Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 5) [2009] FCA 859 (10 August 2009)

Last Updated: 14 August 2009

FEDERAL COURT OF AUSTRALIA

Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 5) [2009] FCA 859

FLASHBACK HOLDINGS PTY LIMITED, GAIAM INC and GAIAM AMERICAS INC v SHOWTIME DVD HOLDINGS PTY LTD, INTERFREIGHT LOGISTICS PTY LTD, WILLIAM NIGEL HEYDON LESLIE, GT HOLDINGS INC and JAFFA ROAD LIV LIMITED PARTNERSHIP
NSD 680 of 2008

PERRAM J
10 AUGUST 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 680 of 2008

BETWEEN:	FLASHBACK HOLDINGS PTY LIMITED First Applicant GAIAM INC Second Applicant GAIAM AMERICAS INC Third Applicant
AND:	SHOWTIME DVD HOLDINGS PTY LTD First Respondent INTERFREIGHT LOGISTICS PTY LTD Second Respondent WILLIAM NIGEL HEYDON LESLIE Third Respondent GT HOLDINGS INC Fourth Respondent JAFFA ROAD LIV LIMITED PARTNERSHIP Fifth Respondent

JUDGE:	PERRAM J
DATE OF ORDER:	10 AUGUST 2009
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The motion be dismissed with costs.
2. The matter be listed for further directions at 2:15pm on 27 August 2009.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 680 of 2008

BETWEEN:	FLASHBACK HOLDINGS PTY LIMITED First Applicant GAIAM INC Second Applicant GAIAM AMERICAS INC Third Applicant
AND:	SHOWTIME DVD HOLDINGS PTY LTD First Respondent INTERFREIGHT LOGISTICS PTY LTD Second Respondent WILLIAM NIGEL HEYDON LESLIE Third Respondent GT HOLDINGS INC Fourth Respondent JAFFA ROAD LIV LIMITED PARTNERSHIP Fifth Respondent

JUDGE:	PERRAM J
DATE:	10 AUGUST 2009
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. These proceedings have a most unfortunate history. They are concerned with the relatively anodyne topic of copyright infringement. On 8 May 2009, in circumstances to which it will be necessary to return, I directed the Registrar to draw up a minute of order recording that the defences of the first and third respondents (“Showtime” and “Mr Leslie” respectively) had been struck out on 18 March 2009 and judgment entered against them: Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 4) [2009] FCA 461 (“Flashback No 4”). I made that order because I had concluded that Showtime and Mr Leslie had substantially failed to comply with a self-executing order made by me on 13 March 2009.
2. By a notice of motion dated 24 May 2009 Showtime and Mr Leslie sought to set aside the direction to the Registrar of 8 May 2009. As a result of leave granted during the hearing of the present application, the motion was amended so that it also sought to set aside the original self-executing order of 13 March 2009. As the argument was developed Showtime and Mr Leslie made two points:

(a) my conclusion on 8 May 2009 that the self-executing order had not been substantially complied with was incorrect. In fact, evidence now prepared showed that the respondents had substantially complied with the self-executing order. In that circumstance, I should set aside my direction to the Registrar to record that the defences of Showtime and Mr Leslie had been struck out and judgment entered against them. The applicant (“Flashback”), on the other hand, submitted that my judgment of 8 May 2009 was plainly correct;

(b) even if there had been a failure substantially to comply with the self-executing order the Court should, in the interests of justice, set aside the original self-executing order and with it the direction to the Registrar. This was because of the absence of real prejudice to Flashback and the presence of genuine prejudice to Showtime and Mr Leslie if any other course were taken.

3. Before turning to these matters it is necessary to say a little more of the facts. In these proceedings, Flashback alleges that it has the exclusive right to sell in Australia a range of animated children’s DVD classics. It complains that Showtime has sold and attempted to sell the same classics in Australia in considerable quantities. Flashback alleges that this is an infringement of the copyright which subsists in the films. It asks, inter alia, for declarations that Showtime has infringed the copyright, for injunctions and for damages on various bases.

