Argo Pty Ltd v Page Seager (A Firm)
[2000] TASSC 89
•13 July 2000
[2000] TASSC 89
CITATION: Argo Pty Ltd & Ors v Page Seager (A Firm) [2000] TASSC 89
PARTIES: ARGO PTY LTD (ACN 009 523 817)
WRIGHT, George Peter
NATURELAND OF TASMANIA PTY LTD
(ACN 009 524 494)
TATLOW, Michael Winston
v
PAGE SEAGER (A FIRM)
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 210/1990
DELIVERED ON: 13 July 2000
DELIVERED AT: Hobart
HEARING DATES: 8, 9, 10, 11 May 2000
JUDGMENT OF: Slicer J
CATCHWORDS:
Procedure - Supreme Court procedure - Tasmania - Practice under Rules of Court - Time - Leave to take fresh proceedings in the action - Delay exceeding six years since last proceeding taken - Factors relevant in the exercise of discretion to grant leave.
Aust Dig Procedure [283]
Rules of the Supreme Court, O56.
Appleby v Mobil Oil [1997] TASSC 120; Khavounitis v NRMA Insurance Limited [1999] TASSC 2; Imaging Applications Pty Ltd v Sun Alliance Australia Ltd [1998] VSC 129; Duncan v Lowenthal [1969] VR 180 at 185 - 186; considered.
Brisbane South Health Authority v Taylor (1996 - 1997) 186 CLR 541 at 547, 553; Dept Transport v Chris Smaller Ltd (1989) 1 AC 1197; Spitfire Nominees Pty Ltd v Ducco [1998] 1 VR 242; Hungerfords v Walker (1989 - 1991) 171 CLR 125; Closer Settlement Board v Thomas [1982] Tas R 179, referred to.
Koziol v Gargel, [1999] TASSC 12; Allen v Sir Alfred McAlpine & Sons Ltd, [1968] 1 All ER 543, cited.
REPRESENTATION:
Counsel:
Applicants: C J Gunson
Respondent: K B Procter
Solicitors:
Applicants: Abetz Curtis & Worsley
Respondent: Murdoch Clarke
Judgment Number: [2000] TASSC 89
Number of Paragraphs: 58
Serial No 89/2000
File No 210/1990
ARGO PTY LTD (ACN 009 523 817), GEORGE PETER WRIGHT,
NATURELAND OF TASMANIA PTY LTD (ACN 009 524 494)
and MICHAEL WILLIAM TATLOW
v
PAGE SEAGER (A FIRM)
REASONS FOR JUDGMENT SLICER J
13 July 2000
These proceedings involve an application by the plaintiffs for leave to take fresh proceedings in an action pursuant to the Rules of the Supreme Court, O56 (replacing a rule in similar terms, Rules of the Supreme Court, O79, r11(2)).
Argo Pty Ltd ("Argo"), formerly registered under the name of Mack Investments Pty Ltd, is an original plaintiff in these proceedings. It was the sole trustee of the Tatlow Family Trust and the owner of ten of twenty issued $1 units in the Natureland Unit Trust. Natureland of Tasmania Pty Ltd ("Natureland") was the trustee of the Natureland Unit Trust, the remaining ten units being owned by George Peter Wright. Michael William Tatlow and George Peter Wright ("Tatlow and Wright") were directors of Natureland.
In 1984 Natureland was the holder of a mining lease for 100 hectares of land at Dublin Plains and an applicant for the grant of three further licences at Lake Rowallen, Borriedale Plains and Five Mile Marsh.
The defendant, a firm of solicitors, was at all relevant times retained by Natureland for the sale of the lease and the transfer of the applications or the leases (when granted) to Dranale Pty Ltd ("Dranale"). The transactions were complex and involved dealings with government, third parties and preparation for the listing of a public company on the Stock Exchange. Eventually Dranale refused to complete the agreement, claiming in part that it was entitled to do so because of misrepresentation. This cause of action is said to arise by reason of the negligence of the defendant in its conduct of the legal work performed on behalf of the plaintiffs between May and July 1984. The loss said to have been suffered by the plaintiffs amounted to approximately $3M.
The dealings in relation to the mining lease and the applications became matters of concern to government. An inquiry was conducted, in the course of which demand was made for files and documents held by the plaintiffs to be produced.
The documentation was provided to the inquiry in July 1986 and returned one year later. It is said that its removal inhibited the plaintiffs in their formulation of any legal proceedings involving the defendant.
A criminal prosecution was commenced against Wright and Tatlow but was terminated at the time of committal proceedings. It is said that these proceedings further inhibited the plaintiffs in their conduct of civil proceedings.
There was no indication that the plaintiffs intended to hold the defendant responsible for the loss said to have been occasioned by reason of negligence during the period 1984 to 1990.
On 16 May 1990, the plaintiffs commenced, by writ, an action in negligence against the defendant. At the same time, they commenced proceedings against the State of Tasmania claiming damages said to have been caused by government in relation to the lease, the applications and the failure of the agreement with Dranale. The two actions were linked and some of the conduct of the proceedings against government are relevant to this application. The writ against the State of Tasmania was filed in the Hobart Registry and served shortly thereafter. The writ against the defendant was filed in the Launceston Registry but not served on the defendant until May 1991.
