Chen v Awap Sgt 26 Investment Ltd [No 2]
[2016] WASC 8
•15 JANUARY 2016
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CHEN -v- AWAP SGT 26 INVESTMENT LTD [No 2] [2016] WASC 8
CORAM: ACTING MASTER GETHING
HEARD: 26 OCTOBER 2015
DELIVERED : 15 JANUARY 2016
FILE NO/S: CIV 1384 of 2010
BETWEEN: CHOU LI CHEN
First Plaintiff
CN 2000 HOLDINGS LTD
Second PlaintiffCN (HONG KONG) LTD
Third PlaintiffAND
AWAP SGT 26 INVESTMENT LTD
Defendant
Catchwords:
Application to strike out for want of prosecution
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
First Plaintiff : Mr M C Goldblatt
Second Plaintiff : Mr M C Goldblatt
Third Plaintiff : Mr M C Goldblatt
Defendant: Mr M C Hotchkin
Solicitors:
First Plaintiff : Holborn Lenhoff Massey
Second Plaintiff : Holborn Lenhoff Massey
Third Plaintiff : Holborn Lenhoff Massey
Defendant: Hotchkin Hanly Lawyers
Case(s) referred to in judgment(s):
Alvaro v Metaxas & Hager [2012] WASC 341
Australian Growth Managers Ltd v Egerton‑Warburton [2007] WASC 10
Birkett v James [1978] AC 297
CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; (1997) 189 CLR 345
CVW Group Holdings Pty Ltd v Addison [2011] WASC 267
Devir v Western Australian Planning Commission [2007] WASC 176
Hendeson v Hewitt [No 4] [2008] WASC 135
Hughes v Gales (1995) 14 WAR 434
Jakovljevic v L & B Doslov [2000] WASCA 131
Lewandowski v Lovell (1994) 11 WAR 124
McDowall v Reynolds [2006] QSC 414
Meridian Oil NL v Smyth [2007] WASC 179
Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273
Smith v Bank of Western Australia Ltd [2010] WASCA 15; (2010) 265 ALR 472
The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398
Timcal Pty Ltd v Sons of Gwalia Ltd (Subject to Deed of Company Arrangement) [No 2] [2011] WASC 58
Ulowksi v Miller [1968] SASR 277
Wine Connection Pty Ltd v Pitcliff Pty Ltd [2013] QSC 56
ACTING MASTER GETHING: The defendant, AWAP SGT 26 Investment Ltd (AWAP), is a company incorporated in Samoa. It is the owner of a building situated at 26 St Georges Terrace Perth and known as International House. Between 1997 and 2006 AWAP was effectively controlled by Chou Li Chen, who is the first plaintiff in this action (Mr Chou).
In January 1997 Mr Chou was appointed secretary of AWAP, with an entitlement to secretarial fees at a daily rate. Mr Chou says that from time to time from 12 February 1997 he loaned money to AWAP which was repayable on demand with interest. As at 30 January 2009, Mr Chou asserted that AWAP was indebted to him in the amount of $1,923,000.80.
In January 1997, the third plaintiff CN (Hong Kong) Ltd (CNHK) was appointed a director of AWAP. I am told that it is permissible under the law of Samoa for a corporate entity to be appointed a director. CNHK pleads that as a director of AWAP it is entitled to director's fees on a daily rate and to be reimbursed for its expenses. CNHK also pleads that it was appointed the manager of the property at a daily rate.
In August 2007 the second plaintiff, CN 2000 Holdings Ltd (CN 2000), was appointed a director of AWAP. As a director CN 2000 pleads that it is entitled to director's fees. CN 2000 also pleads that there was a rights issue in September 2007 which it participated in and paid AWAP $875,000. However, it says that the shares issued to it were cancelled, and it has not received a refund of the consideration it paid. It asserts that the money was paid either under a total failure of consideration or as a result of a mistake of fact.
By writ dated 17 March 2010 Mr Chou, CN 2000 and CNHK commenced proceedings against AWAP. Mr Chou sought repayment of the loan, as well as some modest amounts in respect of secretarial fees and disbursements relating to the period from September 2007 to December 2008. CN 2000 sought payment of $51,732 in respect of director's fees for the period August 2007 to December 2008, and $875,000 in respect of the rights issue. CNHK sought $176,148 for director's fees (for the period June 2005 to December 2008), $525,111.44 in respect of management fees (for an unspecified period ending 17 December 2008) and $20,967.51 in respect of travelling expenses (June 2007 to November 2007).[1]
[1] The most recent version of the statement of claim is the re‑amended statement of claim dated 30 May 2013.
From the latest version of the defence[2] it appears that the essence of AWAP's case is that by agreements made between March and December 2006 Mr Chou agreed to resign as secretary of AWAP and effective control of AWAP passed to Tan Kah Hock and Tan Kah Hong (the Tan brothers). AWAP asserts that as a result of these agreements all moneys owing to Mr Chou, CN 2000 and CNHK for loans or fees have been paid (2006 Agreements). AWAP asserts that the meeting in September 2007 at which the rights issue was agreed, was invalid, as is the rights issue. A dispute arose in relation to an agreement by which Mr Chou was to sell certain shares in AWAP to the Tan brothers which led to litigation in Singapore. This was resolved by a consent judgment for specific performance in the High Court of Singapore in October 2008. There was then a dispute as to the implementation of the consent order which was resolved at a meeting in December 2008 (2008 Agreement).
