Australian Growth Managers Ltd v Egerton-Warburton
[2007] WASC 10
•31 JANUARY 2007
AUSTRALIAN GROWTH MANAGERS LTD -v- EGERTON-WARBURTON [2007] WASC 10
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WASC 10 | |
| Case No: | CIV:2327/2002 | 25 OCTOBER 2006 | |
| Coram: | MASTER NEWNES | 30/01/07 | |
| 30 | Judgment Part: | 1 of 1 | |
| Result: | Application to amend refused Application to dismiss action for want of prosecution refused | ||
| B | |||
| PDF Version |
| Parties: | AUSTRALIAN GROWTH MANAGERS LTD (ACN 079 141 969) GREY EGERTON-WARBURTON |
Catchwords: | Practice and procedure Application to amend statement of claim Relevant principles Whether proposed pleading discloses arguable cause of action Whether embarrassing Turns on own facts Practice and procedure Application to dismiss action for want of prosecution Delay Failure to provide security for costs Relevant principles Turns on own facts |
Legislation: | Trade Practices Act 1974 (Cth), s 52 Fair Trading Act 1987 (WA), s 9 |
Case References: | Arktos Pty Ltd v Idyllic Nominees Pty Ltd [2004] FCAFC 119 Astvilla Pty Ltd v Director of Consumer Affairs [2006] VSC 289 Atkinson v Fitzwalter [1987] 1 WLR 201 Australian Competition & Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 Banque Commerciale SA en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281 Bishopsgate Insurance Australia Ltd (In Liq) v Deloitte Haskins & Sells [1999] 3 VR 863 Citibank Ltd v Liu [2003] NSWSC 569 Cleary v Australian Co-operative Foods Ltd (1999) 32 ACSR 701 Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1 Dare v Pulham (1982) 148 CLR 658 Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 Genocanna Nominees Pty Ltd v Thirsty Point Pty Ltd [2006] FCA 1268 Gould & Birbeck & Bacon v Mount Oxide Mines Ltd (In Liq) (1916) 22 CLR 490 Hooker Corporation Ltd v Commonwealth (1986) 65 ACTR 32 Houghton v Arms [2006] HCA 59 Hughes v Gales (1995) 14 WAR 434 Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599 Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271 Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18 Jakovljevic v L & B Doslov [2000] WASCA 131 King v GIO Australia Holdings Ltd (2001) 184 ALR 98 Lewandowksi v Lovell (1994) 11 WAR 124 Medical Benefits Fund of Australia Ltd v Cassidy [2004] FCAFC 35 Monaveen Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v ABB Service Pty Ltd [2004] WASC 5 Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 Nescor Industries Group Pty Ltd v Miba Pty Ltd (1997) 150 ALR 633 Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405 Philips Electronics Australia Pty Ltd v Matthews (2002) 54 NSWLR 598 Porter v Gordian Runoff Ltd (No 3) [2005] NSWCA 377 Quinlivan v Australian Competition and Consumer Commission (2004) ATPR 42-010 Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93 Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 Wong v Citibank Ltd [2004] NSWCA 396 Yorke v Lucas (1985) 158 CLR 661 Birkett v James [1978] AC 297 Havyn Pty Ltd v Webster [2005] NSWCA 182 Henville v Walker (2001) 206 CLR 459 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 Medlin v State Government Insurance Commission (1995) 182 CLR 1 Pereira v Director of Public Prosecutions (1988) 63 ALJR 1 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
GREY EGERTON-WARBURTON
Defendant
Catchwords:
Practice and procedure - Application to amend statement of claim - Relevant principles - Whether proposed pleading discloses arguable cause of action - Whether embarrassing - Turns on own facts
Practice and procedure - Application to dismiss action for want of prosecution - Delay - Failure to provide security for costs - Relevant principles - Turns on own facts
Legislation:
Trade Practices Act 1974 (Cth), s 52
Fair Trading Act 1987 (WA), s 9
(Page 2)
Result:
Application to amend refused
Application to dismiss action for want of prosecution refused
Category: B
Representation:
Counsel:
Plaintiff : Mr A Metaxas
Defendant : Mr M J McCusker QC & Mr M C Hotchkin
Solicitors:
Plaintiff : Arthur Metaxas & Co
Defendant : Hotchkin Hanly
Case(s) referred to in judgment(s):
Arktos Pty Ltd v Idyllic Nominees Pty Ltd [2004] FCAFC 119
Astvilla Pty Ltd v Director of Consumer Affairs [2006] VSC 289
Atkinson v Fitzwalter [1987] 1 WLR 201
Australian Competition & Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17
Banque Commerciale SA en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281
Bishopsgate Insurance Australia Ltd (In Liq) v Deloitte Haskins & Sells [1999] 3 VR 863
Citibank Ltd v Liu [2003] NSWSC 569
Cleary v Australian Co-operative Foods Ltd (1999) 32 ACSR 701
Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1
Dare v Pulham (1982) 148 CLR 658
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1
Genocanna Nominees Pty Ltd v Thirsty Point Pty Ltd [2006] FCA 1268
Gould & Birbeck & Bacon v Mount Oxide Mines Ltd (In Liq) (1916) 22 CLR 490
Hooker Corporation Ltd v Commonwealth (1986) 65 ACTR 32
(Page 3)
Houghton v Arms [2006] HCA 59
Hughes v Gales (1995) 14 WAR 434
Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599
Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271
Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18
Jakovljevic v L & B Doslov [2000] WASCA 131
King v GIO Australia Holdings Ltd (2001) 184 ALR 98
Lewandowksi v Lovell (1994) 11 WAR 124
Medical Benefits Fund of Australia Ltd v Cassidy [2004] FCAFC 35
Monaveen Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v ABB Service Pty Ltd [2004] WASC 5
Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388
Nescor Industries Group Pty Ltd v Miba Pty Ltd (1997) 150 ALR 633
Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405
Philips Electronics Australia Pty Ltd v Matthews (2002) 54 NSWLR 598
Porter v Gordian Runoff Ltd (No 3) [2005] NSWCA 377
Quinlivan v Australian Competition and Consumer Commission (2004) ATPR 42-010
Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236
The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
Wong v Citibank Ltd [2004] NSWCA 396
Yorke v Lucas (1985) 158 CLR 661
Case(s) also cited:
Birkett v James [1978] AC 297
Havyn Pty Ltd v Webster [2005] NSWCA 182
Henville v Walker (2001) 206 CLR 459
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506
Medlin v State Government Insurance Commission (1995) 182 CLR 1
Pereira v Director of Public Prosecutions (1988) 63 ALJR 1
(Page 4)
1 MASTER NEWNES: This is an application by the defendant for an order dismissing the action for want of prosecution or alternatively to strike out the plaintiff's statement of claim on the ground that it is an abuse of process. The latter application, in effect, was replaced by an application by the plaintiff to amend the statement of claim in terms of a minute of proposed re-amended statement of claim of 7 August 2006 ("the minute"). The defendant opposed leave being granted on the ground that the minute was embarrassing and disclosed no reasonable cause of action. The argument as to the adequacy of the plaintiff's pleading centred on the minute.
