Beverage Bottlers (SA) Ltd (in liq) v Abode Enterprises Pty Ltd - [2009] SASC 272

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
BEVERAGE BOTTLERS (SA) LTD (IN LIQUIDATION) & ANOR v ABODE ENTERPRISES PTY LTD
[2009] SASC 272
Judgment of The Full Court
(The Honourable Justice Vanstone, The Honourable Justice Layton and The Honourable Justice Kourakis)
3 September 2009
PROCEDURE - COURTS AND JUDGES GENERALLY - COURTS - DISMISSAL OF PROCEEDINGS FOR WANT OF PROSECUTION
The plaintiff commenced proceedings in the District Court on 23 September 1998 for rent due and payable under a lease, of which it claimed the defendants were guarantors pursuant to a Deed of Guarantee – no steps were taken in those proceedings between 23 October 2000 and 16 March 2007 – a Master of that Court dismissed the plaintiff’s action for want of prosecution on 15 February 2008 – the plaintiff appealed that decision to a Judge of that Court, who allowed the appeal – the defendants appealed the Judge’s decision to a single Judge of the Supreme Court, who referred the appeal to the Full Court for determination – whether the Judge erred in allowing the appeal – whether the plaintiff’s action should be dismissed for want of prosecution or as an abuse of process – whether the defendants were prejudiced by the delay in prosecuting the proceedings - whether general prejudice to the defendants can be inferred from the length of the delay - whether particular prejudice to the defendants arising from their reduced capability to bring third party proceedings.
Held (by Layton and Kourakis JJ, Vanstone J agreeing): Both the decision of the Master and the decision of the Judge were affected by error – this Court is therefore required to consider the defendants’ application to have the plaintiff’s action dismissed for want of prosecution or as an abuse of process afresh – in an application to dismiss for want of prosecution it is the entirety of the prejudice that the defendant would suffer that is relevant, not merely prejudice arising out of the plaintiff’s period of inactivity – inaction on the part of the defendant is a relevant consideration, although it will not always mean that an application for want of prosecution will be dismissed – the defendants are not prejudiced by the death of a witness for the purposes of pursuing any third party claim - the plaintiff would still be within time to sue on the Guarantee as that time limit is 15 years - it would not be within time to sue on the contract as that time limit is 6 years.
(by Kourakis J, Vanstone J agreeing): Determination of liability under the Deed of Guarantee and the defendants’ case on quantification of resulting damages have not been materially prejudiced by the delay – there can be a fair hearing of any third party claim brought by the defendant Lapointe - a real risk of prejudice has not been shown - a fair trial of the plaintiff’s alternative claims is still possible – the prejudice suffered by the defendants is discounted by reason of their own inaction and failure to bring proceedings to join third parties earlier – the appeal is dismissed notwithstanding the errors made by the Judge.
Held (by Layton J in dissent): The plaintiff’s delay was inordinate and inexcusable – no action was taken in the proceedings for five and a half years - overall the action is in the same position as it was when commenced 11 years ago - there was no allegation or evidence that suggested the defendants contributed to any delay - there is a risk or a possibility of prejudice to the defendants if the action is now required to proceed to trial - there is a lack of memory of the defendants' former solicitor and the destruction of the solicitors file - there is presumptive prejudice by reason of the long delay - although much of the argument on the Guarantee is documentary, witnesses are likely to be required for historical context, quantum of any damage and mitigation of loss - a court should also have regard to wider effects of delay - the conduct of litigation is not simply a matter for the parties - the hardship suffered to the plaintiff if the action is dismissed is that it will be out of time for its claim in contract - balancing all factors the appeal should be allowed and the plaintiff's action be dismissed.
Limitations of Actions Act 1936 (SA) s 34, s 35, s 48; District Court Act 1991 (SA) s 43; District Court Civil Rules 2006 r 17, r 192, r 193 ; District Court Civil Rules 1987 r 2.02, r 2.03, referred to.
Ulowski v Miller [1968] SASR 277; BQ and HM Doe Pty Ltd v National Australia Bank [1999] SASC 124, applied.
Stollznow v Calvert [1980] 2 NSWLR 749, discussed.
Lenandowski v Lovell (1994) 11 WAR 124; Birkett v James [1978] AC 297; Allen v Sir Arthur McAlpine & Sons Ltd [1968] 2 QB 229; Queensland Trustees Limited v Drysedale Henay & Co [1992] 2 Qd R 625; Bliss v Lambeth Southward and Lewisham Area Health Authority [1978] 1 WLR 328; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; Batistatos v Road Traffic Authority of New South Wales & Anor (2006) 226 CLR 256; Aon Risk Services Australia Limited v Australian National University (2009) 83 ALJR 951; Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146; House v The King (1936) 55 CLR 499; Hardel Pty Ltd v Burrell & Family Pty Ltd (2009) 103 SASR 408; Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246; Pople v Evans [1969] 2 Ch 255; Graziano v Graziano [2008] SASC 142; Abode Pty Ltd v Beverage Bottlers (SA) Ltd [2008] SADC 163; FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268; Magnus v National Bank of Scotland (1888) 57 LJ Ch 902; Hart v Hall and Pickles Ltd [1969] 1 QB 405; Rogers v Legal Services Commission of South Australia (1995) 64 SASR 572; Hughes v Gales (1995) 14 WAR 434; Duncan v Lowenthal [1969] VR 180; Police v Pakrou (2008) 103 SASR 124; Police v Sherlock (2009) 103 SASR 147; Krakauer v Katz [1954] 1 WLR 278; Williams v FS Evans & Sons (1988) 52 SASR 237; Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274; Lenijimar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388; Roebuck v Mungovin [1994] 2 AC 224; Tyler v Custom Credit Corp Limited [2000] QCA 178; Jackamarra v Krakouer (1998) 195 CLR 516; Candler v SA Institute of Technology (1973) 6 SASR 162; Gill v Eatts [1999] NSWSC 1056; Shtun v Zalejska [1996] 1 WLR 1270; Niemann v Electronic Industries Ltd [1978] VR 431; Barclays Bank v Tom [1923] 1 KB 221; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Australia & New Zealand Banking Group Ltd v Turnbull & Partners Ltd (1991) 33 FCR 265, considered.

BEVERAGE BOTTLERS (SA) LTD (IN LIQUIDATION) & ANOR v ABODE ENTERPRISES PTY LTD
[2009] SASC 272
Full Court: Vanstone, Layton and Kourakis JJ

VANSTONE J: That the interlocutory application leading to this appeal is finely balanced is demonstrated by the diversion of judicial opinion as to its merits, both in this Court and in the Court below. Having identified error in the approach of the judge under appeal, the issue is to be decided afresh. That involves a qualitative assessment of a number of factors, some of which favour striking out the action and others pointing the other way.
Two factors are ultimately decisive in my mind. The defendants are responsible, at least in part, for some of the (potential) prejudice which they say will accrue to them if the action proceeds. And, they could have made attempts in the “lost” five years to bring the matter to a head. There is a suggestion that their decision to take no action might have been a tactical one. In addition, as Kourakis J observes, to a large extent the claims turn on questions of construction of documents, in respect of which the elapse of time is not of significance.
For these reasons I would join with Kourakis J in dismissing the appeal.
LAYTON J: The subject of this appeal concerns the exercise of discretion by a Judge of the District Court who in turn had set aside an order by a master of the District Court. The Master determined to dismiss an action for want of prosecution, and the Judge granted an appeal against that order. Although the decision and reasons of the Judge are the prime focus of this appeal, the decision and reasons of the Master are also relevant to a consideration of the issues. The reasons given for the respective decisions of the Master and the Judge are each very comprehensive, containing detailed analyses of the facts and the law.
The appellants (“the defendants”) allege eight grounds of appeal and the respondent (“the plaintiff”) filed a notice of contention adding two further bases upon which were alleged to support the Judge as being correct in his conclusion.
The topics raised on the appeal and the notice of cross-contention were first, whether the Judge was in error in finding that it was necessary for the defendants to establish that the plaintiff’s delay was the sole or predominant cause of prejudice to the defendants, and, that the defendants were as much responsible as the plaintiff for any prejudice alleged to have been sustained by them.[1] This in turn raised four further issues namely:
·whether it is necessary for the defendants to show that they had suffered prejudice before the action was dismissed for want of prosecution;
·the relevance of any inactivity of the defendants during the period of the plaintiff’s alleged delay;
·the relevance, if any, of the alleged failure of the defendants to investigate allegations contained in the plaintiff’s Further More Explicit Statement of Claim (“Further Statement of Claim”) filed on 22 August 2000. In particular, the failure to take statements from Mr Sutton before his death in June 2004, and Mr La Vincente, the former solicitor for the second defendant and;
·the relevance, if any, of the alleged failure of the second defendant to institute third party proceedings against Jardine Australia Restaurants (Vic) Pty Ltd (“Jardine”) of which Mr Sutton was the principal Australian representative and a director.
[1] Reasons for decision of Judge [48]-[50], [69], [79], [80], [83], [84].
The second topic concerned the likelihood of the defendants suffering prejudice in the conduct of their defence generally and particularly, given that the file of the former solicitors acting on behalf of the second defendant was destroyed in November 2006, and given the effect on Mr La Vincente’s recollection of the matter. The defendants also submitted that the death of Mr Sutton caused considerable prejudice to them because the ability to institute third party proceedings against Jardine was significantly disadvantaged.
The third issue was a discussion of the test or principles that ought to be applied in the circumstances of a statute time-barred action being the subject of an application for dismissal for want of prosecution.
The Approach by the Judge and the Master
For reasons which I amplify hereafter, I consider that the Judge as well as the Master both erred in their respective approaches to the exercise of discretion in deciding the defendants’ application. As a matter of convenience, I refer first to the errors of the Master. In my view, the Master made a wrong assumption (an assumption brought about by the parties themselves) that the time limit for the cause of action was six years when it was in fact 15 years. He was therefore wrong in assuming that any dismissal of the action would result in the action being statute barred. The Master also erred in finding that the second defendant would not be entitled to institute third party proceedings against Jardine unless and until the plaintiff was successful in entering judgment against the second defendant in the proceedings.
Turning now to the Judge’s reasons. His Honour correctly identified the two errors of the Master, but also named additional errors with which I do not agree. The identification of those two errors alone rendered it appropriate for the Judge to reconsider the exercise of discretion afresh.
