City of Canning v Christou Nominees Pty Ltd - [2022] WASC 170

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   CITY OF CANNING -v- CHRISTOU NOMINEES PTY LTD [2022] WASC 170
CORAM:   ALLANSON J
HEARD:   13 MAY 2022
DELIVERED          :   13 MAY 2022
PUBLISHED           :   13 MAY 2022
FILE NO/S:   CIV 2326 of 2018
BETWEEN:   CITY OF CANNING
Plaintiff
AND
CHRISTOU NOMINEES PTY LTD
First Defendant
AECOM AUSTRALIA PTY LTD
Second Defendant

Catchwords:

Practice and procedure - Application to remove action from Inactive Cases List - Turns on own facts

Legislation:

Local Government Act 1995 (WA)
Rules of the Supreme Court 1971 (WA)

Result:

Matter removed from Inactive Cases List

Category: B

Representation:

Counsel:

Plaintiff	:	Ms R Joseph
First Defendant	:	Mr R Edwards
Second Defendant	:	Mr S Popperwell

Solicitors:

Plaintiff	:	Thomson Geer - Perth
First Defendant	:	DLA Piper Australia - Perth
Second Defendant	:	Popperwell & Co

Cases referred to in decision:

Ansa Enterprises Pty Ltd v Australian Finance Group Ltd [2020] WASC 378
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Australian Building and Construction Commissioner v Pattinson [1922] HCA 13
Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261
MTQ Holdings Pty Ltd v Lynch [2007] WASC 49
Rowe v Stoltze [2013] WASCA 92; (2013) 45 WAR 116
State of Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146

ALLANSON J:

Introduction

On 18 November 2021, the principal registrar gave notice to the parties pursuant to O 4A r 25 of the Rules of the Supreme Court 1971 (WA) that she had put this action on the Inactive Cases List because no party had taken any procedural step in the proceeding for 12 months.
On 6 May 2022, the solicitors for the plaintiff requested that the action be removed from the list. The request was supported by an affidavit of Stephen Cain, Interim Chief Executive Officer of the City of Canning, affirmed 6 May 2022. The plaintiff later filed a supplementary affidavit of Mr Cain, affirmed 11 May 2022.
Both defendants opposed the application.

Principles

Order 4A r 27 provides:
(1)Any party to a case on the Inactive Cases List may make a request to the Court for an order that the case be taken off the Inactive Cases List.
(2)The Court may order a case be taken off the Inactive Cases List if satisfied the case will be conducted in a timely way or for any other good reason.
(3)An order that a case be taken off the Inactive Cases List may include any conditions necessary to ensure the case is conducted in a timely way.
Rule 27 must be read in the following context. First, a case may be put onto the Inactive Cases List in various ways: by direction of the case manager after giving notice to the parties to show cause why the case should not be put on the inactive cases list; by operation of a springing order; or, as in this case, where no procedural step is taken in the case for 12 months by any party. Second, while the case is on the Inactive Cases List only those documents listed in r 26(1) may be filed. In effect, the case must either be taken off the list or disposed of within six months. Third, if the case is on the list for six continuous months after the date on which notice is given, the case is taken to have been dismissed for want of prosecution. Fourth, if no procedural step is taken in the six months after the date on which a case is ordered to be taken off the inactive cases list, the case is taken to have been dismissed for want of prosecution.
The first question is whether I am satisfied that the case will be conducted in a timely way or there is some other good reason why the case should be removed from the list.
Even if I am satisfied that the case will be conducted in a timely way, the power under O 4A r 27 is discretionary. Like any discretionary power conferred by statute, the power under r 27 is 'to be exercised judicially, that is, fairly and reasonably having regard to the subject matter, scope and purpose of the legislation'.[1] On an application of this nature, the exercise of the discretion must in the end depend upon all the circumstances of the case, without being limited by conditions or guidelines articulated in other cases. The authorities do, however, offer guidance and help to ensure consistency in the exercise of judicial discretion.
[1] Australian Building and Construction Commissioner v Pattinson [1922] HCA 13 [40].
In Ansa Enterprises Pty Ltd v Australian Finance Group Ltd, Master Sanderson summarised principles identified in the cases that guide the exercise of the discretion under r 27.[2] The parties were agreed on the relevant principles, and I will not set them out here.
[2] Ansa Enterprises Pty Ltd v Australian Finance Group Ltd [2020] WASC 378 [10].
It is important consideration that legal business be conducted efficiently: that is reflected in O 1 r 4A and 4B and in the frequently cited observations in Aon Risk Services Australia Ltd v Australian National University.[3] But there must always remain sufficient flexibility to make reasonable allowance for human error.[4] The achievement of justice in the particular case remains a consideration to which the court may properly give significant weight.[5]
[3] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 [100] - [101]. And see Rowe v Stoltze [2013] WASCA 92; (2013) 45 WAR 116 [51]
[4] See, for example, MTQ Holdings Pty Ltd v Lynch [2007] WASC 49 [50].
[5] State of Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, 155; Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261 [46].