The history of the litigation
2 It is, I think, appropriate first to set out the background to, and the relevant history of, the action.
3 The action has its genesis in a contract entered into between the plaintiff and WA Forest Management Pty Ltd ("WAFM") in June 2000. A dispute subsequently arose between those parties and that dispute was referred to arbitration. The arbitration was heard by Mr J A Chaney SC (now Judge Chaney) over 13 hearing days between 6 December 2001 and 14 January 2002. The date upon which the arbitrator's decision was delivered is not apparent from the evidence but, in the result, the plaintiff received an award in its favour in the order of $1.3 million. Shortly afterwards, WAFM went into liquidation and the plaintiff has never recovered the amount of the award or any part of it. The plaintiff then instituted the present action against the defendant, the sole director and shareholder of WAFM.
4 The writ, indorsed with a statement of claim, was filed on 19 September 2002. It was apparently served on the defendant on 14 October 2002. The defendant entered an appearance on 22 October 2002 and filed a defence on 6 November 2002. Discovery was given by the plaintiff on 4 December 2002 and by the defendant on 5 December 2002.
5 On 4 February 2003 the defendant brought an application to strike out the statement of claim as an abuse of process or as disclosing no reasonable cause of action. That application was heard on 6 June 2003 and, on 17 June 2003, an order was made striking out the statement of claim, with leave to the plaintiff to re-plead.
6 An amended statement of claim was filed by the plaintiff on 1 July 2003.
(Page 5)
7 On the same day, administrators were appointed to the plaintiff pursuant to a resolution of the board of directors.
8 On 19 August 2003 the defendant filed an application to have the statement of claim struck out as embarrassing and for security for costs. On 24 September 2003 the plaintiff brought an application to have the action stayed until 20 June 2004, following the appointment of the administrator. That application was heard with the defendant's application of 19 August 2003.
9 On 20 November 2003, on the defendant's application, an order was made that the plaintiff provide security for costs in the sum of $80,000 and that pending such payment the action be stayed. The defendant's application to strike out the statement of claim was adjourned sine die.
10 The action thereafter remained dormant. On 8 April 2005, the plaintiff filed a notice of intention to proceed under O 3 r 7, but no steps were subsequently taken to prosecute the action.
11 The plaintiff ceased to be in administration on 29 April 2005.
12 On 11 May 2006, the defendant gave notice to the plaintiff's solicitors of the defendant's intention to apply to dismiss the action for want of prosecution by reason of the plaintiff's failure to provide security for costs pursuant to the order of 20 November 2003. The present application by the defendant was filed on 6 June 2006.
13 On 15 June 2006, the plaintiff's solicitor filed an affidavit in which he said that, on 14 June 2006, he had been instructed by the plaintiff that it wished to proceed with the action and would pay the sum of $80,000 into court within seven days.
14 On the return date of the defendant's current application, on 7 August 2006, the plaintiff's solicitor told the Court that the amount of the security would be paid into court within two days. It was paid into court on 9 August 2006. On 7 August 2006, the plaintiff's solicitor also served the minute which was the subject of argument on this application.
15 The defendant's solicitors wrote to the plaintiff's solicitors on 22 August 2006 to say that the minute was defective. On 4 September 2006 the defendant's solicitors wrote again, this time setting out the defendant's objections to the minute in some detail. It seems that there was no response from the plaintiff's solicitors.
(Page 6)
The proposed statement of claim
16 In the minute, the plaintiff pleads that the defendant was, at all material times, the sole director and shareholder of WAFM, which has been in liquidation since before 19 September 2002. WAFM carried on the business of establishing and maintaining eucalypt blue gum plantations. In 1999 it established a plantation for the plaintiff at Bremer Bay in Western Australia.
17 It is alleged that, in 1999, the plaintiff proposed to establish blue gum eucalypt plantations, among other places, on land at Kangaroo Island in South Australia. In August 1999, the plaintiff planted four trial lots which were severely damaged by vermin.
18 The plaintiff pleads that, in about November or December 1999, the manager of WAFM and the defendant's son inspected the trial lots and the damage caused to the plants. By letter dated 14 January 2000, WAFM confirmed that it would provide to the plaintiff services for the establishment of blue gum eucalyptus plantations in the 2000 calendar year, on the basis that WAFM would be paid the cost of its work plus 15 per cent.
19 In February 2000, the defendant and his son, as agents of WAFM, inspected the trial lots on Kangaroo Island and the damage caused to the plants on them by vermin.
20 It is alleged that, at a meeting at the plaintiff's offices on 10 February 2000, the plaintiff and WAFM, by the defendant and his son, verbally agreed that WAFM would be engaged by the plaintiff to provide plantation establishment services on Kangaroo Island in the 2000 calendar year, that WAFM would be paid its costs plus 15 per cent for its services, and that the plaintiff and WAFM would execute a written agreement in respect of the services.
21 It is alleged in par 12 of the minute that, shortly after 10 February 2000, the defendant, as a director of WAFM, provided to one James Richardson ("Richardson"), on behalf of the plaintiff, a document setting out the proposed terms of the written agreement. The document included terms to the effect that WAFM would prepare an establishment and management plan for the land to be planted, obtain all necessary approvals, establish and maintain fire breaks, exterminate vermin, and remove weeds.
(Page 7)
22 It is alleged in par 13 of the minute that the provision of that document by WAFM was an express representation by WAFM that in undertaking work to establish the plantation in 2000, WAFM would undertake vermin extermination or control measures as were appropriate.
23 The plaintiff pleads in par 14 that implicit in the same conduct was a representation that WAFM would provide its services with reasonable skill, care and diligence and in accordance with good silvicultural practices, including vermin extermination or control. The implication is said to arise from WAFM's inspection of the trial lots, the inclusion of vermin control in its proposal and the fact that no competent contractor would undertake plantation establishment without steps to exterminate or control vermin.
24 It is alleged in par 16 of the minute that, in March 2000, the plaintiff, by Richardson, had a meeting with the defendant, on behalf of WAFM, to discuss the proposed written agreement to the extent that either party sought to include additional terms in it. It is pleaded in par 17 that at the meeting Richardson provided to the defendant a draft agreement drawn between the plaintiff and WAFM containing covenants by WAFM to do all work necessary to establish the plantations, to perform its services in accordance with good silvicultural practices and that those services would include use of all reasonable measures to exterminate and keep the land free from rabbits and other vermin, and to control vermin on the land. It is pleaded that the defendant did not request any amendment to the terms of that draft agreement.
25 The plaintiff alleges that implicit in that conduct were representations by WAFM that WAFM would perform the services in accordance with the terms of the draft agreement and/or it would take all reasonable steps to perform the services in accordance with the terms of the draft agreement, and that its obligations included vermin control.
