Austrack Infrastructure Development Pty Ltd v Sharvine Pty Ltd (No. 7)
[2012] VSC 267
•15 June 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2005 10032
| AUSTRACK INFRASTRUCTURE DEVELOPMENT PTY LTD (ACN 065 271 141) AND ORS (according to the schedule attached) | Plaintiff |
| v | |
| SHARVINE PTY LTD (ACN 080 518 396) | First Defendant |
| - and - | |
| TRANSPACIFIC CLEANAWAY PTY LTD (formerly known as Brambles Australia Limited) (ACN 000 164 938) | Second Defendant |
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JUDGE: | LANSDOWNE AsJ | |
WHERE HELD: | Melbourne | |
DATES OF HEARING | 28 March 2012 and 15 June 2012 | |
DATE OF JUDGMENT: | 15 June 2012 | |
DATE OF REASONS: | 29 June 2012 | |
CASE MAY BE CITED AS: | Austrack Infrastructure Development Pty Ltd and ors v Sharvine Pty Ltd and anor (No. 7) | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 267 | |
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CORPORATIONS -Whether leave required for application for dismissal against a plaintiff company in liquidation-s.471B Corporations Law
PRACTICE AND PROCEDURE -Dismissal for failure to pay security- Dismissal for intentional and contumelious default-Dismissal for want of prosecution-Intentional and contumelious default not established-Dismissed for want of prosecution compounded by failure to pay security
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | No appearance | |
| For the Defendants | Mr C.P. Young | Thomsons Lawyers |
HER HONOUR:
Application and procedural history
By summons dated 7 March 2012 the defendants sought dismissal of the proceedings. The plaintiffs are all corporations. Only the first to third and sixth are still registered. The sixth plaintiff went into liquidation on 29 February 2012. There has been no solicitor on the record for the plaintiffs since 1 April 2011. By orders made 7 November 2011 I dismissed a summons filed on behalf of the plaintiffs seeking leave to be represented by their sole director, Mr Robert Taylor. I published written reasons for that order on 17 November 2011, at that time to the parties only. I now republish those reasons generally with these reasons.
The summons was first returnable on 28 March 2012. As indicated, there was no appearance on that date by a solicitor on the record for the first to third plaintiffs. Mr Taylor also did not attend. He did, however, instruct a solicitor to seek to appear as amicus curiae to seek an adjournment on the basis of an affidavit sworn by him. I refused the application for leave to appear as amicus on that day. There was no appearance on that date for the sixth plaintiff, which had recently gone into liquidation although it was clear from material before the Court on that date that the liquidator was aware of the summons and the hearing.
Counsel for the defendant submitted that leave to proceed was not required as against the sixth plaintiff, because the summons is a defensive measure by a defendant against proceedings instituted by a plaintiff corporation in liquidation, rather than a proceeding against a defendant corporation in liquidation. By orders made and written reasons published to the parties on 5 April 2012 I considered that issue but did not rule on it. I refused the adjournment sought on behalf of the first to third plaintiffs by Mr Taylor’s affidavit. I did, however, adjourn the hearing of the summons to give the liquidator more time to consider his position given the short period of time since his appointment.
The summons came on for adjourned hearing on 15 June 2012. There was no appearance for the first to third plaintiffs. The liquidator had advised both the first to third plaintiffs and the defendants by letter dated 16 May 2012 that he does not propose to take any steps in the litigation unless compelled by court order to do so. For completeness, I note that both the legal representative and a representative of the liquidator personally attended court on 15 June 2011 at the adjourned hearing of the summons and confirmed that the liquidator did not wish to enter an appearance in relation to it.
Mr Taylor did not appear. He had sought adjournment of the hearing by informal means, in this instance by email the day before. For the avoidance of doubt I considered that application, although informal, and refused it.
Having heard further from counsel for the defendants I ruled that I did not consider that leave to proceed as against the sixth plaintiff was required, but for the avoidance of doubt I would grant such leave if required. I dismissed the proceedings. I gave ex tempore reasons for my refusal of Mr Taylor’s informal request for adjournment and for my leave ruling and indicated that the balance of my reasons would be provided in due course. These are my revised reasons in relation to adjournment and leave and my reasons for dismissal of the proceedings.