The background facts

The plaintiff is a body corporate, established as a local government under the Local Government Act 1995 (WA). On or around 17 December 2009, the first defendant tendered for a contract to provide services to the plaintiff in respect of a new community leisure facility. The tender was accepted in or about February 2010 and the first defendant was engaged as head consultant. The second defendant also provided services as a subconsultant.
The first defendant's design brief for the facility was approved by the plaintiff on or around 19 October 2010. On or around 15 December 2010 the plaintiff awarded a contract for the construction of the facility. The facility was officially opened on or around 10 September 2012.
The potential factual disputes between the parties relate primarily to matters that occurred in the period from late 2010 to about 2013.

Procedural history

For the purpose of this application, I have had regard to the electronic file maintained by the court, the reasons of Master Sanderson in an interlocutory decision on 25 March 2020, and matters raised in the affidavits of the parties. The following matters appear to be uncontroversial, at least for the purposes of this application.
The plaintiff became aware of issues regarding the mechanical system designed by the defendants for the facility in December 2012.
The plaintiff first raised issues with the first defendant regarding a project in about early 2013. The plaintiff proposes to plead measures that were implemented to deal with problems that occurred.
Representatives of the parties met on 30 June 2015.
In or around October 2015, the plaintiff engaged Archon Legal Pty Ltd to act on its behalf.
The parties and their solicitors met for without prejudice discussions on 8 November 2016. These negotiations came to nothing.
On 26 June 2017 Archon Legal sent the defendants' solicitors a letter providing substantive notice of the nature of the issues with the mechanical system and the plaintiff's claims. The claims were confined to claims for breach of contract - a cause of action the plaintiff no longer pursues - and were limited to costs incurred to date.
The parties met again on 24 January 2018, but again there was no resolution of the dispute.
On or about 26 July 2018 the plaintiff advised the first defendant that it was issuing proceedings.
The plaintiff commenced the action by writ with endorsement of claim, lodged on 30 July 2018. The writ was not immediately served.
In December 2018, the plaintiff instructed its current solicitors, following Archon Legal closing its practice.[6]
[6] A later change of representation merely reflected a change in name for the firm representing the plaintiff.
In an affidavit sworn on behalf of the plaintiff in the proceedings before the Master, Mr Spitz, the solicitor with carriage of the matter for the plaintiff, attached a letter dated 22 May 2019 in which the plaintiff estimated that it would file and serve an amended writ by 26 July 2019 and a statement of claim by mid to late August 2019.[7]
[7] Affidavit of Adam Spitz, sworn 4 September 2019,ARS -9.
On 29 July 2019, the plaintiff filed an amended writ adding the claim that loss and damage 'began to manifest from December 2012'.
On 30 July 2019, the last day on which the writ was valid for the purpose of service, the plaintiff attempted to serve the writ on both defendants. The period between July 2019 and 8 April 2020 was lost to a dispute about the validity of service of the writ on the first defendant.
No party took any procedural step in the action after 8 April 2020. And there is no evidence of any correspondence between any of them until, on 12 November 2021, the solicitors for the first defendant wrote to the Principal Registrar requesting that the action be placed on the Inactive Cases List. The letter was copied to the other parties.
On 6 May 2022, the plaintiff requested the action removed from the list.