26 It is then pleaded as follows:
"19. On 10 May 2000 Richardson and the defendant met at the plaintiff's offices to consider a proposed written agreement and in the course of that meeting the defendant in effect informed Richardson that:
19.1 WAFM would give to the plaintiff a warranty to the effect that WAFM would plant about 900 to 1000 seedlings per hectare and if after 9 months there were less than sufficient seedlings to
- maximise the mean annual increment ('MAI') of growth on each hectare, WAFM would at its own expense infill the necessary seedlings;
- 19.2 WAFM would agree that the Services would include:
19.2.1 using all reasonable measures to keep the Plantation Land free from rabbits and other vermin;
19.2.2 infill planting in spring of the year of planting
and verbally agreed with the plaintiff that:
19.3 the plaintiff should instruct the plaintiff's solicitors to amend the proposed written agreement in accordance with the matters in paragraphs 19.1 and 19.2 above and that the redrawn document would be executed by WAFM;
19.4 the written agreement would operate from 1 March 2000.
- 20. In May of 2000 WAFM commenced preparatory work on the KI [Kangaroo Island] Land for establishment of plantations. Planting commenced on 13 June 2000 and was completed by 24 July 2000.
21. Implicit in WAFM's conduct as pleaded in paragraph 19 above was a representation by WAFM that:
21.1 WAFM had the financial capacity to meet the warranted obligation for infill planting pleaded in paragraph 19.1 above;
21.2 WAFM would take all reasonable steps to keep the Plantation Land free of vermin;
21.3 WAFM would take all necessary measures to comply with its proposed obligations under the Agreement from 1 March 2000;
21.4 WAFM would execute the written agreement.
(Page 9)
- 22. In reliance upon the representations pleaded in paragraphs 12, 13, 14, 17, 18, 19 and 21 above, the plaintiff permitted WAFM in May of 2000 to commence performance of the Services on the KI Land."
27 It is pleaded in par 23 of the minute that, in further reliance upon the representations, in or about July 2000 the plaintiff and the defendant executed an agreement which was in the same terms as the proposed written agreement, amended in accordance with WAFM's agreement pleaded in par 19. The executed agreement provided, in effect, that the plaintiff appointed WAFM from 1 March 2000 to perform the services, that WAFM would perform the services in a proper and efficient manner and in accordance with good silvicultural practices, that WAFM warranted that it would maintain approximately 950 healthy seedlings on each woodlot, to be confirmed by an independent forester, that if the forester concluded there was a loss of 10 per cent or there were insufficient healthy seedlings, WAFM would replace them, and the plaintiff would pay WAFM a fee equal to 15 per cent of the reimbursable costs of the work.
28 It is then pleaded:
"24. The defendant was knowingly concerned in the conduct of WAFM as pleaded in paragraphs 12, 13, 14, 17, 18, 19 and 21 above and was knowingly concerned in that conduct.
25. The representations made by WAFM pleaded in paragraphs 12, 13, 14, 17, 18, 19 and 21 above were misleading and deceptive insofar as:
25.1 as to paragraphs 19 and 21 above, in April of 2000 WAFM had decided to take no steps for vermin extermination on the KI Land prior to planting and rather to await vermin damage and then determine its extent and necessary counter measures;
25.2 as to paragraphs 14 and 17 above, no competent contractor in WAFM's position would have planted the seedlings on the KI Land without having first undertaken a vermin extermination programme;
- 25.3 as to paragraph 18 above, the plaintiff repeats 25.2 above;
25.4 as to paragraph 19.2.1 above, the plaintiff repeats paragraph 25.2 above;
25.5 as to paragraph 19.2.2 above, WAFM had no financial capacity to perform in accordance with the warranty;
25.6 as to paragraph 21.1 above, the plaintiff repeats paragraph 25.2 above;
25.7 as to paragraph 21.2 above, the plaintiff repeats paragraph 25.2 above;
25.8 as to paragraph 21.3 above, in April of 2000 WAFM had decided to take no steps to control vermin.
- 26. In the alternative to paragraph 25, the conduct and representations in paragraphs 12, 13, 14, 17, 18, 19 and 21 above were representations as to future matters for which there was no reasonable basis contrary to section 9 of the Fair Trading Act (WA). The plaintiff repeats paragraph 25.1 above and says further that the defendant as the sole director and shareholder of WAFM knew that WAFM had not incurred any expenditure to implement reasonable vermin eradication measures on the KI Land and that the defendant had not authorized such expenditure."
29 The plaintiff alleges in par 27 that, by reason of the defendant's misleading and deceptive conduct, the plaintiff has suffered loss and damage in that WAFM failed to achieve 950 healthy seedlings on each lot and that its failure to do so was due to extensive damage from vermin. The plaintiff claims damages.
The defendant's submissions on the pleading
30 It was submitted by Senior Counsel for the defendant that the minute disclosed no arguable cause of action and was embarrassing. Counsel argued that in light of the history of the matter, the existing statement of claim should be struck out, leave to amend in terms of the minute should be refused and the action should be dismissed.
(Page 11)
31 It was submitted that pars 12 and 13 of the minute were embarrassing because the provision of a draft document in the course of negotiations, in the circumstances pleaded, could not constitute a representation of the type pleaded. It implies no more than that the party providing it proposes the terms of the written agreement for consideration. It was submitted that par 14 was embarrassing for the same reason.
32 It was submitted that par 16 was embarrassing in that the alleged purpose of providing the written agreement was nonsensical; the purpose must be for negotiating the terms of the written agreement.
33 Senior Counsel submitted that pars 17 and 18 of the minute were embarrassing because the conduct pleaded could not give rise to the implied representation. The presentation of a draft document by the plaintiff to WAFM during negotiations, and before their conclusion, could not give rise to a binding obligation on WAFM to perform the services before final agreement is reached simply because no objection is raised to the draft document. It is clear from the minute that the parties were still negotiating the terms of the written agreement, with the result that either party was still free to withdraw or change any previous position it may have taken.
34 It was submitted that par 19.4 failed to outline which obligations were required to be performed by WAFM before 10 May 2000, and it was inconsistent with the plea in par 22 that the plaintiff only permitted WAFM to commence performance of the services after 10 May 2000.
35 It was submitted that par 20 was embarrassing in that it was unclear whether the "preparatory work" was alleged to be in performance of the pleaded oral agreement or the written agreement or otherwise.
36 Senior Counsel argued that par 21 was embarrassing in a number of respects. In the first place, it failed to specify which particular conduct in par 19 gave rise to any of the pleaded representations. Secondly, it was insufficiently precise to give rise to the inference pleaded in par 21.1. Thirdly, it was impossible to imply from the conduct pleaded in par 19 that WAFM had agreed to perform "proposed" obligations as from 1 March 2000 when the conduct pleaded in par 19 occurred on 10 May 2000.
