CBFC Ltd v Charitopoulos - [2008] SASC 86

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
CBFC LTD v CHARITOPOULOS & ORS
[2008] SASC 86
Judgment of The Honourable Justice White
7 April 2008
PROCEDURE - COURTS AND JUDGES GENERALLY - COURTS - ADJOURNMENT
Application by defendants for adjournment of trial - factors relevant to consideration of application - whether adjournment would prejudice the plaintiff - where delays in progress to trial substantially attributable to the defendants - where nothing proffered to meet the prejudice to the plaintiff - whether refusal of application would result in significant prejudice to the defendants - whether refusal of application would result in multiplicity of actions.
Held: defendants responsible for not having taken action to prepare for trial - significant prejudice to the plaintiffs which would be caused by the adjournment not addressed by the defendants - application for adjournment of trial refused.
Corporations Act 2001 (Cth) s 420A, referred to.
State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146; Howarth v Adey [1996] 2 VR 535; Cirillo v Citicorp (2001) 216 LSJS 254; Aberdine Pty Ltd and York Consultants Pty Ltd v Vineyard Estate Management Pty Ltd [2001] SASC 442; Maxwell v Keun [1928] 1 KB 645; McColl v Lehmann [1987] VR 503, applied.
Indrisie v General Credits Ltd [1985] VR 251; Doherty v Murphy [1996] 2 VR 553, discussed.

CBFC LTD v CHARITOPOULOS & ORS
[2008] SASC 86
Civil

WHITE J: On 18 March 2008 I refused an application by the defendants for an adjournment of the trial in this action. I gave some ex tempore reasons for that decision but reserved the right both to edit and to amplify my reasons once the complete transcript of counsels’ submissions became available. These are the more complete reasons.
The trial was listed to commence on 18 March 2008 and to continue for three weeks. The trial date, initially 17 March 2008, was fixed on 12 December 2007 but was subsequently varied to 18 March 2008. The application for the adjournment of the trial, together with a supporting affidavit from the third defendant, was filed and served on Friday, 14 March 2008. The third defendant is the son of the first and second defendants. He has been the source of instructions from the defendants to their solicitors.
The adjournment is sought principally on the ground that the matter is not yet ready for trial. The third defendant says that because of financial constraints and because of his involvement in a significant amount of other litigation, he has not been able to provide sufficient instructions to his solicitors. The plaintiff is concerned that the defendants are simply seeking to avoid a trial.
The plaintiff sues to enforce a guarantee given by the three defendants in respect of the obligations of Asset Management Solutions Pty Ltd (AMS) under certain financial facilities extended to it by the plaintiff. In addition to the guarantee, the plaintiff obtained registered equitable mortgages over the assets and undertaking of AMS and of another company Golden Chef Australia Pty Ltd (GCA). Receivers and managers were appointed over both AMS and GCA by the plaintiff and the Commonwealth Bank of Australia (CBA) on 3 August 2005. An order was made for the winding up of GCA on 29 July 2005.
The filed defence raises several grounds of defence. Of importance for the present application is an allegation that assets of AMS and GCA were sold by the receivers and managers for less than true value. The defendants plead that the receivers and managers were, at material times, agents of the plaintiff. The defence attributes the conduct of the receivers and managers to the plaintiff. The defence claims that the plaintiff has breached equitable and common law duties owed to AMS, GCA and the defendants, and is in breach of the statutory duty contained in s 420A of the Corporations Act 2001(Cth). The plaintiff disputes that the receivers and managers are, or have been, its agents.
As I understand the defence, the argument is that had the requisite care been exercised, the receivers and managers would have obtained sufficient proceeds from the sale to discharge the liability of AMS to the plaintiff or, at the least, to have reduced significantly the extent of that liability. In support of this contention, the defendants principally rely (presently) on the disparity between the pre-sale estimates of the amounts which could be obtained on the sale of those assets, and the actual results achieved at sale.