The application for removal

In his first affidavit in support of the application, Mr Cain deposed that the plaintiff's endeavours to progress the matter have been hampered and delayed by events:
(1)The plaintiff's General Counsel - the officer with general responsibility for instructing the plaintiff's solicitors - left its employ in March 2020, and the position of General Counsel remained vacant until around June 2020. From around March 2021 until late March 2022, the position of General Counsel was again vacant.
(2)In or around January 2021, the Director Canning Community and Commercial left his position and Mr Cain was appointed to that position until around June 2021, when the position was split.
(3)The Chief Executive Officer of the plaintiff left the position in or around late June 2021, and Mr Cain was appointed Interim Chief Executive Officer. Mr Cain was then the primary instructor of the plaintiff's solicitors until the appointment of a new General Counsel in March 2022.
Mr Cain also deposed that, as at 26 March 2020 when the Master delivered his decision, the plaintiff and its solicitors 'were in the process of investigating around 14 claims it considered it had or potentially had' against the defendants, with those investigations involving relatively complex and technical issues. At the time Mr Cain was appointed Interim Chief Executive Officer in around June 2021, those investigations were ongoing and continued until around early May 2022 when the plaintiff had narrowed the claims to around five claims, with an estimated value of around $2 million in damages. The plaintiff's solicitors then advised Mr Cain that they were in a position to finalise the statement of claim. When the plaintiff applied for removal from the list, it had prepared a draft statement of claim which it proposes to file on 20 May 2022.
For an action that was commenced in December 2018, relating to events between 2010 and 2013, the period of delay required better explanation. While Mr Cain referred to changes in personnel at the plaintiff between March 2020 and now, he did not fully explain how that affected the ability to instruct or the instructions given to the plaintiff's solicitors.
Mr Cain tried to address the causes of delay further in his supplementary affidavit of 10 May 2022. Mr Cain deposed that the plaintiff had taken the following steps:
(1)Since the delivery of the Master's decision, the plaintiff's solicitors have carried out further investigation for the purpose of narrowing the claims against the defendants, aided by the engagement of a consultant, Element47, which assisted the plaintiff and its solicitors in understanding the technical aspects of the claim. Little detail was given regarding the engagement of the consultant, other than Mr Cain said that the plaintiff has expended $450,000.
(2)Mr Cain referred to delays occasioned by Element47 in meeting deadlines, but said the plaintiff's investigations are now complete.
(3)The plaintiff has filled the position of General Counsel, the position with responsibility for instructing the solicitors.
(4)The plaintiff has processed the documents relevant to the matter using an external service provider, with over 50,000 documents processed.
(5)On 4 May 2022, General Counsel advised Mr Cain that the plaintiff's solicitors had sent a proposed draft statement of claim.
(6)The plaintiff has taken steps to prepare its expert evidence, including steps to brief a quantity surveyor for the purposes of expert evidence with respect to damages.
Mr Cain also referred, in a very general way, to the impact of the pandemic. The court is, of course, aware of the effect of both illness and restrictions on everybody in the State. Mr Cain was not, however, specific as to how the plaintiff had been affected in its progress of this action by COVID.
Finally, Mr Cain deposed to his commitment, as Interim CEO of the plaintiff to progress the matter, that the plaintiff has the financial resources available to it, and that it is willing to use them to take the action to trial. He stated that the matters which caused delay no longer operate.
Mr Cain attached a copy of the draft statement of claim, and a minute of proposed orders to progress the matter. The plaintiff proposes to serve a statement of claim by 20 May 2022 (that is in approximately another week), and for the defendants file and serve defences by 24 June 2022.
The evidence of Mr Cain was criticised for both lack of detail and for failing to account properly for the period of delay. In particular, the defendants pointed to the letter written by the previous solicitors for the plaintiff in 2017 which set out the substance of most of the matters upon which the claim, only now pleaded, is based. The defendants submitted that little progress has been made in five years and the plaintiff has acted only when faced with the imminent threat of having its action dismissed.
The defendants submitted that the plaintiff has given no details about when Element47 was engaged, what precisely they were doing, when delays occurred, and what was the nature of the delays. Further, while the plaintiff says it has taken steps to prepare its expert evidence, the plaintiff's evidence is short on detail as to what steps have been taken, including whether potential expert witnesses have been approached.
While the plaintiff says it has processed relevant documents in anticipation of discovery, the evidence suggests that was done some years ago and is not itself a cause of delay. In the affidavit of Mr Spitz, sworn 4 September 2019 and filed in the application before the Master, Mr Spitz deposed that on 19 March 2019, the plaintiff instructed its solicitors to engage a commercial service for recovery and electronic processing of the plaintiff’s documents, resulting in the solicitors having 52,926 of the plaintiff's documents processed and available to them on 29 May 2019.
The defendants also point to earlier occasions when the plaintiff indicated it would be in a position to file a statement of claim, but did not do so.
Finally, the defendants submitted that the plaintiff has not explained why only now, towards the end of the six month period, it has applied to take this matter off the Inactive Cases List and why it did nothing immediately on notification by the Principal Registrar in November 2021.
The first defendant has adduced evidence of prejudice. In his affidavit of 11 May 2022, Mr Christou has given evidence of the impact the action has had on the first defendant's reputation, apparently, as the result of an article published in 2018 on the filing of the writ. Mr Christou complains that the first defendant has been prevented from dealing with the action due to it languishing on the Inactive Cases List.
Mr Christou also deposed that the first defendant has continued to incur costs in dealing with the proceedings, notwithstanding that it was on the inactive cases list. Finally, Mr Christou says that the project architect responsible for the project left the firm in about 2016.
The second defendant has not adduced evidence of prejudice. I would, however, infer that prejudice must be suffered from such a long delay when the relevant events relate to a contract which was entered and implemented approximately 10 years ago.
In assessing the prejudice suffered by the defendants, in my opinion, it is appropriate to take into account the whole of the period of delay and not simply the period following April 2020. In my opinion the following additional matters are relevant.
First it is common ground that the parties attempted to resolve this matter without legal proceedings. Neither defendant has given evidence of anything that it did by way of investigating the claim against it, but I would find it extraordinary that they did nothing. Second, the writ was, on its face, filed within six years of the causes of action arising and was validly served within 12 months of filing. If there is a limitation dispute, that is a separate matter. Third, a substantial delay was caused by the dispute regarding service. The second defendant's submission that the matter 'has deliberately not been advanced in almost 4 years' must be qualified by the period required to resolve the service dispute. Fourth, while the defendants properly criticised the generality of Mr Cain's evidence, it is not contradicted. Fifth, the second defendant submitted that the plaintiff 'has chosen not to instruct its lawyers' to advance the proceedings. That is not a finding I am prepared to make on the affidavits before me.