Tatlow claims that he was unaware of the delay in service. It is said that the writ was filed in the Launceston Registry to avoid professional embarrassment to the defendant. No evidence was produced by the plaintiffs as to the reason for delay or choice of registry, other than the terms of a letter dated 26 April 1991 from the plaintiffs' solicitors. The filing of the writ in the Launceston Registry (and non-service) might have enabled the plaintiffs to concentrate on the action against government whilst maintaining another option for the recovery of damages. Failure to serve the writ might have permitted a testing of government resolve without committing the plaintiffs to disputation with another party. It is a reasonable inference that the choice of registry and delay in service were tactical decisions made by the plaintitffs' solicitors with or without notice to the plaintiffs. It matters not whether Tatlow was made aware. The plaintiffs had waited until near the limitation period and the delay in service was just within the time permitted by the Rules of Court. The period of seven years between the date of the cause of action and notice to the other party creates prejudice and renders significant any subsequent delay.
That delay makes it more likely that prejudice is suffered by a defendant if the subsequent course of the proceedings is delayed by reason of non-action on the part of a plaintiff.
A statement of claim was delivered in August 1991. It stated the history of the dealings between Natureland and Dranale, the relationship of solicitor and client with the attendant obligations and claimed that the agreement with Dranale "was cancelled or became otherwise unenforceable or … had never been capable of completion". The particulars of negligence were stated as:
"(a)Having been instructed by the first, second and fourth named Plaintiffs to extend time for Dranale to complete the agreement but to otherwise enforce the agreement the defendant confirmed in writing to Dranale's solicitors by letter of the 11th July, 1984 that the agreement was cancelled.
(Further particulars to be supplied after discovery)
(b)Failed to advise the first, second and fourth named Plaintiffs that the agreement was enforceable.
(c)Advised the first, second and fourth named Plaintiffs not to sue Dranale for damages or specific performance.
(d)Advised the first, second and fourth named Plaintiffs to negotiate a second agreement on much less favourable terms.
(e)Accepted on behalf of the first, second and fourth named Plaintiffs a Bank Guarantee purporting to comply with the terms referred to in paragraph 10 hereof when such guarantee did not comply with the terms referred to in paragraph 10 hereof in that it expired at midnight on the 28th June, 1984 and was thereafter of no value.
(Further particulars to be supplied subsequent to discovery).
(f)Advised the plaintiffs to enter into the agreement when the agreement required the plaintiffs to be in a position to transfer the licences referred to in paragraphs 6 7 and 8 hereof at completion when the defendant knew or ought to have known that the plaintiffs would not be able to transfer the said licences and that the plaintiffs had not intended the agreement to require them to do so.
PARTICULARS OF PLAINTIFFS' LOSS
(a)As a result of the Defendant's negligence the first, second and fourth named Plaintiffs were unable to dispose of their units or their shares. The third named Plaintiff, by agreement dated the 25th June, 1985, disposed of those assets referred to in paragraph 12 hereof for the sum of $160,000.00.
(b)In the premises the Plaintiffs' loss is $2,840,000.00."
The respondent concedes that the plaintiffs have, on the pleadings, established an arguable case in negligence. It is not necessary to consider the basis or strength of the case, but as can be seen by the particulars of negligence, the issues raised related to a discrete period of time and their basis lay within the knowledge of the plaintiffs. They knew the nature and form of their instructions and the advice provided by their solicitors; they had possession of the files; and were aware of the basis on which Dranale claimed that it was not required to complete the agreement. Questions of whether delay in the conduct of the actions was due to the absence of other material held by government are of little import in that it was possible from the information possessed by the plaintiffs to discern and formulate the issues involving the defendant's solicitors without recourse to material which might have been necessary in the formulation of the concurrent claim against government.
On 28 August the defendant delivered its defence which consisted of bare denials and a plea of contributory negligence. At the same time the defendant made a request for particulars. In general terms, the particulars sought were:
(1) the nature and form of the retainer between the parties;
(2) details of the means, time and place of the cancellation of the agreement with Dranale;
(3)particulars of the basis on which the plaintiffs contended that the agreement was either unenforceable or otherwise incapable of completion;
(4)whether the breach of the agreement by the defendant was oral or evidenced by documentation and the date and place of such breach;
(5)particulars of the instructions given by the plaintiffs in relation to the extension of time "for Dranale to complete the agreement but to otherwise enforce the agreement";
(6)details of the advice provided by the defendant in relation to the second agreement and the nature and form of such advice;
(7)particulars of the return and form of the acceptance by the plaintiffs of the bank guarantees provided by Dranale;
(8)particulars of the advice provided in relation to the plaintiffs entering into the agreement;
(9)details of the matters relied upon "to establish the allegation that the defendant ought to have known that the plaintiffs would not be able to transfer the licences".