The defendants now wish to develop these allegations further and to address the possibility that the conduct of the receivers and managers is not attributed to the plaintiff. They contend that even if the receivers and managers were not agents of the plaintiff, their conduct can still give rise to what was sometimes expressed as an equitable set off, and sometimes as an equitable estoppel, against the plaintiff. Reference was made to O’Donovan & Phillips “Modern Contract of Guarantee” 4^th Ed paragraph 11.607 at 11.1067 to support this proposal. I do not propose to refer to authority in detail. Counsel did not do so. I note however that there is authority to the effect that a guarantor under a guarantee which makes it liable without more for the full indebtedness of the debtor cannot rely upon a cross-claim for damages which may be available to the principal debtor as against the creditor in reduction of, or as a defence to, its liability under the guarantee.[1] But the possible existence of an equitable set off available to a guarantor arising from the creditor’s conduct was acknowledged in Doherty v Murphy.[2]
[1] Indrisie v General Credits Ltd (1985) VR 251.
[2] (1996) 2 VR 553.
The defendants contend that the receivers and managers should be joined to the proceedings to allow their claims against them to be pursued. It was submitted that it would be appropriate for the defendants to join the receivers and managers as defendants to a counterclaim, seeking relief against them by asserting the rights of AMS and GCA. For this purpose the defendants would need to obtain leave to proceed in the names of the companies. If the defendants did not obtain that leave, they would bring some form of claim against AMS yet nevertheless for the benefit of AMS. Next, it was said that the receivers and managers should be joined so as “to obtain a proper account for the sales of the assets and the amounts received”. In addition, the defendants contend that it is necessary to join AMS, GCA and Golden Chef Victoria Pty Ltd (GCV) “most probably to a counterclaim”; to obtain contribution from GCA as a co-security; and to join CBA because it, together with the plaintiff, appointed the receivers and managers. These submissions were made at a level of some generality.
It is said that the matter is not yet ready for trial because the plaintiff has not discovered documents directly relevant to a proper accounting for the debt claimed by the plaintiff, the sale of the assets by the receivers and managers, and offers made for the purchase of assets by a third party (which offers are pleaded in paragraph 24.3 of the defence). Further, it is said, as outlined above, that the proceedings have not been “clothed” with all the necessary parties so as to allow a determination by this Court of all claims which the defendants may wish to make.
Relevant Principles
The principles to be applied on an application of this kind are well established. The paramount consideration is the doing of justice between the parties. Litigants should have a reasonable opportunity to present their claims or defences fairly and fully. If an adjournment is necessary to allow a party that opportunity, then ordinarily it ought not be refused unless the adjournment would result in irremediable prejudice or injustice to the other. Put more positively, an adjournment should ordinarily be granted if the applicant for the adjournment would suffer irreparable harm if it is not granted and when costs will be a sufficient compensation to the opposing party. Adjournments or amendments are not to be refused as a means of punishing parties for mistakes made in the conduct of their cases. This does not mean that a party may not have to suffer the consequences of deliberate decisions made as to the way in which it will pursue or defend proceedings. The decisions in State of Queensland v J L Holdings Pty Ltd;[3] Howarth v Adey;[4] Cirillo v Citicorp;[5] Aberdine Pty Ltd and York Consultants Pty Ltd v Vineyard Estate Management Pty Ltd;[6] Maxwell v Keun[7] and McColl v Lehmann[8] are authorities for these propositions.
[3] (1997) 189 CLR 146 at 152-55.
[4] (1996) 2 VR 535 at 542-5.
[5] [2001] SASC 349; (2001) 216 LSJS 259.
[6] [2001] SASC 442 at [41]-[44].
[7] (1928) 1 KB 645 at 653.
[8] (1987) VR 503 at 505-10.
Prejudice to the Plaintiff
The plaintiff asserts that it would be prejudiced by the grant of an adjournment. It claims that interest is continuing to accrue at the rate of $903.00 per day on the principal sum which is the subject of the claim. That interest will continue to accrue during the adjournment period. In addition the plaintiff relies on the costs which will be thrown away.
The plaintiff points to evidence suggesting that the defendants are unlikely to be able, ultimately, to meet the additional interest which accrues, and the costs thrown away.
