Broadlands Ltd formerly Broadlands Finance Ltd v General Development Corporation Pty Ltd
[1999] WASC 182
BROADLANDS LTD formerly BROADLANDS FINANCE LTD -v- GENERAL DEVELOPMENT CORPORATION PTY LTD & ANOR [1999] WASC 182
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASC 182 | |
| Case No: | CIV:2103/1989 | 24 AUGUST 1999 | |
| Coram: | MASTER SANDERSON | 24/09/99 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff's action for want of prosecution dismissed | ||
| PDF Version |
| Parties: | BROADLANDS LTD formerly BROADLANDS FINANCE LTD GENERAL DEVELOPMENT CORPORATION PTY LTD FRANCIS DONALD O'SULLIVAN |
Catchwords: | Practice and procedure Application to strike out for want of prosecution Turns on its own facts |
Legislation: | Limitation Act, s 38(1)(c)(v) and s 38(1)(e)(i) Rules of the Supreme Court |
Case References: | Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 Birkett v James [1978] AC 297 Dean & Westham Holdings Pty Lyd v Lloyd [1991] WAR 235 Lewandowski v Lovell (1994) 11 WAR 124 Monarch Petroleum NL v Sitco Australia Pty Ltd & Ors [1986] WAR 310 State of Queensland & Anor v JL Holdings Pty Ltd (1997) 189 CLR 146 Alginates (Australia) Pty Ltd v Thompson & Carroll Pty Ltd [1970] VR 570 Closer Settlement Board v Thomas [1982] Tas R 179 Department of Transport v Chris Smaller (Transport) Ltd [1989] AC 1197 Duncan v Lowenthal [1969] VR 180 Eagil Trust Co v Pigott Brown [1985] 3 All ER 119 Gleeson v Brock [1969] Qd R 361 Hughes v Gales (1995) 1 WAR 434 Saint Martins Centre Pty Ltd v Civil & Civic, unreported; SCt of WA (Master Ng); Library No 7458; 17 February 1992 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
GENERAL DEVELOPMENT CORPORATION PTY LTD
First Defendant
FRANCIS DONALD O'SULLIVAN
Second Defendant
Catchwords:
Practice and procedure - Application to strike out for want of prosecution - Turns on its own facts
Legislation:
Limitation Act, s 38(1)(c)(v) and s 38(1)(e)(i)
Rules of the Supreme Court
(Page 2)
Result:
Plaintiff's action for want of prosecution dismissed
Representation:
Counsel:
Plaintiff : Mr L W Roberts-Smith QC
First Defendant : Mr W S Martin QC
Second Defendant : Mr W S Martin QC
Solicitors:
Plaintiff : Chalmers & Partners
First Defendant : Murfett & Co
Second Defendant : Murfett & Co
Case(s) referred to in judgment(s):
Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229
Birkett v James [1978] AC 297
Dean & Westham Holdings Pty Lyd v Lloyd [1991] WAR 235
Lewandowski v Lovell (1994) 11 WAR 124
Monarch Petroleum NL v Sitco Australia Pty Ltd & Ors [1986] WAR 310
State of Queensland & Anor v JL Holdings Pty Ltd (1997) 189 CLR 146
Case(s) also cited:
Alginates (Australia) Pty Ltd v Thompson & Carroll Pty Ltd [1970] VR 570
Closer Settlement Board v Thomas [1982] Tas R 179
Department of Transport v Chris Smaller (Transport) Ltd [1989] AC 1197
Duncan v Lowenthal [1969] VR 180
Eagil Trust Co v Pigott Brown [1985] 3 All ER 119
Gleeson v Brock [1969] Qd R 361
Hughes v Gales (1995) 1 WAR 434
Saint Martins Centre Pty Ltd v Civil & Civic, unreported; SCt of WA (Master Ng); Library No 7458; 17 February 1992
(Page 3)
1 MASTER SANDERSON: This is the defendants' application to strike out the plaintiff's claim for want of prosecution. The application is brought by summons dated 19 May 1999. As an alternative to dismissal of the pleadings the defendants sought to strike out certain paragraphs of the statement of claim. When this matter was called on for hearing I was advised by counsel for the defendants that the alternative remedy would not be pursued. Thus, the simple issue is whether the action ought be struck out for want of prosecution.