Whilst access to government records might have been necessary in the presentation of the case at the trial, the particulars sought, with the possible exception of (9), related to matters within the province of the plaintiffs. The position of Dranale had been made clear in a telex message of 19 July 1984 from its solicitors, which stated in part:
"we are instructed that the tasmanian government has placed a moratorium on the grant of the leases applied for by applicatoins 35m/83, 36m/83 and 1126p/m, and that it is most unlikely that the applicatoins will ever be granted.
if your client is of the view that our client's concerns have no basis, our client would be pleased to receive whatever assurances your clients can provide."
and in a further undated telex:
"our client has instructed us to contact you by telex concerning the above mentioned matter. we intended to write to you but the mails have been disrupted by a strike.
despite promises by or on behalf of your clients that the applications for leases and licenses referred to in the agreement of 22 may would be granted, nothing has happened. furthermore, it has been stated on a number of occasions on behalf of your clients that they no longer consider themselves bound by the agreement.
in the circumstances our client considers that your clients have repudiated the agreement of 22 may 1984, and we have been instructed to notify you that our client now treats the whole agreement as having been discharged in consequence of your clients' breach. our client reserves all its rights to proceed against your clients for damages for breach of the agreement.
to the extent that your clients consider that our client has made any offers to your client or its representatives concerning any peat areas in tasmania, all such offers are hereby withdrawn (please note that our client denies that any such offers have been made).
if your clients have any suggestions they would like to make concerning matters generally, our client would be happy to hear of them."
Wright and Tatlow were aware of the nature of their dealings with Dranale. They were aware of Dranale's claim that it had entered into the agreement on the basis (either by representation or the term of the written agreement) that it would receive the leases for areas described in 357/83, 367/83 and 1126 P/M. They were aware of the documentation held by themselves and their solicitors and of the return of the advice provided. They were in a position to provide most, if not all, of the information requested by the defendant. That request remains unanswered.
Concurrent Proceedings
In May 1990, separate proceedings were commenced by the plaintiffs against the State of Tasmania and other named persons, Phillip Chandler and Peter Faircloth. The plaintiffs retained the same solicitors for the actions and at one stage the defendant and Chandler and Faircloth were represented by the same firm of solicitors. Some of the communications between the solicitors is relevant to the knowledge held by the defendant and some of the exchanges between the plaintiffs' solicitors and the Director of Public Prosecutions is relevant to this application.
On 14 May 1990, 12 months before the defendant was served with the writ, the Director of Public Prosecutions wrote to the plaintiffs' solicitors, asking:
"Is the Attorney-General sued in his representative capacity in relation to the alleged conduct of the second, third and fourth Defendants? If this is so, then I will be pleased if you would let me know the basis upon which you say it is that the Attorney-General should be sued and can be joined as a representative of those Defendants, the second of whom is an independent statutory authority.
Appearances will be entered as soon as I have your answer to this request.
I would be grateful if you would confirm in the meantime that it will be unnecessary for any of the Defendants to file an Appearance or deliver a Defence until I have had you response to this letter."
On 29 May the Director delivered a request for particulars to the plaintiffs in terms more complex and compendious than later sought by the defendant. The request traversed many issues and involved the conduct of at least three parties. It might be that the plaintiffs were inhibited in providing full details until they had obtained access to film and documents, held by the State, but such ought not have seriously impacted on their capacity to properly particularise their claim against the defendant. The plaintiffs' solicitors replied to the request on the same day, indicating that particulars would not be provided, at least until after the delivery of a defence. On 28 June 1990, the plaintiffs delivered a list of documents but indicated that they could not swear a verifying affidavit until discovery had been made by two of the defendants. They stated:
"The reason for this is that a number of documents taken from Mr Tatlow for the purposes of the Zeeman Inquiry and retained by the Crown thereafter for the purposes of the prosecution against Mr Tatlow were not returned to him."
On the previous day they had forwarded a copy of that unsworn list together with the Director's request for particulars to the solicitors acting for the other parties to the action against the State. On that day also Tatlow made a statement to police alleging that certain items, including documents relevant to the dealings of Natureland, had been stolen.
On 10 July the solicitors for the other parties repeated their request for particulars noting that such differed significantly from those sought by the Director and ought be provided separately. On 16 July they delivered a defence and repeated their request which was repeated on 25 July. On that date and by later letter dated 25 August, the plaintiffs requested the Director and the solicitors to make discovery. On 27 August they sought, by way of interlocutory application, an order that the State make discovery, an application consented to by the Director. In turn, the Director made discovery but claimed privilege in relation to some of the material in the possession of the State, although an offer of examination and further discovery was made at the same time. On 23 November the plaintiffs' solicitor repeated the demand for discovery to the solicitors of Faircloth and Chandler.
On 20 December 1990, Tatlow made an application to the Law Society of Tasmania for a grant of legal assistance in relation to his action against the Attorney-General of Tasmania, Tas Development Authority, P J Chandler, P L Faircloth for:
"Preparation and court appearances re Tas Hobart Registry No 570 of 1990. The writs were issued & served 8 May 1990. A copy of the Statement of Claim & also Further and Better Particulars are enclosed. The plaintiffs Mack Investments P/L & Natureland of Tas P/L, in which I have interests have no assets or income. Colleague & co-plaintiff G P Wright is also applying for Legal Assistance."
No reply was received, probably because of the enactment of a new legal aid scheme, the Legal Aid Commission Act 1990, which commenced on 1 January 1991.