The third defendant says that the first defendant has been absent continuously from Australia since approximately January 2005 and that he has no knowledge of his present whereabouts. The third defendant also says that the second defendant has no independent financial resources which would enable her to instruct solicitors and to engage counsel to prepare for a trial on her behalf and that she relies upon him to secure the necessary funds to pay lawyers costs. The third defendant himself is presently the subject of a bankruptcy petition being considered in the Federal Magistrates Court in Melbourne. The third defendant has deposed to financial difficulties in paying legal costs and expenses necessary to deal with the number of legal actions which he, or companies associated with him, are involved. The third defendant has deposed that he has no income other than “income derived from borrowings on, and/or proceeds from the sale of real estate or rental income from the real estate” which he later identifies.
The plaintiff submits that in these circumstances, the Court could not have confidence that the defendants will be able to meet the costs thrown away by any adjournment, let alone the interest which will continue to accrue on the principal sum which is the subject of its claim. The defendants have not proffered any security to the plaintiff at all, whether in respect of the interest which will accrue or in respect of costs.
The History of the Proceedings
In those circumstances, I turn to examine more closely the submission that refusal of the adjournment would deny the defendants the opportunity to present their case fully and fairly.
A consideration of the history of this matter shows that it has been marked by delays, mostly (but not wholly) attributable to the defendants. The history also shows that the distinction between the role of the plaintiff, on the one hand, and the receivers and managers, on the other, and the implications of that distinction, has been prominent in these proceedings to date.
The proceedings were instituted on 6 February 2006. In accordance with the Supreme Court Rules 1987, a defence (at least from the second and third defendants) should have been filed by 16 March 2006. No defence was filed at that time.
On 10 May 2006 the defendants filed an interlocutory application seeking an order that they be excused from filing their defence and counterclaim until after the plaintiff had made discovery. In an affidavit sworn 9 May 2006, the third defendant said that without access to documents held by the plaintiff, he was not able to provide the defendants’ solicitors with meaningful instructions in relation to the defence or the grounds of counterclaim. No mention was made in that affidavit of financial constraints. The third defendant did refer to his involvement in two other actions, one in this Court and one in the Supreme Court of Victoria. The affidavit raised an allegation that the assets of AMS had been sold by the receivers and managers at undervalue and, amongst other things, foreshadowed an application under s 420A of the Corporations Act.
The application filed on 10 May 2006 was dismissed on 23 May 2006. Judge Lunn, the master of this Court who heard the application, was not satisfied that the documents relating to the sale of the assets by the receivers and managers and which were sought by the defendants were in the possession or power of the plaintiff. This was because the defendants had not shown any basis for the claim that the receivers and managers were agents of the plaintiff. Nor was Judge Lunn satisfied that the defendants had shown an arguable basis for the claim that the plaintiff was vicariously liable for any default of the receivers and managers in carrying out the sale.
The defendants were therefore alerted, at least by 23 May 2006, to the distinction between the role of the plaintiff, on the one hand, and the receivers and managers, on the other, and of possible limitations on their ability to obtain relief from the plaintiff’s claim by reference to the conduct of the receivers and managers.
The defendants then filed a defence on 6 June 2006 and a substantially amended defence (settled by counsel) on 14 July 2006. Both the defences raised the issue of the alleged sale of assets at less than true value and raised allegations of a breach of s 420A of the Corporations Act, as well as breaches of equitable and common law duty said to be owed by the plaintiff. The amended defence filed on 14 July 2006 (which is the current defence) raises, in addition, numerous other bases of defence. It is reasonable to infer that it was settled by counsel after a detailed review of instructions from the defendants. Both the original and the amended defence concluded with an assertion that the defendants could not plead further grounds of defence until the plaintiff had made full discovery and the defendants had obtained experts’ reports. The defendants did not file any counterclaim whether against the plaintiff, the receivers and managers, or others. No explanation is now provided to the Court for that omission.
Thereafter, time was taken up with strike out and summary judgment applications of the plaintiff filed on 21 July 2006 and 23 August 2006 respectively, which were ultimately heard and determined on 27 November 2006. As I understand it, the basis of both of the plaintiff’s applications was that the defence that the plaintiff had engaged in the sale of assets, or had breached s 420A or common law or equitable duties owed to ASM and GCA could not be established because, as a matter of fact, the plaintiff had not itself engaged in the sale of the assets. It was the receivers and managers who had engaged in that sale and, in doing so, they had not acted as agents of the plaintiff.