In the course of my management of these proceedings I have provided the parties with written reasons on a number of occasions in respect of different matters. It is for that reason that these reasons are numbered 7. As many of these reasons are of limited relevance to others than the parties I have not published them generally. As indicated above, I now publish generally the reasons of 17 November 2011 in relation to the application by the plaintiffs that they be represented by their director, as those reasons contain useful background to these reasons.[1] I also publish generally my reasons of 22 December 2011 for refusal of an earlier application for dismissal of the proceedings[2]. I adopt certain findings then made in these reasons. I also publish generally my reasons of 24 November 2011 for refusing an application for adjournment by Mr Taylor on behalf of the plaintiffs, as reference is made to a paragraph of those reasons in the reasons on the earlier dismissal application.[3]
[1][2011] VSC 684
[2][2011] VSC 686
[3][2011] VSC 685
Informal application for adjournment on behalf of the first to third plaintiffs
There was on 15 June 2012 no appearance by a solicitor on the record for the first to third plaintiffs to make any application for adjournment in the correct manner, nor by Mr Taylor to seek leave to do so as director of the first to third plaintiffs. Mr Taylor sought adjournment by email to the Court and the defendants the day before, 14 June 2012. The application was presumably made on behalf of the first to third plaintiffs as Mr Taylor personally is not a party. He sought an adjournment of the adjourned hearing, initially for 60 days and subsequently for 90 days. The adjournment was opposed by the defendants and Mr Taylor was accordingly informed by email that the application would proceed today. Administrative adjournment is only possible where it is by consent. Accordingly, if the first to third plaintiffs wished to seek an adjournment they were obliged to enter an appearance on 15 June 2012 and to do so in open court. As there was no application properly before the Court, I did not call upon counsel for the defendant to address it. I did, however, consider the matters advanced by Mr Taylor and for completeness, and without wishing to indicate that the manner he sought to make the application was in any way appropriate, I gave reasons as follows for refusing it.
Four reasons were advanced in the various email exchanges on 14 June 2012. The first was that Mr Taylor, and so the first to third plaintiffs, were unaware of the date of the adjourned hearing. The second was that he was medically unfit; the third that he required time to consider the affidavit of Ms Urquhart which was served on him on 14 June 2012 by email after 4.00pm. The fourth reason was that he was required to attend a directions hearing before Justice Vickery of this Court in other proceedings in which Mr Taylor is personally a defendant at the same time as the adjourned hearing.
In relation to the first matter, the orders and reasons of 5 April 2012 were sent to the first and third plaintiffs at their address for service, which is Mr Taylor’s email address, by email sent by the Court on 5 April 2012 at 3.03pm. The orders of 5 April 2012 specified 29 May 2012 as the adjourned date. The defendant subsequently sought a later date and by email reply to those solicitors, which was copied to my associate on 20 April 2012 at 1.15pm, Mr Taylor agreed to 15 June 2012 as the adjourned date. The matter was then listed for that date and the parties informed by reply email from my associate to the solicitors for the defendant and Mr Taylor, sent on 20 April 2012 at 17.11pm, that is, shortly after 5.00pm. Accordingly, I am satisfied that the first to third plaintiffs and Mr Taylor were notified of the adjourned date well in advance.
In relation to the second matter relied upon by Mr Taylor, Mr Taylor relies on a medical certificate from his general practitioner dated 22 May 2012 attached to an email sent to the solicitors for the defendant and the Court yesterday at 14.58pm. It is apparent from both the date of that medical certificate and the email of 22 May 2012 from Mr Taylor to his general practitioner by which he sought it, that it was obtained for other proceedings. Moreover, the certificate was prepared on the basis not of a personal consultation with Mr Taylor but on the basis of his symptoms as reported by him by email and his instructions as to what the certificate should contain. Any weight that could be given to the certificate is significantly undermined by these factors. Further, the certificate itself shows no knowledge by the general practitioner concerned of the past history of these proceedings or the comments made by me in previous rulings on similar adjournment requests as to the nature of the medical evidence required to support an adjournment request given that past history.
