The quickest way to an adverse costs order: non-compliance with Court directions

It is fundamentally important that case management directions of the Court are recognised as being orders of the Court rather than administrative suggestions that may be disobeyed if inconvenient.[1]

Unfortunately, this statement was necessary in the context of the ACT Supreme Court having to deliver three decisions arising out of non-compliance with case management directions within less than 12 months. All three decisions were in the context of a personal injury damages claim, and each resulted in costs orders against the plaintiff. Further, in each of the cases the Court effectively granted liberty to the defendants to pursue costs orders against the plaintiffs’ solicitor.

Hall & Wilcox acted in the most recent of these cases, and successfully defended an allegation that the non-compliance of the plaintiff was due to the defendant’s inadequate discovery.

The cases

In Monaghan v Australian Capital Territory [2015] ACTSC 187 (Monaghan) the plaintiff had failed to pay his share of a Court-ordered mediator’s fee. The plaintiff was suffering financial difficulty but nothing was said about this until six weeks after the order to pay the mediation fee was made and eight days after the deadline to pay it. The matter was listed in relation to the non-payment and the Court ordered that the plaintiff file an affidavit disclosing the circumstances of his non-compliance.

At the hearing, no such affidavit had been provided. Associate Justice Mossop noted that he expected, at a minimum, that such an affidavit contain enough information so he could determine whether the non-compliance arose from the conduct of the solicitor or the conduct of the client. His Honour also queried why there was no evidence explaining how the plaintiff was able to retain his solicitors but not pay the mediation fee.

After the hearing, but before His Honour’s decision, the plaintiff paid the mediation fee. Noting this, His Honour did not dismiss the proceedings, but granted the parties liberty to apply for an order that the plaintiff’s firm of solicitors pay the defendant’s costs on an indemnity basis.

In Crawford v Australian Capital Territory [2015] ACTSC 282 (Crawford) the plaintiff failed to comply with directions made by the Court across 15 months to serve an expert report. As a result, the defendant moved to have the proceedings dismissed.

After outlining the extensive history of the matter, Associate Justice Mossop stated that:

‘The manner in which the solicitors for the plaintiff have addressed the plaintiff’s non-compliance with orders of the Court appears to reflect an attitude that non-compliance with the directions made by the Court is an administrative matter from which a party will be excused, that in the event of non-compliance no explanation needs to be given on oath or affirmation of the reasons for the non-compliance and that non-compliance will have few if any consequences for the defaulting party.

It is completely unsatisfactory that a party allows itself to drift casually into non-compliance with the orders of the Court then, after it is in default, to seek to explain away its non-compliance by submissions to the Court unsupported by sworn evidence.

The kind of non-compliance demonstrated in this case demonstrates a preparedness to impose upon the defendant the costs and delay associated with a failure to comply with an order of the Court rather than to run the plaintiff’s case within the framework set by the orders of the Court if that involves compromising the plaintiff’s ideal evidentiary position.’

Although his Honour did not find the conduct sufficient to warrant dismissal, the plaintiff was not permitted to serve any further evidence and was ordered to pay the defendant’s costs of its non-compliance, including every hearing that had occurred in the 15 months that had passed. His Honour also granted liberty to the defendant to apply for costs against a ‘non-party’ (likely being a reference to the plaintiff’s solicitor).

In Leonard v Northside Community Services Limited [2016] ACTSC 90 (Leonard), Hall & Wilcox acted for one of three defendant insurers. The day before the plaintiff was directed to serve her expert evidence, the plaintiff’s solicitor sought an extension of time to do so and proposed a set of amended directions but provided no explanation for the request. The amendment had the effect of reducing the defendant’s time in which to obtain its own expert evidence. The matter was re-listed after the plaintiff refused to provide a reasonable explanation for her non-compliance and subsequently alleged the defendant’s discovery was deficient which contributed to her delay.

The matter was docketed on Hall & Wilcox’s request and after hearing the dispute, Associate Justice Mossop held that:

• The plaintiff’s attempt to reframe the issue as one of discovery only occurred in the context of her non-compliance with Court orders.
• According to the plaintiff’s own chronology, discovery was provided nearly five months prior to the date that the plaintiff was to serve her expert evidence, and nothing was said by the plaintiff at the time those orders were made about discovery being inadequate.
• The plaintiff had not formally moved to address the alleged inadequacy of discovery but had simply relied upon the assertions of her solicitors in correspondence. Those assertions emerged after the initial extension was sought, and such correspondence is not suited to proving the facts asserted in the correspondence where those facts are contentious. An affidavit should have been provided.

In addition to making orders consistent with an amended timetable requested by Hall & Wilcox, his Honour ordered the plaintiff to pay the costs of all three insurers. He also granted liberty to apply for an order that the plaintiff’s firm of solicitors pay those costs.

The importance of compliance

Although a full reading of the cases above will reveal numerous pieces of useful guidance, the following core points can be drawn for parties and solicitors involved in litigation:

• Parties to a civil procedure are required by section 5A of the Court Procedures Act 2004 (ACT) to help the Court achieve its objectives in resolving matters quickly, inexpensively, efficiently and justly. Solicitors should ensure that they comply with practice directions of the Court that outline the obligations of solicitors in case management (including Practice Direction No 2 of 2014 in the ACT). This applies for matters where such practice directions do not apply to, as was the case in Leonard.
• If a solicitor is of the view that a proposed direction is unlikely to be capable of being complied with, this should be raised with the Court at the time the direction is made. Although this may not prevent non-compliance, it will provide a more reasonable basis upon which to explain default, should it occur, at a later date.
• One party should not acquiesce to the default of another party. It should be addressed promptly, particularly in circumstances where it is likely to delay the matter beyond the direction that has been defaulted on.
• If a party will default on an order of the Court, they should disclose this to the other parties with a ‘full and frank’ explanation of the reasons behind the default as soon as possible. Solicitors should also be prepared to provide this explanation in an affidavit which clearly establishes whether the default is due to the client’s conduct, or the solicitor’s.

Non-compliance with Court-ordered case management directions has the potential to affect the reputation of a firm and even its relationship with clients. We recommend that the utmost care and attention be paid to complying with orders of the Court and, if necessary, actively addressing any defaults if and when they occur.

Hall & Wilcox would be pleased to discuss the cases summarised above in more detail.

[1] Crawford v Australian Capital Territory [2015] ACTSC 282 at [22] (Mossop AsJ).