On 17 January 1991, the plaintiffs' solicitors wrote to the Director advising:
"Thank you for your letter of the 11th January. We have wanted for some time to inspect the documents such as they are. Whilst Mr Tatlow's documents are readily available to us the writer will have to spend a day or two to go through and ensure they are in order. We expect to be in a position to allow mutual inspection by the end January. Are you similarly positioned?"
The request was repeated by letter dated 1 March with the addition of a statement of urgency in the following terms:
"Our agreement (to adjourn an application for discovery) was not to be taken as an acceptance that delays will be countenanced. They will not.
We are instructed to proceed with this matter with all due haste."
This activity had taken place whilst the writ against the defendant remained unserved. The plaintiffs had made discovery of documents in their possession. They were aware of the ambit of their claim against the defendant. Having waited for six years before commencing proceedings, it was incumbent on them to provide notice to the defendant as soon as possible and thereafter to proceed with due diligence. The request for particulars by this defendant remained unanswered.
On 1 May 1992, two years after the filing of the writ, an application for legal assistance was made for the first time in relation to the action against the defendant. On 2 September, a further letter was forwarded to the Legal Aid Commission of Tasmania requesting a response to the application. On 18 March 1993, the Director gave Notice of Intention to Proceed. The plaintiffs did not notify the defendant of this development, nor did they request the defendant's solicitors for further time. The defendant was entitled to assume that it need take no steps in the preparation of its case. It was still unaware of the precise nature of the claim made against it.
A grant of legal aid limited to 20 hours each for two solicitors was made on 1 July 1993, following which notice was given to the Director of the intention to proceed and a further request made for the provision of documentation. No such notice was afforded the defendant. There were further exchanges of correspondence between the solicitors for the plaintiffs and the Director in September, October and December 1993. In April 1994, the solicitors wrote to the Legal Aid Commission advising that they were unable to prepare the advice for which aid had been granted because of the non-provision of documentation by the State. Further exchanges of letters occurred between the solicitors, the Director and the Commission in April 1994, following which problems with the provision of documentation and the cost of such provision were raised in October and November. In February 1995, a copy of an interlocutory application for discovery was delivered to the Director and in August of that year, the Director advised that he had received the discovery process and listed the files held by the State or its instrumentalities which were relevant to the proceedings. On 12 January 1996, counsel retained by the plaintiffs' solicitors advised of the terms of his retainer if he were to provide advice as to the prospects of the cause of action for Michael Tatlow. The letter refers to the action being dependent on:
"… the Beaudesert principle and … the general trend of legal development restricting liability to intentional or negligent infliction of harm".
It is a reasonable inference that the attention of counsel had been directed to the action against the State and not the defendant. A request was made for an extension of legal assistance in January 1996, to which reply was made on 30 January, the terms of which stated:
"I acknoledge [sic] receipt of your letter of 24 January last. This matter has now dragged on for years. I am now at a stage where unless I receive an opinion to the effect that the plaintiffs to this cause of action actually have a case, aid will be withdrawn. I am therefore prepared to grant aid in the sum of $4000 to permit a proper canvassing of the issues by Mr Estcourt. Please do not apply for an extension of this sum - it will not be granted. If Mr Estcourt is unable to reach a concluded view, again do not apply for an extension, because if he cannot tell me, in the time provided, whether or not the plaintiffs have a case, I will presume that either they do not or that the issue is too complicated to permit the Commission to fund it. It is further a requirement that any opinion from Mr Estcourt be received at this Commission by no later than 15 March next, as too much time has elapsed already on this matter."
On 18 March 1996, the Commission advised that aid had been withdrawn. Between March 1992 and 26 April 1999 there was no communication between the plaintiffs and the defendant. Irrespective of the causes of delay as between the plaintiffs and government's failure to keep contact with the defendant, in what was a separate cause of action, for seven years is inexcusable, and inordinate.
Relevant Principles
The principles relevant to an application of this nature have been set out by Underwood J in Appleby v Mobil Oil [1997] TASSC 120 and Khavounitis v NRMA Insurance Limited [1999] TASSC 2. For the purpose of this determination, it is accepted that (with minor variance) principles relevant to a striking out application apply.
The exercise of discretion should be made as if the application was one to dismiss for want of prosecution with the consequence that the determination will be final. It is for the plaintiffs to satisfy the court on the basis of material placed before it, that:
(1) there is an arguable case;
(2) there is sufficient explanation for the delay;
(3)that the defendant will not suffer significant prejudice as a consequence of the order. This proposition will be applied although, in the terms expressed, it favours the plaintiffs.
The application made pursuant to the Rules of the Supreme Court, O79, r11(2) is now governed by the terms of the Rules of the Supreme Court, O56(1) which state:
"If a step, other than application on which no order has been made, has not been taken in a proceeding for six years since the last step was taken, a party may not take any further step in the proceeding without the order of the court or a judge."