In my view the first error of the Judge concerns the approach taken to the topic of prejudice. The following passages are relevant to this consideration:
The cases require that the prejudice must be attributable to the delay. This is evident from the acceptance by Bray CJ in Ulowski and by Lander J in BQ & HM Doe Pty Ltd of the principles enunciated in Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2QB 229, a case which was approved by the House of Lords in Birkett v James: cf. the comments of Lander J in BQ & HM Doe Pty Ltd at [86].[2]
… in my view, that, even if there is material prejudice not based on surmise, the appellant is neither solely nor predominantly responsible for that prejudice. It was clearly open to the respondents to investigate the allegations introduced by amendment into the Statement of Claim in July 2000 at any time thereafter. The fact that there was a delay between November 2001 and November 2006 in obtaining reports as to quantum does not alter the existence of that opportunity.[3]
… It is clear from Ulowski and BQ & HM Doe Pty Ltd that the delay must be the cause of the prejudice. There may be more than one cause but, if so, delay must be the predominant cause of the alleged prejudice. In this case, delay was by no means either the sole or predominant cause of the alleged prejudice. To hold otherwise would be to ignore a significant failure by the respondents to prosecute their defence while at the same time seeking to penalise the appellant by dismissing its action.[4]
…To the extent that (impliedly or otherwise) the Master found to the contrary, I consider that he was in error. He should have found, first, that the respondents were at least equally responsible for the prejudice following Mr La Vincente’s memory impairment and that that was insufficient to justify dismissal of the proceedings.[5]
… In broad terms, I have concluded that the Master erred in finding that the appellant, by reason of delay, was responsible for the two types of prejudice which the respondents said arose as a result of that delay. I have found that in each instance the conduct of the respondent was as much to blame for the existence of any prejudice that may have arisen. This means that one of the essential requirements for the exercise of the jurisdiction to dismiss for want of prosecution has not been made out. It follows that the Master erred in exercising the jurisdiction at all.[6]
… The conclusions to which I have come, namely that the respondents are as much responsible as the appellant for any prejudice that arose either from the impairment of Mr La Vincente’s memory or the death of Mr Sutton, preclude such a finding. Therefore, even if it is assumed that there is a possibility of actual prejudice arising from Mr La Vincente’s impaired memory or the death of Mr Sutton, the discretion to dismiss is not enlivened because the appellant’s delays were not the sole or predominant cause of such prejudice.[7]
[2] Reasons for decision [43].
[3] Reasons for decision [49].
[4] Reasons for decision [50].
[5] Reasons for decision [51].
[6] Reasons for decision [83].
[7] Reasons for decision [84].
In my view these passages contain a number of errors. First, his Honour formulated and applied a test, namely, whether the plaintiffs were “solely or predominantly responsible” for alleged prejudice to the defendants, which is not propounded in the cases to which the Judge refers.
Second, the Judge at [83] and [84] concluded that “the discretion to dismiss is not enlivened because the appellant’s delays were not the sole or predominant cause of such prejudice” (emphasis added). Therefore, the Judge did not consider it necessary to canvass the paramount factors referred to in Ulowski v Miller[8] (“Ulowski”) discussed hereafter.
[8] [1968] SASR 277.
A third concern is that the Judge when assessing the prejudice to the defendants only considered prejudice caused by the delay of five years.[9] The Chief Justice in Ulowski expresses the relevant prejudice to be that which is likely to be suffered by a defendant “if the action is allowed to proceed”; the prejudice to be considered is not solely limited to the effect of delay per se. The Judge appeared to pose and apply the wrong principle in relation to prejudice. This error is discussed further hereafter.
[9] Being the period from 7 December 2001 when the plaintiff’s solicitor wrote to the defendants’ solicitor and 11 November 2006, being the next communication by the plaintiff’s solicitor with the defendants’ solicitor.
In my view, the fourth error was the approach taken by the Judge with regard to the defendants’ conduct, which he characterised as including a failure to investigate allegations raised by the amendment to pleadings in July 2000. This factor led the Judge to conclude that the defendants were equally responsible for the prejudice caused by the plaintiff’s delay. This attribution of blame was not only incorrectly directed to the issue of alleged prejudice, but the Judge also inappropriately placed positive responsibility on the defendants to have progressed their defences. This argument is further developed hereafter.
The fifth and final error was the rejection by the Judge of the allegations of prejudice asserted by the defendants.
As a consequence of these five errors I consider it appropriate to reconsider the exercise of the discretion of the Judge. Before doing so I will explain the reasoning behind my findings as to these errors.
Errors of the Judge
Prejudice to the Defendants
The cases to which the Judge refers in support of the test which he applied, namely whether the plaintiff was “solely or predominantly responsible” for the alleged prejudice, are those adverted to in [43], [49] and [50] of his reasons. A reading of these cases does not support his Honour’s proposition.
Commencing first with the case of Ulowski.[10] This case established the principles which have been followed in South Australia for more than 40 years. The case has also found favour in other State courts.[11] The reasoning of Bray CJ, with whom the other two members of the Full Court concurred, has for many years provided a way forward for dealing with the confusing approaches and differing terminology used by judges in Australia and in England, in relation to the exercise of discretion when delay for want of prosecution is asserted. The strength of the reasoning of the Chief Justice lies in the manner in which he rejected the approach of certain English authorities which recommended the taking of a prescriptive approach to the exercise of discretion, but at the same time retained certain aspects of the relevance of some of the features referred to in those authorities.
[10] Ulowski v Miller [1968] SASR 277.
[11] Stollznow v Calvert [1980] 2 NSWLR 749; Lenandowski v Lovell (1994) 11 WAR 124 at 133; Berrigan v McIver [1974] VR 811 at 815.
In essence, Bray CJ promoted a true exercise of judicial discretion, unfettered by any absolute or inflexible rules.[12] Quite simply, the Chief Justice espoused “five paramount matters” to be considered by the Court. Bray CJ indicated:
[The] five paramount matters to be considered are the length of the delay, the explanation for the delay, the hardship to the plaintiff if the action is dismissed and the cause of action left statute-barred, the prejudice to the defendant if the action is allowed to proceed notwithstanding the delay, and the conduct of the defendant in the litigation.[13]
[12] Ulowski v Miller [1968] SASR 277, 280.
[13] Ulowski v Miller [1968] SASR 277, 280.
The Chief Justice again emphasised:
Speaking for myself I would deprecate any attempt to lay down any rules which would bind Courts dealing with future applications of this kind to hold that any particular onus was laid on either party to prove any particular matter, or that once a particular matter had been proved by either party a certain result would automatically follow unless the other party proved something else, …I think the discretion should be exercised as seems best in the interests of justice after considering in relation to the particular case the five matters mentioned above.[14]
[14] Ulowski v Miller [1968] SASR 277, 281.

Further at 282, the Chief Justice specifically addressed the factors of explanation and prejudice by saying:
…I cannot accept either that if the plaintiff fails to show a reasonable explanation for a long delay the action will be dismissed irrespective of other considerations, or that unless the defendant can show that a fair trial would not be possible in the circumstances the action must proceed irrespective of other considerations. Both explanation for delay and possible prejudice to a fair trial are highly important but I am not prepared to say that either of them amounts to a sine qua non for the making of any particular order.
Those passages contain no reference to the need for the plaintiff to have been “solely or predominantly” the cause of either delay or prejudice, let alone this being a pre-requisite to the discretion being enlivened. On the contrary, the decision in Ulowski specifically indicated that it was not necessary for there to be prejudice suffered by the defendant before an order for dismissal of the action could be made.
Another important feature is that the prejudice to the defendant spoken of in Ulowski is not prejudice caused to the defendant as a consequence of the delay, but any prejudice to the defendant “if the action is allowed to proceed notwithstanding delay”.[15] The focus is not on alleged prejudice to the defendants caused by delay alone, instead, the reference to prejudice embraces the whole of the consequence of delay in relation to the overall circumstances of the action.
[15] Ulowski v Miller [1968] SASR 277, 280.
Similarly, in relation to a consideration of potential hardship to the plaintiff, that is expressed to be hardship caused to the plaintiff if the action is dismissed. The distinction between the two concepts is not simply a semantic point. It is important to the way in which discretion is exercised in deciding whether an order should be made. Ultimately, as Bray CJ indicated, “the discretion should be exercised as seems best in the interests of justice”.[16]
[16] Ulowski v Miller [1968] SASR 277, 281.
Turning now to the case of BQ and HM Doe Pty Ltd v National Australia Bank (“BQ and HM Doe”).[17] The passage referred to by the Judge, being paragraph [86], does not support such a test as applied. That passage of the reasoning of Lander J refers to the reasons for decision of Diplock LJ as encapsulated in Birkett v James[18] which presumptively indicated that the discretion to dismiss should only be exercised where the court was satisfied that the default of the plaintiff had been “intentional and contumelious” but, in addition, inter alia, that the delay is “likely to cause or have caused serious prejudice to the defendants”.[19] However, Lander J later in his reasoning specifically indicated that Ulowski did not follow the English decision in Allen v Sir Arthur McAlpine & Sons Ltd.[20] At [89] Lander J stated:
…It was not a condition that the jurisdiction could only be exercised if the default had been intentional and contumelious or that there had been an inordinate and inexcusable delay on the part of the plaintiff or the plaintiff’s lawyers and that such delay would give rise to a substantial risk that it was not possible to have a fair trial of the issues in the action.
Lander J continued that whilst they were matters to which a court should have regard, it should not be such as to limit the exercise of the jurisdiction to those circumstances.
[17] [1999] SASC 124.
[18] [1978] AC 297.
[19] Birkett v James [1978] AC 297, 318.
[20] [1968] 2 QB 229.
Again, none of these paragraphs support the test applied by the Judge. On the contrary, Lander J at [87] and [103] of his reasons adverts to prejudice to the defendant and does so in the context of prejudice suffered as a result of the action not being dismissed or, as he alternatively put it, “the injustice in defending the case”. Finally at [103] of that decision, Lander J specifically states: [21]
However prejudice to the defendant is not a pre-requisite to the exercise of the jurisdiction to dismiss for want or prosecution. It is an important factor but not the only factor.
[21] BQ and HM Doe [1999] SASC 124 at [103].
The approach of the Judge indicates that his decision to allow the appeal was because he was not satisfied that the prejudice to the defendants had been solely or predominately caused by the plaintiff’s delay. The Judge in his reasoning did not embrace the overall effect of prejudice to the defendants if the action was not struck out.
In my view therefore the Judge was in error in his approach to the topic of prejudice to the defendants when reaching his decision.
Inactivity of the Defendants
The Judge at [47]-[52] referred to it being “incumbent” upon the solicitors for the defendants to have investigated the assertions made in the Further Statement of Claim filed on 22 August 2000. Reference was made to the failure to obtain a statement from Mr La Vincente, the second defendant’s former solicitor. Later at [66]-[81] the Judge referred to the potential third party proceedings and the relevance of the death of Mr Sutton. The Judge at [69] and [80] concluded that while the second defendant could have awaited the outcome of the proceedings on foot before seeking third party indemnity from Jardine, the decision not to take third party proceedings and the failure “to attempt to obtain Mr Sutton’s statement”, were as much a cause of prejudice to the defendants as the plaintiff’s delay.
In my view, the Judge erred in the attribution given to the defendants’ inaction, and in his conclusion that by their own inactivity the defendants were as much to blame as the plaintiff for the prejudice allegedly suffered.
I first turn to the case law relating to the relevance of a defendant’s inaction.