Flashback (No 1)

4. There was a significant interlocutory skirmish between Flashback and Showtime as to whether Flashback was obliged to join the copyright owner to the proceedings. That debate was resolved in favour of Showtime and the proceedings stayed until Flashback joined the copyright owner: see Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd [2008] FCA 1541 (“Flashback (No 1)”). There were some further twists and turns concerning the question of who the owner of the copyright was which have resulted in the current form of the proceedings.

Flashback (No 2)

5. The present difficulties have their origins in orders made by me on 10 December 2008: Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 2) [2008] FCA 2008 (“Flashback (No 2)”). On that day I made orders having three broad effects. First, subject to an entity known as Gaiam Inc being joined to the proceedings, I lifted the stay I had ordered in Flashback (No 1). Secondly, I ordered Showtime to file and serve an affidavit detailing its assets and liabilities and identifying some films which Showtime appeared presently to be selling which were called “Animated Classics”. Thirdly, I ordered Showtime to give discovery by 18 January 2009. That discovery was, in turn, divided into a number of categories.

Flashback (No 3)

6. Discovery was not given by 18 January 2009. The matter came before me again on 11 March 2009. Again, there were three matters of significance. First, there had been a significant failure by Showtime to comply with my previous order to set forth its assets and liabilities. Secondly, it was plain that the discovery order had not been complied with. Before me, the professed reason why discovery had not been given was because of an alleged failure fully to implement a confidentiality regime. I was told the list of documents was otherwise ready. Thirdly, Flashback applied to join further parties who had an interest in the copyright in the films. This joinder was opposed by Showtime on the basis that Flashback had not shown that the proposed parties were the copyright owners. This was, of course, a reverse of the position adopted by it in the hearing which had resulted in Flashback (No 1). I formed a negative view about the position being adopted by Showtime, the full reasons for which are explained in Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 3) [2009] FCA 308 (“Flashback (No 3)”). In the event, I made a number of orders including an order that Showtime give discovery in accordance with the orders made on 10 December 2008 by 18 March 2009 and in default thereof that their defence be struck out and judgment entered against them. The short time provided for in that order is to be understood in the context of my having been informed that the list of documents was, in fact, ready.

Flashback (No 4)

7. I turn then to the circumstances giving rise to the present application. On 20 April 2009 Flashback applied for a determination that Showtime and Mr Leslie had not complied with the self-executing discovery order and that accordingly their defences had been struck out and judgment entered against them. On 20 April 2009 neither Showtime’s usual counsel, Mr Lindsay, nor the solicitor normally handling the file, Mr Chelvathurai, were available. I informed the solicitor who did appear of the gravity of the situation and adjourned the matter to 28 April 2009.
8. On that occasion Mr Chelvathurai appeared. In the course of that hearing it became apparent that he required an adjournment to put on evidence. I granted that adjournment and stood the matter over to 1 May 2009. On that occasion Showtime and Mr Leslie filed some affidavits.
9. Flashback’s argument on 1 May 2009 was that Showtime and Mr Leslie had not given discovery by 18 March 2009 as was required by the orders of 13 March 2009. Evidence was lead from a Ms White, who is a solicitor, that this was so. The evidence prepared by Showtime and Mr Leslie did not go to that issue but instead was directed to the general unfairness that would attend the striking out of their defences and entry of judgment against them. Despite that, there was no application made to set aside the orders of 13 March 2009.
10. The question for determination on 1 May 2009 was, therefore, circumscribed. It was whether the order of 13 March 2009 had been complied with. It was not whether the order of 13 March 2009 operated unfairly or whether the interests of justice required the setting aside of that order.
11. On 8 May 2009 I determined that Showtime and Mr Leslie had not substantially complied with the orders of 13 March 2009: Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 4) [2009] FCA 461 (“Flashback (No 4)”). I specifically referred to the fact that no application had been made to me to set aside the orders of 13 March 2009. I directed the Registrar to draw up a minute reflecting the fact that the self-executing order took effect on 18 March 2009. Contrary to some of the submissions made during the present application, I did not decide to strike out the defences and to enter judgment. That decision was taken on 13 March 2009 when the self-executing order was made. The decision of 8 May 2009 merely determined that the condition precedent to the operation of that order had been satisfied.