The medical conditions reported in the certificate are three. First of all, active tuberculosis which is currently preventing active treatment of the second condition being prostate cancer. Mr Taylor’s condition in relation to his tuberculosis is to be reviewed, according to the certificate, in July 2012. The third condition is depression for which the certificate states he has been under treatment since October 2011. This condition is also for review in July 2012 by a different specialist. In the accompanying email to the Court by which he forwarded this certificate, Mr Taylor advised the Court and the solicitors for the defendant that tests take three to four weeks, and reports five to six weeks. It is not entirely clear to what he was referring.
I assumed for the purposes of the adjourned hearing that the medical certificate is correct as to the conditions from which Mr Taylor suffers and the treatment timeline. Nevertheless, in my view it was insufficient to support his request for adjournment for the following reasons.
First of all, Mr Taylor is not personally a party to these proceedings. He is the director of the first to third plaintiffs, but they are separate legal entities required to be represented by a solicitor on the record and not by him. Secondly, the matter under consideration is an application, albeit a serious one, not the trial of proceedings where Mr Taylor would be required to give evidence. Limited instructions to a solicitor on the record are required for such an application. Given the demonstrated capacity of Mr Taylor to participate in proceedings for the purpose of correspondence and to give instructions to a solicitor to seek leave to appear without being on the record, I am not persuaded that he is so ill that he cannot give the type of instructions required for this application. Thirdly, the medical certificate gives no clear timeline as to when or if Mr Taylor will be in a position to defend this application or prosecute these proceedings generally. Mr Taylor has relied on his ill‑health for failure to prosecute the proceedings since 2009. I accept, for the purpose of this application, that he is unwell and has been unwell for the period he claims, but given the prejudice to the defendants thereby occasioned by this delay, and the other matters already referred to, I do not consider his medical condition to be a sufficient basis for further adjournment.
In relation to the third matter advanced by Mr Taylor, that is, the service on 14 June 2012 of an affidavit by Ms Urquhart, I did not consider that to be sufficient reason for adjournment. The affidavit is of an updating nature only. It exhibits ASIC searches in relation to the first to third plaintiffs and the sixth plaintiff, confirming that their position has not changed since 28 March 2012, being the first hearing date of the summons. It also exhibits correspondence from the liquidator to the parties and as between the parties of which the first to third plaintiffs would have already been aware. The affidavit does not require lengthy consideration or response.
In relation to the final matter, I only became aware of that matter late on the afternoon before the adjourned hearing. Arrangements were then put in place between the associates to Justice Vickery and myself to allow Mr Taylor to attend both hearings. I was informed by my associate at the commencement of the hearing on 15 June 2012, who had in turn been informed by the associate to Justice Vickery, that the matter before Justice Vickery was called at 10.30am with a view to standing it down until the matter before me had been heard and that there was no appearance by or for Mr Taylor. Some of the parties in those proceedings then attended this Court and confirmed that to be the case from the body of the Court, and Mr Taylor was then called in these proceedings and there was no appearance by or for him.
By virtue of all of the above, there was no basis demonstrated to adjourn the further hearing of the application.
Is leave to proceed required as against the plaintiff in liquidation?
I next gave ex tempore reasons as to whether leave to proceed is required as against the sixth plaintiff, being a company in liquidation.
Section s. 471B of the Corporations Law provides as follows:
While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:
(a) a proceeding in a court against the company or in relation to property of the company; or
(b) enforcement process in relation to such property
except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.
On 28 March 2012 the defendants submitted that leave was not required on the basis of Pasdale Pty Ltd v Concrete Constructions (1995) 59 FCR 446 (“Pasdale”) a decision of Finn J. of the Federal Court and the explanation of the purpose of the leave requirement given by McPherson J. of the Queensland Supreme Court in the Full Court decision of Re Gordon Grant and Grant Pty Ltd (1983) 2 Qd. R. 314 (“Gordon Grant”). I did not determine the issue in my subsequent reasons, because I was concerned to give the liquidator a further opportunity to consider his position and appear.