Bray CJ in Ulowski stated:[22]
I accept that it is not necessary for the defendant or the Court to give the plaintiff any locus poenitentiae, by warning him that an application will be made that the action be dismissed, or an order made dismissing it, unless some further step is taken within a specified time (Allen v Sir Alfred McAlpine & Sons Ltd[23] per Lord Denning MR (p 547), per Diplock LJ (at pp 555-556)).
I accept, too, that it is no answer to the defendant’s application to say that he could have applied earlier to have the action struck out (Fitzpatrick v Batger & Co Ltd,[24] per Salmon LJ at p 659 and Allen v Sir Alfred McAlpine & Sons Ltd,[25] per Diplock LJ at pp 554-555). I do not regard the defendant’s inaction, however, as entirely irrelevant to the question of whether he will in fact suffer any prejudice if the action is allowed to continue.[26]
[Emphasis added.]
[22] Ulowski v Miller [1968] SASR 277, 282.
[23] [1968] 1 All ER 543.
[24] [1967] 2 All ER 657.
[25] [1968] 1 All ER 543.
[26] Ulowski v Miller [1968] SASR 277, 282.
These passages indicate that a defendant’s inaction will be potentially relevant when considering a defendant’s assertion that prejudice will be suffered by him or her if the action is allowed to continue. There is nothing in the above reasons of the Chief Justice which suggests that a defendant is required to take positive steps towards defending him or herself, or, for example, to meet some arbitrary standard of a “model litigant”. However, if a defendant has taken steps to prosecute the defence, then this will obviously assist when attempting to demonstrate the extent of the plaintiff’s failure to prosecute the action, and the prejudice the defendant will suffer if the action was allowed to proceed.
Counsel for the plaintiff submitted that the Judge was correct in finding that the defendants had failed to take appropriate action to prosecute their defence after the July 2000 pleadings amendment. It was further submitted that the Judge’s attribution of blame as to the cause of the alleged prejudice was correct.
In support of his submission counsel for the plaintiff relied on Stollznow v Calvert (“Stollznow”).[27] In Stollznow, the President of the Court of Appeal, with whom the other Judges concurred, stipulated a general statement which touched on the topic of inaction by the defendant. In my view this general statement should be looked at carefully in view of its context. The argument before the Court of Appeal was primarily addressing the contention of the plaintiff that the delay was entirely attributable to her solicitors, and she therefore was blameless. It was in the context of this scenario that the President made the following observations:
Similarly, despite some judicial observations concerning the right of defendants to let sleeping dogs lie and that defendants should not be penalized for earlier inaction when subsequently an application is made to dismiss proceedings for want of prosecution, no rigid rule can be laid down on the matter. By way of example, which I give because of its relevance in the present case, in some cases inaction by a defendant in the face of impending prejudice to him if delay continues, may render a later claim of actual prejudice less creditworthy, and the prejudice, if established, a less weighty factor. A defendant in proceedings which have been instituted, particularly as in the present case, proceedings brought to issue on the pleading with the supply of all required and requested particulars, is in a quite different position from that of the nominal defendant who may be unaware of the relevant occurrence. A defendant of the former type is in a position to prepare his case for trial, including interview of witnesses and inquiry as to their availability to be called to give evidence. A plaintiff may have legitimate reasons for some delay, as where he is about to undergo an operation to regard preparation for, and bringing the proceeding to trial, as a one sided affair resting entirely on the plaintiff, who has the carriage of the action. I cannot accept, for example, that defendant, who has written complaining of the delay and warning that particular prejudice will occur to him if delay continues, is not, on a later application to dismiss the proceedings, in a position superior to that of a defendant who has lain silent, and later claims for the first time that prejudice has occurred by reason of the delay. Whatever may have been past views of the adversary system in regarding skill in exploiting the rules in adversary duel as some kind of virtue, current ideas of justice, at least in this country, are directed to the substance of things. The exercise of the undoubted right of a defendant to do nothing runs the risk of being classified in the circumstances of some cases as being in the category of the ‘ambush’ approach to litigation.[28]
[27] [1980] 2 NSWLR 749.
[28] Stollznow v Calver [1980] 2 NSWLR 749 at 753.
In making these observations the President was at pains to point out that “no rigid rule could be laid down”. Thereafter, the President gave an example, which when carefully read, indicates no more than that in a situation where a defendant has taken active steps to complain of the delay or to give warning of an impending application for dismissal, that defendant would be in a better position than a defendant who instead had lain silent “in the face of impending prejudice to him if delay continues”. The reference to defendant inaction being potentially classified as “ambush” litigation is at the extreme end of defendant conduct.
I do not consider that Stollznow, in setting out a general statement, suggests that it is “incumbent” upon a defendant to take affirmative steps to progress a matter. Nor does it provide any authority for the proposition that a failure to take such steps prevents a defendant from relying on prejudice as one of the factors to be considered in the overall exercise of discretion to dismiss an action.
To the extent that observations made by Lander J in the case of BQ and HM Doe[29] may suggest a different approach by reason of case flow management principles I note the following. Lander J was concerned with the increased importance of case flow management principles since Ulowski had been decided. His Honour importantly said: [30]
There must come a time when the party has so conducted the litigation that it would be appropriate to shut that party out of that party’s litigation even if the point is arguable. Justice delayed can be justice denied. Both the plaintiff and the defendant are entitled to justice.[31]
…
If the plaintiff has conducted his or her case so that the defendant has suffered prejudice or will suffer injustice in defending the case then the defendant is entitled to justice, and justice can only be achieved by shutting the plaintiff out of his or her case.
However prejudice to the defendant is not a pre-requisite to the exercise of the jurisdiction to dismiss for want of prosecution. It is an important factor but not the only factor. … If the plaintiff's inaction has caused prejudice to other litigants then that also is a factor to which regard must be had in considering whether the order should be made. It is not only the parties before the Court who are entitled to justice. There will be circumstances when the plaintiff's inaction requires that in the interests of the administration of justice the action be dismissed. [Reference omitted]
[29] [1999] SASC 124 at [103].
[30] [1999] SASC 124 at [103].
[31] [1999] SASC 124 at [103].
Lander J therefore considered that case flow management principles impose a greater imperative on a plaintiff to pursue litigation in a timely manner. Further, it was not a matter of considering only the effect of delay and prejudice to the defendant in the particular litigation if the action was not dismissed, but also the overall administration of justice and the prejudice to other litigants. This factor is further considered later in these reasons at [97] – [99].
I further note that the 1987 Rules, which apply in this case, including r 2.02, are generalised statements which affect all parties to proceedings. Those Rules enjoin all parties including defendants to assist with the resolution of litigation and to avoid delay. However, in circumstances in which there has been a long and inexcusable period of inaction by the plaintiffs and where the defendants have not acquiesced to, induced or waived this inaction,[32] I do not regard that these general provisions can be converted into a positive requirement for a defendant to take affirmative action to progress a matter, or risk losing their ability to successfully put forward a prejudice submission. A defendant’s inaction is, however, relevant when considering a submission of prejudice if it can be found that the defendant contributed to the claimed prejudice by failure to take reasonable and appropriate steps. At the same time the defendant’s inaction should be viewed with the understanding that the primary obligation to bring an action to trial in a timely manner lies with the plaintiff. Both of these errors provide a basis for reconsidering the exercise of discretion which I discuss hereafter.
[32] Queensland Trustees Limited v Drysedale Henay & Co [1992] 2 Qd R 625.
When discussing the re-exercising of the discretion I will address the three remaining errors of the Judge.
Re-exercise of Discretion
Length of Delay and Explanation for Delay
The following two factors were not the subject of any real dispute between the parties. It was found by both the Master and the Judge that there was a period of five years between 7 December 2001 and 11 December 2006 when there was no communication whatsoever between the plaintiff and the defendants’ solicitors. The last communication was sent by the plaintiff’s solicitors on 7 December 2001 which, inter alia, indicated that the plaintiff would be bringing the matter back to Court for the filing of defences and referral to mediation in the new year. This action was never taken. Both the Master and the Judge correctly characterised that delay by the plaintiff as inordinate and inexcusable.[33] The explanations offered by the plaintiff did not excuse the delay. I also note at this point that the time interval between the plaintiff taking steps in the litigation were between 12 October 2000 when the trial date was vacated and 16 March 2006 when a Notice for Further Directions was filed by the plaintiff’s solicitors, was almost five and a half years.
[33] Judge’s Reasons for decision [41] and [42].
There was no allegation and no evidence which suggested that the defendants contributed in any way to that delay, either by acquiescence or encouragement, or that they in any way waived the requirement for the plaintiff to take appropriate action. If it was the plaintiff’s intention to pursue mediation, an appropriate application could have been brought with directions obtained. If the plaintiff has changed its mind as to the appropriateness of the dispute for a mediation, this also could have been communicated to the defendants.
Prejudice to the Defendants
As indicated earlier in my reasons, Bray CJ’s judgment in Ulowski places the focus of a discussion about prejudice squarely on whether there is a risk or possibility that a defendant will suffer prejudice if an action is allowed to continue.[34] For reasons given earlier, a consideration of prejudice is not limited to the consequences of delay, but should also include the overall context of the action and its prosecution, and the likely consequences should the action continue.
[34] Candler v Council of the South Australian Institute of Technology (1973) 6 SASR 162 at 184.
The reasons for decision of Kourakis J provide a sound framework for describing the nature of the action and the process of litigation. However I wish to highlight the following aspects as being particularly relevant to the issue of prejudice to the defendants if the action is not dismissed.
The Deed of Guarantee and Indemnity (“the Guarantee”), being the central subject of the litigation is dated 9 February 1988 (21 years ago). The then lessees defaulted on their payments in April 1996, and abandoned the property in April 1997. Eighteen months later, the plaintiff issued proceedings on 23 September 1998 against the defendants seeking the claim under the Guarantee. Between September 1998 and February 1999 pleadings were filed by the parties, including Amended Defences by the defendants.
Between 8 April 1999 and 8 June 1999 the defendants pursued financial information from the plaintiff for the purposes of considering whether to apply for security for costs.
On 16 June 1999, a Case Evaluation Conference was held at which the defendants’ solicitors advised of their intention to apply for an order that there be a trial on a separate issue of construction of the Guarantee. The construction of the Guarantee was the primary issue on liability. The defendants contended that following the plaintiff entering into a transfer of leasehold interests to new parties on 10 April 1991, and that having regard to the terms and conditions of the Guarantee, the defendants were thereby released and discharged from any liability under the Guarantee. In June 1999 the defendants’ solicitor inspected the Thomson files and arranged for relevant documents to be copied in light of the litigation issues as they stood.
Between June and November 1999 the defendants attempted to obtain the plaintiff’s consent to the application for a separate hearing, which was not forthcoming. On 19 November 1999, the defendants formally applied to the Court for the separate hearing on the construction issue and were successful in their application despite the continued opposition by the plaintiff.
On 29 March 2000 the plaintiff’s solicitor advised the defendants’ solicitor by facsimile that the plaintiff intended to amend the Statement of Claim to plead a new cause of action. Namely, that at about the time of the lease assignments, in April and August 1991 the defendants gave fresh undertakings to guarantee the lease following the assignments, which the plaintiff had relied upon when transferring the leases.