The present application

12. On 13 May 2009 Showtime and Mr Leslie applied for leave to appeal from the determination that the self-executing order had taken effect. Subsequently on 24 May 2009 Showtime and Mr Leslie applied to set aside the same order.
13. These applications came before me on Thursday 28 May 2009. The leave application was not pursued nor was it, however, abandoned. Showtime and Mr Leslie’s application to set aside the order was made pursuant to O 35, r 7 of the Federal Court Rules, which permits the Court to set aside any order prior to its entry. The present orders have not been entered hence the power under this rule arises. As developed, Showtime and Mr Leslie made three applications. They were:

(a) an application to set aside the determination in Flashback (No 4) that the self-executing order had taken effect because, contrary to my then conclusions, it had not;

(b) an application to set aside the direction to the Registrar in Flashback (No 4) to record that Showtime and Mr Leslie’s defences had been struck out and judgment entered against them on the basis that the interests of justice required this conclusion; and

(c) an application to set aside the original self-executing order of 13 March 2009 on the basis that the interests of justice so required.

14. I shall deal with these matters in turn.

First Issue: Revisiting the prior determination that the self-executing order had not been complied with

15. The sole issue in Flashback (No 4) was whether there had been substantial compliance with the orders of 13 March 2009. Both parties led evidence about this issue and, having heard debate, I reserved my decision. Showtime and Mr Leslie now seek to have the same argument a second time. Further evidence was prepared on their behalf which was directed towards showing the incorrectness of the original determination.
16. The circumstances in which such applications will be entertained were explained by McLelland J in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 in these terms:

In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application...

17. The soundness of that view has been repeatedly accepted: see, for example, Truth about Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [2001] FCA 1603 at [11] per Hely J.
18. No attempt was presently made to show changed circumstances in the sense discussed by McLelland J. I do not think, in that situation, that it would be appropriate to entertain Showtime and Mr Leslie’s application. Given the seriousness to Showtime and Mr Leslie of this conclusion I have again given consideration to the correctness of the decision of 8 May 2009. Having done that, I do not think that it makes any difference.
19. Showtime and Mr Leslie’s evidence sought to show that a number of documents I concluded had not been discovered in truth had been. I determined that some 29 documents had not been discovered. On that basis I concluded that there had not been substantial compliance with my order of 13 March 2009. Mr Chelvathurai gave evidence which, if accepted, showed that only 11 or 12 of the documents (rather than 29) had, in truth, not been discovered. That evidence was hotly disputed by Flashback. Mr Chelvathurai also gave evidence that the undiscovered portion amounted only to 4.8% of the total number of documents discovered. There are, as Flashback correctly submitted, difficulties in approaching the question of the adequacy of discovery on a purely numerical basis.
20. However, assuming all that in Showtime and Mr Leslie’s favour, I would still conclude that there had not been substantial compliance with my orders of 13 March 2009. This is so because I regard 11 or 12 documents as a substantial number and because, as I will presently explain, I do not think the discovery order was diligently implemented. The failure was, in these circumstances, neither trivial nor accidental. Accordingly, even if I thought it was appropriate to entertain Showtime and Mr Leslie’s application to revisit the conclusions in Flashback (No 4) (and I do not) I would not, in fact, reach a different conclusion.

Second Issue: Should the direction to the Registrar to prepare a minute recording the striking out of the defences and the entry of judgment be set aside in the interests of justice?

21. I consider below whether the self-executing order of 13 March 2009 should itself be set aside in the interest of justice. Clearly, if the answer to that question be yes, then the interests of justice will, naturally enough, require as an ancillary matter that the direction to the Registrar also be set aside.
22. However, the present argument is not to that effect. Rather, it is that the operation of the direction is itself unjust.
23. This argument should be rejected. To accede to it would achieve nothing. The direction of 8 May 2009 resolved a very narrow controversy viz whether the self-executing order had been complied with. If that determination were to be set aside it would leave that question unresolved. Interfering with this order in any context which does not include setting aside the self-executing order is a course lacking utility which I do not, in the circumstances, propose to take.