[2] Amended re‑amended defence dated 29 November 2011.
It is thus readily apparent that the factual issues which this court will need to deal with at any trial of the action will centre on events between 2006 and 2008. In particular, the key issue is whether all disputes between the parties were settled by the 2006 Agreements and/or the 2008 Agreement.
The action was listed for a case evaluation conference before the case managing registrar on 31 July 2015. On 30 July 2015, AWAP filed a chamber summons seeking to have the action dismissed pursuant to the Rules of the Supreme Court 1971 (WA) (RSC) O 33 r 2. That rule permits a party other than the plaintiff to apply to the court for an order dismissing the action for want of prosecution where the plaintiff has neglected to enter the action for trial. The registrar dismissed the application. By notice of appeal filed 4 August 2015, AWAP appealed from this decision.
The reasons which follow are in relation to the appeal.
AWAP filed two affidavits in support of the application. The first was filed by Tan Kah Hock, being sworn 16 July 2015. Mr Tan is a director of AWAP, and is also known by his English name, Daniel Tan.[3] The second was sworn by Michael Charles Hotchkin on 29 July 2015. Mr Hotchkin is a principal of AWAP's lawyers.[4]
[3] Which I will refer to as the 'Second Tan Affidavit'.
[4] Which I will refer to as the 'Hotchkin Affidavit'.
The plaintiffs filed three affidavits in opposition to the application. The first one was by Mr Chou, and was filed on 30 September 2015.[5] The second and third were sworn by David Lenhoff on 14 September and 22 October 2015. Mr Lenhoff is a consultant with the plaintiffs' lawyers.
[5] Which I will refer to as the 'Chou Affidavit'.
The parties also relied on two of the affidavits filed in relation to the summary judgment application. The plaintiffs relied on the affidavit of Daniel Tan sworn 12 June 2010.[6] AWAP relied on an affidavit of Craig John Dawson sworn 24 May 2010.[7] At the time of swearing this affidavit, Mr Dawson was then an executive with Knight Frank Australia Pty Ltd, the property manager of International House.
[6] Which I will refer to as the 'First Tan Affidavit'.
[7] Which I will refer to as the 'Dawson Affidavit'.
Counsel for the plaintiffs objected to certain statements contained in the Second Tan Affidavit and the Hotchkin Affidavit. At the hearing on 26 October 2015, I ruled on the objections and drew a red line through the paragraphs which I struck out on the original filed affidavits.[8]
[8] My reasons for the rulings on evidence are set out in the transcript of the hearing.
What issues arise for determination?
The court has inherent power to prevent its processes from being abused and the corresponding power to protect their integrity once they are set in motion.[9] The power to dismiss an action for want of prosecution is a well‑established exercise of this inherent power. The power to dismiss for want of prosecution is discretionary, and although the discretion is not fettered by any absolute or inflexible rules, it must be exercised judicially.[10] It is also to be exercised having regard to the case flow management principles set out in O 29 RSC O 1 r 4A and r 4B.[11]
[9] CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; (1997) 189 CLR 345, 391 (Dawson, Toohey Gaudron, McHugh, Gummow & and Kirby JJ); The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398 [93] (Steytler P & Owen JA).
[10] Hancock [100] ‑ [101]; Smith v Bank of Western Australia Ltd [2010] WASCA 15; (2010) 265 ALR 472 [4] (Owen JA).
[11] Hancock [93]; Hughes v Gales (1995) 14 WAR 434, 450 (Malcom CJ, Kennedy & Pidgeon JJ agreeing).
The onus is on the party seeking to move the court to exercise its discretion to dismiss the action.[12]
[12] Hancock [98].
There are five matters which the court will usually consider in the exercise of the discretion:[13]
•the length of the delay;
•the explanation for the delay;
•the hardship to the plaintiff if the action is dismissed and the cause of the 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] Ulowksi v Miller [1968] SASR 277, 280 (Bray CJ); Lewandowski v Lovell (1994) 11 WAR 124, 130 ‑ 135 (Murray J, Kennedy & White JJ agreeing); Hancock [100]; Smith [4], [14] (Pullin JA), [78] (Newnes JA).
Three other matters which the court should have regard to in exercising the discretion are:[14]
(a)whether any default has been intentional and contumelious, for example, disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or
(b)whether there has been inordinate and inexcusable delay on the part of the plaintiff or his or her lawyers, and, if so
(c)whether such delay:
(i)will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action; or
(ii)is such as is likely to cause or to have caused serious prejudice to the defendant either as between themselves and the plaintiffs or between each other or between them and a third party.
[14] Birkett v James [1978] AC 297, 318 (Lord Diplock); Lewandowski (130 ‑ 135) (Murray J, Kennedy & White JJ agreeing); Hancock [98]; Smith [13] (Pullin JA), [78] (Newnes JA).
In the end, it 'will always be necessary for the court to stand back and ask: what does justice, in all the notions or senses of it that are relevant, require in the circumstances of this case?'.[15]
[15] Hancock [103].
These principles apply equally to an application to dismiss an action for want of prosecution pursuant to RSC O 33 r 2.