I also did not consider that the authorities cited at that time were necessarily conclusive. In particular, Pasdale concerned not a company in liquidation, but a company in administration. While the same words are used in the applicable sections of the Corporations Law as to the requirement of leave in each situation, in Pasdale Finn J. placed particular emphasis on the purpose of administration, which is, of course, different to the purpose of liquidation in interpretation of the section. He also left open the issue as to whether “proceeding” in the equivalent section to s.471B was limited to substantive proceedings taken against a defendant company in liquidation. He stated that “proceeding” could, depending on either express definition or proper construction, include a procedural application in an action.[4]
[4]At 448 A
I further expressed doubt at that time as to whether the explanation of the purpose of the leave requirement given by McPherson J. in Gordon Grant cast any determinative light on whether or not leave is required for an application against a company in liquidation for dismissal of the proceedings brought by it. McPherson J. said in Gordon Grant that the explanation sometimes proferred for the provision is to ensure that the corporate assets are distributed rateably amongst all creditors so that none secure an advantage. He continued:
A more convincing explanation is that, without the relevant restriction, a company in liquidation would be subjected to a multiplicity of actions which would be both expensive and time-consuming, as well as in some cases unnecessary.[5]
[5]At p.316, point G
He then described the difference between submitting to the liquidator a proof of debt and taking proceedings to obtain a judgment and continued:
The question whether a claimant should be permitted to proceed by action, or should be required to submit his proof of debt and, if dissatisfied, appeal to a judge, is therefore reduced largely to one of choosing between alternative forms of procedure.[6]
[6]At p.317, point E.
My concern was that an application for dismissal is not capable of alternative resolution by lodgement of proof of debt, and so the explanation was inapplicable.
Having now heard further from the defendants I accept their submission that leave is not required for this application by the defendant against the sixth plaintiff, a company in liquidation. In particular, I accept their submissions that, firstly, clear language would be required if the intention of s 471B was to limit defensive procedural measures otherwise available to the defendant in an action brought by a company in liquidation. The authority for that proposition is BPM Pty Ltd v HPM Pty Ltd a decision of the Full Court of Western Australia.[7]
[7](1996) 131 FLR 339.
That case also establishes that leave is not required in respect of an application for security for costs against a company in liquidation. I accept the submission of the defendants that a subsequent application for dismissal on the basis of failure to pay security, which is now relied upon in this application, can fairly be regarded as the usual consequence of such an application, and so it would be anomalous to require leave for the consequential application for dismissal if it was not required for the foundational application for security for costs.
On reflection, I also accept the submission of the defendants that the inapplicability of the purpose of the leave requirement, as elaborated in Gordon Grant, supports the proposition that leave is not required.
If I am wrong in my conclusion that leave is not required, I further accept the submission of the defendant that leave should be granted in respect of the application as against the sixth plaintiff. I do so having regard to the liquidator’s position. That position is not just that the liquidator does not seek to be heard in relation to whether leave is required or this application generally, but that he will not take steps in the litigation at all, that is, he will take no steps to prosecute the claims of the sixth plaintiff unless required to do so by the Court. In those circumstances, it seems to me leave, if it is required, is entirely appropriate.
Dismissal of proceedings
The defendants rely on the specific matters listed in their summons dated 7 March 2012, together with both limbs of the common law test for dismissal for want of prosecution. The specific matters listed in the summons are:
· failure of the first to third and sixth plaintiffs to pay the security for costs ordered by me in the sum of $124,530 on 16 December 2011;
· failure of those plaintiffs to apply for leave to reinstate the proceedings as required by me by orders made 6 April 2011 as against all plaintiffs;
· failure of those plaintiffs, who are all corporations, to retain a solicitor on the record as ordered by me on 7 November 2011; and
· failure of those plaintiffs to pay the costs order in the defendants’ favour taxed by Registrar Conidi in the sum of $40,016.16 on 10 February 2011.
The proceedings are currently stayed by virtue of two distinct orders- the order for security for costs made by me 16 December 2011 as against the only plaintiffs registered at that time, the first to third and sixth plaintiffs, and my orders of 6 April 2011 made as against all plaintiffs, none of whom were registered at that time. The orders of 6 April 2011 required the plaintiffs to seek reinstatement of the proceedings on proof of various matters, only one of which, re-registration in respect of certain plaintiffs, has been attended to since that date. I dismissed an application for reinstatement made on behalf of the plaintiffs by their director, Mr Robert Taylor, on 16 December 2011. No subsequent application for reinstatement has been made.