I note that on 9 August 2006 when the matter was before Judge Burley, the then counsel for the defendants expressed an acute appreciation of the distinction between the plaintiff, on the one hand, and the receivers and managers, on the other, when he said:
I have come fully prepared today for a strikeout application based on the argument that the Bank, the plaintiff, was not the entity which actually sold the property. The Bank has alleged all along that these paragraphs of the amended defence should be struck-out on the basis that the bank appointed a receiver manager, the receiver manager was the entity that sold the property, and therefore any claim my clients may have, any grounds of defence or counterclaim they may have, are against the receiver manager because it is the receiver manager that may be the controller and subject to s 420A.[9]
[9] Transcript of hearing on 9 August 2006 page 16 line 4-15
It can be seen that the prospect that the claim against the receivers and managers should be made against them directly was raised expressly by the defendants’ counsel. Later, counsel for the defendants said:
Now that there’s an amended defence the issue of this business of the receiver manager, and whether he’s on his own or acting as agent for the Bank is really now a key issue.[10]
[10] Transcript of hearing on 9 August 2006 page 26 line 33-36
In that same hearing, the possibility that the defendants would wish to obtain non-party discovery from the receivers and managers under R60 of 1987 Rules was also mentioned.
On 27 November 2006 the plaintiff’s application for summary judgment was dismissed. Judge Lunn held that the question of whether the receivers and managers were agents of the plaintiff was a matter to be determined on the facts, and that the defence did disclose sufficiently tenable grounds for the defendants’ claims. Judge Lunn then ordered that the plaintiff make discovery of the documents in its possession custody and power, including documents relevant to the issues raised by the amended defence. He referred to the possibility that the defendants would amend their defence after discovery had been made, including by pleading the material facts by which the agency they alleged between the plaintiff and the receivers and managers was created. Judge Lunn put in place a timetable which, if complied with, would have had inspection of documents completed by 28 February 2007.
The plaintiff filed its list of documents on 30 January 2007 (and an identical list on 22 February 2007). It is not clear whether the defendants had inspected those documents at all by 28 February 2007. On 6 March 2007 Judge Lunn ordered that the plaintiff “supply copies of discovered documents as requested within 21 days and defendants to have 28 days from delivery of those copies to either request further discovery, seek R60 discovery or formulate the amended defence.” It seems that Judge Lunn was fixing the time within which copies for which the defendants had paid under R58.01(3) should be delivered. The matter was then adjourned to 8 May 2007.
It is not clear when the copied material was provided to the defendants but it seems that the defendants had not taken any of the actions contemplated by the order of 6 March 2007 by 8 May 2007. On that day Judge Lunn was told that counsel for the defendants (who had also appeared on 6 March 2007) wished to “review the documentation now obtained to see whether a R60 application or an application for further and better discovery should be made.” The Court was told that this might give rise to an amended defence to be considered on the next occasion. Judge Lunn ordered that any application for R60 discovery or further and better discovery was to be filed and served within 21 days.
The defendants did not lodge any application for R60 discovery or further any better discovery in accordance with Judge Lunn’s order. However, there may have been some discussions between the parties on the topic of further discovery. On 8 June 2007 Judge Lunn ordered the plaintiff to file a supplementary list of documents within 14 days and the defendants to inspect those documents within a further 14 days. In addition, Judge Lunn ordered the defendant to take out any application for further discovery within 21 days of the inspection.
A supplementary list of documents was filed by the plaintiff on 22 June 2007. It listed a further 24 items. The list concluded with a statement by the plaintiff that it had now fully discharged its obligations, as at the date of delivery of the list, with respect to discovery.

The defendants did not make any application in accordance with Judge Lunn’s order of 8 June 2007. On 2 August 2007 Judge Lunn was told that the plaintiff had not supplied copies of the further discovered documents as the defendants had not paid the sum of approximately $1,000.00 required by the plaintiff for copying. Judge Lunn extended the time within which the defendants were either to pay the copying costs or to inspect the documents until 16 August 2007.
Inspection had still not occurred by 30 August 2007. On that day counsel for the defendants told the Judge that the cheque for the copying fees had been sent recently but the plaintiffs solicitor had no knowledge of that cheque. Judge Lunn expressed his concern that the defendants “may be delaying this matter for tactical reasons.”