Third Issue: Should the self-executing order itself be set aside.

24. There is no doubt that the Court has jurisdiction to set aside the self-executing order. There can there be no objection to my considering the application on the basis that it has previously been determined (as there can in the case of the application to revisit whether the order was complied with). This is because, perhaps surprisingly, no such application was made until someway into the oral argument in the present application (that is, on the third occasion the whole question was before the Court).
25. Mr Lindsay submitted that the order should be set aside for the following reasons:

(a) the non-compliance was relatively minor and, indeed, it was now clear that Flashback had all of the documents about which complaint was made;

(b) to shut a case out from being heard on the merits was an extreme step to be taken only in the clearest of cases and only where the interests of justice permitted no other course;

(c) here the respondents had prepared their evidence. The non-compliance, whilst not trivial, did not bespeak the deliberate suppression of evidence;

(d) there was no particular prejudice to Flashback.

26. Mr Ellicott for Flashback took a different tack. He argued that the interests of justice required the orders to be left in place because:

(a) it was shown that Showtime and Mr Leslie could not be trusted with the process of discovery and hence there was a real risk, should the matter proceed to trial, that the trial would be unfair;

(b) there had been no attempt, even at this late stage, by Showtime or Mr Leslie to put their house in order and to file an affidavit as to discovery explaining precisely what led to the initial non-compliance;

(c) there was no offer to pay the costs of Flashback which had been caused by the non-compliance with the orders. Where Showtime had effectively conceded that it was insolvent this meant that the perpetuation of the proceedings was, by itself, a species of prejudice.

Consideration

27. The original discovery order was made on 10 December 2008. It called for the discovery of ten categories of documents by 18 January 2009. The topics were disparate but related, broadly speaking, to the quantity and price of the films imported into Australia.
28. That order was not complied with. When the matter came before the Court on 11 March 2009 I was told that the reason for the delay in the provision of discovery was because a confidentiality undertaking had not yet been signed by Mr Ellicott, counsel for Flashback. It was not suggested on 11 March 2009 that no steps had been taken towards carrying out the discovery process. To the contrary, the solicitor for Showtime and Mr Leslie, Mr Chelvathurai, swore as follows:

The First and Third Respondent’s Affidavit of Discovery is now ready to be filed and served upon receipt of Mr Ellicott’s duly signed Confidentiality Agreement.

29. No suggestion was made on 10 December 2008 that there should be a confidentiality regime and, indeed, the matter was not raised in correspondence until 4 February 2009, several weeks after the first and the third respondents’ discovery was due.
30. No application was made on 11 March 2009 to impose such a confidentiality regime. In light of those two circumstances I ordered the provision of discovery by 18 March 2009. Since I had been told that the list of documents was ready and that the only thing which was holding up the provision of discovery was the alleged failure of Mr Ellicott to provide the undertaking – a reason for non-compliance which I regarded as unsatisfactory – I made the orders self-executing.
31. A list of documents was filed on 18 March 2009. The affidavit of Mr Leslie which accompanied that list of documents contradicted Mr Chelvathurai’s statement that the list was ready on 11 March 2009. At paragraphs 14 and 15 of his affidavit of 11 May 2009 Mr Leslie said:

14. My Solicitors and I began preparing immediately from the 14th of March 2009 to provide the First and Third Respondent’s discovery to the Applicant’s Solicitors. I had 4 days within which the First and Third Respondents Affidavit of Discovery had to be filed and served on the Applicant.

15. During the limited time, I had to verify each and every entry to the Affidavit of Discovery and I had to locate records of the First Respondent with respect to matters which the Court had ordered to be discovered as per Order 4 of the Order of 10 December 2009.