2 The history of the matter can be simply stated. The plaintiff's statement of claim (amended pursuant to my order on 9 April 1997) pleads that the first defendant, by mortgage in writing dated 27 September 1994, mortgaged 2.4 million shares it held in a company called Hawkstone Investments Ltd as security for an advance of $110,000 ("the mortgage"). The mortgage was subject to three variations. By the first, the parties extended the term of the loan, the second variation further extended the term and increased the rate of interest and the third variation, after there had been a reduction in principal by the defendant, altered the principal to $88,292.15. This final variation also provided for interest-only instalment payments with a final instalment of interest and principal sum on a repayment date of 6 February 1988.
3 By notice in writing dated 24 March 1988 the plaintiff demanded from the first defendant all moneys due under the mortgage as varied. As against the second defendant, the plaintiff pleads a guarantee in writing dated 27 September 1994 whereby it is alleged that the second defendant as guarantor guaranteed the due and punctual performance and observance by the first defendant of the terms and conditions contained in the mortgage and the due and punctual payment to the plaintiff of any moneys due under the terms of the mortgage. It is further alleged against the second defendant that he agreed, among other things, to indemnify the plaintiff in respect of any moneys owing to the plaintiff under the mortgage and as a separate and additional agreement, agreed with the plaintiff that the second defendant would pay on demand the sum equivalent to the aggregate of those moneys and the loss, damage, costs and expenses suffered or incurred by the plaintiff in respect of breach of covenants contained in or implied by the mortgage. The second defendant is sued accordingly, both on the guarantee and the indemnity.
4 The plaintiff further pleads that by notice in writing dated 7 July 1988 there was a demand by the plaintiff for payment by the second defendant of moneys due and payable pursuant to the mortgage. The amount actually sought by the plaintiff from the defendants is the
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- sum of $108,986. The prayer for relief also contains a claim for interest at the rate of 20 per cent per annum from 27 June 1989 until payment or judgment. I will have more to say in relation to this claim for interest later in these reasons.
5 The writ in this matter was issued on 13 July 1989. It was served on the first defendant on 19 July 1989 and on the second defendant on 29 August 1989. The first defendant filed an appearance on 28 July 1989 and the second defendant filed an appearance on 1 September 1989. A statement of claim was filed on 2 March 1990. In other words, the plaintiff delayed just over seven months between the issue of the writ and the delivery of the statement of claim. According to an affidavit filed in opposition to this application and sworn by Brian Dennis Beer on 3 June 1999, once the second defendant filed an appearance he commenced settlement negotiations with the plaintiff. These negotiations continued in sporadic fashion between September 1989 and February 1990. No satisfactory resolution of the dispute was achieved.
6 In March 1990 the plaintiff ceased its operations in Western Australia and relocated to New South Wales. Beer, in his affidavit (at par 7), says that this resulted in lost time to the plaintiff as it needed to reorganise its affairs and reactivate debt recovery measures. With respect, that excuse seems to me to be rather limp. There is no explanation as to why the plaintiff's solicitors simply could not have been instructed to proceed with the action in the usual way. A further affidavit filed in opposition to this application was sworn by Keith Glenn Bartlett on 3 June 1999. Mr Bartlett says that having received the debtor's files from the plaintiff it was not until October 1994 that he was able to turn his attention to recovery actions (par 5). Once again, there is no explanation as to why this action should not have proceeded.
7 It is worth pausing at this point to say something of the nature of the claim brought by the plaintiff against the defendants. As I have said, the plaintiff was suing on a mortgage and a guarantee both of which were in writing. It is not a complicated action. Indeed it is difficult to understand why, once an appearance was entered, an application was not made for summary judgment. It may be that the plaintiff took the view that while settlement negotiations were in progress a summary judgment application was not appropriate. But these negotiations had broken down by March 1990. The present O 14 requires that an application be brought within 21 days of the filing of an appearance. But that time limit was not introduced into the Rules until mid 1992. The summary judgment procedure is tailor-made for actions such as this and it is very difficult to
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- understand why it was not used. Certainly, there is no explanation in the affidavits filed in opposition to the application as to why instructions were not issued to seek summary judgment. On 5 July 1990 the plaintiff's then solicitors wrote to the defendants' solicitors threatening to enter judgment in default of defence. On 10 July 1990 defences of the first and second defendant were filed. They are to be found in the same document. They amount to a bare denial. The defendants do not put any positive case at all. Nine years later, this is still the pleading upon which the defendants rely.