The defendants’ solicitor responded on 30 March 2000 by return facsimile, and indicated that the first defendant had no involvement in any matters to do with the Guarantee or the Lease after December 1990 when it sold out of the business. Further, it was asserted that the second defendant did not have any contact with the plaintiff at the times alleged and that the plaintiff’s allegations of oral undertakings could not be sustained.
On 4 April 2000 the separate trial of the construction issues was listed to commence on 12 July 2000. One month later, on 3 May 2000, the plaintiff filed an application seeking leave to amend its Statement of Claim, and also requesting that the trial be delayed. By letter dated 8 May 2000 the defendants’ solicitor complained about the lateness of the plaintiff’s application to amend. Ultimately, the plaintiff’s application to vacate the trial date set for 12 July 2000 was granted. The plaintiff’s application to amend its Statement of Claim was adjourned for argument to 25 July 2000.
Between 25 May 2000 and 28 June 2000, the defendants’ solicitor provided the plaintiff’s solicitor with further discovery evidencing the sale of the first defendant’s interest in the business in order to support the assertion that it was discharged from any obligation under the Guarantee.
On 23 June 2000 the defendants filed an application seeking orders that the separate trial on construction issues be again listed for trial. Meanwhile on 17 May 2000 and 12 July 2000 the defendants’ solicitor reiterated the nature of their defence, and in a letter of 12 July 2000, put the plaintiff’s solicitor on notice that the defendants would seek indemnity costs in the event that the proposed amendments to the Statement of Claim were still pursued, particularly with regard to the allegations sought to be made against the first defendant. The defendants’ solicitors also noted that indemnity costs would be sought in the event that “there was any further attempt on the part of [the plaintiff] to delay the separate trial of the construction issues”.
On 25 July 2000 orders were made by consent granting the plaintiff leave to amend its Statement of Claim. There was also an order listing the construction issues for a three day trial commencing on 12 October 2000.
On 12 October 2000, being the first day for hearing of the trial, the plaintiff submitted that by reason of the recent amendments to the Statement of Claim, it was inappropriate to determine the construction issues as a separate issue. The District Court Judge vacated the trial date but ordered that the plaintiff pay the defendants’ costs thrown away in any event on an indemnity basis.
On 21 August 2001 the plaintiff’s solicitor sent a letter to the defendants’ solicitors advising:[35]
At present, the matter needs to be advanced by the filing of your clients’ respective amended defences. We acknowledge that you have been awaiting a proposal from our client to see if efforts can be directed at a resolution of the dispute, given the significant steps involved in the next stage of the proceedings.
With this in mind, our client has engaged its accountants to quantify its losses flowing from the default of lease terms, and so as to acquaint you with precise figures. We have also conferred with Senior Counsel concerning the plaintiff’s prospects of success in the action if it proceeds to judgment.
…
Please convey this offer to the first and second defendant respectively and inform us of your instructions. Meanwhile, we do not press you to file amended defences now, unless you wish to. We are prepared to enable an adequate period of time for settlement to be explored at this stage, and will give fair notice if and when our instructions are to press the next procedural steps.
[35] Affidavit of Natasha Jane Haslam filed 18 May 2007, Exhibit NJH22. [CB Vol 1, 261-2]
The defendants’ response to this letter was sent on 18 October 2001, in the following terms:[36]
[36] Affidavit of Natasha Jane Haslam filed 18 May 2007, Exhibit NJH23. [CB Vol 1, 264-5]
We refer to your letter dated 21 August 2001 and telephone conversation with the writer on 18 October 2001.
As you are aware, we are of the view that, based on the construction arguments, our clients have no liability to your client in these proceedings.
We agree that there is a considerable gulf between the parties as to settlement and as to perceptions of the case. The schedules you have provided do not assist this situation.
In our view, you have not provided enough information for our clients to sufficiently understand the way in which your client has quantified its loss. …
In order to properly understand your client’s claim we would require an appropriate and detailed expert report together with copies of all relevant documents.
Further, your client does not appear to have taken into account the significant problems it faces in terms of its failure to mitigate its loss. As discussed, an inspection of the files of Jones Lang Wootton early in these proceedings revealed that, since August 1997, there had been five separate offers to lease the property at rentals ranging from $115,000 per annum to $148,000 per annum, plus one offer to purchase the property for $1.1 million. It is unclear to us as to why those offers were not accepted.
In any event, a proper consideration of the issues as to quantum will require a significant amount of further work. Our clients simply cannot make any kind of accurate assessment from the information you have provided.
As you are aware, we are of the view that our clients have strong prospects of success based on the construction of the documents. It was in order to avoid all parties unnecessarily incurring significant legal costs related to a consideration of issues of quantum that our clients applied for a preliminary hearing of the construction issues.
… The allegations against the first defendant cannot possibly be sustained. As we have previously stated, in the event that these allegations are to be pursued against the first defendant (including your client requiring the first defendant to file a defence to those allegations) the first defendant will seek indemnity costs against your client.
Although our clients are willing to explore any resolution of this litigation that may be acceptable to both parties, unless your client is prepared to provide significantly more information in a form which will allow our clients to accurately assess your client’s claim, and take a realistic approach to the significant risk which, in our view, it faces in terms of liability and failure to mitigate, there is little point in continuing discussions along these lines any further.
A reading of this letter provided little realistic hope to the plaintiff as to the utility of mediation at that time, particularly in relation to the defence of the first defendant. The defendants made it clear that they regarded themselves as having strong defences on liability based on the construction of the Guarantee. They also had significant issues as to quantum and failure to mitigate loss.
On 7 December 2001 the plaintiff’s solicitor sent a letter to the defendants’ solicitor expressed in the following terms:[37]
We note the issues raised by you as to quantum and would propose to deal with them now, including the getting of an expert report and furnishing of documentation to demonstrate the claim, if your clients are amenable to setting this matter for mediation. Are they?
Would you kindly take this letter as notice under Rule 6.04 that we shall in the new year bring the matter back to Court for directions as to the filing of defences (by both defendants) and for referral to mediation (in the event that one or both of your clients are amenable).
[37] Affidavit of Natasha Jane Haslam filed 18 May 2007, Exhibit NJH23. [CB Vol 1, 267]
Rule 6.04 provided:
Where twelve months or more have elapsed since the last step in the proceeding, the party who desires to proceed shall, unless the Court otherwise orders, give to every other party not less than one months’ notice of his intention to proceed. A summons on which no order has been made shall not be deemed a proceeding within this subrule.
This letter was therefore the notice which was required to be given by the plaintiff who already had exceeded the 12 month period since action had been taken. The plaintiff required leave before it could further pursue its action.
Of further particular note is the expressed intention to bring the matter back to Court for directions as to the filing of defences and referral to mediation in the new year.
After the letter of 7 December 2001 no further action was taken, either in the new year or the following five years.
In June 2004 Bob Sutton died.
The first communication between the parties after December 2001 was a letter from the plaintiff’s solicitors enclosing the report of an accountant expert, Mr Crase, sent on 14 November 2006. On 30 November 2006, unbeknown to the defendants, the file of the defendants’ previous solicitors was destroyed in accordance with usual business practice. The defendants were not advised of this destruction until 13 August 2007.
On 16 March 2007 the plaintiff took its first formal step to progress the action since its application to vacate the trial on 12 October 2000. The defendants’ application to dismiss the plaintiff’s action for want of prosecution was filed on 18 May 2007.
In the months that followed, the defendants’ solicitor attempted to access the Thomson files, and was notified of their destruction. The solicitor also contacted Mr La Vincente, but was told that his memory of the relevant events was not assisted by any of the documentation previously forwarded to him by the defendants’ solicitor.
In considering the consequences of this five and a half year delay in the context of the overall litigation, the following points should be noted:
·The Deed of Guarantee and Indemnity upon which the principal claim depends was executed some 21 years ago. The proceedings were not instituted until over a year after the leased premises had been abandoned, and two years after the lease default.
·The defendants repeatedly took action to expedite the matter on the construction point. It was not until March 2000, after the defendants had strongly asserted their defence to the action as pleaded, that any indication was given by the plaintiff of a new cause of action. This Amended Statement of Claim was not filed until 22 August 2000.
·If the Statement of Claim had appropriately been amended in about February 1999 after the Amended Defences of the defendants had been filed, to reflect its new cause of action, then the following events were likely to have occurred:
-the defendants’ solicitor when inspecting the Thomson files in June 1999 would have been alerted to documents relevant to the new allegations of an oral agreement in 1991;
-the allegations made in the Amended Statement of Claim in respect of Mr La Vincente could have also been investigated at an earlier point of time when his memory would have been fresher and with the benefit of an in-tact solicitor’s file;
-A statement could have been taken from Mr Sutton (who was still alive at this time), in respect of a potential third party action which only became relevant after the Amended Statement of Claim was filed.
·The defendants had already incurred significant indemnity costs which were required to be paid by the plaintiff pursuant to Court order.
·The plaintiff’s mediation and its failure to pursue its cause of action suggests that it did not perceive itself to be in a strong position in the action.
·Finally, a further matter to note is that if the action is not struck out, it is not as though this matter can immediately be set down for trial. There is still the requirement for the filing of defences, there is an outstanding application for discovery which has not been dealt with, there is a matter of any further reply that the plaintiff may wish to file in answer to the defendants’ defences. The defendants may also wish to retain their own expert. At best it could be some months before this action can be further progressed to a state where it is ready to be set down for hearing.
Memory of Mr La Vincente and Destruction of the Thomson files
By reason of the allegations contained in paragraphs 9A-9H of the Amended Statement of Claim, Mr La Vincente’s evidence will clearly be relevant in relation to the allegations contained therein. In paragraph 9A the agreement upon which the plaintiff relies is alleged to be partly oral and partly implied. To the extent that it was oral, the oral terms (which are not specified) are said to have arisen from a conversation involving Mr La Vincente (in or about March 1991).[38]
[38] Amended Statement of Claim, paragraph 9A.2.
The facts relied upon in relation to the “implied terms” allegation include an assertion that the solicitor acting for the defendants instigated the transaction, and that the defendants “by their solicitor and agent” expressly represented the matters set forth in paragraph 9A.4.1 and that the defendants’ solicitor (Mr La Vincente) “said nothing to suggest that the defendants would not continue to be liable” under the Guarantee and “impliedly represented that the defendants would continue to be liable to the plaintiff” under the Guarantee. Further, in paragraph 9F of the Amended Statement of Claim, it is alleged that the plaintiff assumed “to the knowledge of the defendants” that the Guarantee would continue to be effective, despite a transfer of an interest in the Lease. The contents of a telephone call are relied upon, specifically the absence of a reference to the Guarantee or to a release in the conversation. Paragraph 9G also alleges a partly oral and partly implied agreement deriving from correspondence from Thomsons and, in part, from the alleged instigation of the transaction from the defendants’ solicitors.[39] There is also a pleading of reliance by the plaintiff on alleged representations, in support of an alleged estoppel.[40]
[39] Amended Statement of Claim, paragraph 9G.2, 9G.4.1 and 9G.5.