The Full Court of the Victorian Supreme Court considered the common law test for dismissal for want of prosecution in Bishopsgate Insurance Australian Ltd (in liq) v Deloitte Haskins & Sells[8] (“Bishopsgate Insurance”). Justices Tadgell and Ormiston, with whom Justice Brooking agreed, adopted the test as stated by Lord Griffiths in Department of Transport v Chris Smaller (Transport) Ltd [1989] A.C. 1197 at 1203 as follows:
The power should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious, e.g. disobedience to a peremptory order of the court or conduct amounting to an abuse of process of the court; or (2)(a) that there has been an inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (b) that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants, either as between themselves and the plaintiffs, or between each other, or between them and a third party.[9]
[8][1999] 3 V.R. 863.
[9]Adopted at [28] of Bishopsgate Insurance.
The summons does not expressly seek dismissal of the proceedings for want of prosecution. A previous application by the defendants for dismissal on that ground was before me on 16 December 2011. By judgment given that day and reasons published on 22 December 2011 I dismissed that summons.[10] By way of summary, I found in relation to the previous summons that the delay by the plaintiffs since September 2009 to the date of the hearing of that summons had been inordinate, but that it could not be said, as at the filing of that summons in March 2011, or when it commenced to be heard in September 2011, that the delay was inexcusable, because the defendants themselves had made no objection to it until November 2010. I did not consider the period from November 2010 to the filing of the then application for dismissal in March 2011 and thereafter to its hearing to be sufficient to support dismissal of the proceedings.[11] I warned the plaintiffs, however, that any further inexcusable delay on their part may well support an application for dismissal in the future.[12]
[10]Now published as [2011] VSC 686.
[11]Ibid, at [9]-[20].
[12]Ibid, at [21].
I also found that there was already, by the date of those reasons, significant prejudice to the defendants in the conduct of their defence, and that that prejudice would increase by the necessity for witnesses to recall events of many years ago.[13]
[13]Ibid, [21] –[24].
Although dismissal for want of prosecution is not expressly referred to in the current summons, counsel for the defendants relied on want of prosecution in oral and written submissions in support of the summons, having regard to the specific failures set out in the summons. These specific failures were said to demonstrate that the first alternative requirement for dismissal for want of prosecution was established, that being intentional or contumelious default. In addition, the defendants also rely on the second alternative requirement for dismissal for want of prosecution, being inordinate and inexcusable delay giving rise to a substantial risk that it is not possible to have a fair trial, or the likelihood of serious prejudice to the defendants.
Dismissal of any proceeding is a serious step. It is a particularly serious step when, as here, the limitation period has expired and so the proceedings cannot be recommenced. The effect of dismissal of these proceedings will be that the plaintiffs’ claims as to the defendants’ breaches of various agreements with them, by virtue of which the plaintiffs seek damages in excess of $28 million, will never be litigated. Further, in respect of the sixth plaintiff, creditors may by virtue of dismissal of these proceedings, be deprived of an avenue for recovery.
I am also cognisant of the fact that the application for dismissal is undefended. It is undesirable that such a serious application have no contradictor. This is, however, in my view entirely due, in respect of the first to third plaintiffs, to the failure of those plaintiffs to retain a solicitor on the record and sufficiently instruct and fund that solicitor to enter an appearance to oppose the application. I do not consider any sufficient reason has been shown for this failure for the following reasons.
First, at the hearing of Mr Taylor’s application for leave to represent the corporate plaintiffs as their director, he did not say that the plaintiffs could not afford legal representation and I found that this was not the case.[14]
[14][2011] VSC 684 at [34]-[35].
I next considered the financial position of the plaintiffs in my reasons of 22 December 2011 in relation to the defendants’ application for security for costs.[15] I found that there was reason to believe that the corporate plaintiffs would be unable to pay the defendants’ costs if the defendants were successful. Mr Taylor contended, however, in opposition to the application, that he personally would be in a position to do so.
[15][2011] VSC 686 at [42] to [46].
Mr Taylor has subsequently sought funding for the plaintiffs from litigation funders for the litigation as a whole, which attempts appear to have been unsuccessful. Nevertheless, he has twice sufficiently instructed a solicitor to seek to appear as amicus for the purpose of seeking adjournment without going on the record. On the first occasion, on 16 December 2011 (the adjourned date for hearing of the defendants’ first application for dismissal, the defendants’ application for security for costs, and the plaintiffs’ application for reinstatement of the proceedings), I gave leave for the appearance but refused the application for adjournment. On the second, 28 March 2012, being the first return date of this application, as set out above I refused the application by the same solicitors to appear and also the application for adjournment. If Mr Taylor can sufficiently instruct a solicitor to seek to appear as amicus it is difficult to see why he cannot sufficiently do so to retain a solicitor on the record for the purpose of resisting this application.