37 Senior Counsel submitted that par 22 was embarrassing for the same reasons and, further, that the plaintiff could not be said to have acted in reliance upon representations made by WAFM on 10 May 2000 that it would comply with its obligations under the agreement from
(Page 12)
- 1 March 2000, at a time when the plaintiff was aware as at 10 May 2000 that WAFM had not in fact commenced to perform the services. A similar objection was taken in relation to par 23.
38 It was submitted that par 24 was embarrassing in that it alleged the defendant was knowingly concerned in specified conduct, but accessorial liability is only established by proving the defendant not only knew the conduct giving rise to the pleaded representations but also that the representations were false: Yorke v Lucas (1985) 158 CLR 661 at 670. It is not pleaded that the defendant knew the representations were false and no particulars of the alleged knowledge are given. It was submitted that alleging an individual knew representations were false or knew that there were no reasonable grounds for making representations as to a future matter, is tantamount to an allegation of fraud and must be particularised: Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599.
39 A number of complaints were made about par 25. It was submitted that pars 25.1 and 25.2 failed to identify with any particularity which representation is said to have been falsified by the pleaded matter. Paragraphs 25.3 and 25.4 were embarrassing to the extent they relied on par 25.2 and, in addition, so far as they relied on the prospective nature of the matters pleaded in pars 9 and 21, they were not sustainable. Paragraph 25.5 was embarrassing because par 19.2.2 does not refer to financial capacity and it does not plead any material facts giving rise to the alleged falsity. Similarly, par 25.6 fails to plead properly any falsity as to financial capacity and par 25.7 is embarrassing insofar as it relies on the prospective nature of the matters pleaded in pars 9 and 21. Paragraph 25.8 was similarly embarrassing.
40 There were also a number of objections to par 26. In particular, it was submitted that par 26 pleads that the representations were as to future matters, whereas the plea in par 21.1 as to financial capacity was a plea as to present fact. It was also submitted that the plea of knowledge in the second part of the plea in par 26 was irrelevant as there was no plea of any representation that WAFM had incurred expenditure to implement reasonable vermin eradication measures. It is also not pleaded on or by what date the defendant had the pleaded knowledge.
41 The claim for damages in par 27 was attacked on the basis that it claimed damages on a contractual basis rather than the losses suffered in reliance upon alleged misleading and deceptive conduct. Senior Counsel argued that the only occasion on which a contractual measure of damages can be claimed in these circumstances is where the relevant act of reliance
(Page 13)
- is a loss of a contractual entitlement the plaintiff otherwise had: Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1. There is no allegation the plaintiff had any contract with another supplier which they terminated as a result of the alleged misleading and deceptive conduct, nor is there any other basis to justify a contractual measure of damages.
The plaintiff's submissions on the pleading
42 It was submitted on behalf of the plaintiff that, in relation to pars 12 and 13, the conduct must be considered in the light of all the circumstances and when so considered it was not embarrassing. Similarly, in relation to par 14, the plea cannot be considered in isolation. In the circumstances pleaded the proposed agreement was a statement of what WAFM would do in circumstances where it was engaged to provide the services.
43 It was submitted in relation to pars 17 and 18 that the fact that either party was free to withdraw was irrelevant as neither party sought to withdraw and WAFM agreed that it would perform according to the terms of the draft agreement.
44 It was submitted there was no embarrassment in pars 19 and 21. It was submitted in relation to par 21 that in offering the warranty there was implicit a representation by WAFM as to the capacity to perform when and if the warranty was to be honoured. WAFM went ahead with the contracted work in the circumstances pleaded and that gave rise to the implied representations as to the obligations to be performed.
45 In relation to par 22, it was submitted that there was no inconsistency. WAFM represented it would do certain acts in the future and, in reliance upon that, the plaintiff permitted WAFM to commence work.
46 It was argued there was no embarrassment in relation to par 23. It was pleaded the plaintiff executed the agreement in July 2000 in reliance on the representations WAFM had made. The fact that the contract stipulated 1 March 2000 as the commencement date is not contradictory.
47 It was submitted on behalf of the defendant that there could be no clearer case of being "knowingly concerned" in conduct than where, as here, the defendant, the sole director of WAFM, made the representations on behalf of WAFM.
(Page 14)
48 In relation to par 25, counsel said there were omissions in the paragraph numbers referred to in par 25.1, which counsel then sought to rectify. It was submitted that par 25.2 sets up the material facts by which WAFM's conduct must be assessed.
49 In relation to the complaint about the plea as to the defendant's knowledge in par 26, it was submitted that that was a plea of the basis of the defendant's knowledge that nothing had been done to authorise vermin control.
The relevant principles
50 The general principles to be applied on an application of this sort are well-established. A court will not grant leave to amend a pleading into a form which is liable to be struck out: Hooker Corporation Ltd v Commonwealth (1986) 65 ACTR 32 at 38; Atkinson v Fitzwalter [1987] 1 WLR 201 at 214 - 215. In determining the adequacy of a pleading it is fundamental that a party is entitled to a statement of the opponent's case sufficiently clear to allow the party a fair opportunity to meet it: Gould & Birbeck & Bacon v Mount Oxide Mines Ltd (In Liq) (1916) 22 CLR 490 at 517; Dare v Pulham (1982) 148 CLR 658 at 664. A pleading may therefore be struck out where it is vague, ambiguous or pleaded at too great a level of generality so as to leave the other party in doubt as to how to respond to the pleading: Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405 at 413; Banque Commerciale SA en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 per Mason CJ and Gaudron J.
51 The application of those principles, and the rules as to pleading contained in O 20 of the Rules of the Supreme Court 1971 (WA), in any particular case invariably involves matters of judgment and degree. The approach to be taken to objections to pleadings, or proposed pleadings, must be directed to the attainment of the objectives set out in O 1 r 4B. Such an approach requires a degree of flexibility that may not always be consistent with the practices of earlier times.
52 The question of whether a pleading is so defective that it should be struck out is not, therefore, to be answered by any mechanical application of the rules of pleading. It is generally to be answered by whether or not the pleading serves the fundamental objective of pleadings and whether any significant deficiencies in it can adequately be overcome by the provision of particulars or by some other means. While it is necessary that a pleading set out with reasonable clarity and detail the case that the other party must meet, on an application of this nature the focus must be
(Page 15)
- on whether the pleading is sufficient for the fair and proper disposition of the case, not whether it complies meticulously with the rules of pleading.
53 In Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281, Martin CJ said (at [6] - [8]):
"In my view, the contemporary role of pleadings has to be viewed in the context of contemporary case management techniques and pre-trial directions. …
Those processes leave very little opportunity for surprise or ambush at trial and, it is my view, that pleadings today can be approached in that context and therefore in a rather more robust manner, than was historically the case; confident in the knowledge that other systems of pre-trial case management will exist and be implemented to aid in defining the issues and apprising the parties to the proceedings of the case that has to be met.