The principles in relation to an appeal from a decision of a registrar are conveniently summarised by Le Miere J in CVW Group Holdings Pty Ltd v Addison in the following terms:[16]
The appeal from a registrar to a judge is not a hearing anew as if there had been no hearing before, and decision by, the registrar. That is apparent from O 60A r 5 which requires an appeal to be commenced by filing a notice of appeal and for the notice of appeal to state, amongst other things, the grounds of the appeal. Nevertheless, having regard to the fact that a registrar is exercising delegated powers, and having regard to the provisions of O 60A r 4, 5 and 6, an appeal from a registrar by way of rehearing involves many of the features of a hearing de novo. The appeal may be on the evidence before the registrar or as supplemented by any further evidence the judge admits. The appeal from a registrar to a judge is a hearing de novo in the sense that the powers of the court on appeal are exercisable not only where the appellant can demonstrate that, having regard to all the evidence now before the court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error. On an appeal from a registrar the court may exercise its powers regardless of error.
[16] CVW Group Holdings Pty Ltd v Addison [2011] WASC 267 [17] (Le Miere J).
On the evidence and submissions before me, it is convenient to analyse the case under five headings:
•The length of, and explanation for, the delay.
•The conduct of AWAP in the litigation.
•The prejudice to the plaintiffs if the action is dismissed.
•The prejudice to AWAP if the action is allowed to proceed.
•The interests of justice.
The length of, and explanation for, the delay
The plaintiffs' solicitors prepared a detailed chronology which I have used as the basis of the chronology annexed to these reasons. The parties have exchanged pleadings, which have been revised, and discovery appears to be complete. The case is on the cusp of being programmed through to trial.
There are three significant periods of delay which emerge from the chronology. The first is the period between April 2012 and May 2013 when the parties were grappling with the issue of how to lead evidence as to the incorporation, shareholdings and officers of the parties, none of which is incorporated in Australia. The plaintiffs commenced this process by notice to admit facts filed 10 April 2012. By notice of admission of facts filed 17 September 2012, the only fact which AWAP admitted was the due incorporation of CNHK. In response to a request for a status report, the plaintiffs' lawyers wrote to the case managing registrar by letter dated 18 September 2012 outlining the difficulties they were experiencing in dealing with AWAP's lawyers in endeavouring to agree the facts. Those difficulties continued in 2013, in particular as evidenced by a letter dated 7 February 2013 from the plaintiffs' lawyers to AWAP's lawyers. Various status conferences were held during this period. At a case evaluation conference on 8 February 2013 the registrar ordered the parties to confer in relation to the plaintiffs' notice to admit. Eventually a process was agreed whereby the parties would jointly engage legal experts in Hong Kong and Samoa. The experts provided their advices in May 2013.[17] On the material before me, I do not discern any particular fault on the part of the plaintiffs in this process; if anything, more of the fault for the delays rests with AWAP and its lawyers.
[17] See generally: First Lenhoff Affidavit, pars 10 ‑ 21 and annexures DL10 ‑ DL22, pages 88 ‑ 133.
The second is the period from July 2013 to December 2013. On 12 July 2013, the plaintiffs' lawyers sent AWAP's lawyers an email inquiring whether AWAP proposed to amend its defence in response to the re‑amended statement of claim filed 30 May 2013. Despite a number of follow up requests, it was not until 6 December 2013 that AWAP's lawyers advised the plaintiffs' lawyers that AWAP did not propose to amend its defence. This was in compliance with an order to file an amended defence by this date. The letter from the plaintiffs' lawyers to the case managing registrar dated 23 August 2013 confirms that the failure of AWAP's lawyers to advise whether the defence was to be amended was the operative cause of the delay in this period.[18] I do not discern any fault on the part of the plaintiffs for this period of delay.
[18] See generally: First Lenhoff Affidavit, pars 22 ‑ 26 and annexures DL23 ‑ DL26, pages 134 ‑ 137.
The third is the period from the case evaluation conference on 15 November 2013 to the case evaluation conference on 31 July 2015. The following events occurred within this period:[19]
[19] See generally: First Lenhoff Affidavit, pars 27 ‑ 31 and annexures DL27 ‑ DL29, pages 134 ‑ 138.
Date Event 15 November 2013 Plaintiffs' list of documents filed. 6 December 2013 Letter from defendant's solicitors to plaintiffs' solicitors that defendant did not intend to file a further re‑amended defence. 4 February 2014 Draft minutes of trial directions sent by plaintiffs' solicitors to defendant's solicitors with enquiry as to whether or not the suggested dates in the minute were suitable to the defendant. 12 February 2014 Email from plaintiffs' solicitors to defendant's solicitors requesting response to draft minute of trial directions. 13 February 2014 Email from defendant's solicitors to plaintiffs' solicitors that defendant would respond the following week to plaintiffs' draft minute of trial directions. 14 July 2014 Letter from registrar to plaintiffs' solicitors requesting report on current status of the matter. 1 August 2014 Letter from plaintiffs' solicitors to registrar providing report. 2 July 2015 Notice of relisting of Case Evaluation Conference on 31 July 2015 from registrar. 21 July 2015 Telephone call from defendant's solicitor to plaintiffs' solicitor informing of defendant's intention to bring dismissal application for want of prosecution. 21 July 2015 Letter from defendant's solicitor to plaintiffs' solicitor conferring on dismissal application. 30 July 2015 Application to dismiss filed and served. 31 July 2015 Case Evaluation Conference - dismissal application dismissed by registrar.
