Commonwealth Bank of Australia v Renstel Nominees Pty Ltd
[1999] VSC 483
•22 October 1999
SUPREME COURT OF VICTORIA
CAUSES JURISDICTION
Not Restricted
No. 4594 of 1994
COMMONWEALTH BANK OF AUSTRALIA Plaintiff v RENSTEL NOMINEES PTY LTD Defendants ANTHONY RENE STELLA
ELIZABETH MARY STELLAAND BETWEEN: RENSTEL NOMINEES PTY LTD Plaintiffs by Counterclaim MEYRICK COURT PTY LTD
STELLA & SON (BUILDERS) PTY LTD
RENBET INVESTMENTS PTY LTD
STELLA & SON INDUSTRIES PTY LTD
ANTONRENE INVESTMENTS PTY LTD
ANTHONY RENE STELLA
ELIZABETH MARY STELLAV COMMONWEALTH BANK OF AUSTRALIA Defendant by Counterclaim
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JUDGE: Ashley, J. WHERE HELD: Melbourne DATES OF HEARING: 19, 20 October 1999 DATE OF JUDGMENT: 22 October 1999 MEDIA NEUTRAL CITATION: [1999] VSC 483
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Appeal from decision of Master – Practice and procedure – Application to dismiss claim for want of prosecution – Application to permanently stay claim as an abuse of process – Application to strike out parts of statement of claim.
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APPEARANCES: Counsel Solicitors For the Plaintiff Mr M. Sifris Freehill Hollingdale & Page For the Defendants Mr S. Wilson QC Kliger Partners with Mr J. Loewenstein
HIS HONOUR:
The Orders Made on 9 July 1999.
On 9 July 1999 a Master of this Court made orders by which, inter alia, the plaintiff, the Commonwealth Bank of Australia, was required by 2 August to "respond to the defendant's (sic) letter of complaint as to the statement of claim of 17 May 1999". The plaintiff replied to that letter of complaint, which was of the extraordinarily short length in the context of this litigation of four pages, by a one-line letter in which it said, in effect, that there was nothing wrong or incomplete in the statement of claim as it then stood. Nonetheless, by summons filed 21 July 1999 the plaintiff sought an order extending the time within which it might appeal against the Master's orders of 9 July 1999. It filed notice of appeal on 22 July 1999.
The Orders Made on 17 August 1999
Even before the Master made orders on 9 July, the defendants had filed a summons, returnable on 16 August, by which they sought relief as follows:
"1. An Order pursuant to Order 23.01(1) of the Rules of the Court
that the Plaintiff's claim herein be stayed;2.
Further or alternatively, an Order pursuant to Order 23.02 of the Rules of Court that the Second Further Amended Statement of Claim filed and served pursuant to the Orders made by Master Wheeler on 29 March 1999 be struck out on the grounds that it does not disclose a cause of action or alternatively is scandalous, frivolous or vexatious or alternatively may prejudice, embarrass or delay a fair trial of the proceeding herein or alternatively is otherwise an abuse of the process of the Court;
3.
Further or alternatively, an Order that the Court in exercising its inherent jurisdiction forever stay the Plaintiff's claim herein;
4.
Further or alternatively, an Order pursuant to Order 24.05 of the Rules of Court that the Court invoke its inherent power to dismiss the Plaintiff's claim herein for want of prosecution;
5.
Further or alternatively, an Order that if the Second Further Amended Statement of Claim (dated 30 April 1999) stand, that the Plaintiff's claim herein be dismissed by reason of:
(a)
the Plaintiff's failure to comply with the Orders made by Master Wheeler on 29 March 1999;
(b)
further or alternatively, the Plaintiff's failure to comply with the Orders made by Master Wheeler on 28 November 1997 that the Plaintiff file and serve full and proper particulars of its monetary claim herein; and
(c)
further or alternatively, the Plaintiff's failure to comply with the Orders made by Master Wheeler on 24 September 1998 that the Plaintiff file and serve full and proper particulars in response to the Defendants' Request for same;
6.
Further or in the alternative, an Order pursuant to Order 2.01(2)(b) that the Second Further Amended Statement of Claim (dated 30 April 1999) filed and served pursuant to the Orders made by Master Wheeler on 29 March 1999, be set aside on the grounds that the document breaches Order 36 and in particular Order 36.05(4) of the Rules of Court.
7.
Further or in the alternative, an Order that the Plaintiff's claim herein be stayed until the payment by the Plaintiff to the Defendants of the costs ordered to be paid by the Plaintiff by:
(a) Mr Justice McDonald on 18 August 1998; (b) Master Wheeler on 24 September 1998; (c) Master Wheeler on 24 November 1998; and (d) Master Wheeler on 29 March 1999. 8.
In the event of the Court ordering a stay of the plaintiff's claim herein, an Order that the Plaintiff pay the costs of and incidental to the proceeding (including all costs reserved) and all the costs of this application on a full indemnity or alternatively a solicitor and own client basis;
9.
Further, or in the alternative, in the event that the Court does not set aside the Further Amended Statement of Claim (dated 30 April 1999), Orders extending paragraphs 3, 4, 5 and 6 of the Orders made by Master Wheeler on 29 March 1999;
10.
