (previous) motions".
Counsel for the appellants challenge this approach, contending that
the objective facts do not support the findings as to their
clients' conduct which were made by his Honour."

After further reviewing the facts their Honours continued (at p 52,289):

"But, having said all this, and with respect to Spender J, we think
that it is difficult to describe the conduct of the appellants'
case as exhibiting such a degree of persistent and inexcusable
tardiness as would justify an order for summary dismissal of the
application."

Their Honours continued (at p 52,290):

"The appellants submit that his Honour failed to specify their
relevant default. We think that there is substance in this
submission. Although, as we have said, the only pre-condition
to the exercise of the power given by Order 10 rule 7 is that
there has been a default in compliance with a direction, it is
important that an applicant whose proceeding is under threat of
dismissal be made aware of the nature of the alleged default
and that there be a finding on that matter. That did not occur
in this case. As we have said, the notice of motion failed to
state any ground for the proposed order. The appellants were
left to divine this from the evidence. There was no finding of
default and there could not have been a finding of continuing
non-production of the documents on 6 June. His Honour seems to
have been influenced entirely by the history of the matter.
While this history was unsatisfactory, it seems to us that it
does not support the findings made by his Honour in
justification for his order. We think that his Honour's
discretion miscarried, so that this Court should intervene and
set aside the order."

Their Honours concluded their judgment by noting that they wished to associate themselves with the comments made by Pincus J. regarding the function and operation of Order 10 rule 7. His Honour said (at p 52,292):

"Order 10 rule 7, which is quoted in the reasons of Wilcox and
Gummow JJ, appears to me to give a broad discretion to the
Court to deal with non-compliance with orders made at
directions hearings. Although the circumstances which have to
be dealt with may vary widely, commonly the problem is to
balance the desirability of letting the party in default
present his or her case, in order that the substance of the
dispute may be dealt with, against the desirability of
encouraging compliance with the Court's directions. If
non-compliance is routinely excused and never visited with
significant penalties, it is likely to increase. I think
sub-rule 7(2) is drawn so as to enable a range of sanctions to be
applied, whether or not they would have been available under
older rules of Court. Suppose the Court has, as commonly
happens, required statements of expert evidence to be furnished
or exchanged by a certain date; if one party fails to do that,
it appears to me that the Court could fix a new date for
production and order that, in default of production by the new
date, the right to adduce such evidence be lost. A
cross-claiming respondent who makes default may, in some
circumstances, be appropriately dealt with by having the
hearing of the cross-claim deferred, rather than made to take
place concurrently with the hearing of the claim. An order for
costs can be a substantial penalty, although there is sometimes
reason for concern as to whether it is fair to saddle the
litigant with a liability for costs, if the default has been
caused, in part, by solicitors or counsel.
It appears to me, as to Wilcox and Gummow JJ, that it is
"undesirable to make any exhaustive statement of the
circumstances under which the power granted by the rule will
appropriately be exercised". Such a range of considerations
may be material to the just exercise of the discretion that
attempts by this Court to prescribe criteria and indicate their
weight are not likely to be helpful. In some circumstances,
the Court may, in my opinion, take into account such matters as
whether the claim or defence of the party in default appears to
have substance, whether the case is one in which delay in
hearing is likely to be particularly damaging to prospects of
correctly deciding the dispute, whether the party applying for
dismissal has itself transgressed, whether the party in default
has gained some advantage by delay (for example, where it has
had the benefit of an interlocutory injunction), whether
credible assurances (supported, perhaps, by arrangements to
commit the conduct of the matter to another firm or other
counsel) have been given as to the prompt carrying out of
future steps and whether the delay has been such as to induce
the party not in default to think that the matter has probably
gone to sleep; as to the last point, I refer to The
Commonwealth v Verwayen (1990) 64 ALJR 540 at 561R, 568L. In
that case, the party which had adopted a particular attitude in
litigation was held to be absolutely precluded from departing
from it. But short of that, the existence of reasonable
expectations that a claim has been abandoned may be a relevant
factor in exercising the discretion under Order 10 rule 7.
In the present case, it appears to me that the learned primary
Judge's discretion miscarried because, as Wilcox and Gummow JJ
have pointed out, the material filed in support of the
application to dismiss relied on a failure to give inspection.
There appears to have been an assumption that inspection was
required by his Honour's order of 12 April 1990. It is true
that the primary Judge did not specify that as a matter on
which he relied, but I have been persuaded by the argument on
behalf of the appellant that the failure to give inspection
was, in all probability, thought to be a default. The
consequence is that it is necessary for this Court to exercise
its own discretion. While I recognise the force of the
criticisms of the appellant's conduct of the case, made in the
reasons of the primary Judge as well as in those of Wilcox and
Gummow JJ, it is my opinion that the case was not an
appropriate one for the application of the ultimate remedy,
that of dismissal."