The explanation provided by the plaintiffs' solicitors to the registrar in their letter of 1 August 2014 is in the following terms:[20]
I telephoned my client in Singapore in response to your letter and have been informed by him that he is currently involved in litigation in China which is taking up all his time at present. Furthermore, I have been instructed by my client that his health is at present unsound which has further complicated matters. Consequently, it is respectfully suggested that the matter should be called on for a directions hearing in about six weeks where the present status of the proceedings can be further examined.
[20] First Lenhoff Affidavit, annexure DL 29, page 140.
Mr Chou elaborates on the position in his affidavit. His evidence is to the effect that he suffered significant financial losses in late 2008 in the global financial crisis. These losses caused him to consent to settle the Singaporean proceedings, though he maintained then, and still does, that he had a good defence on the merits to the claims by the Tan brothers in those proceedings. The damages, costs and legal expenses from the Singaporean litigation and two other proceedings in Australia again involving the Tan brothers, added to his financial difficulties. He then states:[21]
Consequently, it has been an enduring struggle for me to be able to fund the legal costs required by me in these proceedings, particularly in relation to the preparation for and the conduct of a trial. I am now in a position to do so.
[21] Chou Affidavit, pars 3 ‑ 7.
Mr Chou was also suffering health issues:[22]
In addition, I have, for more than a year, been struggling with health issues related to hypertension, high cholesterol and prostate problems, which have impacted upon my ability properly to manage and attend to my affairs, as I am constantly feeling ill and fatigued. My financial and health issues caused me to adopt the view that, as the defendant was delaying in taking steps to progress the proceedings and was not responding to my solicitors correspondence, it appeared to me to be unconcerned by the length of time that the proceedings were taking. The time gave me the opportunity to look after and restore my health and also to attend to my financial affairs, which were consuming a great deal of time when I was well enough to attend to them.
[22] Chou Affidavit, par 8.
Mr Lenhoff annexes to his second affidavit a bundle of medical reports relating to Mr Chou.[23] This information loosely confirms the statements made by Mr Chou, but does not provide me with any evidence as to the impact of the medical conditions on Mr Chou's ability to instruct solicitors in this action.
[23] Second Lenhoff Affidavit, annexure DL1, pages 3 ‑ 8.
Counsel for AWAP was critical of the explanation given by Mr Chou. He referred to the comments of Henry J in Wine Connection Pty Ltd v Pitcliff Pty Ltd, that, in a case like the present one, 'the affidavit evidence will ordinarily warrant close scrutiny to properly consider not only whether an explanation is proffered for the delay, but what, if any, evidentiary detail is proffered in support of that explanation'.[24] In particular, counsel was critical of the fact that no particulars were given of precisely how, when and why Mr Chou's financial issues or his health issues preclude him from properly instructing his solicitors. Counsel for AWAP thought that this information ought to be provided for the entire period that the action has been on foot; however, as I understand Mr Chou's evidence, the financial and health issues were only put forward as a reason for what I have described as the third period of delay. Nonetheless, the failure to provide detailed information as to Mr Chou's medical conditions undermines the weight which may be given to this explanation for the delay.
[24] Wine Connection Pty Ltd v Pitcliff Pty Ltd [2013] QSC 56 [40] ‑ [52] (Henry J).
Counsel for AWAP is also critical of the fact that Mr Chou does not deal with the China litigation in his affidavit, his involvement in which was given as a reason for the delays by Mr Lenhoff in his letter to the court of 1 August 2014. AWAP submits that it is open to the court to infer that the real reason for the high level of inactivity since 2010 is that it suited Mr Chou's purposes by enabling him to prioritise his resources (both time and money) to engage in litigation in China, presumably on the basis that it was more commercially important to him. Counsel drew my attention to authority that a strategic decision to delay an action for reasons related to other actions is not a justifiable excuse for the undue prolongation of proceedings.[25]
[25] Hughes v Gales (444) (Malcolm CJ, Kennedy & Pidgeon JJ agreeing).
In relation to this third period, there is some fault on the part of the plaintiffs, though its lawyers, in not following up with AWAP's lawyers to get a response to the draft minute of trial directions sent to that firm, or to otherwise list the action for a directions hearing at which trial directions could be made. There is, however, also fault on the part of AWAP's lawyers through this period as a result of their failure to confer, which I will consider next in the context of AWAP's conduct as a whole.
The conduct of AWAP in the litigation
The plaintiffs submitted that AWAP acquiesced in the delays, thereby disentitling it from relying on those delays in an application for dismissal for want of prosecution. The issue of acquiescence was considered by the court in Hancock.[26] However, the present case is different from that discussed in Hancock in which there were interactions between the parties from which a 'tacit acceptance of a state of affairs or a course of conduct' could be inferred. Here there is no such interaction, merely a failure by AWAP's lawyers to confer in relation to trial directions. In this regard, counsel for AWAP referred to the following comment by Roberts‑Smith JA in Hancock:[27]
I accept the respondent's submission that there is no obligation upon a defendant to press a plaintiff to prosecute an action against the defendant. Accordingly, mere failure to do so cannot militate against a defendant who seeks to strike out the plaintiff's action for want of prosecution. The defendant who does no more than stand by while the plaintiff delays, is not by that alone, acquiescing in the delay; there must be something more which indicates a willing acceptance or allowance of the delay, for whatever reason. The submission is that there was more here.