The application was made eight years after the delivery of the request for particulars. The onus rests with the plaintiffs to show good reason why the court should depart from a general prohibition (Appleby v Mobil (supra); Brisbane South Health Authority v Taylor (1996 - 1997) 186 CLR 541 at 547, 553). Delay before the commencement of proceedings, especially when the limitation period has nearly been reached, is a relevant factor, although a party ought not be penalised for delay prior to the issue of the writ (Dept Transport v Chris Smaller Ltd (1989) 1 AC 1197; Sacco v Renault (Australia) Pty Ltd (Unreported, Victorian Court of Appeal, 8 September 1996); and Bishopsgate Insurance Australia Ltd (In Liquidation) v Deloitte Haskins & Sells (Supreme Court of Victoria, Full Court, Unreported, 3 September 1994, 4901/89). As Lord Griffiths observed in Dept Transport v Chris Smaller Ltd (supra) at 1208:
"… it should not be forgotten that long delay before issue of the writ will have the effect of any post writ delay being looked at critically by the court and more readily being regarded as inordinate and inexcusable than would be the case if the action had been commenced soon after the accrual of the cause of action. And that if the defendant has suffered prejudice as a result of such delay before issue of the writ he will only have to show something more than minimal additional prejudice as a result of the post writ delay to justify striking out the action."
Prima Facie Case
The defendant concedes that, for the purpose of this application, the plaintiffs have made out a prima facie case although it contends that the case is weak. That concession highlights one of the problems associated with the plaintiffs' delay. The cause or causes of action arose during a short period of time. If the defendant permitted the third party to escape from an otherwise enforceable contract or failed to ensure a binding agreement, then such could have been established from the documentation in the possession of the plaintiffs or their solicitors. The issue of the guarantee was discrete and could be determined as of the date of expiry. The question of the adequacy or otherwise of advice provided could likewise be determined as between the parties and did not require access to government documentation. The anticipated plea by Dranale of misrepresentation might have required access to external material and might have been raised by the defendant in its pleading. Had the defendant raised this issue, the requirement to identify the relevant documentary material would have been its responsibility. The request for particulars did not raise this issue. The fact that the licences had not been issued by government was known to the parties. Particular (f) of the statement of claim, par17, might have required some additional material, but a substantial amount of material necessary to enable full particulars to be given was known to the plaintiffs. Involvement in the Zeeman inquiry and preparation for the criminal proceedings enabled Wright and Tatlow to discern the general state of the relationship between the various parties. This is not to say that the matter was not complex, nor that the plaintiffs were not inhibited in their preparation of the case against the defendant, but to state that they were able to make progress in this action.
Reasons for Delay
Following the withdrawal of legal assistance in March 1996, the plaintiffs approached the Victorian firm of Slater & Gordon on a "no win no fee" basis in December 1996, which declined to accept instructions in January 1997. In February 1997, the plaintiffs retained that firm "for the limited purpose of opposing a mooted application by the Director of Public Prosecutions to have the related proceeding struck out and to further investigate the matter as a potential 'no win no fee basis'". In May 1998 Slater & Gordon advised that they were prepared to conduct this action on "a partially funded and partially 'no win no fee' basis". Then followed more than 12 months' delay whilst the new solicitors concerned themselves with questions of right of practice, local agency, notice of change of solicitors and other procedural issues. No action was taken to advance the pleadings until the filing of an interlocutory application on 22 November 1999.
The period of delay and the associated reasons can be conveniently considered in three phases (Spitfire Nominees Pty Ltd v Ducco [1998] 1 VR 242). The first is the time between the cause of action and the commencement of proceedings and service of the writ. It is accepted that the plaintiffs were distracted by the inquiry and the criminal proceedings and inhibited by the absence of documents. The plaintiffs are not to be prejudiced by reason of delay during this period, but the lapse of time in the commencement of proceedings imposes an obligation that they proceed with due diligence and might increase the prejudice suffered by a defendant (Dept Transport v Chris Smaller Ltd (supra)). The delay in service of the writ is a matter relevant to conduct. In a letter dated 26 April 1991, the plaintiffs' solicitors wrote to the defendant in the following terms:
"You are now [sic] doubt aware that nearly 12 months ago Writs were issued by the abovenamed against the Attorney-General, Mr Chandler and Mr Faircloth.
On the same date that those Writs were issued a Writ was issued against your firm but out of the Launceston District Registry of the Supreme Court.
We had no desire then or now to publicise any action against your firm.
We had rather hoped, that some progress and indeed maybe even settlement of Mr Tatlow's claims against the other parties may have been effected by now.
That has now [sic] been the case. The Writ must be served by the 8th May.
Do you wish us to direct the Writ to a particular firm or are you content that it merely be delivered to yourself or some other partner who could acknowledge service."
It is a reasonable inference that a conscious decision was taken to defer service until the prospects of progress and/or settlement were known. It is a reasonable inference that the primary defendant was to be government and its officers and that the action against the defendant was to be an option. That might have been an appropriate tactic but remained fraught with risk. There was the potential for increased risk to the defendant and an obligation to proceed diligently once the tactical decision was made. No such diligence was exercised.
The second period is that between the date of service and the limited retainer of Slater & Gordon in 1997, a period of six years, the plaintiffs took no steps to notify the defendant of problems experienced in the prosecution of these proceedings. I do not accept that no further steps could be taken because of delays in the obtaining of documentation. The plaintiffs were able to provide particulars of claim to the State and the public officers who were separately represented. They were able to make limited discovery of their own documentation in those separate proceedings. They had the defendant's file, including records of the various dealings with Dranale. The plaintiffs chose to pursue the action against others and not to take any steps to advise the defendant of steps taken or problems associated with those proceedings. It is said that the failure to proceed was because of impecuniosity. Limited evidence was produced in support of that claim. There was some evidence of the contents of the legal aid application form prepared by Tatlow, but little in relation to the position of the other plaintiffs (other than failure to re-register the companies).