In my view, it follows that provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action or defence, as the case may be, and apprising the parties of the case that has to be met, the Court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the Court to be spent extensively debating the application of technical pleadings rules that evolved in and derive from a very different case management environment.
Most pleadings in complex cases … can be criticised from the perspective of technical pleading rules that evolved in a very different case management environment. In my view, the advent of contemporary case management techniques and the pre-trial directions, to which I have referred, should result in the Court adopting an approach to pleading disputes to the effect that only where the criticisms of a pleading significantly impact upon the proper preparation of the case and its presentation at trial should those criticisms be seriously entertained."
54 It is against that background that I turn to the defendant's complaints about the minute.
(Page 16)
Is the proposed pleading defective?
55 I do not consider that the defendant's complaints about par 12 and par 13 are made out. Whether or not, before the contract was entered into, the provision by WAFM of a document setting out the manner in which it would carry out the plantation establishment services is capable of constituting a representation that it will carry out the work in that manner is, in my view, properly a matter for trial. It involves issues of fact that cannot be determined on an application of this nature. Similarly, whether or not such conduct of WAFM gives rise to a representation that it would undertake the proposed plantation establishment services with reasonable skill and care and in accordance with good silvicultural practices is a matter that can only be determined at trial. It cannot be said at this stage that it is plainly incapable of doing so.
56 I consider that the plea in par 16 is embarrassing and is likely to give rise to difficulty at trial. I accept the submission of Senior Counsel for the defendant that it is unclear what is meant by the plea that "the plaintiff … met with the defendant … for the purpose of negotiating the proposed written agreement …". The word "negotiating" in the preceding version of the statement of claim has been deliberately omitted from the minute. For what "purpose" the parties met is therefore quite unclear. Indeed it is difficult to know what is meant by a plea that the parties "met … for the purpose" of a proposed written agreement. I would not allow the plea.
57 The defendant's other complaint about par 16 led to the plaintiff's counsel proposing to amend the second part of the plea to refer to "the proposed written agreement" instead of "the written agreement". I consider that would overcome the defendant's difficulty.
58 I do not accept the defendant's complaints about par 17 and par 18 of the minute. Whether or not the presentation to WAFM of the draft contract, in circumstances where WAFM did not request any amendment to the terms of the draft, constituted a representation that WAFM would perform, or take all reasonable steps to perform, the services in accordance with the terms of the draft, involves issues of fact that should be left to be determined at trial. I do not consider that on a fair reading it can be taken to mean that it gave rise to a binding contractual obligation to so perform the services. I think it is clear that what is pleaded is a representation by WAFM that its services under the contract would be performed in the manner set out in the draft document.
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59 I do not consider there is any real uncertainty created by the plea in par 19.4 that on 10 May 2000 the defendant told the plaintiff that "the written agreement would operate from 1 March 2000". It seems to me that "operate" in that context means the same as "have effect". I do not see any necessary legal difficulty with parties agreeing that a contract should take effect retrospectively.
60 But there does seem to me to be difficulty with the plea in par 21 that implicit in what (it is alleged in par 19) WAFM told the plaintiff on 10 May 2000 in the course of discussing the proposed written agreement, were representations that WAFM had the financial capacity to "meet the warranted obligation" for infill planting and that WAFM would take all necessary measures to comply with its proposed obligations under the verbal agreement reached on 10 February 2000 "from 1 March 2000". In the first instance, it is not apparent what "warranted obligation" then existed. In the second instance, it is not clear how what WAFM did on 10 May 2000 could constitute a representation that WAFM "would take all necessary measures to comply with its proposed obligations … from 1 March 2000". [emphasis added]
61 A number of other complaints were made about the degree of precision and particularity of par 19 and par 21, and the lack of a clear link between the conduct pleaded in par 19 and the representations alleged in par 21. I consider that those are matters that could adequately be dealt with by a request for particulars.
62 But in light of the difficulties with par 21 to which I have referred, I would not allow the plea.
63 There is, in my view, a difficulty with par 22. It is there pleaded that in reliance upon (among other things) the representations pleaded in par 19, the plaintiff permitted WAFM in May 2000 to commence performance of the services on the land. But the representations pleaded in par 19 include, in par 19.3, a representation that WAFM "wouldtake all necessary measures to comply with its proposed obligations … from 1 March 2000". It is not clear what is meant by the allegation that, in May 2000, the plaintiff permitted WAFM to commence performance of the services in reliance upon a representation that WAFM would take all necessary measures to comply with its proposed obligations from 1 March 2000. If the "proposed obligations" refer to something different to "performance of the Services", that does not emerge from the minute. Similar issues arise in respect of par 23.
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64 It was submitted on behalf of the defendant that the plea of accessorial liability in par 24 is defective and should be struck out as the plaintiff does not allege that the defendant knew that the representations were false: Yorke v Lucas (supra) at 669 - 670; Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at 281 - 283 [156] - [160]; Quinlivan v Australian Competition and Consumer Commission (2004) ATPR 42-010 at 48,844 [15]. The plaintiff's counsel, on the other hand, referred to the allegation in par 25 that the representations by WAFM were misleading or deceptive. He submitted that, as the sole shareholder and director of WAFM and the person who made the representations, the defendant must have known the relevant facts and therefore must have known that the representations were misleading or deceptive.
65 It is helpful to go first to par 25, where the plaintiff pleads that the representations made by WAFM were misleading and deceptive. As it stands, the plea, in my view, is confusing and therefore embarrassing. Paragraphs 12 and 13 of the minute are referred to in the prefatory words but it is not apparent that they are in fact relied upon in the plea. In addition, there are a number of difficulties with the specific allegations as to the respects in which the conduct of WAFM is said to have been misleading.
66 In the first place, the plea in par 25.1 does not identify the conduct which is said to be misleading. In the course of argument, counsel for the plaintiff said it was intended to refer to the conduct pleaded in par 19 and par 21. The specific part or parts of par 21, however, were not specified.
67 It is also difficult to ascertain what is intended by par 25.2, which refers to pars 14 and 17. It appears to plead, in effect, that the representation by WAFM that it would undertake its services in accordance with good silvicultural practice, including vermin control, was misleading because no competent contractor would have planted the seedlings that WAFM planted without having first undertaken a vermin extermination programme. The pleaded representation, however, is a representation as to the future conduct of WAFM. It cannot, therefore, be shown to be misleading at the time it was made simply by showing that WAFM did not in fact subsequently do what it represented it would do.
68 The further pleas which rely on par 25.2, namely pars 25.3, 25.4, 25.6 (which also appears to refer erroneously to par 19.2.2 instead of par 21.1) and 25.7 are similarly defective.
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69 In par 25.5, it is alleged that the representation pleaded in par 19.2.2 was misleading because WAFM had no financial capacity to perform in accordance with the warranty. The reference to par 19.2.2 appears to be an error and should be a reference to par 21.1. The latter pleads that WAFM impliedly represented that it had the financial capacity to meet the "warranted obligation" for infill planting. I have already mentioned that I consider par 21.1 objectionable. Whether or not the plea in par 25.5 is otherwise defective would have to await the resolution of the problem with the plea in par 21.1.