8 Once again, it is difficult to know why the plaintiff took no action once the defence was received. Summary judgment was still an option and I have dealt with that issue. But the plaintiff could have moved to strike out the defence. It apparently considered doing so and in February 1991 instructed its solicitors to that effect. But not action was taken. In fairness to the plaintiff, it must be said that there were further settlement discussions in July 1990. These negotiations appear not to have progressed very far at all and certainly did not lead to a resolution of the dispute. Nothing further occurred until October 1994. At that time, Bartlett instructed solicitors to commence settlement negotiations with the second defendant. A letter was written to the defendants' solicitors to attempt to initiate these discussions, but the solicitors wrote back advising they were no longer acting. In June 1995 the second defendant advised the plaintiff's solicitors of details of the solicitors now acting on his behalf. It does seem that between October 1994 and June 1995 some effort was made to discuss settlement with the second defendant. But once again, just what efforts were made and why no steps were taken to progress the action is unclear.
9 In August 1995 there was what, for this action, might be regarded as a flurry of activity. By letter dated 11 August 1995 Messrs Dwyer Durack, the defendants' then solicitors, requested copies of certain documents from the plaintiff's solicitors. These copies of documents were provided on 25 August 1995. On 26 August 1995 Messrs Dwyer Durack proposed a meeting to discuss possible settlement. This meeting was held on 1 September 1995, but no resolution was reached. Upon failure of these negotiations it might have been expected that the plaintiff would have been stung into action and would have progressed its claim. But that was not the case. No further action was taken until 26 November 1996.
10 On that date the plaintiff filed a notice of intention to proceed. That notice was required, pursuant to O 3 r 7. On 13 December 1996 the defendants' present solicitors came on record. The plaintiff then decided
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- to amend its statement of claim. It made application to that effect on 25 February 1997 and the application was opposed. It was heard by me on 9 April 1997 and leave to amend was granted. On 4 July 1997 the plaintiff requested discovery from the second defendants. There was no compliance with this request and on 24 September 1997 the plaintiff sought an order for discovery. An order to that effect was made on 3 October 1997 and the defendants were required to give discovery within 14 days. That order was not complied with. The plaintiff sought a springing order for discovery on 23 October 1997 and that summons came on for hearing on 3 November 1997. An order was made that discovery be provided within 14 days. Discovery was provided on 6 November 1997. It would appear that the plaintiff regarded this discovery as inadequate. By letter dated 20 November 1997 the plaintiff sought further and better discovery from the second defendant. This request was ignored and the plaintiff has taken no further action in this regard.
11 During the course of submissions much was made by the plaintiff of the defendants' failure to co-operate with the discovery process. Two points can be made about that submission. First, it is difficult to see why discovery is necessary at all. As I have said, the defence in this matter amounts to a bare denial. There is no prospect of the defendant putting a positive case as the pleadings stand at present. All the plaintiff has to do at trial is establish that the mortgage and its variations and the guarantee was properly executed and it would be entitled to judgment in its favour. What possible relevance documents held by the second defendant could have is unclear and was not explained during the course of submissions. Second, in the context of this action as a whole, the time taken for the discovery process is insignificant. The request for discovery was first made on 4 July 1997. Discovery was provided on 6 November 1997. That is a period of some four months. These proceedings have been on foot for 10 years. Any delay in the conduct of the action cannot be laid at the feet of the defendants, either with respect to the discovery process or otherwise.
12 On 13 January 1998 the defendants made a request to inspect the plaintiff's documents. It would appear that this inspection has not taken place. On 9 December 1998 the plaintiff issued a notice to admit documents and this was served on the defendants on 16 December 1998. It is worthy of note that discovery was given by the defendants on 6 November 1997 and the notice to admit was served on 16 December 1998. It would appear then that there was no step in the proceedings for more than 12 months. Before the notice to admit was
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- served by the plaintiff it should have filed and served a notice of intention to proceed in accordance with O 3 r 7. This was a matter alluded to by counsel for the defendants during the course of submissions, but it has not been the basis of any application and it can be noted and put to one side.
13 On 24 February 1999 the plaintiff filed a certificate of readiness and entry for trial. These documents were served on 3 March 1999. On 18 March 1999 the defendants applied to countermand the entry for trial. On 31 March 1999 Ipp J suspended the entry for trial for three months and granted to the defendants leave to bring any application to strike out for want of prosecution. The application to strike out was brought on 19 May 1999.