[40] Amended Statement of Claim, paragraph 9H.
It can be seen, therefore, that Mr La Vincente’s evidence would not only be relevant to the plaintiff in establishing its cause of action, but also is likely to be relevant to the defendants to negate reliance of the plaintiff on alleged representations or alternatively negate knowledge of defendants of any detriment suffered by the plaintiff.
The plaintiff is still able to call Mr Giglio about documentation, correspondence and conversations with Mr La Vincente in support of its case. No impediment has been proffered by the plaintiff as to his evidence. However, the quality of that evidence is likely to be impeded by the passage of time. The defendants are under an even greater handicap. Mr La Vincente appears to have little independent memory. Moreover, he is unable to refresh his memory from a complete solicitor’s file, but only the documentation specifically extracted by the defendants’ solicitors when the allegation of an oral agreement had not been articulated. This clearly gives rise in my view to a risk or possibility of prejudice to the defendants if the defendants are required to proceed to trial. I consider that this prejudice arises having regard to the inordinate and excusable delay in the context of the plaintiff’s overall failure to progress to a trial of this action. In my view, it was not prejudice caused or contributed to in any material way by the defendants such that it would lessen the weight which should, in my view, be attached to the risk or prejudice to the defendants.
The decisions made by the defendants and their legal representatives during the five years of non-contact from the plaintiff must be considered from a reasonable, realistic and commercially pragmatic point of view. The defendants had already taken steps designed to minimise costs. They were owed a substantial sum for indemnity costs. The decision not to take a detailed statement from Mr La Vincente as at December 2001 was not unreasonable given the amount of costs already incurred in the defence of the action. The plaintiff had indicated that it intended to take steps in the action by seeking an order for mediation. As time marched on, the impression which a reasonable litigant in the defendants’ circumstances could reasonably be left with was that the plaintiff was no longer progressing the matter with any vigour, and therefore it would be financially prudent to await any further activity, if any, by the plaintiffs, before embarking upon further costly legal work.
In my view, the defendants have acted reasonably, or to put it in the negative, have not been shown to act so unreasonably as to have brought about the prejudice which they allege to suffer as a result of the Thomson file destruction and the loss of memory of Mr La Vincente. Once it became clear to the defendants that the plaintiff intended to resurrect the matter, the defendants’ solicitors attended to the two issues by attempting to take a statement from Mr La Vincente, and by requesting access (once again) to the Thomson file. Neither step was taken by the plaintiff who, after all, was also seeking to rely on Mr La Vincente. For those reasons, I consider that there was a risk or possibility of prejudice to the defendants, which was attributable to the conduct of the plaintiff, (the delay), in the context of the litigation generally, to which I have referred.
The Death of Sutton
I have had the opportunity of considering the reasons for decision of Kourakis J and respectfully adopt his conclusion in regard to any prejudice which may have been suffered by the second defendant as a consequence of the death of Mr Sutton as set out in paragraphs [198] – [202] herein. I agree for the reasons that he has set forth that the prejudice is speculative and should have little weight in respect to the exercise of the discretion as to whether to dismiss the action.
Presumptive Prejudice
A final consideration in relation to the risk or potential prejudice to the defendants if the action is not struck out is what has been regarded by the Court as a prejudice in a defendant having “an action over his head indefinitely, not knowing when it is going to trial”.[41] As Lord Denning stated in that case:[42]
There comes a time when [the defendant] is entitled to have some piece of mind and to regard the incident as closed.
[41] Biss v LambethSouthward and Lewisham Area Health Authority [1978] 1 WLR 328, 389.
[42] Biss v LambethSouthward and Lewisham Area Health Authority [1978] 1 WLR 328, 389.
These observations by Lord Denning led to Murray J in Lewandowski v Lovell[43] to conclude that prejudice could extend to the impact which delay would have on a defendant’s “business or personal affairs”.
[43] (1994) 11 WAR 124, 126.
In 1996 the High Court in Brisbane South Regional Health Authority v Taylor[44] considered the effect of delay in circumstances involving an application for extension of time to institute proceedings after the expiration of a statutory time limit. Some pertinent observations were made by McHugh J about the general effect of delay and lapse of time in litigation. McHugh J said:[45]
Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by he parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo, ‘what has been forgotten can rarely be shown’. So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now ‘knowing’ that it ever existed. Similarly, it must often happen that time will diminish the significant of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings, but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.
[Citation omitted.]
[44] (1996) 186 CLR 541.
[45] (1996) 186 CLR 541, 551.

These matters are also appropriate to be taken into account when considering prejudice to defendants, particularly in a situation of inordinate and inexcusable delay. The question of weight given to such a presumptive prejudice is another matter and it would depend on all of the circumstances of the case.
Summary on prejudice to the defendants
I am satisfied that there is a risk of prejudice if the action is not dismissed. This prejudice is specifically in relation to the oral agreement alleged in the Amended Statement of Claim and, in particular, in relation to the loss of memory of Mr La Vincente and the destruction of the Thomson file. In addition, I take into account the length of the delay, and the inexcusable nature of the delay.
It is true that should this matter continue to trial, much of the argument may depend upon existing documentation. However, in my view evidence will likely be required from witnesses as to the chronology of events and the documentation in issue. It is highly unusual that a case of this nature will be entirely dependant on documentation and, in particular, matters related to mitigation of loss and the quantum of damage. This will, in all likelihood, require evidence of an historical nature dependent on memory and circumstances. I do not consider that the conduct of the defendants in any way reduces the weight of this prejudice to the defendants.
Hardship to the Plaintiff if the Action is Dismissed
The effect on the plaintiff if the action is dismissed is that it would still be within time to re-commence an action in the manner originally posed, namely suing on the Guarantee, as that time limit is 15 years[46] and the cause of action arose in about 1996-97. However, the subsequent amendments made to paragraph 9A to allege an agreement in 1991 is not an action on speciality as provided for in s 34 of the Limitation of Actions Act 1936, but instead is an action in contract with a six year time limit. If therefore the overall action including this further cause of action is dismissed, the latter would be time-barred and sought to be re-introduced.
[46] Section 34 of the Limitation of Actions Act 1936.
An issue which arises is what are the principles which should guide the Court in exercising its discretion as to whether to dismiss an action when the plaintiff may potentially simply re-commence the action.
A starting point for considering this is the case of Ulowski[47] in which Chief Justice Bray said:[48]
… the answer to the question whether the period of delay exceeds the appropriate limitation period ‘will rarely be decisive or even significant’. It would seem to me to be a curious result if a delay of over three years after the commencement of the action were fatal to an action for damage for personal injuries, but not to an action for damages for breach of contract in precisely similar circumstances. Moreover it seems to me, with all respect to the contrary views of Salmon L.J. in Allen v. Sir Alfred McAlpine & Sons Ltd., that it would be wrong to look only at the delay after the issue of the writ and not to the interval between the cause of action and the issue of the writ, otherwise a plaintiff who issued his writ promptly and then delayed would be in a worse position than a plaintiff who delayed his proceeding until the end of the limitation period.
[Citation omitted.]
[47] Ulowski v Miller [1968] SASR 277.
[48] Ulowski v Miller [1968] SASR 277, 281.
In so concluding, the Chief Justice followed the approach indicated in a number of Victorian decisions and a Queensland decision that whether or not a cause of action has expired “may be a relevant consideration, it cannot be a governing one”.
This is quite different from the approach indicated in the English decision of Birkett v James[49] which in turn had followed the approach of Lord Diplock in Allen v Sir Alfred McAlpine & Sons Ltd.[50]In those cases it was expressed that it was only in wholly “exceptional cases” that an action would be struck out when it was within the relevant time limit. This approach, as indicated in the English cases, has not found favour in South Australia.[51] The High Court in Batistatos v Road and Traffic Authority of New South Wales & Anor[52] also considered the relevance of an unexpired period of limitation. This was in the course of considering an application to dismiss an action for delay which was alleged to have amounted to an abuse of process. Their Honours specifically rejected the approach taken by the English authorities in respect of time limitations and, in particular, the case of Birkett v James.[53] Expressly, the majority of the High Court concluded:[54]
There is no substance in the negative implication which the plaintiff seeks to draw from an unexpired statutory limitation period. As Bryson JA pointed out, periods of statutory limitation operate indifferently to the existence of what might be classified as delay on the part of a plaintiff. Section 63 of the Limitation of Actions Act provides for the extinction of causes of action ‘to recover any debt damages or other money’. But s 68A requires a party claiming the benefit of extinction to plead that extinguishment. To say that a limitation period has not run is to say that the potential defendant, if now sued, has no accrued defence to the action.
[49] [1978] AC 297.
[50] [1968] 2 QB 229.
[51] BQ & HM Doe Pty Ltd v National Australia Bank [1999] SASC 124, [89].
[52] (2006) 226 CLR 256.
[53] [1978] AC 297 [60]-[62].
[54] Batistatos v Road and Traffic Authority of New South Wales & Anor (2006) 226 CLR 256, [62].
As is apparent from the High Court decision, the issue is whether the burdensome effect of not dismissing a trial is such that a fair trial is not possible.
Although this was directed at abuse of process, in my view there is no reason why the legal reasoning on this point should differ if the claim is one for dismissal for want of prosecution.
The Full Court of Western Australia in Lewandowski & Ors v Lovell[55] had cause to consider an application to dismiss an action for want of prosecution. A number of issues arose, one of which was whether the Master was correct in concluding that it was no answer to the defendant’s application to strike out for want of prosecution, the fact that the time limit for taking “similar or related causes of action” had not expired.[56]
[55] (1994) 11 WAR 124.
[56] Lewandowski & Ors vLovell (1994) 11 WAR 124, 144.
Murray J, with whom the other members of the Court concurred, stated:[57]
… The Master thought that in a case such as this, that possibility was one of a number of factors to be considered in the exercise of his discretion. I rather think that is correct. Certainly it seems to me that the appellants cannot suggest that in the particular circumstances, these are cases where the exercise of the discretion was to be approached upon the basis that the relevant limitation period has not expired, a factor which has traditionally been regarded as being one of great weight in the exercise of the discretion.
[57] Lewandowski & Ors vLovell (1994) 11 WAR 124, 145.
In my view, this suggests that the fact that an action is still within time is not of itself a bar to dismissal, even if the delay is such that it did not amount to an abuse of process. Utility in itself is not an overriding argument. In particular, the test of “exceptional case” has not been adopted in South Australia. Instead, it is to be regarded as one of the factors to which attention should be given in deciding whether or not in all of the circumstances there should be a dismissal of the action and, in particular, having regard to overall “interests of justice”.
In this case the plaintiff may well be able to institute fresh proceedings in regard to the first cause of action. It would be prevented from pleading the elements in s 9A as it stands.