Although there is a divergence of authority as to the relevance of impecuniosity in relation to delay (A & S Oayda Investments Pty Ltd v Burns Philp Trustee Company Ltd (in Liquidation) (1997) 844 FCA, Tsolakkis Nominees Pty Ltd v Low & Duff (Developments) Ltd, Supreme Court Victoria 6029/1993, Country & Urban Real Estate v Newcrest Mining Limited, Supreme Court Victoria 229/1991) it will be accepted as a relevant factor (Imaging Applications Pty Ltd v Sun Alliance Australia Ltd [1998] VSC 129, Duncan v Lowenthal [1969] VR 180 at 185 - 186). But a number of matters lessen the impact of the claim of impecuniosity. The evidence of lack of means was scanty. There is no cogent evidence that the other plaintiffs lacked means or that solicitors had refused to act unless a specific amount of money was guaranteed nor that those solicitors were not prepared to accept payment by instalments. The delay in proceedings whilst negotiations were conducted about the payment of a copying charge of $700 demonstrates that the plaintiffs were not prepared to obtain even minimal resources for the conduct of their action. No mention was made of the action against this defendant in the first application for legal assistance and the delay in making the second application shows a desultory approach and demonstrates that the plaintiffs' first solicitors were prepared to keep acting for the plaintiffs, with or without fee, in the action against government during this period. The second application for legal assistance did refer to the action against the defendant, but there is no evidence that the solicitors performed any work specific to this action or that counsel had given any advice other than that pertaining to the other action. It is a reasonable inference that the grant of aid was used wholly for the prosecution of the other proceedings and no resources were utilised in this. It is accepted that the plaintiffs had limited resources but not to an extent that they were unable to take any steps to further the cause of action against the defendant.
The third period is that between January 1997 and the date of this application in November 1999. The plaintiffs continued with their endeavours to obtain a legal retainer on a "no win no fee" basis, but again made no attempt to notify the defendant that they were attempting to restart proceedings. Once Slater & Gordon agreed to act on a "no win no fee" basis, partially funded and partially "no win no fee" basis in May 1998, the intervening time was taken up with questions of agency, capacity for Slater & Gordon to conduct the proceedings in Tasmania, notice of change of solicitors and the procedural matters. No attention was given to the substantive issues or to notification to the defendant.
Prejudice
In July 1986, the defendant's file was delivered to the Zeeman inquiry and was returned 12 months later. Tatlow took possession of the file some days later. Mr Harry, a partner of the defendant, did not see the files again until April 2000. In his affidavit he stated:
"6I attended at the offices of the plaintiffs' solicitors on 14th April, 2000, with a view to inspecting my file. I was initially handed a bundle of about 8 folders, 2 or 3 of which appeared to be my original file covers and the others of which I had not seen before. Each of these folders contained a number of documents, many of them photocopies. After examining them, I realised that many documents which had been in the original file were not there.
7I was subsequently shown several ring binders containing documents, some of which appeared to have come from my original file or which were photocopies of documents from there. These documents were arranged in chronological order, without regard to their subject matter or the source from which they had been taken.
8When they were delivered to Mr Zeeman, all documents in my file were securely fastened in the various folders. The documents I saw on 14th April, 2000 are either contained in the aforementioned ring binders, interspersed among other documents, or are held loosely in the aforementioned folders. I have no recollection now of exactly what documents were in my folders and I am unable to tell if all the documents which were once there are now held by the plaintiffs' solicitors and available for use in this action.
9I am not confident of my total recollection of the instructions which I was given and the events which occurred in my conduct of the transaction in question in 1984 and 1985. I have not had my file available to me to refresh my memory since 1986, at which time I had no idea that Page Seager was to be sued by the plaintiffs. I retained no copies of the documents in the file. Even with the benefit of the documents in front of me on 14th April, 2000, I am not confident that my memory of events was fully revived. I am in a position where I do not know whether what is in the documents now in the plaintiffs' possession accurately reflects the full facts. Obviously, I did not record all instructions which I received and all events which occurred during my conduct of the matter and I fear I may be unable to give full and accurate evidence of matters which are not recorded if this case proceeds to trial.
10If documents have been removed or lost from the file, which seems highly probable, given the way it is now maintained, I fear I will be unable to give full and accurate evidence concerning events recorded in them."
It would be impossible to recreate the file in its original form and chronological order. The defendant could not be confident that all of the diary and file notes are now present. It is unreasonable to expect Mr Harry to rely on memory when some nine years have elapsed since he was last required to turn his mind to the matter and some 15 years since the events said to give rise to the cause of action occurred.