[26] See generally: Hancock [122], [126] ‑ [143],[150], [213] ‑ [214]; Timcal Pty Ltd v Sons of Gwalia Ltd (Subject to Deed of Company Arrangement) [No 2] [2011] WASC 58 [35], [41] (Le Miere J).
[27] Hancock [195].
However, I am of the view that there is a caveat to those observations, being the obligation to confer in RSC O 59 r 9. This obligation is amplified in par 4.3.2 of the Consolidated Practice Directions.
As I have noted, in February 2014, the plaintiffs' lawyers sent to AWAP's lawyers a draft minute of trial directions. On 13 February 2014, AWAP's lawyers sent the plaintiffs' lawyers an email to the effect that they would respond in the following week to the plaintiffs' minute of trial directions.[28] They did not do so. Significantly, Mr Hotchkin does not provide any explanation in his affidavit for failing to confer with the plaintiffs' lawyers. Had Mr Hotchkin done what he said he would do - respond to the plaintiffs' lawyers in the week commencing 17 February 2014 - and there had then been delay by the plaintiffs, then AWAP's case would have been much stronger.
[28] First Lenhoff Affidavit, par 29, annexure DL28, page 139.
The obligation to confer imposed a clear requirement on AWAP's lawyers to provide a response to the minute of trial directions proposed by the plaintiffs' solicitors. AWAP should not benefit from their failure to do so. The power to dismiss an action for want of prosecution is to be exercised having regard to the principles of case management set out in RSC O 1 r 4A and r 4B. Pursuant to the latter, the court manages and supervises actions with the object, among others, of 'facilitating the timely disposal of business'.[29] Allowing a defendant to benefit from ignoring the obligation on its lawyers to confer would undermine what the court is endeavouring to achieve in case management.
[29] RSC O 1 r 4B(d).
The prejudice to the plaintiffs if the action is dismissed
In his first affidavit, Mr Lenhoff states that the plaintiffs would suffer prejudice if the action is dismissed as the causes of action pleaded in the re‑amended statement of claim are now statute barred.[30] 'It is always a hardship to a plaintiff to be denied their day in court'.[31]
[30] Devir v Western Australian Planning Commission [2007] WASC 176 [21] (Sanderson M).
[31] Devir [21].
The plaintiffs' claims are substantial, and would run into millions of dollars, especially once interest is taken into account.
The prejudice to AWAP if the action is allowed to proceed
AWAP only identifies one area in which it says it will suffer prejudice if the action is allowed to proceed notwithstanding the delays. This is the impact of delay on its ability to secure evidence from a Singaporean lawyer, Mr Lee Mun Hooi. As a matter of principle, the loss of a witness who may testify on a relevant issue, or even of a person in a position to provide instructions or assistance in the preparation of a trial on a particular issue, may be a very serious prejudice in the circumstances of a particular case.[32]
[32] Australian Growth Managers Ltd v Egerton‑Warburton [2007] WASC 10 [95] (Newnes M); McDowall v Reynolds [2006] QSC 414 [32].
Mr Lee acted on behalf of AWAP against Mr Chou and his related entities in Singapore. This included the litigation in the High Court of Singapore to enforce the 2006 Agreements.[33] A key element in AWAP's defence is that 'all disputes between the parties had been settled on [its] behalf by ... Mr Lee'.[34] Mr Hotchkin's instructions are that the settlement of the Singaporean proceedings in 2008, in which Mr Lee acted, 'was intended to effect a settlement and release of all claims each party may have made against each other in relation to the dispute, which would include the claim brought in these proceedings' by the plaintiffs.[35]
[33] Second Tan Affidavit, par 3; Hotchkin Affidavit, par 4.
[34] Second Tan Affidavit, par 3.
[35] Hotchkin Affidavit, par 5.
Mr Tan's evidence is that at the time this case was commenced (March 2010) Mr Lee was practising as a lawyer and providing him with legal advice and services on legal matters in Singapore. Mr Lee told Mr Tan that he was prepared to help Mr Tan by giving Mr Hotchkin a statement as to what was said, and to allow him to go through his files, to obtain all evidence necessary to prove that the dispute had been settled.[36]
[36] Second Tan Affidavit, par 5.
Mr Tan then goes on to say that he spoke to Mr Lee shortly after receiving an email from AWAP's lawyers advising that the court wanted to review this case (which I take to be in July 2015). Mr Tan was told by Mr Lee that he did not want to go to Perth to give evidence, and did not want to give a statement or spend any further time on this matter. Mr Lee told Mr Tan that 'he could not remember anything very well any more anyway and did not think that more than 10 years after the settlement agreement had taken place, his memory would be good enough to help the Court anyway'.[37]
[37] Second Tan Affidavit, pars 6 ‑ 8.
Mr Hotchkin met with Mr Lee in July 2011. The meeting was brief, and Mr Hotchkin did not have an opportunity to go through all the issues in detail with Mr Lee on that occasion. Mr Hotchkin's observation from this meeting was that, whilst Mr Lee did not say that he would refuse to give evidence, he appeared reluctant to do so. On another occasion, Mr Lee did not attend a prearranged meeting with Mr Hotchkin at Mr Lee's office.[38]
[38] Hotchkin Affidavit, pars 9 ‑ 11.