Inherent or Incidental Jurisdiction

28. PMA's argument as presented before me proceeded on the express assumption that, in addition to the power conferred by Order 10 rule 7, the Court's inherent or incidental jurisdiction included a power to dismiss for want of prosecution. In courts of general jurisdiction such a basis for the power is well established: see Duncan v Lowenthal (1969) VR 180 at p 182 and the cases there cited. However the judgments in Lenijamar make it clear that Order 10 rule 7 stands as an essential element of the case management system which has long been a distinctive feature of litigation in the Federal Court. I doubt whether the inherent or incidental power would still exist so as to empower dismissal for want of prosecution in circumstances where the pre-conditions specified by Order 10 rule 7 were not met. The position seems analogous to the case where a statute covers a ground of power which could be exercised under the Royal prerogative; it is then the statute which rules: Attorney-General v De Keyser's Royal Hotel Ltd [1920] UKHL 1; (1920) AC 508 at p 26. But whether or not this is so, I think that in the light of the considered statements of the Full Court in Lenijamar it would be clearly wrong to act otherwise then under Order 10 rule 7.
Order 10 rule 7 pre-conditions

29. Consistently with Lenijamar I think PMA's application can be disposed of on a simple basis. First, there was no failure by Fuji to "comply with an order of the Court directing (it) to take a step in the proceeding". The order of Jenkinson J. of 28 February 1986 required that:

"2. Any response to such a request be served within 28 days
after receipt of the request."

30. "Such a request" refers to the request directed by paragraph 1 of the order, viz a request served within 14 days of 28 February 1986. No such request was served. I do not think any argument based on waiver can avoid this conclusion. Whatever happened later between the parties did not affect the terms of the order of 28 February 1986. It follows that an essential pre-condition of the exercise of the power under Order 10 rule 7 has not been satisfied.

31. Secondly, even if there was a failure to comply, such failure ceased some 18 months ago, when on 5 December 1989 Fuji filed and served further and better particulars. At the time PMA moved the Court, whether that be the date of its notice of motion (19 April 1991) or the subsequent hearing, Fuji was not in default.

32. In my view the conclusion that continuing default is a pre-condition of the exercise of power under Order 10 rule 7 follows from the plain grammatical meaning of the provision. The opening words of sub-rule (1) "Where a party fails to comply" are in the present tense. The words "if the party in default is" speak of default existing as at the date at which the innocent party moves the Court.

33. The competing construction is not only ungrammatical - the words "or has failed" and "or has been" have to be read in to the two phrases mentioned - but also assumes that the power was intended to extend to punishment for past default which had already been rectified. That seems inconsistent with the concept of case management. Such a system assumes the parties will come under express directions of the Court to take all such steps as are necessary along the path towards trial. If those steps are taken tardily, but have nevertheless been taken by the time the innocent party's complaint about tardiness is heard by the Court, the appropriate remedy is an order for costs in favour of the innocent party and, perhaps in serious cases, a direction that if the tardy party defaults in any subsequent steps specified consequences, including dismissal of claim or judgment against a respondent, may follow.

34. Even assuming there was a continuing default, the comments of Pincus J., expressly adopted by the other members of the Court, as to the "range of sanctions" envisaged by Order 10 rule 7(2) rather suggest that it would be the exceptional case where a "sudden death" order was made under Order 10 rule 7(1)(a). In other words, one would expect that in the normal course of things the drastic remedy of dismissal of the applicant's claim would not be exercised merely upon proved non-compliance with an order (assuming the default to be continuing) but that there would have been as a first step an order specifying such a consequence for non-compliance, as is contemplated by sub-rule (2).