Inspection had still not taken place by 10 September 2007. Judge Burley recorded the following:
Mr Heinrich’s instructions are that a cheque to cover costs of photocopying of documents discovered by pltf was delivered to the pltf’s solicitors office on mid-Friday. Mr McCarthy informs me that his instructions are that the cheque has not been delivered. This leaves completion of inspection of documents by the dft to be performed. The pltf wishes to have the matter entered in the trial list and can provide a certificate of readiness, with the exception of the inspection of documents by the dft, within 7 days. I think it appropriate to enter the matter in the trial list but to give the defts the opportunity to have that order set aside if good cause be shown. Mr McCarthy informs me that the length of trial may be 4 weeks. That being the case I intend to refer to this matter to the Judge in charge of the long and complex cases list.”
Judge Burley then made an order referring the matter into the long and complex list and an order that the matter be listed before Debelle J on a date and time to be fixed. The defendants were given liberty to apply to set aside those orders within 14 days. They did not exercise that liberty. It is difficult to reconcile the statements concerning the delivery of a cheque which were made to the Court on 30 August and 10 September 2007 respectively.
The matter came on before me in the long and complex list on 23 November 2007. I was informed that the plaintiff was ready for trial and that the defendants had been provided with copies of the documents discovered in the supplementary list of documents on 8 October 2007. I was informed by the defendants’ counsel that the defendants’ solicitors were reviewing the documents provided and may wish to amend the defence and to lodge a counterclaim. The matter was then adjourned to 4 December 2007. I indicated that in the meantime the defendants were expected to complete their assessment of the plaintiffs discovered documents, to form a view as to whether further discovery was needed, to prepare proposed amendments to the defence and, if a counterclaim was to be pursued, to prepare that counterclaim. I ordered that any application for further and better discovery, for leave to amend the defence, for leave to file a counterclaim or any other interlocutory application was to be filed and served by no later than 2pm on Monday 3 December 2007. The defendants did not file any interlocutory applications at all within the stipulated time.
On 4 December 2007, the plaintiffs asked to have the matter listed for trial. The defendants sought an extension of 2 months in which to file an amended defence and a counterclaim. Mr McNamara, the solicitor for the defendants, informed me, amongst other things, that the defendants were waiting to see what action would be taken by the plaintiffs in proceedings in the Supreme Court of Victoria involving the third defendant and Charitopoulos companies with respect to an “accounting” for the sale of plant and equipment. I was told that the reason for the non-compliance with the orders made on 23 November 2007 was that the defendants were “waiting to see what happens in the Victorian proceedings.” It seemed that very little attempt had been made to comply with the orders made on 23 November 2007. Mr McNamara mentioned that the third defendant was involved in litigation in Victoria and New South Wales as well as in this State and that his resources were limited. I did not accede to the defendants’ request for an adjournment for 2 months but did indicate that a further week could be allowed if that was sought. There was no such application and so I directed that the matter proceed to trial.
The parties were informed on 12 December 2007 that the trial of the action would take place in the 3 weeks commencing 17 March 2008.
At a directions hearing on 11 February 2008 Mr Heinrich, then counsel for the defendants, informed me that he had seen an email from the defendants’ solicitors indicating that “the defendants were going to instruct my instructing solicitor to make an application, within 14 to 20 days from 30 January, to apply to adjourn and amend and so on.” However, no application to adjourn the trial was made at that time. The defendants were warned that if the application for adjournment was left to the eve of trial, it was not likely to be looked upon favourably.
A further directions hearing was held on 29 February 2008. No application for an adjournment was made at that time.
The present application was filed on Friday 14 March 2008.
The history accounted above is one of delays and of repeated non-compliance by the defendants with orders of this Court, including orders with respect to the lodgement of applications for further or non-party discovery, amendment of the defence, and a counterclaim. The defendants in these proceedings have been given numerous opportunities in the past to pursue the claims which they now wish to pursue.