Mr Hotchkin wrote a detailed letter to Mr Lee dated 5 August 2011 in which he set out the issues in dispute in some detail. He requested the opportunity to meet with Mr Lee on a date in August 2011 when he was travelling through Singapore on other business.[39] Mr Hotchkin does not give evidence that this meeting occurred.
[39] Hotchkin Affidavit, par 11, annexure MCH‑3.
Mr Hotchkin goes on to say that he did not make any further effort to obtain a statement from Mr Lee, nor to inspect his file, 'as the cost of doing so properly was not justified unless and until the matter was listed for hearing'.[40] Mr Hotchkin concludes by stating that:[41]
My inability to take a statement for him prejudices my preparation of this matter for hearing on behalf of the Defendants and the conduct of the hearing itself, as there may well be facts which support his view or which undermine the claim, which I can not now find out.
[40] Hotchkin Affidavit, par 12.
[41] Hotchkin Affidavit, par 14.
Counsel for the plaintiffs questioned the significance of Mr Lee's evidence on two bases. Both stem from the pleading in relation to the effect of the settlement of the Singaporean proceedings in 2008 in pars 17(e) and (f) of the amended re‑amended defence. The first basis is that the particulars to these paragraphs refer to certain letters as well as to a meeting at Mr Lee's office on 11 December 2008. The people said to be present at the meeting are the Tan brothers, Mr Lee, Mr Chou and his solicitor Kevin Kwek. Thus, even if AWAP is not able to arrange for Mr Lee to give evidence, it will still be able to lead evidence from the Tan brothers as to what occurred at the 11 December 2008 meeting.
The second basis is that the plea in pars 17(e) and (f) of the amended re‑amended defence only refers to a dispute relating to the rights issue and the characterisation of the $875,000 paid by CN 2000 to AWAP. As set out in the amended re‑amended defence, the other claims made by the plaintiffs were alleged to have been settled by the 2006 Agreements.[42] The key meeting in 2006 is said to have been between Mr Daniel Tan and Mr Chou.[43]
[42] Amended re‑amended defence, par 7.
[43] Amended re‑amended defence, pars 7(b), 7(d).
Both points made by the plaintiffs have some weight. They diminish any prejudice which AWAP may have otherwise suffered by not being able to call Mr Lee to give evidence. Further, AWAP's lawyers did not consider Mr Lee's evidence to be significant enough to warrant detailed instructions to be taken from him for the purposes of enabling AWAP to plead its case; they were content to defer any further approach to Mr Lee until closer to trial. In doing so, they took a risk that he might change his attitude to assisting AWAP in this case, especially given Mr Hotchkin's observations from their meeting which I have set out above [43].
AWAP did not point to any other specific prejudice. For example, there is no evidence in the present case that the ongoing litigation is affecting AWAP financially, or imposing any particular personal impact on the directors of AWAP.[44]
[44] Contrast: Australian Growth Managers [96].
The interests of justice
Having considered the four factors which I have specifically identified, I am now required to 'stand back and ask: what does justice, in all the notions or senses of it that are relevant, require in the circumstances of this case?'.[45]
[45] Hancock [103].
Of the three periods of delay which I have identified, totalling some three years, AWAP is as responsible for much of the delay as a whole as the plaintiffs. In particular, the failure of AWAP's lawyers to confer in relation to trial directions weighs heavily against the dismissal of the action.
Counsel for AWAP submitted that it was difficult to see how the steps taken by the plaintiffs over the period from commencement to the case evaluation conference on 15 November 2013 could reasonably have taken more than two to three weeks of legal work. By the same token, it is difficult for me to see how it could have taken AWAP's lawyers more than a day or so to have reviewed the re‑amended defence to determine whether it required amendment. The fact that it took them six months to address this issue can only be due to a lack of interest or a conscious tactical decision on the part of the directors of AWAP; both count against the dismissal of the action.
I do need to evaluate these delays in the context of the age of the dispute as a whole.[46] In doing so, I am mindful that the quality of justice deteriorates as time goes on.[47] The present dispute goes back to the arrangements made in 1997 for the remuneration of officers of CNHK and CN 2000, some 18 years ago. AWAP proposes to challenge the veracity of these arrangements at trial. It will face obvious forensic difficulties. In particular, it has raised an issue as to whether the invoices on which CNHK and CN 2000 base their claims were created well after the date on which the transactions they record were alleged to have taken place.[48] However, the key trial issues are whether the 2006 Agreements and the 2008 Agreement had the effect of settling all claims the parties may have had against each other. This will require oral evidence of meetings held seven to nine years ago.
[46] Hendeson v Hewitt [No 4] [2008] WASC 135 [49] (Martin CJ).
[47] Jakovljevic v L & B Doslov [2000] WASCA 131 [41] ‑ [42] (Steytler J, Kennedy & Anderson JJ agreeing); Australian Growth Managers [96].
[48] See for example, Dawson Affidavit, par 3, annexure A, pages 3 ‑ 39.
In his submissions, counsel for AWAP states:
There was an opportunity to achieve a global settlement of all disputes between the parties, including the dispute the subject of these proceedings, but as the terms of the Singapore Consent Judgement entered in December 2008 demonstrates, that opportunity was not taken. In the interest of justice, it is relevant and reasonable to consider that if a party wishes to continue to agitate a dispute rather than negotiate a global settlement, it is all the more incumbent upon that person to prosecute the remaining dispute with diligence. In essence, that is the policy which under‑pins the Anshun estoppel doctrine.