Specific failures identified in the summons
I consider first whether the proceedings should be dismissed having regard to the specific matters listed in the summons.
The first of these is the failure to pay the ordered security for costs. Rule 62.04 of the Supreme Court (General Civil Procedure ) Rules 2005 (“the Rules”) provides that this is a specific reason for dismissal of proceedings i.e. independent of delay or other reason for dismissal at common law. I have not been referred to any Victorian authority on this provision. In New South Wales, the factors to be considered in relation to an application for dismissal for failure to pay security were identified by Einstein J. in Idoport Pty Ltd v National Australia Bank Ltd and ors and the related proceedings[16] (“ Idoport”) as in that case including the period of time that had elapsed since security was ordered; prior warning to the plaintiff of the intention to apply for dismissal; the seeming inability of the plaintiff in those proceedings to further fund them; the prejudice to the defendant and the position of the Court. I also consider relevant here the impact of continued stay on the proceedings; whether there is any explanation for the failure to comply; whether further time to comply has been sought; and whether there is any indication that the plaintiffs will be able to comply at some point in the future.
[16][2002] NSWSC 18 at [24].
In relation to those matters, my orders made 16 December 2011 included a liberty to apply so that the plaintiffs could, if so advised, seek further time to pay. This was adverted to in the reasons delivered on 22 December 2011.[17] No application has been made by the plaintiffs pursuant to this liberty to apply and there is no material whatsoever before me on behalf of the plaintiffs providing explanation for the failure to pay or as to whether or not the order can be complied with at any certain point in the future.
[17][2011] VSC 686 at [36].
The consequence of the plaintiffs’ failure to comply with the order is that the proceedings remain stayed for failure to pay security. This will increase the already inordinate delay in progressing the proceedings and consequent prejudice for the defendants.
In Idoport at first instance, Einstein J. dismissed the proceedings. His approach was upheld on appeal.[18] Amongst other matters, Mason P., with whom the other members of the Court agreed on these matters, held that the application was not flawed by a short period of time elapsing after failure to pay security before the application for dismissal was made, as there is no minimum period required; the inability of the plaintiff to fund the case, and the fact that that was unlikely to change was properly afforded significant weight for dismissal; the prejudice to the defendant of further delay arising from the stay was also a significant matter tending towards dismissal; as was the fact that the plaintiff was on prior notice of the possibility of dismissal if security was not paid.[19] All of these factors are also present in these proceedings.
[18]Idoport Pty Ltd v National Australia Bank Ltd and ors [2002] NSWCA 271.
[19]Ibid, at [51], [56],[58] and [60].
The factors identified in Idoport were applied in Battenberg v Union Club [2007] NSWSC 265, a first instance decision of Nicholas J. They were also considered in relation to dismissal of an appeal for failure to pay security ordered in the appeal by Tobias JA of the New South Wales Court of Appeal in Porter v Gordian Runoff Ltd (No.3) [2005] NSWCA 377. In that case, the appeal was dismissed for want of prosecution but the failure to pay security, and the consequences for delay in the proceedings, was critical in reaching that determination.
I consider that that is the correct approach to take in these proceedings. I will discuss this further later in these reasons.
The second and third matters listed in the summons refer to the first to third and sixth plaintiffs’ failure to take steps to reinstate the proceedings pursuant to orders made 6 April 2011, which can only be done by retaining a solicitor on the record. I have expressed earlier my view that there is no sufficient explanation for the first to third plaintiffs’ failure to so retain a solicitor on the record for the purpose of opposing this application. That applies equally to sufficiently instructing and funding a solicitor to seek to reinstate the proceedings, which is also an application requiring limited material and hearing time. The orders of 6 April 2011 required such an application to be supported by evidence as to reinstatement of registration of all or any of the plaintiffs (the first to third and sixth plaintiffs were subsequently reregistered); evidence in response to the security for costs application (subsequently heard and determined); evidence as to the measures put in place by the plaintiffs to ensure the proceeding is prosecuted without further delay; and payment of the costs order of Registrar Conidi. As I indicated in the reasons given 22 December 2011, it is now only the third and fourth of these matters that require attention in a reinstatement application.[20]
[20][2011] VSC 686, at [33].