I accept the point made forcibly by counsel for the defendants on the present application to the effect that the Court should be concerned about achieving justice now rather than engaging in any exercise in the nature of punishing a party for its failure to action in the past. That is so, but when it appears that the opposing party will be prejudiced by the adjournment I do consider it to be relevant to have regard to the opportunities which the party seeking the adjournment has had in the past to take the action which it now seeks to take.
The Explanation of the Defendants
Having regard to the history, it is appropriate that I refer to the explanation provided by the defendants. The evidence on that topic is contained in the affidavit from the third defendant. The continued absence of the first defendant overseas suggests that he may be taking very little interest in the proceedings.
The third defendant refers firstly to the substantial amount of other litigation, some in this Court, some in the Supreme Court of Victoria, and some in Magistrates Courts in which he, or companies in which he has an involvement, are engaged. He lists off a substantial amount of litigation, much of which is still current. It is easy to accept in a general way that his engagement in other litigation is likely to have involved some preoccupation and required some devotion of his energies from time to time. However, the information provided in the affidavit about the other litigation is of a general kind. It does not provide detail about precisely when the actions were commenced, when precisely they required input from the third defendant nor of the extent to which they have required his attention as opposed to that of his solicitors. The affidavit does not indicate anything about the issues involved. They could, for example, be relatively straightforward debt collection matters. There is one exception, that being Action number 2010 of 2006 in the Supreme Court of Victoria in which a copy of the pleadings is exhibited to the third defendant’s affidavit. It is not made clear how the third defendant’s involvement in other litigation has prevented him or his solicitors from complying with the orders of the Court made from time to time in this action. Further, the fact of the matter is that these are proceedings in the Supreme Court of this State. It is to be expected that the third defendant would ensure that sufficient resources, including time, were available to meet the requirements of this Court. If on any one occasion preoccupation in the litigation being conducted in another court did prevent compliance with this Court’s orders, one would expect this Court to have been informed at the time and for an extension of time for that reason on that occasion to be sought.
The third defendant also refers to financial difficulties. Again, the information about this is in very general terms. The Court has not been provided with specific information about the incomes and resources of any of the defendants. The third defendant says that he borrowed the sum of $400,000.00 in connection with proceedings in the Supreme Court of Victoria and in connection with his defence of a creditors bankruptcy petition. He says that it has been difficult for him to borrow money since being the subject of bankruptcy proceedings. One might readily accept that it is so. However, a bankruptcy notice was not issued until 14 September 2007 and a creditors petition not served until 5 November 2007. Those matters could not have interfered with the third defendant’s ability to borrow monies before those dates.
I referred earlier to the third defendant’s affidavit evidence that he has no income other than income derived from borrowings, from the sale of real estate, or from rental income. The third defendant has not provided any detailed information about the borrowings, the proceeds from the sale of real estate or the rental income to which he has referred. I am willing to accept it in a general way that the third defendant is the subject of financial constraints but in the absence of detailed financial information, am not prepared to infer more.
The third defendant says that he has been trying continuously since July 2007 to obtain new finance or to increase finances with his current financier. No detail has been provided. The third defendant has deposed to an offer of short-term finance from a Melbourne financial broker which he says can, in part, be used to fund the defendant’s defence to the present action. That is a loan for an amount not exceeding $500,000.00 (and also not exceeding 68% of a sworn valuation over the property at 33 Pirie Street, Adelaide) for a period of 6 months at an interest rate of 25% per annum. The loan is subject to numerous other conditions. The offer had not been accepted in the two days during which it remained open. There is no evidence as to whether the offer may be renewed. Further, as the loan is available only for 6 months, it is not clear how the defendants would propose to conduct a defence if the matter was adjourned for several months.
I also accept that the third defendant was in custody in the period between 9 October 2007 and 8 November 2007 arising out of a contempt of the Supreme Court of Victoria. I accept that the third defendant would have had difficulty in giving instructions during that period. However, I was informed that the actual date of surrender to the authorities in Victoria was the subject of agreement and accordingly, the third defendant could have given appropriate instructions to his solicitors in Adelaide as to the conduct of these proceedings before going into custody.
I accept also that there are bankruptcy proceedings on foot in Victoria. Again, I accept that those proceedings would have preoccupied the third defendant to some extent, but the information before me does not warrant a conclusion that it has preoccupied him wholly to the exclusion of an ability to attend properly to the present action.