35. In Lenijamar the Full Court did not in terms deal with the point whether continuing default at the time of the hearing of the application was an essential pre-condition. Their Honours found (at p 52,288) that there was no continuing non-compliance at the time when the order for dismissal was made but went on to consider "the history of the matter". They held (at p 52,289) that, contrary to the view of the learned primary judge, the conduct of the appellants' case did not exhibit "such a degree of persistent and inexcusable tardiness as would justify an order for summary dismissal of the application". It may be said that there would have been no need for such an approach if the non-existence of a continuing default was determinative. If that reasoning be part of the ratio decidendi of Lenijamar then obviously only the first of the two grounds for dismissing PMA's application mentioned above is available to me.
Discretion

36. In the view I have taken, it is strictly unnecessary that I consider the arguments that have been urged in favour of an exercise of discretion in a way which would dismiss Fuji's claim. However, in case a Full Court takes a different view and finds it necessary to exercise a discretion I make certain findings and observations.

37. Before doing so, I think it is important to keep in mind that this is a fundamentally different exercise from that undertaken by a court considering an application to dismiss for want of prosecution. In such a case a plaintiff might not be in breach of any order at all but because of failure to advance his case his action is dismissed. In the Federal Court however, it is not want of prosecution as such that enlivens the jurisdiction to dismiss but failure to comply with an order of the Court. Discretionary matters are to be considered only as they bear on the question: what is the appropriate order in the circumstances consequent upon the applicant's non-compliance?
Delay

38. I think the delay which has occurred could be said to merit the traditional epithet of "inordinate", in the sense that it is immoderate or excessive. It is now 5 1/2 years since the proceeding commenced. The claim is fairly typical of a category of claims made under s.52. Ordinarily such claims should get to trial very much earlier than this. However, I do not think that for the present purposes the delay should be considered as running from early 1983 when it is alleged the representations were made. It was not until almost the end of the following year that the applicant would have been in any position to suspect that the representations were untrue and thereafter it was reasonable for Fuji to engage in negotiations for rent reduction rather than commence proceedings. The proceedings were in fact commenced within a month or two of those negotiations breaking down.
Responsibility for Delay

39. It was common ground before me that the cause of the delay was partly the responsibility of Fuji itself and partly that of its former and present solicitors and its accountant, Mr Black. However in my view, those professional advisers must bear a substantially greater share of the blame than does Fuji.
Delay or Default by PMA

40. It has to be said that where this case really went off the rails was the directions hearing on 23 May 1986 when neither side appeared. PMA must share some of the blame for this. It was equally open to PMA to have the matter re-listed and it would have been reasonable for it to do so seeing that its substantial claim for rent etc. was being held up.

41. Perhaps more importantly, after the belated delivery of Fuji's further and better particulars in December 1989, PMA made no attempt to have the proceedings dismissed until April 1991. During this period there was no relevant default by Fuji and its solicitors did display at least some activity, albeit of a rather desultory and inconclusive kind. This activity, viz the delivery of interrogatories and the correspondence about re-listing, directly involved PMA's solicitors, but no attempt was made by PMA to launch the present application. Indeed the correspondence in September 1990 seems to involve an implicit admission by PMA's solicitors that it would be appropriate to have the matter re-listed provided only that a suitable form of words for the consent orders could be agreed upon. Not an insuperable drafting problem, one might think.

42. In courts without a case management system, the rules usually require a notice of intention to proceed where a plaintiff has not taken any step in the proceeding for a specified period, typically 12 months. When such a notice is given, it often provokes an application by the defendant for dismissal for want of prosecution. When there is a delay in making such an application, that is usually regarded as a factor telling against the defendant. By analogy in the present case, it does not lie well in the mouth of PMA to complain of delay when it itself has delayed over this 15 month period without any satisfactory explanation. And all the more so when the particular default (which in any case had now been rectified) was itself the essential pre-condition of any right PMA might have under Order 10 rule 7.

43. To accede to PMA's application in these circumstances would be unfair for a number of reasons. Between June 1989 (when Mr Beruldsen wrote to Mallesons foreshadowing the long overdue production of the further and better particulars) and April 1991, PMA not merely stood by but engaged, through its solicitors, in active dialogue with Fuji's solicitors thereby encouraging Fuji to incur trouble and expense in prosecuting its claim: cf. Commonwealth v Verwayen (1990) 64 ALJR 540. Secondly, it would be incongruous and lacking in even-handedness for the Court to take the drastic step of shutting one party out from its right to a determination of its case on the merits at the instance of another party who has also been guilty of substantial delay.
Merits of Fuji's Claim