70 There is also, in my view, a difficulty with par 25.8, which refers to the alleged representation in par 21.3. Paragraph 25.8 pleads, in effect, that a representation made in May 2000 that WAFM would take all necessary measures to comply with its obligations under the agreement as from 1 March 2000 was misleading because in April 2000 WAFM had decided to take no steps to control vermin. The uncertainty of what is intended by the plea perhaps highlights again the difficulty with the terms of par 21.3, to which I referred earlier.
71 When regard is had to those matters, the difficulties that arise with the plea in par 24 - that the defendant was knowingly concerned in the misleading and deceptive conduct of WAFM - become manifest.
72 I should mention in passing that it is not alleged (or at least it does not appear to be alleged) by the plaintiff that the defendant was primarily liable under s 9 of the Fair Trading Act 1987 (WA), although a number of authorities on s 52 of the Trade Practices Act 1974 (Cth), and the equivalent provisions in the State Fair Trading Acts, have held that if a director or employee of a corporation engages, in trade or commerce, in conduct on behalf of the corporation which is misleading or deceptive, not only is the company primarily liable for the contravention, but the individual is also primarily liable, and not merely as an accessory: see Houghton v Arms [2006] HCA 59; Arktos Pty Ltd v Idyllic Nominees Pty Ltd[2004] FCAFC 119 at [13], [87] - [89]; Nescor Industries Group Pty Ltd v Miba Pty Ltd(1997) 150 ALR 633at 641; Cleary v Australian Co-operative Foods Ltd(1999) 32 ACSR 701; Citibank Ltd v Liu[2003] NSWSC 569 at [53], and on appeal Wong v Citibank Ltd[2004] NSWCA 396 at [19]; Astvilla Pty Ltd v Director of Consumer Affairs[2006] VSC 289 at [169] - [175]; Genocanna Nominees Pty Ltd v Thirsty Point Pty Ltd [2006] FCA 1268at [295] - [300].
73 It is clear that the effect of Yorke v Lucas (supra) is that for the defendant to be liable for being knowingly concerned in misleading and
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- deceptive conduct constituted by the making of representations, the defendant must know the essential elements of the contravention.
74 While it is not necessary to establish that the defendant knew that the representations in question were in fact misleading or deceptive, it is necessary to demonstrate that the defendant had knowledge of each of the essential elements of the contravention.
75 In Compaq Computer Australia Pty Ltd v Merry(1998) 157 ALR 1 Finklestein J at 4 - 5 explained the position as follows:
"A contravention of s 52(1) of the Trade Practices Act can occur regardless of whether the corporation is acting honestly or reasonably: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 197. But where it is sought to make a person liable as an accessory to a contravention of s 52(1) based on s 75B it is necessary to establish that the person has intentionally participated in the contravention. To establish intentional participation it must be proved that the person has knowledge of the essential matters that make up a contravention of s 52(1): see generally Yorke v Lucas (1985) 158 CLR 661; Edwards v R (1992) 173 CLR 653. In this regard 'knowledge' means actual and not constructive knowledge. For example, it would not be sufficient merely to show that the person charged with accessorial liability had shut his eyes to the obvious if that is intended to be a substitute for actual knowledge: Giorganni v R (1985) 156 CLR 473. Of course, where there is a combination of suspicious circumstances and a failure to make an inquiry it may be possible to infer knowledge of the relevant essential matters: Pereira v Director of Public Prosecutions(1988) 82 ALR 217."
76 Similarly, in Medical Benefits Fund of Australia Ltd v Cassidy [2004] FCAFC 35, Moore J (with whom Mansfield J agreed) said at [15]:
"[I]n my opinion, liability as an accessory (in circumstances where the contravening conduct of the principal was making false or misleading representations) does not depend on an affirmative answer to the question whether the alleged accessory knew the representations were false or misleading. All that would be necessary would be for the accessory to know of the matters that enabled the representations to be characterised in that way. In a comparatively simple situation,
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- such as the situation considered in Yorke v Lucas, where particular representations were made to individuals or groups of individuals, knowledge of those matters would almost inevitably result in the alleged accessory also knowing the representations were false or misleading. …"
77 See also Australian Competition & Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 at [133].
78 The mere fact that a person is a director, or the director, of a company that engages in contravening conduct is not therefore sufficient to establish that he or she is a person involved in the conduct. What must be shown is that the person had actual knowledge of the essential matters that make up the contravention. That is, so far as relevant in the present case, that the defendant knew the facts that made his alleged representations misleading or deceptive.
79 When regard is had to the problems with the plea in par 25 in relation to identifying the respects in which it is alleged the pleaded representations were false or misleading, it is apparent that any determination of the adequacy of the plea in par 24 would have to await the rectification of those problems.
80 My current, necessarily tentative, view is that the minute does not sufficiently identify the matters relied upon for the contention that the defendant knew the facts that rendered the various alleged representations misleading or deceptive. But a firm view would have to await the rectification of the other parts of the pleading.
81 In addition, insofar as the plea of accessorial liability in par 24 also relates to the plea in par 26, there are further difficulties.
82 The first part of the plea in par 26 is an alternative plea that the representations were representations as to future matters for which WAFM had no reasonable basis. It pleads, however, that the "conduct and representations" pleaded in various paragraphs of the minute (including pars 18.3 and 21.1) were representations as to future matters. In the context it is not clear what the word "conduct" is intended to add to "representations". In addition, the representations pleaded in pars 18.3 and 21.1 appear to be pleas as to the present, not as to future matters.
83 The second part of the plea in par 26 seems to be directed to the accessorial liability of the defendant in respect of the matters pleaded in par 25.1 - treating them as a plea as to future matters - in that it pleads the
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- defendant's alleged knowledge that WAFM had not incurred, and the defendant had not authorised, any expenditure for vermin extermination. But quite what is intended is unclear and the plea in par 26 is therefore embarrassing.
84 What in fact would be required to be proved by the plaintiff to establish accessorial liability in the defendant in respect of representations as to future matters is not entirely clear.
85 In King v GIO Australia Holdings Ltd (2001) 184 ALR 98 at [20], Moore J put the issue as follows:
"If an applicant alleges contravention of s 52 because a representation was made by a corporation in respect to any future matter the corporation must demonstrate, to avoid a finding that the representation was misleading, that it had reasonable grounds for making the representation. However, if the applicant alleges that a person has been knowingly concerned in or party to the contravention described in the preceding sentence, is it necessary for the applicant to demonstrate, as against that person, that the corporation did not have reasonable grounds for making the representation or otherwise demonstrate the conduct was misleading or deceptive? On the other hand, does s 51A have the effect, in the action against that person, that the person (or another party) must demonstrate the existence of reasonable grounds to avoid a finding that the representation was misleading?"