Dealing with the fourth matter, payment of the costs order, the costs order is modest in quantum, given the amount in issue in the proceeding. This is not a failure that alone would, in my view, justify dismissal, given its small size compared with the amounts in issue. Failure to pay such a modest sum does, however, speak poorly of any capacity to pay the substantially larger amount required to be paid by way of security and to expend the even larger sums that would be required to retain a solicitor to prosecute the proceeding as a whole. It is no doubt this third matter that is really the nub of the issue. To remove the stay imposed on 6 April 2011 the reregistered plaintiffs must show that they can prosecute the proceedings with a solicitor properly instructed and funded. They have not made any attempt to do so. The irresistible inference is that they cannot. In the absence of a solicitor on the record, the proceedings will not be prosecuted and the delay and consequent prejudice to the defendants increase.
Intentional and contumelious failure to comply
The failures to comply with court orders specified in the summons are said to evidence intentional and contumelious failure to comply with court orders, in addition, in the case of the first matter, to being sufficient in itself to justify dismissal. I have not been referred to any authority on this limb of the common law test. “Contumelious” is defined in Black’s Law Dictionary as “insolent, abusive, spiteful or humiliating”[21]. Accordingly, under this limb the defendants must establish that the plaintiffs’ various failures to comply with previous court orders are not just intentional, but also go to the point of insolent disregard of the orders.
[21]Garner, Black’s Law Dictionary, 9th edition.
This is a high bar for the defendants to establish. It is particularly high given that the litigation has been essentially conducted on behalf of the plaintiffs since 1 April 2011 by an unrepresented litigant, their director Mr Taylor. The defendants would need to establish that the plaintiffs have failed to pay the security, seek reinstatement of the proceedings, retain a solicitor or pay the costs order because their active mind, Mr Taylor, has chosen to wilfully disregard these orders, despite being in a position to comply with them. I do not consider the material before me goes that far, except perhaps in relation to Mr Taylor’s persistent disregard for orders requiring him not to file any material except by a solicitor on the record. I would not dismiss the proceedings on the ground of the filing of such material alone.
Payment of the security, payment of the costs order and application to reinstate the proceedings all require the plaintiffs to be in sufficient funds to pay the required sums and, in the case of reinstatement, to sufficiently fund a solicitor not just to defend an application but to prosecute the proceedings in the longer term. On 28 March 2012 there was evidence that one litigation funder had declined to fund the proceedings and there is no evidence that the other litigation funder Mr Taylor said at that time he had approached has agreed to fund it. I infer there is no litigation funding. Thus it is entirely possible that the failure to comply with these orders, while intentional, is a consequence of no funding, rather than insolent disregard.
Mr Taylor has also asserted that he has suffered continued and serious ill health for a number of years. For the reasons set out earlier in these reasons and in earlier rulings I have not accepted that this ill health has been sufficient to adjourn the proceedings in any of the various applications for adjournment made by Mr Taylor, or sought to be made on behalf of the plaintiffs by solicitors not on the record. On the face of the material he has submitted he does, however, suffer from various medical complaints, and there is no countervailing medical evidence. This would also impose a significant challenge to the defendants in seeking to establish the first limb of the common law test for dismissal.
For these reasons, I do not consider that intentional and contumelious disregard of previous Court orders of sufficient magnitude to justify dismissal of the proceedings is demonstrated.
Inordinate and inexcusable delay causing prejudice
I do consider, however, that the proceedings should be dismissed by virtue of this second limb of the common law test. This limb focuses on the conduct of the plaintiffs in relation to delay, and the impact on the defendants of such delay. I will not repeat the detail of the delay found by me in my reasons of 22 December 2011. I adopt those findings.[22] In Bishopsgate Insurance the Court held that the relevant period for the examination of delay is the period after the issue of proceedings, but a plaintiff who has issued late in the limitation period is thereafter required to act with greater speed.[23] Here the plaintiffs issued a generally endorsed writ in December 2005 on the eve of the expiration of the limitation period; they did not serve the writ until the eve of the expiration of the service period; their statement of claim was not served until four months later, and was not finalised until the further amended statement of claim filed on 2 June 2009 i.e. three and a half years after issue of the writ. Further, the plaintiffs have taken no active steps to advance these proceedings since the filing of the defence in July 2009.