A dismissal of the action will not preclude the plaintiff from instituting new proceedings in the terms of the original pleadings. A dismissal will, however, preclude the plaintiff from instituting proceedings in the terms of paragraph 9A of the Amended Statement of Claim as the time limit for this type of action is six years and has therefore expired.
Conclusion
I return to the comments of Bray CJ in Ulowski, and refer again to the five paramount matters to be taken into account when exercising discretion upon an application to dismiss for want of prosecution. The discretion should always be exercised in the interests of justice.
The interests of justice in situations of delay and prejudice have recently been highlighted by the High Court in Aon Risk Services Australia Limited v Australian National University.[58] The High Court in Aon was considering the appropriateness of the granting of a late application for leave to amend. The Judges used the opportunity to make observations generally about the approach to be taken by courts, having regard to case management principles. The majority strongly expressed the view that the conduct of litigation was not simply a matter for the parties and that a court should have regard to the wider effects of the delay upon the Court and the prejudice to other litigants. It was not simply a costs matter.[59]
[58] (2009) 83 ALJR 951.
[59] Aon Risk Services Australia Limited v Australian National University (2009) 83 ALJR 951 at 974-76, [93]-[103]; 977, [111]. See similar views expressed by French CJ at 960-2, [25]-[30] and Heydon J at 980-1, [133]-[134].
In expressing those views, the majority also rejected earlier reasoning of the Court in the case of Queensland v J L Holdings Pty Ltd,[60] to the extent that the Court in that case took a different approach.
[60] (1997) 189 CLR 146.
Specifically relevant to the circumstances in this case was the acknowledgment given by the majority to the general prejudice suffered not only by individual litigants but also by corporations and witnesses as a consequence of delay. As the majority indicated:[61]
The views expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd, that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants, are also now generally accepted.
…
In Ketteman Lord Griffiths recognised, as did the plurality in J L Holdings, that personal litigants are likely to feel the strain more than business corporations or commercial persons. So much may be accepted. But it should not be thought that corporations are not subject to pressures imposed by litigation. A corporation in the position of a defendant may be required to carry a contingent liability in its books of account for some years, with consequent effects upon its ability to plan financially, depending upon the magnitude of the claim. Its resources may be diverted to deal with the litigation. And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, have to bear the strain of impending litigation and the disappointment when it is not brought to an end. The stated object in the Court Procedures Rules, of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings.
[References omitted.]
[61] Aon Risk Services Australia Limited v Australian National University (2009) 83 ALJR 951 at 975-6, [100]-[101].
In this case, the delay of the plaintiff was inordinate and inexcusable. The plaintiff spent five and a half years advancing its case, without once contacting the defendants to advise as to the state of its progress. Prior to that gross delay, the plaintiff had been tardy at every point from the institution of proceedings; the failure to progress the action; the delayed filing of pleadings and the vacation of two trial dates. The action is no further advanced than it was when the plaintiff instituted proceedings almost 11 years ago in September 1998. The prejudice to the defendants if the action is allowed to continue is significant. The defendants are hampered in their ability to fairly prosecute their defence and are disadvantaged in their ability to question and test key areas of defence and loss which have been put in issue by the plaintiff. As to whether the conduct of the defendants contributed meaningfully to this circumstance, I am not persuaded that the defendants, or their legal representatives, ought to have acted any differently in the conduct of their defences. They did not contribute to the creation of this risk of prejudice to themselves. They should not have been required to incur yet further costs in prodding the plaintiff into action.
If the action is dismissed, the plaintiff is not precluded from instituting a new action in the terms of the original pleadings on the Guarantee. The plaintiff will, however, be precluded from pursuing the contractual cause of action included in the Further Statement of Claim. This hardship is a relevant factor to consider, however in light of the other circumstances in this case I do not consider that this hardship is such that it outweighs the other factors of the action when, in my view, all other factors weigh in favour of dismissal.
When the facts of this appeal are properly considered in light of these five paramount matters and the interests of justice, I consider that discretion should be exercised in favour of dismissing the action for want of prosecution.
The expression of Lander J is apposite here:[62]
... there must come a time when a party has so conducted the litigation that it would be appropriate to shut that party out of that party’s litigation even if the point is arguable. Justice delayed can be justice denied.
[62] BQ and HM Doe [1999] SASC 124 at [103].
I would therefore allow the appeal, set aside the order made by the Judge and in lieu thereof order that the plaintiff’s action be dismissed.
KOURAKIS J: The appellants are defendants in an action in the District Court which was commenced on 23 September 1998. I shall refer to them as the defendants. The respondent to this appeal is the plaintiff in those proceedings and I shall refer to it as such. The plaintiff is the registered proprietor of certain land at Enfield. It leased that land, which I shall refer to as the Enfield site, to entities which built and operated a restaurant on it. The restaurant traded under the name Sizzler. The lease was assigned to successive purchasers of the business. The restaurant business eventually failed and the restaurant on the Enfield site was closed down. Rent due and payable under the lease remains unpaid. The plaintiff brought this action to recover its loss from the defendants in their capacity as guarantors of the lease. A Master of the District Court struck out the action for want of prosecution. That order was set aside by a Judge of the District Court. The issue on this appeal is whether the Master’s order should be reinstated.
It is necessary to explain briefly the relationships between the lessors of the Enfield site and the guarantors. In June 1988 the plaintiff leased the Enfield site to Spignel Pty Ltd (“Spignel”) and Sizzler Restaurants Australia Ltd (“Sizzler Ltd”). Those two corporations operated a chain of Sizzler restaurants (“the Sizzler business”) on various sites throughout Australia. The corporate defendant, Beverage Bottlers (SA) Ltd (in liquidation) (“Beverage”), which was at the time known as Diverse Products Ltd (“Diverse”), held a controlling interest in Spignel. Mr Lapointe held a controlling interest in Sizzler. Lapointe and Diverse entered into a deed of guarantee (“Deed”) by which they guaranteed the performance of the lease by Spignel and Sizzler.
In December 1990 Diverse sold its interest in Spignel to Lapointe, giving Lapointe the effective control of the Sizzler business. In April 1991 Lapointe sold a half interest in the Sizzler business, which he held through Sizzler Ltd, to Jardine Australia Restaurants (Vic) Pty Ltd (“Jardine (Vic)”). Jardine (Vic) was one of a group of companies owned and controlled by Jardine Matheson Holdings Pty Ltd. As a result, the lease over the plaintiff’s land was assigned from Sizzler Ltd and Spignel to Jardine (Vic) and Spignel.
In August 1991 Spignel, which was the wholly owned subsidiary of Sizzler Ltd, sold its interest in the Sizzler business to Sizzler Ltd, which was, in turn, controlled by Lapointe. The reason for that transaction is not clear, but it left Sizzler Ltd and Jardine (Vic), as the owners of the Sizzler business. As a result of that transaction, Spignel, with the consent of the plaintiff, transferred its interest in the lease of the Enfield site to Sizzler Ltd.
Sizzler Ltd later changed its name to SRAL Pty Ltd. In March 1994, Lapointe retired from the Sizzler business altogether by selling his shares in SRAL Pty Ltd to Jardine (Vic) (the share sale agreement).
In 1996 Jardine (Vic) and SRAL Pty Ltd defaulted on the lease. In April 1997 the Enfield site was abandoned. The plaintiff brought proceedings against the defendants on the Deed. The defendants contested the claim on two grounds. First, they contended that they had guaranteed only the performance of Spignel and Sizzler Ltd under the original lease and not the assignees. Secondly, they contended that the assignments to which I have referred, and the transfer in the shareholding of the lessees, materially altered the risk that they had guaranteed, and for that reason, they too, were not bound by the Deed.
The hearings before the Master and the Judge proceeded on what is now accepted to be an erroneous assumption that the statutory limitation period applicable to that claim was six years and that it had therefore expired. It is accepted on this appeal that the applicable limitation period is 15 years.[63]
[63] Limitations of Actions Act 1936 s 34.
The plaintiff later amended its claim to plead that at the time of the assignment of the lease to Jardine (Vic) in April 1991, and again when Spignel transferred its interest in the lease to Sizzler Ltd, the defendants agreed to extend their guarantee to cover defaults by the assignees and transferee respectively. The agreements were alleged to be partly oral and partly in writing. The applicable limitation period for the amended claim in contract is six years.[64]
[64] Limitations of Actions Act 1936 s 35.
I shall refer to the course of the proceedings in the District Court in a little more detail below, but for now it can be noted that no steps were taken in those proceedings between 22 October 2000 and 16 March 2007, when the plaintiff brought an application for directions on the further hearing of the matter. On 18 May 2007 the defendants brought an application seeking an order that the plaintiff’s action be dismissed for want of prosecution. The defendants’ application was heard by Master Norman, who dismissed the plaintiff’s action on that ground on 15 February 2008.
The plaintiff’s appeal against that decision, which was an appeal by way of re-hearing pursuant to s 43 of the District Court Act 1991 and r 17 of the District Court Civil Rules 2006, was heard by Judge Burley sitting as a Judge of the District Court. In the hearing before Judge Burley the plaintiff accepted that to succeed on appeal it was required to show that the discretion of the Master had miscarried by reason of any one or more of the errors described in House v The King.[65] Judge Burley found such an error and allowed the appeal. He dismissed the defendants’ application. The defendants’ appeal to this Court came before a single Judge of the Court, who then referred the appeal to the Full Court.
[65] (1936) 55 CLR 499 at 504-05.
An interlocutory decision
The decision of the Master was an interlocutory decision. It did not purport to resolve the underlying controversy between the parties about the effect of the Deed or the liability of the defendants under the alleged agreements. Rather, the Master’s decision denied the plaintiff access to the procedures of the District Court for the resolution of that controversy.[66] I accept that the practical consequences of Master Norman’s order may well be that the reinstitution of the proceedings would be an abuse of practice. Further proceedings may even be statute barred. If either consequence were to follow, the practical result would be that the plaintiff could not obtain an order redressing the wrong it claims it has suffered. Nonetheless, it is the legal effect of the order that is determinative.[67] The legal effect of Master Norman’s order was merely procedural and adjectival.[68] Even if the limitation period had expired, a further action could be brought if the plaintiff were to discover a material fact within s 48 of the Limitation of Actions Act 1936 and the circumstances were such as to allow a favourable exercise of the discretion under that provision. If the plaintiff was allowed to prosecute a fresh action, the decision of the Master would in no sense be a judgment on the underlying controversy such as to support a plea of res judicata or issue estoppel in those proceedings.[69]
[66] Hardel Pty Ltd v Burrell & Family Pty Ltd (2009) 103 SASR 408 at 421-2, [34]-[36].
[67] Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246 at 248.
[68] Hardel Pty Ltd v Burrell & Family Pty Ltd (2009) 103 SASR 408 at 422, [36].
[69] Pople v Evans [1969] 2 Ch 255.

Even though Lapointe’s claim to an indemnity appears, on his own account, foredoomed to fail he contends that it has been further prejudiced by the death of Mr Sutton in June 2004.