The defendant has raised a number of specific matters or prejudice. An issue central to the cause of action is whether Dranale was entitled to bring the agreement to an end, which in turn depended on agreement reached and statements made by Tatlow and Wright with the directors of Dranale at meetings not attended by Mr Harry. Persons involved in negotiations included Ms Dorothy Auyeung and Mr Ray Conyngham as directors of Dranale, Mr Brian Killalea, a partner of the firm Baker & McKenzie, who acted for Dranale, Mr John Bennetto, a financier, and Mr Chris Langdon, the accountant for Wright. Conyngham is believed to have died in 1997 and the defendant has been unable to locate Auyeung, despite endeavouring to do so. It might be, given material supplied by Wright at the hearing of the application, that it might be possible to locate her, although the material produced by the plaintiffs in this regard is unsatisfactory. It is not enough to assert that location is possible with more effort. They have been unable to provide a firm point of contact The firm Baker & McKenzie advised Mr Harry in August 1991 that they no longer held the files for the Dranale transaction, but supplied the addresses of Conyngham and Auyeung. Inaction on the part of the plaintiffs in 1992 - 1993 doubtless resulted in that avenue of preparation remaining in abeyance. Langdon says that he has no recollection of the various discussions in which he was involved. Bennetto, now aged 73, believes that his file has been destroyed and has only a vague recollection of the events in question.
There were six partners of the defendant firm in May 1984, the time of the accrual of the cause of action. At that time the firm held a policy of insurance indemnifying the partners for a total of $4M. The claim of the plaintiffs is for the sum of $2,840,000 which, with interest calculated in accordance with the principles stated in Hungerfords v Walker (1989 - 1991) 171 CLR 125, would far exceed that indemnity. It was only during an exchange with counsel during the hearing that an offer was made to limit the sum of the claim or the suggestion made that leave be granted subject to such limitation (Wing v Stewart B11/1995). The consequence of delay has been that the longer the period of inaction the greater the liability of the defendant.
The action also impinges on the professional integrity, reputation and general standing of the partners of the defendant. Findings of negligence, failure to follow instructions and acting in a manner "as to reduce the value of … assets" are serious matters. As Lord Diplock remarked in Allen v Sir Alfred McAlpine & Sons Ltd [1968] 1 All ER 543 at 559:
"As respects the solicitor defendants, he took the view that the nature of the allegations against them, first of fraud and conspiracy and then of professional negligence, were of a character which common fairness required should not be kept hanging over their heads a moment longer than was necessary. I agree. If such damaging charges are to be made, justice particularly requires that they should be disposed of with the minimum of delay."
a proposition approved in Australia (Duncan v Lowenthal (supra) Bishopsgate Insurance Australia Ltd (In Liquidation) v Deloitte Haskens & Sells, (supra), Casauria v De Kever, Unreported Supreme Court of Victoria, 21 November 1994, 508/1988).
Prejudice identified by the defendant can be summarised as:
(1)general prejudice associated with long delay;
(2)prejudice which might be more readily inferred as a consequence of the delay occurring before the commencement of proceedings;
(3)absence of documentation held by the plaintiffs and inability to locate documentation held by third parties;
(4)loss or unreliability of potential witnesses;
(5)inability to test or meet assertions made by the plaintiffs in relation to the negotiations held with directors and others associated with the Dranale agreement;
(6)inability of a partner of the defendant to recall precisely the sequence of events occurring in May - June 1984;
(7)greater exposure to the quantum of liability and effect on reputation;
(8)absence of notification of the problems undergone by the plaintiffs which might have enabled the defendant to locate and preserve material relevant to its defence.
The prejudice is more than inconvenience or the cost of re-creation of files and documentation. It affects the right of the defendant to obtain a fair trial (Allen v McAlpine (supra)).
Inaction by Defendant
The request for particulars was received in August 1991, and was repeated in letters dated 13 December 1991 and 23 March 1992. No replies were received. The defendant did not pursue the matter. At one stage the defendant appointed new solicitors because of a claimed conflict of interest on the part of its original solicitors. That change deprived it of any opportunity to be informed of progress (or lack thereof) in relation to the other proceedings so that it had no knowledge that at least desultory action was still being pursued. The plaintiffs had themselves appointed new solicitors, at least as of March 1993, without notice ever being given to the defendant's solicitors. Any search of public records would have disclosed that Argo and Natureland were unregistered between 1993 and August 1997. The defendant had referred the claim to its insurers and its solicitor, Mr Bowden. The defendant's solicitors advised by letter dated 19 May 1995 in the following terms:
"We refer to our letter dated 4th December, 1991 and to the discussion between Mr Harry and the writer of the 11th of that month.
As you will probably have gathered, there has been no activity at all from the plaintiffs since that time. We recently sought instructions from Mr Bowden as to whether he wished us to take steps to force the matter to a resolution. Our instructions are that he thinks it is appropriate to let the matter lie in abeyance. Accordingly, we propose to close our file. Of course, it will be resurrected, if there is any activity on the other side."
The defendant had good reason to believe that the plaintiffs were not pursuing their cause of action. In Allen v McAlpine (supra) Salmon LJ, in relation to a motion to strike out in his speech at 563 said:
"Mere inaction on the part of the defendant cannot in my view amount to waiver or acquiescence. Positive action, however, by which he intimates that he agrees that the action may proceed, is a different matter."
whilst Diplock LJ stated at 554:
"Where the delay is on the part of the plaintiff, there are some steps, such as obtaining an order for directions or setting down the action for trial, which the defendant may take himself; but it is seldom in the defendant's interest to press on with the trial of the action, whatever view he takes of the plaintiff's chances of success."