14 The defendants base their application on two broad grounds. First, the defendants say that they suffer from the general prejudice occasioned by lengthy delays in the conduct of litigation. Inevitably memories fade, documents are lost and the chances of the issues being properly before the court are diminished. It must be said that, in this case, there is not much in dispute between the parties and it is difficult to see how memories of the defendants' witnesses and documents could in any way assist either defendant. They are not running a positive case. In his affidavit of 18 March 1999 in support of this application the second defendant seems to suggest that leave to amend the defence will be sought so that some form of positive case can be put. Given that the present defence has stood for nine years and no attempt was made to amend the defence subsequent to the amendment to the statement of claim in 1997, it is by no means automatic that an amendment to the defence will be allowed. Of course, the grant or refusal of leave to amend the defence is not a matter that I can determine on this present application. But I think it must be acknowledged as a matter to be taken into account, the possibility that leave to amend would be refused. In part, that may be the defendants own fault. But had the matter been progressed by the plaintiff, no doubt the defendants would have turned to consider their defence and have moved to make amendments before this very late stage.
15 Turning to the second of the two broad grounds on which this application was made, the second defendant says that he has suffered particular prejudice. He says that two key witnesses, John Patrick Walsh and his sister Maureen May Jones, have died. Mr Walsh died in or about 1985 and as the proceedings were issued in 1989 it is difficult to see how his death is of significance in this application. Mrs Jones died in August 1990. Apparently Mrs Jones was involved in negotiations which led to the mortgage, the guarantee and the variations to the mortgage. As
(Page 8)
- the defence stands at present, her evidence would be irrelevant. In my view, the passing of Mrs Jones is not a matter of great weight in the context of this application.
16 What is of concern is the claim for interest which appears in the statement of claim. The claim is based in contract and seeks interest at 20 per cent per annum on a compound basis. That would mean that by now the interest component of any judgment would be over $300,000. This matter was first raised by counsel for the defendants during the course of his oral submissions. It was not mentioned in the written submissions. In reply, counsel for the plaintiff argued that the award of interest was discretionary and the trial Judge may decline to make any award based on the plaintiff's delay in bringing the action to trial. With respect, that submission seems to me to be wrong. Given the entitlement to interest is said to be contractual, if the plaintiff's claim succeeds then an award of interest follows.
17 At the conclusion of his submissions counsel for the plaintiff sought the opportunity to file further written submissions dealing with this question of interest. I granted leave. The plaintiff subsequently filed an affidavit of Gary Charles Barrow, sworn 27 August 1999. Annexed to that affidavit was a copy of a letter from the plaintiff's solicitors to the defendants' solicitors in which the plaintiff's solicitors advised that their client would not be pursuing any claim for interest in the action and such a claim for interest was abandoned. Presumably the plaintiff would seek leave to amend its statement of claim to reflect the abandonment of the interest claim. It must be acknowledged that this removes a significant factor of prejudice which would otherwise have affected the defendants.
18 There was very little difference between the parties as to the principles to be applied in a case such as this. The principles generally and the relevant authorities were canvassed in detail by Murray J in the Full Court decision of Lewandowski v Lovell (1994) 11 WAR 124. His Honour referred to the classic statement of Salmon LJ in Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 and to the refinement of principle by the House of Lords in the subsequent case of Birkett v James [1978] AC 297. In Lewandowski v Lovell, Murray J quoted with approval the following passage from the speech of Lord Diplock in Birkett v James (at 318):
"The power [to dismiss for want of prosecution] should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious eg disobedience
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- to a pre-emptory order of the court or conduct amounting to an abuse of the process of the court; or (2) (a) that there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers and (b) that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party."
19 Birkett v James also dealt with the question of what account should be taken of the fact that, if an action is dismissed for want of prosecution it may not be possible for the plaintiff to commence fresh proceedings because the limitation period has expired. Once again, in Lewandowski v Lovell, Murray J quoted with approval what Lord Diplock had to say on this question in Birkett v James (at 322):
"I am of the opinion that the fact that the limitation period has not yet expired must always be a matter of great weight in determining whether to exercise the discretion to dismiss an action for want of prosecution where no question of contumelious default on the part of the plaintiff is involved; and in cases where it is likely that if the action were dismissed the plaintiff would avail himself of his legal right to issue a fresh writ the non-expiry of the limitation period is generally a conclusive reason for not dismissing the action that is already pending."