The present action was commenced in March 2010. That is not an unreasonably long period of time from the events of December 2008. Moreover, the terms of the consent order filed in October 2008 in the High Court of Singapore are expressly without prejudice to the rights of Mr Chou and CN 2000 to claim in Australia the $875,000 alleged to have been paid by CN 2000 to AWAP.[49] The parties thus expressly left open the possibility of further litigation in Australia.
[49] Re‑amended defence , par 17(a).
Even in the context of the age of the dispute as a whole, I do not consider that the delays I have identified can be characterised as inordinate or inexcusable. The delays in this case are shorter than delays considered insufficient to warrant dismissal in Devir (five years)[50], Hancock (eight years in formulating a statement of claim)[51] and Meridian Oil (12 years).[52]
[50] Devir [19] (Sanderson M).
[51] Hancock [123] ‑ [125], [140].
[52] Meridian Oil NL v Smyth [2007] WASC 179 [25] (Sanderson M).
AWAP also refers to the public interest, making the following submission:
The public interest in the careful allocation of public resources when administering justice is also relevant. In this case, there is no reason why proceedings brought by companies who had the opportunity to settle this dispute in another jurisdiction, should consume the limited resources of this Court to determine a dispute which could, and should, have been resolved a long time ago, particularly where its inexcusable delay has caused the Defendant prejudice.
Although the public interest is clearly relevant,[53] given the caveat to the consent order which I have noted above [55], I do not attach much weight to this submission.
[53] Hancock [90] ‑ [95].
In terms of the prejudice to the parties, I do not consider that the delays have caused, or will cause, serious prejudice to AWAP. I do not consider that the difficulties in obtaining evidence from Mr Lee's evidence will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action, in particular given that the Tan brothers are able to give evidence of what happened at the critical meeting on 11 December 2008. On the other hand, the plaintiffs will suffer the substantial prejudice of not being able to pursue their substantial claims if the action is struck out.
Further, this is not a case in which the plaintiffs have failed to comply with an order made by the court to enter the action for trial by a specific date; the case management directions made on 15 November 2013 did not impose a time within which the plaintiffs were required to enter the action for trial. There has been no non‑compliance, let alone any intentional or contumelious non‑compliance.
The action is at an advanced stage. Pleadings are closed and discovery has been given. It is ready for the making of trial directions. With one caveat, no party has identified any particular interlocutory steps which need to be taken prior to the making of these orders. The caveat is that, in oral submissions, counsel for AWAP stated that it may need to obtain computer forensic evidence in relation to the dates on which certain invoices relied on by the plaintiffs were created. However, there is no affidavit evidence setting out any particular difficulties with this proposed evidence. Overall, the readiness of the action for trial is a factor weighing against the dismissal of the action.[54]
[54] See for example: Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273 [56] ‑ [58] (Martin CJ, Wheeler & Pullin JJA agreeing); Meridian Oil [25] (Sanderson M); Alvaro v Metaxas & Hager [2012] WASC 341 [23].
This is not one of the rare class of cases in which the merits of the plaintiffs' claims is a factor.[55]
[55] Monaveen [50]; Timcal [44] ‑ [45].
Having regard to all of the circumstances which I have set out above, I do not consider that the interests of justice require that the plaintiffs' action be dismissed. I do not consider that allowing the plaintiffs' case to proceed would inflict unnecessary injustice on AWAP.[56]
[56] Smith [18] (Pullin JA).
What final orders are appropriate?
For the reasons set out above, I am of the view AWAP's application to have the action struck out for want of prosecution should be dismissed. The learned registrar was correct in making this order, though I have re‑heard the application based on the evidence filed since the hearing was before the registrar.[57]
[57] RSC O 60A r 6.
I propose to request court listings staff to allocate a trial judge to the case, with the intent that the trial judge make the necessary orders to programme the case through to trial. To this end, I propose to make directions that:
(a)by 22 January 2016, the plaintiffs serve on the defendant by email a minute of proposed trial directions (to allow the minute drafted in February 2014 to be revised in light of the current issues in the action); and
(b)by 5 February 2016, the defendant serve on the plaintiffs a marked up version of the minute in (a) showing any amendments considered appropriate by the defendants; and
(c)lawyers for the plaintiffs and the defendant confer on the areas of disagreement in the minute; and
(d)by 12 February 2016, the plaintiffs file and serve a minute of proposed trial directions, noting any residual areas of disagreement between the parties.
I will hear from counsel on the final form of the directions and costs.