44. Some complaint was made that the material presented on behalf of Fuji did not contain any verification of its cause of action. In my opinion, this was not necessary. As I have already noted, Fuji's claim is one of a kind which is familiar to this Court. It will ultimately turn on the facts. One cannot say it is inherently likely to fail. It is not possible to infer from the history of the matter that the delay is attributable to any lack of belief by Fuji in the merits of its case, any more than one could infer that PMA's failure to revive its claim for rent etc was due to a lack of confidence in its defence to the Federal Court claim. (Rather, for reasons discussed hereafter, it seems that PMA did not know whether it had a good defence or not.) On the contrary, Fuji seems to have pressed on despite the frustrations induced by the incompetence of the professional advisers it had the misfortune to trust.
PMA's Claim for Rent

45. The conventional view is that a defendant is under no obligation to stir up a sleeping plaintiff, but things may be different where the defendant himself has a counterclaim: Zimmer Orthopaedic Ltd v Zimmer Manufacturing Co (1968) 2 All ER 309.

46. In the present case, there is in substance a counterclaim in the form of PMA's claim for rent and like expenses, the complicating feature being of course that it is in another court. In the light of the delay that occurred in the Federal Court, it would have been open to PMA to apply to the County Court for a discharge of the stay of proceedings, particularly as it would not appear that there was any defence to such a claim other than the possibility of setting off such award of damages as might be recovered in the Federal Court. This was not done. There is no suggestion by Fuji that the failure of PMA to apply for a discharge of the stay of the County Court proceedings played any part in Fuji's delay in progressing the Federal Court claim. However, the relevance of inaction by a defendant with a counterclaim does not seem to depend on whether that delay in fact contributed to the plaintiff's delay. In Zimmer, Cross J. said (at p 312):

".....the position of a defendant who is simply defending a
claim made against him is, to my mind, very different from that
of a defendant who has a cross-claim against the plaintiff
arising out of the same events as are to be investigated in the
action. If such a defendant really wants his view of the legal
position to be established and does not regard his counterclaim
simply as a factor which may give the plaintiff pause in
deciding whether to press on with the action, then I think that
he ought to take active steps to ensure that the case is brough on."

47. Looked at another way, the failure of PMA to take any steps to discharge the County Court stay is some indication that it did not have any reasonable expectation that Fuji's claim had been abandoned: cf. Lenijamar at p 52,292 per Pincus J.

48. In my opinion, the failure to seek a discharge of the stay is a factor which weighs against PMA.
Prejudice

49. On the face of things, it might be thought that PMA is seriously prejudiced in having to meet a case based on representations, some oral, alleged to have been made in early 1983. Also any right of cross-claim for contribution against any other party, and in particular the agent K Gardner and Lang Pty Ltd, became statute-barred by, at the latest, January 1989 (this was common ground before me).

50. However, something needs to be said about how that position has arisen. As I have said, it was not reasonable to expect Fuji to commence its present proceeding much before it did. The statement of claim provided in January 1986 gave the alleged representations with reasonable particularity and it also gave at least some detail as to how it was said these representations were made. Reference was made to an identified brochure and promotional leasing documentation and to one named officer of PMA's agent, with an indication that another officer was involved. Faced with those allegations, what did PMA and its solicitors do? The obvious matters to explore were the agent's version of these alleged representations (it being clear that the allegation was not made against PMA itself) and the possibility of a cross-claim seeking indemnity from the agent. In the principal affidavit sworn in support of the present application, PMA's solicitor deposes in para. 24:

"PMA had retained K. Gardner and Lang Pty Ltd as its real estate
agents for many years. PMA was unwilling to join K. Gardner and
Lang Pty Ltd as a third party to this proceeding until PMA
could assess the extent to which it was alleged that the
representations and warranties were oral and gauged their
substance. This was one of the reasons for seeking the
particulars of Fuji's statement of claim. The other reason was
to enable PMA to prepare its defence of these proceedings,
including identification of relevant witnesses and taking
necessary proofs of evidence, not only in relation to
conversations relied on by the applicant, but also all other
conversations relevant to establishing the context and meaning
of what may have been said in the conversations relied upon by
the applicant as giving rise to the representations and
warranties relied upon."