86 His Honour, having reviewed a number of authorities, concluded (at [33]):
"In my opinion, it is arguable that s 51A would operate, in the action against the second respondent based on s 75B, to relieve the applicant of the initial burden of proving that the representations with respect to future matters pleaded in para 28 are misleading and, if so, it would be incumbent on the first respondent or the second respondent (or indeed perhaps any other respondent) to adduce evidence that the first respondent had reasonable grounds for making the representations."
87 In the circumstances of that case, his Honour considered that no difficulty would be caused by proceeding to trial on that basis, leaving it open to the respondents to renew their objection to the pleading if particular difficulties arose in understanding the case they had to meet.
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88 A similar approach might be appropriate in this case, in circumstances where the defendant was the sole director of WAFM and the person who is alleged to have made the representations concerned. However, in light of the difficulties with the pleading to which I have referred, I do not consider that it is possible to reach any final conclusion as to that at present.
89 In my view, whether or not the defendant's complaint that the plea of damages in par 27 discloses no reasonable cause of action, because it pleads a contractual measure of damages, would depend upon how the alleged conduct of WAFM was ultimately cast in the pleading. It is clear that damages under the Fair Trading Act are not limited to the measure of damages in tort: see Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514, Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388. Equally, it is clear that what must be established is that the damage was caused "by" the alleged misleading or deceptive conduct of WAFM. It must then be shown that the defendant was knowingly concerned in that conduct.
90 In this case, the resolution of the pleading as to damages would have to await a pleading otherwise in acceptable form. For the moment I would simply observe that it is not easy to see how the specific damage claimed could be said, in the relevant sense, to have been caused by the alleged conduct, in that - at least in its terms - par 27 does not appear to plead damage which was caused by the alleged misleading representations but rather by the subsequent failure of WAFM to carry out the services in accordance with those representations.
91 In light of the deficiencies in the minute, I consider that the proper course is simply to refuse leave to amend in terms of the minute. That leads to the question of whether the plaintiff should be permitted the opportunity to file a further minute of proposed amended statement of claim. The defendant submits that it should not because first, no amendments could possibly establish an arguable cause of action and, secondly, that, irrespective of the merits of the plaintiff's claim, the action should be struck out for want of prosecution.
92 I am not satisfied at this stage that the plaintiff could not plead an arguable statement of claim and would not refuse leave to file a further minute of proposed statement of claim on that ground. It is therefore to the second ground that I now turn.
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Want of prosecution
The defendant's submissions
93 The defendant relied upon two inter-related grounds on this application, namely, the overall delay and the delay in complying with the order for security for costs.
94 It was submitted on behalf of the defendant that persistent and long lasting failure to provide security for costs when ordered may justify striking out proceedings for want of prosecution: Philips Electronics Australia Pty Ltd v Matthews (2002) 54 NSWLR 598 at [47].
95 Apart from the plaintiff's failure to provide any explanation for its failure to pay the sum into court earlier than it did, it was submitted that the defendant has suffered prejudice by reason of the delay in the prosecution of the action. Senior Counsel referred to affidavit evidence that one of the defendant's potential witnesses was no longer in the jurisdiction and the whereabouts of the other was not known. If the matter were to go to trial, the state of the defendant's knowledge regarding all aspects of the matter will be critical, in which case the evidence of those witnesses will be critical. That is not overcome by reliance upon evidence that was adduced before the arbitrator.
96 Moreover, the defendant is now 68 years old and the matter is a long way from being ready for trial. The quality of his evidence will plainly be compromised, particularly given that the quality of justice deteriorates as time goes on: Jakovljevic v L & B Doslov [2000] WASCA 131 at [41] - [42]. In addition, the mere existence of the action has affected and continues to affect the defendant commercially and psychologically. The defendant has attested to the fact that the legal costs and risks associated with the ongoing litigation impinge on his ability to invest and causes damage to his reputation as a reliable and professional forestry manager.
97 In circumstances where the plaintiff has had at least four attempts to draft a statement of claim, the fundamental problems with the plaintiff's case and the want of prosecution, given the defendant's circumstances, it is appropriate that the action now be dismissed.
The plaintiff's submissions
98 It was submitted on behalf of the plaintiff that the delay has been caused by the plaintiff's financial incapacity. An administrator was appointed on 1 July 2003 and the administration came to an end in
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- May 2005. The amount of the security for costs has now been paid into court.
99 The plaintiff was successful in the arbitration against WAFM which then was wound up in insolvency. The plaintiff's only recourse now is against the defendant, the sole director and shareholder of WAFM. If the action was struck out, it would be left without any effective remedy for the serious losses it has suffered.
100 It was submitted by counsel that until June 2006 there had been no complaints by the defendant as to delay. In respect of the absence of critical witnesses, counsel disputed that the witnesses named were critical and contended that, in any event, statements should have been taken before they left the jurisdiction if detailed statements had not previously been taken for the purposes of the arbitration. It was also not said by the defendant that the witnesses would not be available for a trial of the action.
101 The plaintiff put into evidence a witness statement of the defendant which was tendered at the arbitration and transcript of some 90 pages comprising the defendant's evidence at the arbitration. He also put into evidence witness statements, tendered at the arbitration, of the defendant's son, who is the witness the defendant says is no longer in the jurisdiction, and a Ms Candy, whose whereabouts are not known to the defendant.
The relevant principles
102 An action will be dismissed for want of prosecution where the Court is satisfied either that the delay has been intentional or contumelious, or that there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers and the 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 defendant: Lewandowksi v Lovell (1994) 11 WAR 124 at 133.
103 The matters which will usually be relevant to the Court's discretion to dismiss a claim for want of prosecution were considered by the Court of Appeal in The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93 at [99] - [103]. They are as follows:
1. the length of the delay;
2. the explanation for the delay;
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- 3. the hardship to the plaintiff if the action is dismissed and the cause of the action is left statute-barred;
4. the prejudice to the defendant if the action is allowed to proceed notwithstanding the delay; and
5. the conduct of the defendant in the litigation.
104 The Court made it clear, however, that it is inappropriate to use these matters as a checklist and the ultimate test is what justice in all its relevant notions or senses requires in the circumstances of the case.
105 While the relevant delay is that which occurs after the issue of the writ, a late start makes it more incumbent upon the plaintiff to proceed with all due speed, and a pace which might have been excusable if the action had been started sooner may be inexcusable in light of the time that has already passed before the writ was issued: Lewandowski v Lovell (supra) at 134.
106 Delay can be constituted by a failure to prosecute an action in a way which would enable the interlocutory steps to be concluded within a reasonable time. There may, therefore, be a want of prosecution during a period in which the plaintiff is involved in continuing unsuccessful attempts to establish a proper pleading: Bishopsgate Insurance Australia Ltd (In Liq) v Deloitte Haskins & Sells [1999] 3 VR 863 at 876 - 877; Monaveen Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v ABB Service Pty Ltd [2004] WASC 5. Generally, therefore, delay is not to be measured simply by the amount of activity by the plaintiff but rather by the amount of progress that the plaintiff has made.