20 Whether or not the limitation period has expired in this case is somewhat problematical. Prima facie, it would appear that this is a claim founded in contract and the limitation period applicable would be six years under s 38(1)(c)(v) of the Limitation Act. For its part the plaintiff says that it is suing on deeds, being the mortgage, the three variations of mortgage and the guarantee and therefore the limitation period is 20 years under s 38(1)(e)(i) of the Limitation Act. In answer to that submission the defendants say that there was no delivery of the deed and therefore at law none of the documents can be considered a deed and s 38(1)(e)(i) of the Limitation Act does not apply: see Monarch Petroleum NL v Sitco Australia Pty Ltd & Ors [1986] WAR 310 per Kennedy J at 352 - 355 and Dean & Westham Holdings Pty Lyd v Lloyd [1991] WAR 235 per Ipp J at 251 - 255. This argument about whether or not the various documents are deeds is not a matter which I could, or should, attempt to resolve in this application. However, on balance, I am of the view that if this action
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- is dismissed for want of prosecution there is a real prospect that the plaintiff will be able to commence fresh proceedings. I could put the plaintiff's position no higher than that. In the context of this case it is not a matter which has influenced my decision one way or the other.
21 Turning then to consider the general principles set out by Lord Diplock in Birkett v James (supra), it is apparent that there had been no intentional and contumelious disobedience of a pre-emptory order of the court by the plaintiff. At no stage has an order been made against the plaintiff requiring it to take some step in the proceedings. However, the defendants referred to O 1 r 4A and r 4B. These orders have to do with the elimination of delay and the system of caseflow management and they were inserted in the Rules in March 1993. It was the defendants' position that in not moving this action along expeditiously the plaintiff had disregarded these Rules and this conduct amounted to an abuse of the processes of the Court. In Lewandowski v Lovell Murray J referred to O 1 r 4A in the following terms (at 131):
"Of course in Western Australia now, the new dimension has been added of the amendment to the Rules of the Supreme Court 1971 by the addition to O 1 of rules specifically directed towards the employment of a system of caseflow management and the elimination of delay generally. These new rules certainly have an impact upon the readiness of the court to dismiss an action for want of prosecution …
That rule (O 1 r 4A) is not directly relevant to these appeals because it came into operation only in 1993, but its impact should not be overlooked in future cases."
22 In response, the plaintiff pointed out that case management is not an end in itself and it must always be the aim of the court to do justice between the parties: see State of Queensland & Anor v JL Holdings Pty Ltd (1997) 189 CLR 146. While I accept as a matter of principle that case management is not an end in itself, it must be remembered that the purpose of case management is to ensure that actions progress at a reasonable pace. Ensuring that this occurs is one aspect of doing justice between the parties. The fact is that in this case since 1993 virtually no progress has been made by the plaintiff. I am satisfied that the plaintiff's lack of action is entirely at odds with r 4A and r 4B and amounts to a contumelious disregard of the processes of the court. In my view, the plaintiff's actions are such as to warrant striking out this matter for want of prosecution.
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23 It would appear that this is the first occasion on which a strike-out application has been successful, based upon a failure to comply with the case management sentiments expressed in r 4A and r 4B. During the course of submissions some consideration was given by the parties to the meaning of the word "contumelious" as it is used in the various cases. The Macquarie Dictionary (2nd revised edition) defines "contumely" (the noun from which the adverb "contumelious" is derived) as "insulting manifestation of contempt in words or actions". The description is generally used when it is a specific order of the court which is not obeyed. But the omission is no less grave when it is the general approach of the court to litigation which is ignored by a party. It may be that the so-called first limb of the test in Birkett v James needs to be expanded to recognise the requirements of caseflow management. Be that as it may, the importance of the orders dealing with caseflow management cannot possibly have been lost on the plaintiff. Yet by its conduct the plaintiff has entirely disregarded the way in which the court approaches litigation.
24 Even if I had not come to that conclusion I would have been prepared to strike out this action under what might be called the second limb of the Birkett v James test. There is no doubt that in this matter there has been inordinate and inexcusable delay on the part of the plaintiff. Counsel for the plaintiff did not seriously argue otherwise. I am also satisfied, on balance, that there is a substantial risk that it will not be possible to have a fair trial of the issues in the action. The defendants, particularly the second defendant, have made it plain that if the matter were to proceed an amendment to the defence would be sought. If amendment to the defence is not permitted then the defendants will not be able to run the case that is now put in the affidavit material. If amendment to the defence is permitted then the defendants will be left with all the difficulties of running a positive case which are occasioned by delay. Given the plaintiff has indicated it will withdraw its claim for interest, I accept that the prejudice would be of a general nature rather than specific. But, nonetheless, such a period of time has elapsed that in my view the prejudice would be real and significant and there is a substantial risk that it will not be possible to have a fair trial of the issues in the action.
25 I would dismiss the plaintiff's action for want of prosecution. I will hear the parties as to costs.
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