Conclusion

While the plaintiff did not bring an application to have the matter removed from the inactive cases list until near the six month time expiring, it did so when it was in the position of being able to not just program a statement of claim, but could advance a complete or substantially complete draft. It is in a position to give discovery, once the issues have been defined by pleaded defences. This is not one of those unfortunate cases where the plaintiff has done nothing and proposes a timetable that is likely to be illusory.
It is not, in my opinion, decisive in the circumstances of this case that the plaintiff is unable to timetable all steps to bring the matter to a hearing. Realistically, if the matter is removed from the inactive cases list, its immediate progress will depend upon the time required by the defendants to prepare and file defences. The timetable proposed by the plaintiff for when that can be done appears optimistic, but it is a matter for the defendants.
In the normal course, discovery will follow the definition of the issues by the pleadings. Whether leave is given for the parties to adduce expert evidence would also ordinarily be determined after pleading, with the court involved in the formulation of the questions upon which the court is to be assisted by the experts.
It is true that the plaintiff has given no evidence about the state of preparation of witness statements for nonexpert evidence, but again that is a procedural step which is not normally ordered until after the close of pleadings.

Counsel for the defendants were justified in their complaints that the plaintiff could have done more to progress this matter earlier. That, after all, is why the matter went on to the inactive cases list. But the powers of the court under the Inactive Case List provisions are not disciplinary, but powers conferred for the purposes of case management. The first question for the court now is essentially prospective: is the court satisfied that the case will be conducted in a timely manner. I am satisfied that the plaintiff is in a position to now advance its case as it should have done earlier and it has committed to do so. The case management powers of the court are available to ensure that the case remains on track. No party sought to use them earlier.
To not remove the case from the Inactive Cases List would result in it being determined, without regard to the merits, and without appeal. The plaintiff would be shut out from any potential remedy. I am not satisfied that would be in the interests of justice.
I will allow the application to remove the case from the Inactive Cases List. That order will be conditional on the plaintiff filing and serving its statement of claim by 20 May 2022.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TB
Associate to the Honourable Justice Allanson
13 MAY 2022