Further on in the affidavit it is deposed:

"35. Proofs of evidence had not been prepared on behalf of PMA when
this proceeding went to sleep in 1986. They could not be
prepared until after receipt of the further and better
particulars of the statement of claim were provided by Fuji as
PMA did not know:
(a) which oral representations were alleged to have
been made by which persons;
(b) when those representations were alleged to have
been made;
(c) to whom those representations were alleged to
have been made; and
(d) in whose presence they were alleged to have
been made.
36. Without these particulars, PMA could not adequately prepare
its defence. PMA did not proceed to prepare any such proofs
after service of the further and better particulars of the
statement of claim because is (sic) did not wish to incur
unnecessary expense in the face of Fuji's lacklustre approach
to pursuing these proceedings."

51. PMA also complain that the further and better particulars which were delivered in December 1989 identify three persons (additional to the Mr Chris Lang referred to in the statement of claim) alleged to have made the representations.

52. It seems to me that, to a substantial extent, PMA is the author of its own misfortune. It took a calculated risk in not taking elementary steps in obtaining instructions for a defence in early 1986. One would expect that PMA's agent would have had a file in relation to each applicant for a tenancy at the Centre and it seems inexplicable why the Mr Chris Lang named in the statement of claim at least would not have been interviewed and the relevant file examined. This is particularly so in the light of the allegation of fraud made in para. 13 of the statement of claim. An allegation of fraud is not one which should be lightly made. By the same token, it is something which should be taken seriously by the party against whom it is made. The statement of claim referred to a brochure and other documentation and it seems implicit in the explanation now proffered by PMA that not even that written material was collected.

53. Further, PMA's conscious decision not to cross-claim against its agent seems to have been influenced by the perceived commercial importance of the relationship between them. That is hardly a factor which should tell against Fuji.

54. Insofar as PMA's predicament is sought to be excused by Fuji's "lacklustre" pursuit of its claim, PMA's own performance was not all that bright. It took six weeks more than the time to which it had consented to file and serve a defence and that document when produced was remarkably unhelpful as an attempt to sensibly define the real issues in the case. It was also three weeks late with discovery. The excuse that PMA could not reasonably investigate its case before receipt of Fuji's further and better particulars does not sit well with the fact that on 28 February 1986 PMA consented to an order that it file and serve a defence by a date which was before any further and better particulars were due from Fuji. If PMA does have a defence on the merits to Fuji's claim, that is something which PMA did not bother to investigate.
Conclusion on Discretion

55. If, contrary to my opinion, this matter is not to be resolved in Fuji's favour by reason of PMA's non-compliance with the pre-conditions required by Order 10 rule 7, and there is a discretion to be exercised, I would for the foregoing reasons not exercise it in favour of PMA.

56. Striking out Further and Better Particulars PMA complains that the further and better particulars which were delivered go beyond the ambit of the statement of claim. In particular they identified three other individuals in addition to Mr Chris Lang as persons making the representations. For the reasons already mentioned I would not be disposed to strike out the particulars in that respect.

57. In the course of the further and better particulars the representations alleged in the statement of claim appear in somewhat reworked form but with one exception they do not differ in substance from what is alleged in the statement of claim. The one exception is para. 7(b)(iii) of the further and better particulars which alleges a representation as to sales expressed in money terms. That is something quite new. In substance this was conceded by counsel for Fuji.
Leave to Interrogate

58. I have some reluctance in granting this order but on balance it may be otherwise difficult for somebody in the position of Fuji to make out a case of falsity of the representations. Fuji's notice of motion sought as its primary relief that it had leave nunc pro tunc to file and serve interrogatories for the examination of PMA. Since that notice plainly referred to the interrogatories delivered last year without leave and since no argument was addressed to me on behalf of PMA as to the inappropriateness of any of those interrogatories, I will simply make the orders sought.
Orders
A. On PMA's motion by notice dated 19 April 1991:

1. Order that paragraph 7(b)(iii) of the applicant's further and
better particulars dated 1 December 1989 be struck out.
2. Motion otherwise dismissed.
3. Order that the respondent Port of Melbourne Authority pay the
applicant's costs to be taxed including reserved costs.

B. On Fuji's motion by notice dated 19 April 1991:

1. Order that the interrogatories for the examination of the
respondent Port of Melbourne Authority dated 18 May 1990 and filed
22 May 1990 stand as though filed and served pursuant to leave of
this Court.
2. Direct that the respondent file and serve answers to such
interrogatories on or before 5 July 1991.
3. No order as to costs.

C. Adjourn the summons for directions to 12 July 1991.