If Lapointe’s evidence in support of his claim against companies in the Jardine Group were to go no further than the general conversations with Mr Sutton to which he has deposed, then it is difficult to see that Mr Sutton’s death has caused Lapointe any difficulty whatsoever. In any action between Lapointe and companies in the Jardine group, the defendant companies would hardly find it necessary to dispute idle conversation of that nature. The conversations could not possibly be found to have had any legal significance or effect. In any event, if the defendant companies were to deny the fact of those conversations, Lapointe’s case is hardly likely to be prejudiced by the absence of Mr Sutton. There is nothing inherently improbable about conversations of that nature that would require some form of corroboration from Mr Sutton. Moreover, if Mr Sutton were available to be called, and assuming he did not deny the conversations, it is difficult to imagine that his evidence would serve any purpose other than to emphasise the general nature of the conversation and the implausibility of the proposition that he had bound the Jardine group to some form of unilateral ambulatory indemnity. The obstacle in the way of Lapointe’s proposed claim against other companies is not proof of the conversations with Mr Sutton which he alleges, but the ineluctable conclusion that they are devoid of any legal significance.
There is a further matter which shows that Mr Sutton’s death, if anything, advantaged, rather than prejudiced, Lapointe’s proposed third party claim. In April 1999, Lapointe’s solicitors wrote to solicitors acting for the Jardine group of companies threatening proceeding against those companies and certain of their executives, including Mr Sutton. Given the threatened action against Sutton himself, it is fanciful to think that Mr Sutton might have cooperated with Lapointe in his claim against companies in the Jardine group or that Lapointe might have subpoenaed Mr Sutton to give evidence in the case not knowing what he might say. It is also likely to have been a breach of Mr Sutton’s fiduciary duty as a director of one or more of the Jardine group of companies to cooperate with Lapointe. The fact that Lapointe and Mr Sutton enjoyed a personal friendship gives little reason, in the face of Mr Sutton’s duties, to suppose that Mr Sutton would have been able to offer Lapointe any real assistance.
The speculative nature of the claimed prejudice caused by Mr Sutton’s death is emphasised by the absence of any affidavit from Lapointe’s agents who negotiated the March 2004 share sale agreement. The express reference in the letter sent on the same day as that transaction to an indemnity by Jardine (Vic) alone suggests that it was not contemplated by the parties that an indemnity was to be given by any other member or members of the Jardine group of companies.
For the above reasons, I am satisfied that there can be a fair hearing of any third party claim Lapointe may bring against companies in the Jardine group. The defendant Lapointe has not established that the plaintiff’s proceedings are an abuse of process on that ground. I accept that, on the ground that there has been a failure to prosecute, the speculative nature of the prejudice does not mean that it can be ignored. In one sense, evidence of prejudice is necessarily speculative or at least hypothetical. In assessing the prejudicial effect of delay the Court is necessarily engaged in the exercise of comparing the position of the defendant after the delay that has in fact happened with the hypothetical position of the defendants had the proceedings been brought or prosecuted more quickly. Accordingly, I accept for the reasons given in [184] above that it is sufficient that a real risk of prejudice is shown. It follows, however, that the more speculative or fanciful the risk of prejudice is, the less weight it can be accorded in the exercise of the Court’s discretion. In my view, the decision of the Full Court of Victoria in Niemann v Electronic Industries Ltd[137] does not state any different principle. It illustrates merely how assessments of the potential for prejudice arising out of delay may differ.
[137] [1978] VR 431.
The prejudice Lapointe claims to have suffered is speculative in the extreme. If Mr Sutton’s death had affected Lapointe’s potential claim against the Jardine group of companies at all, it is more likely to have advantaged than to have prejudiced it.
Significance of Lapointe’s failure to call proceedings on
There is a further circumstance which much reduces the weight that can be given to the possibility, such as it is, that Lapointe’s potential third party claim has been prejudiced. Lapointe, as will be seen, made a deliberate choice to desist from investigating or bringing his claim against other companies in the Jardine group, or any of their directors, in the period that Abode’s actions lapsed into inactivity.
The solicitors acting for the Jardine group were warned of Lapointe’s claim for indemnity as early as April 1999. The claim was again raised by Lapointe’s solicitor in a facsimile to the solicitors acting for the Jardine group on 20 December 2002, at a time when the action brought by the plaintiff had been inactive for about two years. Jardine’s solicitors responded on 7 January 2003 by saying:
If it be the case that our client has a potential liability to your client on the basis set out above, the loss against which your client claims to be indemnified would, it appears, be constituted by an adverse judgment in the Abode litigation. Clearly, such loss has not yet crystalised. Accordingly as we understand your client’s position, rather than being at risk of becoming time-barred, your client’s cause of action has not yet arisen. If you are able to identify some other relevant time period, please advise us. Otherwise, the hasty issue of proceedings in order to defend our perceived limitation period would, in our view, be misconceived.
What exactly are the communications that are said to entitle your client to look to Jardine Pacific to make good the obligations of JAR (V)?
Lapointe’s solicitor replied:
My client accepts the position asserted by you that his cause of action has not arisen, and will not arise, until a loss is crystallised by an adverse judgment against him in the Abode litigation. Accordingly he will not presently commence proceedings against Jardine Pacific.
Communications are matters of evidence.
It can be observed that the correspondence suggested no more than that it was unnecessary for Lapointe to bring any proceeding before a finding of liability was made against him in the proceedings brought by Abode. There is no suggestion in the correspondence that the solicitors were of the opinion that the proceedings could not be brought before that time. Plainly they could be. The correspondence shows that a deliberate choice was made and agreed upon by both sides, that Lapointe’s claims against members of the Jardine group would not be prosecuted unless and until any loss suffered by Lapointe “crystalised”.
It was the very point of the procedural reforms implemented by the making of rules allowing the joinder of third party claims that a defendant could bring its still inchoate claim against a third party in the very proceedings that might lead to a judgment against it. The point of the reforms was that a third party who had indemnified a defendant, or who was otherwise responsible for all or some part of the defendant’s liability to the plaintiff, would be bound by the judgment given in the proceedings brought by the plaintiff. In that way, the controversy between the defendant and the third party would be decided as soon as possible after the adjudication between the plaintiff and the defendant.[138]
[138] Barclays Bank v Tom [1923] 1 KB 221 at 223-4 per Scrutton LJ.
In Port of Melbourne Authority v Anshun Pty Ltd,[139] Gibbs CJ and Mason and Aicken JJ said:
Although the right to an indemnity arises on payment of the liability to which it relates and not before, this is not a bar to the litigation as between a defendant and a third party, or as between defendants, of a claim based on an indemnity in respect of a liability in negligence asserted by the plaintiff in his action. It is accepted that under so-called ‘third party procedures” of the kind provided for by O 16A, the claim to an indemnity may be litigated in the plaintiff's action, notwithstanding that the payment creating the right to indemnity is not made until after the amount of the plaintiff's verdict is ascertained in that action. It has been repeatedly affirmed that one of the peculiarities of third party procedure is that it enables litigation on the indemnity to take place before there is any liability. … Consequently, the fact that liability under the indemnity had not arisen was no bar to the Authority asserting its claim to an indemnity in Soterales’ action by means of a notice served on Anshun under O 16A, r 16.[140]
[139] (1981) 147 CLR 589.
[140] Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 595-6. See also Australia & New Zealand Banking Group Ltd v Turnbull & Partners Ltd (1991) 33 FCR 265 at 273-5.
Quite apart from the third party procedure, it is undoubtedly the case that Lapointe was entitled to seek a declaration that he was liable to be indemnified by a company or companies within the Jardine group at any time before the disposition of the proceedings brought by Abode. A determination of the proceeding would not in any way have been advisory or theoretical. Lapointe was at jeopardy in the proceedings brought by Abode, and there was a real controversy between Lapointe and companies in the Jardine group about the extent of the indemnity that he claimed. Equally, companies in the Jardine group were entitled, at any time, having been notified of the potential claim, to seek a declaration that they had not indemnified Lapointe.
Given the careful and correct terms in which the correspondence to which I have referred was framed, it is difficult to understand how Lapointe came to submit before Master Norman that he was not entitled to bring any proceeding before a judgment was recorded against him in the action brought by Abode. However, that submission was made and accepted by Master Norman. Master Norman was in error in so doing.
The defendants contend on appeal that even if it be accepted that they were entitled to bring proceedings earlier, it was reasonable for them to forego doing so given that the plaintiff’s delay had caused much uncertainty over whether it intended to prosecute its claim against Lapointe. It can be accepted that it is reasonable for a litigant to avoid legal costs that might ultimately prove to be unnecessary. However, both Lapointe and the corporate entitles within the Jardine group made a strategic decision not to litigate their dispute diligently, in the hope that Abode’s action would not proceed to judgment. Implicit in the decision to delay adjudication of their controversy is an acceptance that the delay might prejudice their respective cases. They took that risk in the hope that Abode’s action would not be prosecuted to a successful conclusion. It must be remembered that if Lapointe had issued third party proceedings and the action brought by the plaintiff was eventually abandoned or dismissed, the costs order made against the plaintiff would include the costs of the third party proceedings. The defendants have never claimed that their failure to prosecute the third party proceedings was motivated by any concern about Abode’s impecuniosity.
Lapointe would suffer prejudice if a prospective corporate defendant within the Jardine group were likely to obtain an order staying Lapointe’s claim to indemnification by reason of the delay and the death of Mr Sutton. In one sense, the death of Mr Sutton, as I have said, advantages Lapointe’s claim to an indemnity because Jardine has been left without a witness in its camp to counter the evidence of Mr Sutton. However, the Jardine companies could hardly contend that an action brought against them by Lapointe was an abuse of process by reason of delay when they had invited the very delay on which they relied.
For those reasons, although I accept that Lapointe’s decision does not absolve Abode of its responsibility for the consequences of its delay, it is nonetheless a relevant circumstance on the application to dismiss Abode’s action for want of prosecution.
Significance of 15 year Limitation Period
Because the claim on the Deed is not an abuse of process it follows that if the plaintiff’s claim is dismissed for want of prosecution the plaintiff can issue fresh proceedings. True it is that the order for dismissal will include an order that the plaintiff pay the defendants’ costs. However, in the fresh proceedings the parties will again be required to draw, settle and file pleadings and take the interlocutory steps necessary to bring the matter to trial. It is not suggested that the plaintiff does not have the capacity and intention to prosecute its action. It is difficult to see that any useful purpose would be served by dismissal, other than punishment of the plaintiff for its dilatory conduct and perhaps deterrence of similar conduct on the part of others.[141] I have some sympathy for the view that those considerations should be relevant to the exercise of the discretion to dismiss for want of prosecution, but the authorities suggest otherwise.[142] In particular, to dismiss for want of prosecution in these circumstances appears to me to be inconsistent with the decision of the Federal Court in Lenijamar.[143]
[141] See the discussion of Lord Diplock in Birkett v James [1978] AC 297 at 319-20.