That approach was accepted by the Full Court in Duncan v Lowenthal (supra) when it stated:
"A reference in the reasons given by the judge to inaction on the part of the defendant, in preference to stirring the plaintiff out of her lethargy, which suggests that he regarded the defendant as responsible for increasing his own prejudice and difficulties, runs counter to the opinions expressed by the Court of Appeal in Allen v Sir Alfred McAlpine & Sons Ltd, [1968] 2 WLR 366; [1968] 1 All ER 543, and in Zimmer Orthopaedic Ltd v Zimmer Manufacturing Co Ltd, [1968] 1 WLR 1349; [1968] 2 All ER 309. It is not for a defendant to prosecute the action and he is under no duty to stir up the sleeping dog; he is not acting improperly if he lets it lie."
In Tasmania there has been some divergence of opinion as to the responsibility of a defendant to take steps in order to minimise prejudice or to advance the matter to trial where there has been inactivity on the part of a plaintiff. In Closer Settlement Board v Thomas [1982] Tas R 179 the Full Court determined on an appeal involving an application to dismiss for want of prosecution, that the pre-trial rules in force within this jurisdiction permitted, in any exercise of discretion, failure of a defendant to take procedural steps as a factor which could be taken into account. Neasey J observed at 186:
"Delay or inaction on the part of the defendant may become of particular importance in this State by reason of our procedural rules governing the setting down of an action for trial after the pleadings are completed."
The court was concerned with an application to dismiss which might, as Cosgrove stated at 195, require that the party establish:
"(a) that his opponent has delayed for a significantly long time;
(b)that, viewed against the background of the whole matter, including the conduct of both the applicant and his opponent, that delay is inexcusable; and …".
That view was shared by Underwood J in Khavounitis v NRMA Insurance Ltd (supra), (a case involving an application brought under the Rules of the Supreme Court, O79), and Evans J in Nogarop Pty Ltd v Commonwealth Bank of Australia, [1999] TASSC 86, and Wright J in Koziol v Gargel, [1999] TASSC 12, both cases involving an application for dismissal. As Underwood J observed in the former case at 5:
"Unexplained failure to invoke case management to eliminate delay may, as it does in this case, lead to the inference that no objection was taken to the delay. Although an applicant is entitled to "let sleeping dogs lie", the case for resultant prejudice is much harder to make out when such prejudice could have been avoided by a simple application for directions."
In Koziol, Wright J repeated his earlier conclusion in Howlett v Hurburgh & Anor [1999] TASSC 134, that a defendant's delay might be a relevant factor, but added at 1 - 2:
"In my opinion, it is no answer to an application such as this to say that the defendants could have pressed the matter forward by harrying the plaintiff with correspondence or an application to the Court, pursuant to the Rules of Court, O32A. On this question, I was referred to the judgment of Mr Justice Neasey in Closer Settlement Board v Thomas [1982] Tas R 179 at 188 - 189 and the views expressed by Underwood J in Khavounitis v NRMA Insurance Ltd [1999] TASSC 2 at 5. Whilst I agree with both their Honours that a defendant's failure to invoke the provisions of O32A can be taken into account, I think that this is a matter of very little weight in circumstances such as the present. It must be remembered that despite the availability of pre-trial mechanisms, proceedings of this kind are still adversarial. Furthermore, it must be borne in mind that a defendant is usually brought reluctantly to court and, unless he has a counterclaim, stands to gain little or nothing except peace of mind, even if the proceedings are resolved in his favour. In my opinion, a plaintiff who comes to the court seeking a large sum of money, liability for which is contested, has a clear obligation to advance proceedings at a reasonable pace and to avoid conduct which carries the risk of prejudice to his opponent."
Acceptance of the responsibility on the part of the defendant does little to advance the plaintiffs' cause. Here the delay commenced at the first stage of the proceedings. The defendant had delivered its file to the plaintiffs and notice of the claim was given in relation to a cause of action seven years previous. It was entitled to know the nature of the case brought against it. The particulars in the statement of claim did not do so adequately. The defendant could do little in the way of preparation, at least until it was appraised of a properly formulated claim. It was entitled to assume, given the terms of the letter dated 26 April 1991, that the primary claim for damages was against government. It was in no position to commence preparations or take interlocutory steps, apart from seeking an order that particulars be supplied. It could do little in the way of case management until the particulars were provided. No objection had been taken with the terms of the request so that there was no disputation which it could resolve by court order. No reply was made to its further letters and it was afforded no notice of difficulties experienced by the plaintiffs said to have caused delay. A mixture of metaphors entitled it to "let sleeping dogs lie" and did not require it "to poke a bear with a stick".
Conclusion
The plaintiffs have failed to demonstrate that the justice of the case entitles them to proceed. The delay is of their making and has been inordinate and inexcusable. The prejudice to the defendant is such that as Diplock LJ observed in Allen v McAlpine (supra) at 553:
"… There may come a time, however, when the interval between the events alleged to constitute the cause of action and the trial of the action is so prolonged that there is a substantial risk that a fair trial of the issues will be no longer possible. When this stage has been reached, the public interest in the administration of justice demands that the action should not be allowed to proceed."
That time has well and truly passed.
The application is refused.
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