CHRONOLOGY
| Item No | Document/Event | Date |
| 1. | Writ of Summons with endorsed Statement of Claim issued | 17/03/2010 |
| 2. | Memorandum of Appearance | 19/03/2010 |
| 3. | Application for Summary Judgment | 19/04/2010 |
| 4. | Hearing of Application for Summary Judgment | 26/07/2010 |
| 5. | Reasons for refusing Summary Judgment published | 03/09/2010 |
| 6. | Defence | 24/09/2010 |
| 7. | Reply | 22/10/2010 |
| 8. | Amended Statement of Claim | 05/11/2010 |
| 9. | Amended Defence | 25/11/2010 |
| 10. | Status Conference - discovery by the parties ordered | 21/01/2011 |
| 11. | Defendant's Discovery Affidavit | 31/03/2011 |
| 12. | Plaintiffs' Discovery Affidavit | 04/04/2011 |
| 13. | Status Conference - adjourned to 3/6/11 | 08/04/2011 |
| 14. | Status Conference - converted to Case Evaluation Conference | 08/07/2011 |
| 15. | Re-amended Defence | 19/09/2011 |
| 16 | Amended Re-amended Defence | 29/11/2011 |
| 17. | Case Evaluation Conference - adjourned to 13/4/2012 | 02/03/2012 |
| 18. | Plaintiffs' Notice to Admit re evidence required by s 7 of the Foreign Corporations (Application of Laws) Act 1989 | 10/04/2012 |
| 19. | Case Evaluation Conference listed for 13/4/2012 adjourned | 12/04/2102 |
| 20. | Defendant's solicitor's letter to plaintiffs' solicitors requiring amendments to Notice to Admit | 13/04/2012 |
| 21. | Plaintiffs' solicitors letter recording no response by defendant to Notice to Admit | 28/05/2012 |
| 22. | Letter from Registrar to plaintiffs' solicitors requiring a progress report | 07/09/2012 |
| 23. | Letter from plaintiffs' solicitors to Registrar providing progress report | 18/09/2012 |
| 24. | Notice of Admission filed and served by Plaintiffs' solicitors | 17/09/2012 |
| 25. | Case Evaluation Conference - adjourned to 8/2/2013 | 09/11/2012 |
| 26. | Letter by plaintiffs' solicitors to defendant's solicitors that Defendant had not responded reasonably to Notice to Admit | 07/02/2013 |
| 27. | Case Evaluation Conference - Counsel for parties ordered to confer on Notice to Admit | 08/02/2013 |
| 28. | Letter from plaintiffs' solicitors to defendant's solicitors with proposal to resolve all issues between the parties, which might require evidence of foreign law, in a cost effective and expeditious manner | 14/02/2013 |
| 29. | Email from defendant's solicitors to plaintiffs' solicitors with proposals in relation to joint instruction of legal experts in Hong Kong and Samoa | 20/02/2013 |
| 30. | Email from defendant's solicitors to plaintiffs' solicitors confirming that the letter of engagement and instruction could be sent to the solicitors in Hong Kong and Samoa | 12/03/2013 |
| 31. | Status Conference - adjourned to 31/05/2013 | 19/04/2013 |
| 32. | Letter of advice from solicitors in Samoa | 03/05/2013 |
| 33. | Letter of advice from solicitors in Hong Kong | 07/05/2013 |
| 34. | Re-amended Statement of Claim | 30/05/2013 |
| 35. | Email from plaintiffs' solicitors to defendant's solicitors enquiring when the defendant proposed filing and serving an amended defence | 12/07/2013 |
| 36. | Email from plaintiffs' solicitors to defendant's solicitors requesting when the defendant expected to file and serve an amended defence | 25/07/2013 |
| 37. | Email from defendant's solicitors to plaintiffs' solicitors that Mr Hotchkin was away for the month of July 2013 | 25/07/2013 |
| 38. | Email from plaintiffs' solicitors to defendant's solicitors requesting amendment to defence be filed by 30/8/2013 | 26/07/2013 |
| 39. | Letter from Registrar to plaintiffs' solicitors requesting report on current status of the matter | 13/08/2013 |
| 40. | Letter from plaintiffs solicitors to Registrar providing report | 23/08/2013 |
| 41. | Case Evaluation Conference - defendant ordered to file and serve amended defence by 6 December 2013 and solicitors for the parties were ordered to bring in a minute of trial directions by 20 January 2014 | 15/11/2013 |
| 42. | Plaintiffs' List of Documents | 15/11/2013 |
| 43. | Letter from defendant's solicitors to plaintiffs' solicitors that defendant did not intend to file a Further Re-Amended Defence | 6/12/2013 |
| 44. | Draft minute of trial directions sent by plaintiffs' solicitors to defendant's solicitors with enquiry as to whether or not the suggested dates in the minute were suitable to the defendant | 04/02/2014 |
| 45. | Email from plaintiffs' solicitors to defendant's solicitors requesting response to draft minute of trial directions | 12/02/2014 |
| 46. | Email from defendant's solicitors to plaintiffs' solicitors that defendant would respond the following week to plaintiffs' draft minute of trial directions. No response from defendant ever received | 13/02/2014 |
| 47. | Letter from Registrar to plaintiff's solicitors requesting report on current status of the matter | 10/07/2014 |
| 48. | Letter from plaintiff's solicitors to Registrar providing report | 01/08/2014 |
| 49. | Notice of relisting of Case Evaluation Conference on 31 July 2015 from Registrar | 02/07/2015 |
| 50. | Telephone call from defendant's solicitor to plaintiffs' solicitor informing of defendant's intention to bring dismissal application for want of prosecution | 21/07/2015 |
| 51. | Letter from defendant's solicitor to plaintiffs' solicitors conferring on dismissal application | 21/07/2015 |
| 52. | Application to dismiss filed and served | 30/07/2015 |
| 53. | Case Evaluation Conference - dismissal application dismissed by Registrar | 31/07/2015 |
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