[142] Stollznow v Calvert [1980] 2 NSWLR 749; Micallef v ICI Australia Operators Pty Ltd [2001] NSWCA 274 at [49] per Heydon JA.
[143] Lenijamar Pty Ltd v ACG (Advances) Ltd (1990) 27 FCR 388 at 396.
Defence of the amended claim
The next item of specific prejudice identified by the defendants relates to Abode’s amended claim, which alleges independent agreements to indemnify Abode were made at the time of the transactions which the defendants contend relieved them of any obligation under the Deed. The prejudice identified is the failing memory of the solicitor Mr LaVincente and the destruction of the files of the solicitors Thomson Simmons. Thomson Simmons acted for Lapointe and Jardine (Vic) when the lease of the Enfield site was assigned to Jardine (Vic) in April 1991, and when Lapointe reorganised the interest he held in the Sizzler business and transferred Spignel’s interest in the lease of the Enfield site to Sizzler Ltd in August 1991.
Mr LaVincente of Thomson Simmons wrote to Mr Giglio on 3 April 1991, seeking Abode’s consent to an assignment of the lease to give effect to the agreement reached between Sizzler Ltd, Spignel and Jardine (Vic). Mr LaVincente enclosed a letter to Mr Giglio from Mr Schlee, the Chief Executive Officer of Jardine (Vic). In that letter Mr Schlee wrote:
Both Jardine’s and Bob Lapointe believe this is a highly beneficial marriage, resulting in increased financial strength and additional management experience. JAR (V) is a 100 per cent subsidiary of the international trading company, Jardine Matheson Holdings Ltd, based in Hong Kong.
Jardine Matheson has extensive interests in real estate … retailing … insurance broking, hotels … and merchant banking … in addition Jardine’s is the largest international Pizza Hut franchisee with over 200 restaurants around the Pacific and holder of the Sizzler franchise for Victoria/Tasmania and Western Canada.
Abode executed a Deed of Assignment dated 10 April 1991. By that Deed of Assignment Sizzler Ltd assigned its estate and interest in the lease to Jardine (Vic).
In its statement of claim, the plaintiff alleges that at the time of the correspondence to which I have referred, there was a telephone conversation between Mr Giglio and Mr LaVincente. Abode alleges that the correspondence and the telephone communication together constituted an agreement whereby the defendants agreed to continue to indemnify the plaintiff against all losses and damages which the plaintiff may suffer as a result of the breach or default by Spignel and Jardine (Vic) to whom the lease was assigned. Abode has never particularised the content of that conversation.
It can be observed that Diverse had sold the interest in the Sizzler business by transferring its shares in Spignell to Lapointe in December 1990, several months before the conversations and correspondence on which Abode relies. It is difficult to see how the lapse of time in any way affects the very obvious defence Diverse has to this part of Abode’s claim.
In August 1991, Lapointe restructured the way he controlled his interest in the Sizzler business by causing Spignel to transfer its interest in that business to Sizzler Ltd, which later became SRAL Pty Ltd. Spignel’s interest in the lease of the Enfield land was also to be transferred to Sizzler Ltd. On 14 August 1991, Thomson Simmons wrote to Abode asking it to consent to that transfer. At that time it was envisaged that the assignment of Spignel’s interest would be effected on 31 August 1991, but be effective from 11 August 1991. By written agreement dated 28 August 1991, Spignel agreed to sell to Sizzler Ltd its interest in the business in South Australia and New South Wales. By letter dated 4 September 1991, Thomson Simmons sent the transfer of the lease over the Enfield premises to another Jardine company, Jardine Restaurant Management S.A., for execution. It appears that that document was executed in March 1992.
Abode alleges that an agreement to indemnify it for any default by Sizzler Ltd and Jardine (Vic) following that transfer of the lease was made by the exchange of correspondence whereby Mr Giglio was asked to consent to the transfer, and by conversations between him and a Mr Annells on behalf of Spignel and Jardine (Vic). The conversations are not particularised. Lapointe does not claim to have suffered any specific prejudice with respect to proof of the alleged conversation with Mr Annells. Again, it is difficult to see how the delay in any way affects Diverse, which by this time had been out of the Sizzler business for nearly a year.
In an affidavit received in the hearing before Master Norman, Mr LaVincente deposed that he had “no independent recollection at all of the events alleged in the Claim”. He deposed that certain documents that had been copied from the Thomson Simmons file and shown to him did “not assist my recollection of the events relevant to the allegations made in the Claim”.
The solicitor acting for the defendants deposed to inspecting the Thomson Simmons file in about June 1999. She inspected two files. One related to the Sizzler/Jardine (Vic) lease assignment in April 1999, and the other to the Spignel/Sizzler lease transfer in August 1991. The solicitor deposed to obtaining from those files copies of documents that she thought were of “some relevance to these proceedings”. It is to be observed that at the time that discovery was taken, the alternative claims based on conversations with Mr LaVincente and Mr Annells had not yet been made. The documents which were exhibited to the solicitor’s affidavit generally contain file notes or correspondence recording instructions as to how the several transactions were to be effected. They include the letters sent to Mr Giglio, asking him to give Abode’s consent to the assignment and transfer respectively, to which I have referred. Those letters are of no relevance to the claim based on the Deed itself but are relevant to the amended claim. There is no note amongst the exhibited documents of any telephone conversation between Mr LaVincente and Mr Giglio.

The Thomson Simmons file was destroyed on about 30 November 2006. The solicitor who had earlier conducted the search did not describe the criteria she used to select documents for copying. The solicitor did not say, for example, that she had, or had not, copied from the file all documents referring to or recording any contact with Mr Giglio concerning the assignment and transfer respectively. However, the fact that copies of correspondence between Mr Giglio and Thomson Simmons were made suggests that if there had been any note of a telephone conversation then that too would have been recovered. When the plaintiff sought third party discovery of the Thomson Simmons file on 6 July 2000, Thomson Playford, as the firm was then known, replied that Lapointe’s solicitors had inspected the documents and “made discovery of the relevant documents”.
The letter from Abode’s solicitors requesting discovery was provided by Thomson Playford to the solicitors for the defendants. The defendants’ solicitors also wrote to Abode’s solicitors on 12 April 2000 saying:
The documents to which you seek access have already been reviewed by us and where documents are relevant to any matter in issue in District Court Action No. 1341 of 1998 have been identified, these have been discovered in the usual fashion.
We accept that these documents, to the extent relevant, are in our client’s power pursuant to R 58.01 and therefore if your client thinks there is any inadequacy in our discovery it should bring an application directed to the second defendant.
By letter dated 27 April 2000, the defendants’ solicitors repeated the claim that the Thomson Simmons files were within their power and control and that they had made discovery of such documents in those files as were relevant to any matter in issue. The amendments to the pleading for which Master Kelly gave leave on 25 July 2000 were not in fact filed until 22 August 2000. An application for further and better discovery was brought on 18 July 2000. That application has never been determined.
Nonetheless, in my view it is likely, and I infer, that the defendants’ solicitor copied all documents referring to conversation with Mr Giglio when she inspected the file. If it were otherwise, I would have expected her to have expressly deposed to having retrieved only those documents relevant to that part of the plaintiff’s claim made on the Deed. If there were any notes referring to an indemnity, they would almost certainly have been copied.
The deposition of Mr LaVincente that he has no present recollection is very important. However, until particulars of the conversation are given by Mr Giglio it is difficult to give that consideration decisive importance. Unless and until Mr LaVincente is informed of those particulars, it can not be known whether he will be in a position to give useful evidence or not. It may be that he will be able to say that he would remember if he had said anything of the sort alleged in the particulars, or that it was his usual practice not to engage in conversations of the type alleged. Alternatively, although it is less likely, the particulars of the conversation may revive his recollection.
I am prepared to infer that the delay has caused the defendants some prejudice in defending the plaintiff’s alternative claims. However, I am far from satisfied that a fair trial of the action is not possible. The inherent improbability of Mr LaVincente purporting to bind Lapointe, and Diverse, for whom he did not even act, can be weighed by the trial Judge against any assertion made by Mr Giglio in a way which is not affected by the delay. Depending on precisely what Mr Giglio alleges Mr LaVincente may still be able to give evidence of reasons why he would not have purported to bind Lapointe and Diverse.
I would also discount the prejudice suffered by the defendants by reason of their own inaction. As I have said, I would infer that the defendants’ solicitors copied any note that recorded any contact with Mr Giglio from the Thomson Simmons file before it was destroyed. If they did not do so, even though they had notice of the plaintiff’s alternative claim, the defendants must bear some responsibility for failing to do so. I would take the same approach to their failure to proof Mr LaVincente soon after the alternative claims were made.
I have found it difficult to resolve the competing complaints of prejudice arising out of this part of the plaintiff’s claim. The period in which the claim was allowed to hibernate is ridiculously long. Ultimately I have not been persuaded that the demonstrated and latent prejudice it has caused the defendants is sufficient, having regard to the available means to ameliorate that prejudice, to forever close the doors of the courts to the plaintiff.
I acknowledge the public importance, extending beyond the interests of the parties, of the efficient and expeditious resolution of legal proceedings, which was recently, and emphatically, iterated by the High Court in Aon Risk Services Australia Limited v Australian National University.[144] However unlike applications for amendment and consequential adjournments, the delay in this case has not wasted court resources or delayed or inconvenienced other litigants. Nor do I think that refusing the defendant’s application to dismiss proceedings, which they have allowed to remain inactive, undermines public confidence in the same way that the indulgence criticised in Aon Risk Services would. The defendants in this case, as in cases like Aon Risk Services, will face a protracted period of uncertainty but it was always within their power to bring the proceedings to an earlier conclusion.
[144] (2009) 83 ALJR 951.
Conclusion
Judge Burley’s decision is affected by the errors of law to which I have referred in [173] and [186] above.
However, on a review of Master Norman’s decision I am satisfied that he has erred in law on the question of Lapointe’s entitlement to bring third party proceedings. I am also satisfied, for the reasons that I have given, that there can be a fair trial of the issues both on Abode’s action and on the foreshadowed third party proceedings. The action is therefore not an abuse of process. I am also satisfied that the balance of the considerations identified primarily in Ulowski and the other authorities to which I have referred favours allowing the action to proceed. The plaintiff has reinstated the proceedings and is both willing and able to proceed expeditiously. The largely speculative prejudice claimed by the defendant is not sufficient, as I have said, to make the further prosecution of the action an abuse of process. The defendants were at all times at liberty to call the proceedings on if they were truly embarrassed or inconvenienced by their continued existence.
Insofar as the action is based on the Deed, it is still within time. Little would be gained by putting the plaintiff to the expense of reinstituting the action, which, as I have found, is not an abuse of process. As to that part of the claim based on contract, it may be that the action against Diverse should be dismissed given the poor prospects of success, but the application was not pursued on that ground. As to that part of the action against Lapointe, the action cannot be said to be so devoid of merit as to warrant not allowing the plaintiff an opportunity to put it. For these reasons I would dismiss the appeal, notwithstanding the errors made by Judge Burley.