107 Where there has been substantial delay, that delay of itself may lead to an inference of serious prejudice without specific evidence of prejudice: Hughes v Gales (1995) 14 WAR 434; Jakovljevic v L & B Doslov (supra). Where a claim is made against individuals relating to their probity or competence, especially their professional competence, it is not hard to infer that the defendant against whom allegations are made is under a heavy burden. It is then easier still to infer serious prejudice of a relevant kind: Bishopsgate Insurance Australia Ltd (In Liq) v Deloitte Haskins & Sells (supra); The Hancock Family Memorial Foundation Ltd v Fieldhouse (supra) at 148.
108 In the light of those principles I turn to the merits of the defendant's application for an order dismissing the action.
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Should the action be dismissed for want of prosecution?
109 I accept that an action may be dismissed for failure to comply with an order for security for costs. Such an application usually falls to be determined in circumstances where the security has not been provided.
110 In Idoport Pty Ltd v National Australia BankLtd[2002] NSWSC 18, Einstein J (at [24]) held that the following five factors were relevant in determining whether the Court should exercise its discretion to dismiss proceedings for failure to comply with an order for the payment of security for costs:
(a) The period that has elapsed since the security was ordered;
(b) The fact that the plaintiff has been on notice of the application for dismissal;
(c) The seeming inability of the plaintiff to further fund the proceedings;
(d) The prejudice to the defendant; and
(e) The position of the Court.
111 His Honour (at [24]) acknowledged that that list was by no means exhaustive and that the proper exercise of the Court's discretion required all relevant factors to be weighed in the balance, the ultimate decision reflecting the interests of justice.
112 An appeal against that decision was dismissed: Idoport Pty Ltd v National Australia BankLtd [2002] NSWCA 271. See also Porter v Gordian Runoff Ltd (No 3) [2005] NSWCA 377.
113 The present case, however, is somewhat different in that first, the original order did not specify a time within which the security was to be provided, but simply specified that until it was provided the action be stayed, and secondly, the security has now been provided.
114 It is also, however, the case that a failure to comply with an order for security for costs is evidence of a want of prosecution and is therefore a factor to be considered on such an application. While, as I say, there was no specific time specified within which the security was to be provided by the plaintiff, the failure to provide the security led to the action being stayed between 20 November 2003 and 9 August 2006.
115 In the circumstances of this case, I consider that the failure to provide the security is properly a matter to be considered, not as a discrete
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- issue, but in the determination as to whether overall there has been a want of prosecution of the action by the plaintiff that justifies the action being dismissed.
116 On that issue, there is no doubt that there has been substantial delay on the part of the plaintiff. The action was effectively dormant between November 2003 and 9 August 2006. The explanation offered for a substantial part, but not all, of that delay lies in the plaintiff being in administration from 1 July 2003 to 29 April 2005. The delay after 29 April 2005 has not been satisfactorily explained. A notice of intention to proceed was served by the plaintiff on 8 April 2005 but nothing further happened until the plaintiff was apparently galvanised into action by the filing of the present application to dismiss the action on 6 June 2006. It was only then that steps were taken to pay the amount of the security for costs into court, that finally being accomplished on 9 August 2006.
117 Although the action has been on foot since 19 September 2002 there is still no satisfactory statement of claim in place. Various unsatisfactory versions have been put forward by the plaintiff and considerable time has been spent on those endeavours. But I do not consider that the fact of those endeavours assists the plaintiff in any material way. It is significant, too, that despite those endeavours the current minute, in my view, falls a good way short of an acceptable pleading.
118 The question of prejudice to the defendant is a little different to the usual case in that a substantial amount of the evidence that is likely to be relevant to this action was canvassed in the lengthy arbitration that took place in late 2001 and early 2002, and there exist witness statements and a transcript of the evidence in the arbitration. While the arbitration was concerned with a contractual dispute between WAFM and the plaintiff, a significant amount of the factual ground appears to have been covered in that arbitration, although there are some factual issues in this action which go beyond that.
119 While the defendant is now 68 years of age, it is not suggested that he is in failing health or is otherwise hampered in giving evidence, beyond the ordinary difficulties that are inevitably associated with delay of this magnitude. The defendant says he is still working as a professional forestry manager.
120 I accept that the existence of this action has hung over the defendant for a very lengthy period, but it is the case that the defendant did not take any steps in the period between November 2003 and June 2006 to force
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- the pace and seems to have been content to let sleeping dogs lie. That does not afford any excuse to the plaintiff for its failure to prosecute the action diligently, but it seems to me that it is of some relevance in the context of the complaints of prejudice made by the defendant.
121 The defendant has said in his affidavit that since this action has been on foot he has found it difficult to attract new business and he has lost existing contracts. That evidence, however, is in such general terms that I consider little weight can be given to it. Similarly, the defendant says that prior to this action he had applied for finance 10 or 12 times and had never been refused, but he has since been refused a loan to purchase a property for $12,000,000. Once again, the general nature of the evidence does not permit any inference to be drawn that the refusal was a consequence of the continued existence of this action.
122 The loss of the ability to contact witnesses or cause them to give evidence is a matter of considerable significance on an application of this nature. But in the present case it is not clear that the position is as serious as it might seem at first blush. One of the two witnesses referred to in that respect by the defendant is the defendant's son, who now resides permanently in Myanmar. The defendant does not suggest that his son would be unable or unwilling to return to Australia to give evidence.
123 The other witness is Ms Candy, the former office manager of WAFM. The defendant says that he is informed by his solicitors that Ms Candy may be an important witness. The relevance of her evidence, however, was not explained and is not clear on the material before me. In any event, the defendant says simply that Ms Candy left "the local area" (which I take to mean Bridgetown) around February 2005 and he does not know her current whereabouts. He does not say that any enquiries have been made as to her whereabouts.
124 The prejudice to the plaintiff if the action is dismissed is quite clear. Any further action would be statute-barred. The plaintiff would then be left without having recovered anything from WAFM from the arbitration award and without any remedy that might be available against the defendant as the sole director and principal representative of WAFM.
125 As I have mentioned, the various factors which fall to be considered on an application of this nature are not a checklist, but ultimately what must be determined is what justice requires in the circumstances of the case.
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126 While there has been substantial delay on the part of the plaintiff, in the end, having regard to all of the circumstances, I do not consider that the interests of justice require that the action be dismissed at this stage. What, however, they do require is that the action be prosecuted by the plaintiff with a diligence that recognises the delays that have occurred and the need to bring the matter to trial at the earliest possible time. That involves putting the statement of claim in an acceptable form without further delay.
127 I will hear the parties on appropriate directions for the future conduct of the matter and on costs.
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