I also note that I have not been provided with any affidavit from the defendants’ solicitors indicating what has been done from time to time in response to the Court’s orders, nor indicating any difficulties which they may have had in attending properly to preparation for the action. I refer in that regard to my own statement to Mr McNamara, the defendants’ solicitor, on 4 December 2006:
If there is to be any further application in these proceedings, I indicate now that I will expect from you, or from whoever has the conduct of the proceedings within your office, a very detailed affidavit explaining what has been done by way of progressing the defendants preparation of this matter for trial.
It was submitted that the solicitors cannot reasonably be expected to act in the absence of appropriate funding from a client. The suggestion was made that the defendant’s solicitors had not been provided with sufficient funds in this case. However, solicitors who accept instructions to act in a matter take on professional responsibilities and, while the retainer continues, those responsibilities continue. This Court has not previously been informed of any limitation on the retainer of the defendants’ solicitors. However, in a letter to the plaintiff’s solicitors dated 17 March 2008 the defendants’ solicitors said, “our firm’s only instructions have been and remain to argue our clients’ application to have the trial listed to commence on Tuesday 18 March 2008 vacated.” If the defendants’ solicitor’s retainer was limited in that way, then the lack of readiness for trial on which the defendants now rely may result from their own instructions. The letter of 17 March 2008 appears to provide some support for the plaintiff’s concern that the present application is more directed to avoiding a hearing at this time rather than to furthering the defence of the action.
The general comment which may be made about the defendants’ evidence is that it does not seek to inform the Court of the steps taken to comply with particular orders of the Court in the past, and of how the constraints to which the third defendant is said to have been subject have resulted in the non-compliance with the Court’s orders, or in the delays which have occurred.
The Foreshadowed Application for Further Discovery
In relation to the proposed application for further discovery from the plaintiff, the defendants have not shown any proper basis upon which it could be concluded that the plaintiff’s discovery is inadequate. All they have done is to repeat the assertions previously made, namely, that in relation to the sale of assets, the receivers and managers were the agents of the plaintiff, and that any document in the hands of the receivers and agents is therefore within the power of the plaintiff to discover. The former is a major issue in the trial and is not to be determined at an interlocutory level. As to the latter, it is not every document held by an agent which can be said to be in the power of a principal to produce. I am not satisfied that the defendants have shown that in the event that an adjournment is allowed, further discovery could or would be obtained from the plaintiff. That, of course, does not mean that further discovery could not be obtained from non-parties pursuant to R60.
Prejudice to the Defendants
Counsel for the defendants acknowledged that in the event that the claims against other parties could not be pursued in these proceedings, those claims could still be pursued against the receivers and managers. Of course that would mean that the claims against the other parties could not be raised as a set off in these proceedings but counsel acknowledged that the defendants could still recover from the non-parties whatever amount they may ultimately be obliged to pay. It is, of course, desirable that a multiplicity of actions be avoided. That is a factor in favour of the adjournment application. I do not, however, regard it as decisive.
I note in any event that one of the entities which the defendants wish to join is in liquidation.
Conclusion
In summary, the allegation of sale at undervalue and the relationship between the receivers and managers, on the one hand, and the plaintiff, on the other, have been issues in this action almost since its inception. The defendants have been given numerous opportunities to pursue those allegations within the context of these proceedings in the past. On numerous occasions they have failed to comply with Court orders limiting the time within which they should take action to pursue the allegations if so instructed. On the face of the letter dated 17 March 2008 it seems that the defendants did not ever instruct their solicitors to prepare the matter for trial. It appears to provide some justification for the plaintiff’s concern that the matters now raised are relied upon for the purpose of obtaining an adjournment of the hearing for its own sake rather than principally for the better conduct of the defendants’ defence. The plaintiff will be prejudiced by an adjournment and the defendants have not proffered anything to address that prejudice. If the adjournment is not allowed and the defendants are required to defend the matter, they will not be shut out forever from pursuing the claims which they have foreshadowed. Having regard to the financial circumstances disclosed thus far, it is not clear whether the defendants will in any event be able to fund the actions which they have foreshadowed even if they instruct their solicitors to do so.
In all those circumstances, the application for the adjournment was refused.