32. Pursuant to other orders made on 13 March 2009 Showtime and Mr Leslie filed evidence on 27 March 2009. That evidence consisted of an affidavit of Mr Leslie annexed to which were a series of documents marked WL1 through to WL28 and an additional document marked AC1. None of these documents was included in the list of documents sworn on 18 March 2009. That discrepancy moved Flashback to argue that the self-executing order had taken effect, an argument to which I acceded in Flashback (No 3).
33. In the present application Mr Leslie gave evidence about how this state of affairs came to pass which I have set out above. As I have observed that account is at variance with Mr Chelvathurai’s sworn evidence that the list of documents was ready on 11 March 2009 and that all that was then delaying the provision of discovery was the failure by Mr Ellicott to provide a confidentiality undertaking. It is also inconsistent with the suggestion in Mr Leslie’s affidavit of 18 March 2009 that some of the delay in the provision of the list was caused by the fact that Showtime had imported many other films which meant that it took a considerable amount of time to ascertain the relevant data. It now appears that the process of providing discovery was set in train only on 14 March 2009 and only after the self-executing orders had been made.
34. So much appears from Mr Leslie’s affidavit of 5 May 2009. In that affidavit he explained that the records of Showtime had been stored on various hard drives. At paragraphs 6 to 8 of that affidavit he said:
    6. I have used different types of email programmes, which include Microsoft Outlook and Microsoft Express. As a result of certain malfunctions, operational requirements and upgrade of software, the documents stored on the business computers are archives and stored on hard drives.
       
    7. While I had sufficient knowledge and understanding of the business dealing with Jason Campbell of Absolute Home Entertainment, I could not provide all of the documents required within the time frame of the self executing Orders made by this honourable Court which was the 18th of March 2009.
       
    8. I had not previously made any attempt to make copies of the emails and other documents marked WL1 to WL27 as I was hoping that the matter would not go to trial and that the Applicant and the First Respondent would come to some sort of an amicable settlement.
35. I infer from paragraph 7 that no steps were taken to conduct the requisite searches until the orders were made, and from paragraph 8 that these searches had been postponed for the purposes of avoiding the incurring of costs. Mr Leslie continued at paragraphs 9 to 12 as follows:
    9. My Solicitors explained to me that I would have to show documentary evidence of any of the communications that I had with Jason Campbell as this will be the evidence that the First Respondent would have to rely on at the trial of this matter. As the self executing Orders were made on the 13th of March 2009, the First Respondent had Four clear days within which to provide the discovery.
       
    10. I had to confirm each entry on the Affidavit of List of Discoverable Documents sworn on the 18th of March 2009 before I could sign the affidavit of discoverable documents. I could not provide all the documents marked ‘WL1’ to ‘WL27’ at that time as the documents had to be retrieved from archive and the time frame that I had was insufficient to enable all documentary evidence to be put in the Affidavit of List of Documents sworn, filed and served on the 18th of March 2009.
        
    11. I was also advised by my Solicitors that the First and Third Respondents would also need to file and serve our evidence in chief and the Amended Statement of Defence by the 27th of March 2009.
        
    12. I then commenced to search for any further relevant documents as part of the preparation of the First Respondent’s and the Third Respondent’s case. I had to search for these documents as they were stored on different media in archive. After the search was done and I ascertained where each document was in the relevant archive and media, I made copies of all the documents and submitted them as part of the evidence in chief in my affidavit sworn, filed and served on the 27th of March 2009 and the Amended Statement of Defence.
36. Mr Chelvathurai has given no evidence as to the instructions he gave to Mr Leslie on what was to be discovered. Mr Leslie has given evidence on that topic in the form just set out. I would draw the following conclusions from that account:
37. First, Mr Chelvathurai explained to Mr Leslie that he would need to produce all documentary evidence of communications with Mr Campbell, and that this explanation most likely occurred after 13 March 2009. I conclude this from paragraph 9 and from the fact that no steps were taken in relation to discovery prior to 14 March 2009, apart from the request for a confidentiality regime made in early February.
38. Secondly, after 18 March 2009, but before 27 March 2009, Mr Leslie conducted a search “for any further relevant documents” (paragraph 12 of the affidavit of Mr Leslie, sworn on 5 May 2009). I conclude that Mr Leslie only searched for documents which were relevant to his case and did not attend to the tasks of searching for all discoverable documents. I do so for three reasons: it is what paragraph 12 says; the only documents located by Mr Leslie were annexures WL1 through to WL28, all of which he annexed to his affidavit; and subsequent to the argument on this application Flashback produced a copy of an email which the second respondent (who is not Mr Leslie or Showtime) had annexed to an affidavit on an unrelated topic. That email was from Showtime and was in the following terms:

From: Showtime DVD – Admin [mailto:[e-mail]]
Sent: Monday, 12 May 2008 11:19 AM
To: [e-mail]
Subject: Kids
Importance: High

Hey Guys

Can you please send out ALL existing kids in the system them pack up the order completely.

I know you have some sitting on the shelf but these will need to be packed and a final stocktake done as I have lost track of what you have taken out of the shipment – hopefully you guys have been keeping track!

You may be waiting for them to be picked up but they cant be picked up until I send this form off which states clearly the EXACT number of boxes and pallets and weight. That’s why I need you to pack it all up completely and get back to me with those figures, total weight, pallets and boxes per pallet and total boxes.

Cheers/

Eb

39. This document was not discovered. Flashback contended that it was caught within category 4 of the discovery categories determined on 11 December 2008. Relevantly, that category called for “electronic material ... relating to the films ... and concerning at least ... the importation into Australia and exportation from Australia of copies of the films between September 2007 and June 2008”. I accept that this email was discoverable and, indeed, it was not suggested by Showtime or Mr Leslie that it was not.
40. It follows from these matters that neither as at 18 March 2009 nor as at 27 March 2009 had Showtime or Mr Leslie complied with the discovery orders. That is a matter which need not necessarily be fatal. The critical but not sole issue is whether Showtime and Mr Leslie have now complied with the discovery orders. In my opinion, the evidence does not disclose that they have. In this regard:

(a) there is no statement from Mr Chelvathurai that he has ever explained to Mr Leslie the precise obligations which the discovery orders imposed upon him and Showtime;

(b) there is no explanation of exactly what it is that Mr Leslie has done in complying with the discovery orders.

41. As to (a), there is simply no evidence from Mr Chelvathurai about what he told Mr Leslie he had to do. As to (b), Mr Leslie did give evidence that the records of Showtime were kept on archived hard drives in various formats. His account of what he did with these drives I have already set out above. I cannot discern from that evidence a statement that Mr Leslie has ever searched the contents of those drives with a view to complying with the ten categories of discovered documents rather than merely for the purpose of finding material “to show documentary evidence of any of the communications that I had with Jason Campbell”. Again, this is consistent with the location after the conclusion of argument on the application of the discoverable email of 12 May 1998. In that regard, Showtime and Mr Leslie’s submissions about the significance about that email are instructive by what they do not say:

As to the reference to annexure “A” to the Tamowski affidavit this supports Mr. Leslie’s affidavit of discovery sworn on the 18 March 2009 that the records maintained by the Second Respondent were the only records of DVDs sold. It also supports his contention that he had IT difficulties with communications being stored in different computers.

42. This submission fails to grapple with the apparent significance of the email which was to show that Mr Leslie’s search of his archived hard drives can neither have been complete nor sufficient to comply with the Court’s orders of 13 March 2009. It follows, therefore, that Showtime and Mr Leslie not only did not comply with their discovery obligations on 18 March 2009, but have not presently complied with them.
43. Showtime and Mr Leslie submit that the failure to comply with the orders was neither wilful nor contumelious. I do not think that it was wilful in the sense that an effort has been made deliberately to suppress discovered documents. However, I do think it shows a degree of nonchalance towards this Court’s orders that travels well into the realm of reckless indifference. The material to which I have referred shows, I think, that Showtime and Mr Leslie have failed to comply with the orders through a combination of disobedience and ignorance; ignorance because Mr Chelvathurai appears not to have explained the obligations arising from the orders to Mr Leslie properly or at all; disobedience because of Mr Leslie’s decision not to comply with the orders to conserve costs. The desire, however, to reduce costs – admirable in other contexts – is no excuse for a wilful failure to comply with a court order. At all times after 18 January 2009 the decision not to give discovery to curtail costs was disobedient.
44. I am troubled too by Mr Chelvathurai’s sworn evidence on 11 March 2009 that the list of documents was ready to be served and that only Mr Ellicott’s failure to provide a signed confidentiality undertaking stood in the way of that occurring. That evidence is inconsistent with Mr Leslie’s present evidence that work commenced on the list of documents on 14 March 2009. This matters because it was submitted for Showtime and Mr Leslie that one relevant matter to be taken into account in the present application was the very short time provided for in the self-executing orders. However, that shortness has to be understood in a context which includes Mr Chelvathurai having sworn that the list was ready for filing.
45. The case now put is:

(a) the time set by the order was very short;

(b) discovery has in fact been given.

46. But, in truth, the time was not in any way short in light of Mr Chelvathurai’s evidence. As to (b), for reasons I have given, it is not correct.
47. The power of this court to extend the time for compliance with the orders of 13 March 2009 to some later date or even to set aside the order in whole is not in question. Flashback submitted, and I accept, that the following matters are relevant to the exercise of that power:

(a) the circumstances in which the order was made;

(b) the reason for Showtime and Mr Leslie’s non-compliance;

(c) the prejudice which will accrue to Showtime and Mr Leslie if the time is not extended or the order not set aside; and

(d) the prejudice to Flashback if the opposite course is taken.

48. As to (a), the order was made, so it seems to me, because of evidence that the list of documents was ready. There has been no recantation from that position nor any attempt to enlarge the time provided for in the order by reason of that erroneous statement. No doubt, for that course to be taken would require an explanation of how the statement came to be made in the first place, an explanation which has not presently been provided.
49. As to (b), the reason for the continued non-compliance is that Mr Chelvathurai appears not to have explained to Showtime and Mr Leslie their discovery obligations and they, in turn, seem to have ignored so much of those obligations as they understood in order to save costs until the self-executing order was itself made. Even then, no proper search appears to have been made.
50. As to (c), I accept that the prejudice to Showtime and Mr Leslie if the order remains in place is of an extreme kind. I also accept, however, that Flashback has suffered the prejudice of having spent costs on dealing with the various applications made by Showtime and Mr Leslie in seeking to avoid the consequences of the order and that those costs are most likely unable to be recovered due to the admitted insolvency of Showtime. Flashback also suffers, so it seems to me, the more serious prejudice of having to deal on an ongoing basis with parties who do not seem to understand or to take seriously their obligations of discovery. No doubt some aspect of that difficulty emerged from what appears to be an imperfect grasp of their obligations by their solicitor. However, that matter should be taken into account on Showtime and Mr Leslie’s side of the ledger and not Flashback’s.
51. I have considered whether either, or both, of these species of prejudice can be cured by the making of fresh orders. I do not think that they can and I do not think that Flashback should be put to the expense and further trouble of finding out whether the attitude of Showtime and Mr Leslie might now alter. In particular, having observed Showtime and Mr Leslie’s inability to get their house in order even for the purposes of this application, I have no confidence that any further orders I make are likely to be obeyed.
52. Although it is a serious determination at which to arrive I have concluded that Showtime and Mr Leslie’s application to set aside the self-executing order (or even to vary the time specified within it) should be dismissed. For completeness, I have noted Mr Chelvathurai’s evidence that he works in a small office. This is, however, unpersuasive when the orders were made on 10 December 2008 and when he told this Court the list of documents was ready on 11 March 2009.
53. The motion is dismissed with costs. The matter is listed for further directions on 27 August 2009.
    

I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Associate:

Dated: 10 August 2009

Counsel for the Applicants:	Mr M Ellicott
Solicitor for the Applicants:	Banki Haddock Fiora
Counsel for the First and Third Respondents:	Mr R Lindsay
Solicitor for the First and Third Respondents:	Mr A Chelvathurai of iLaw, Barristers & Solicitors
Solicitor for the Second Respondent:	Mr K de Souza of Robertson Hayles

Date of Hearing:	28 May 2009
Date of Judgment:	10 August 2009