[22][2011] VSC 686 at [9]-[16].
[23]Bishopsgate Insurance, [31]-[33] and [50].
The defendants filed an application for security for costs in September 2009. The plaintiffs did not file any responsive material until after April 2011 i.e. 18 months later. The proceedings have been stayed since 6 April 2011. I found in my reasons of 22 December 2011 that this was an inordinate delay, attributable to the actions of the plaintiffs. That delay has now been compounded by the continuing failure of the plaintiffs to seek reinstatement of the proceedings pursuant to the orders of 6 April 2011, in particular since I dismissed the application filed by Mr Taylor to that effect on 16 December 2011, and to pay the security for costs ordered 16 December 2011, which has also stayed the proceedings. I consider that the appropriate way to take account of these first three matters listed in the summons is to consider them as factors adding to delay rather than as matters sufficient in themselves to justify dismissal.
The defendants’ application for dismissal failed in December 2011 because they had not taken objection to the delay at the hands of the plaintiffs until November 2010. For that reason I did not consider the delay to the filing of that application and its subsequent hearing could be said to be inexcusable. In my view that hurdle is now overcome by the further stay and so delay since December 2011 consequent on the order for security for costs, and the clear warning to the plaintiffs of the likely consequences of further delay. In Bishopsgate Insurance, the Court considered it relevant to its dismissal of the proceedings there in issue that the plaintiff had been warned of the likely consequences of delay, both by the filing of an earlier application for dismissal and in the reasons given on determination of it.[24] The same situation prevails here. The plaintiffs have been on clear notice since December 2011, now nearly six months ago, that further delay would likely expose them to dismissal of the proceedings.
[24]Ibid, at [51].
The plaintiffs’ claims relate to events in the years 1997-2000. In my reasons of 22 December 2011 I accepted the submission of the defendants that the trial will require oral evidence of disputed conversations in March 2000 at least, and possibly earlier.[25] In Bishopsgate Insurance the Court held that the time at which the likely prejudice to the defendant in the conduct of a fair trial is to be considered is the likely time of trial.[26] These proceedings are not ready for trial. Only pleadings have been finalised - discovery (possibly an extensive process) and mediation remain before interlocutory stages are complete. Not even those steps can be taken until the security is paid, a solicitor is on the record and the proceedings reinstated. There is no material from the plaintiffs from which the Court can derive any sense as to when those things might occur, let alone any certainty that they will occur. All that has been filed in this application on behalf of the plaintiffs, and improperly so by Mr Taylor without leave, is his affidavit sworn 26 March 2012. I considered this affidavit in my reasons of 5 April 2012 at length and rejected the adjournment thereby sought. As discussed earlier, the application was adjourned on that day for other reasons, but no updating affidavit has been filed by the plaintiffs.
[25][2011] VSC 686, at [22].
[26]Bishopsgate Insurance, at [34].
Accordingly, it is entirely speculative when, or if, the proceedings might be ready for trial. At the earliest, if all necessary interlocutory steps were prosecuted efficiently from hereon, it would likely be at least a further year. By that date, the defendants will be required to adduce oral evidence of events that took place at least 13 years earlier. In Bishopsgate Insurance the Court held that a court can infer prejudice from the necessity for witnesses to recall events, there 13 years before as well, and the complexity of the proceedings.[27] The plaintiffs’ principal witness would be Mr Taylor, for whom these events were no doubt singular, and of particular significance, and so arguably more easily recalled. For the defendants, their witnesses will be employees or company officers for whom the events may not have been so personally significant or singular. The difficulty for the defendants in obtaining accurate recall is correspondingly likely to be greater. I consider that there is a substantial risk that even if these proceedings were now to proceed efficiently to trial, which cannot be said to be likely on the material before me, it will not be possible to have a fair trial of the issues.
[27]At [57] and [59].
For all these reasons, I consider that the defendants have established inordinate and inexcusable delay at the hands of the plaintiffs, having regard to both earlier delay and the plaintiffs’ failures to comply with the Court orders enumerated as matters one to three in the summons dated 7 March 2012. I consider that this delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action. I dismiss the proceedings on that basis.
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