In the event of the Court not ordering a stay of the Plaintiff's claim herein, an Order that the Plaintiff make discovery, give inspection and provide copies of the following security documents, demands and/or notices referred to in the Plaintiff's Second Further Amended Statement of Claim dated 30 April 1999 -
(a)
the equitable mortgage dated 30 March 1983 referred to in the particulars sub-joined to paragraph 23;
(b)
the first Elizabeth Street Renstel mortgage dated 29 June 1984 referred to in paragraph 25(a);
(c)
the Elizabeth Street Meyrick Court, mortgage dated 29 June 1984 referred to in paragraph 25(b);
(d)
the Ivanhoe mortgage dated 9 September 1985 referred to in paragraph 25(c);
(e)
the second Elizabeth Street Renstel mortgage dated 16 October 1987 referred to in paragraph 25(d);
(f) the Fairfield mortgages referred to in paragraph 25(e); (g)
the instrument of guarantee dated 29 June 1984 referred to in paragraph 25(f);
(h)
each of the instruments of guarantee dated 29 June 1984 referred to in paragraph 25(g); and
(i)
each of the cross guarantees and indemnities referred to in paragraph 25(h);
(j)
the Renstel mortgage dated 24 September 1984 referred to in paragraph 29;
(k)
the first Stella guarantee dated 24 September 1984 referred to in paragraph 32;
(l)
the Stella loan dated August 1984 referred to in paragraph 33;
(m)
the Stella mortgage dated 24 September 1984 referred to in paragraph 35;
(n)
the Mernda mortgage dated 17 October 1988 referred to in paragraph 44(a);
(o)
the Springvale mortgage dated 24 February 1989 referred to in paragraph 47(a);
(p)
the instrument of cross guarantee and indemnity dated 23 February 1989 referred to in paragraph 48;
(q)
the demands dated 17 January 1991 referred to in paragraph 58;
(r)
the letter dated 18 January 1991 referred to in paragraph 62(b);
(s)
the demand dated 22 January 1991 referred to in paragraph 64;
(t)
the demands dated 19 February 1991 and the covering letters dated 21 February 1991 referred to in paragraph 68;
(u)
the notices to pay dated 19 February 1991 referred to in paragraph 73(c);
(v)
the demand dated 21 October 1993 (served 16 November 1993) referred to in paragraph 76;
(w)
the demand dated 19 April 1994 (served 28 April 1994) referred to in paragraph 78;
(x)
the demand dated 21 October 1993 (served 29 November 1993) referred to in paragraph 84;
(y)
the notice to pay dated 19 February 1991and the covering letter dated 25 February 1991 referred to in paragraph 103;
(z)
the notice to pay dated 19 February 1991 and the covering letter dated 25 February 1991 referred to in paragraph 106;
(aa)
the notice to pay dated 19 February 1991 and the covering letter dated 25 February 1991 referred to in paragraph 109;
(bb)
the notice to pay dated 19 February 1991 and the covering letter dated 25 February 1991 referred to in paragraph 112;
(cc)
the notice to pay dated 19 February 1991 and the covering letter dated 25 February 1991 referred to in paragraph 115;
11.
Further, an Order that the Plaintiff provide a full and proper breakdown of how its monetary claims are calculated, comprised and or, or arrived at (including full particulars of all debits and credits made to the Defendants' overdraft and bill facility accounts from 1 January 1990 to date).
12.
Further, an Order that the Plaintiff pay the costs of the Defendants and Plaintiffs by counterclaim or and incidental to the Application herein on a full indemnity or alternatively a solicitor and own client basis;"
The Master heard the defendants' summons on 16 and 17 August 1999. On the latter date he made, relevantly, the following orders:
3.
Paragraphs 23, 24, 25(h), 40(a) and 98(a) of the second further amended statement of claim be struck out.
4.
Leave to amend paragraphs 54, 99(a), 101, 102(a) and the prayer for relief (if so advised) and leave to replead the subject matter of the paragraphs struck out.
5. The Plaintiff has leave to amend paragraph 55 to add 'January 1991'. 6.
The Plaintiff amend paragraph 100 by adding the words in brackets 'annexed to the said mortgage'.
7.
The Plaintiff file and serve a third further amended statement of claim by no later than 17 September 1999, such pleading to include complete particulars of loss and damage reconciled with particulars which preceded the second further amended statement of claim (which are not relied on in the second further amended statement of claim).
8.
The Defendants file and serve a defence and counterclaim no later than 18 October 1999.
9.
The Plaintiff file and serve its reply (if any) and defence to counterclaim no later than 1 November 1999.
10.
The Plaintiff provide to the Defendants by 7 September 1999 a copy of the following security documents, demands and/or notices referred to in the Plaintiff's second further amended statement of claim dated 30 April 1999:
(a) the equitable mortgage dated 30 March 1983 referred to in the particulars sub-joined to paragraph 23;
(b) the first Elizabeth Street Renstel mortgage dated 29 June 1984 referred to in paragraph 25(a);
(c) the Elizabeth Street Meyrick Court, mortgage dated 29 June 1999 1984 referred to in paragraph 25(b);
(d) the Ivanhoe mortgage dated 9 September 1985 referred to in paragraph 25(c);
(e) the second Elizabeth Street Renstel mortgage dated 16 October 1987 referred to in paragraph 25(d);
(f) the Fairfield mortgages referred to in paragraph 25(e);
(g) the instrument of guarantee dated 29 June 1984 referred to in paragraph 25(f);
(h) each of the instruments of guarantee dated 29 June 1984 referred to in paragraph 25 (g); and
(i) each of the cross guarantees and indemnities referred to in paragraph 25(h);
(j) the Renstel mortgage dated 24 September 1984 referred to in paragraph 29;
(k) the first Stella guarantee dated 24 September 1984 referred to in paragraph 32;
(l) the Stella loan dated August 1984 referred to in paragraph 33;
(m) the Stella Mortgage dated 24 September 1984 referred to in paragraph 35;
(n) the Mernda mortgage dated 17 October 1988 referred to in paragraph 44(a);
(o) the Springvale mortgage dated 24 February 1989 referred to in paragraph 47(a);
(p) the instrument of cross guarantee and indemnity dated 23 February 1989 referred to in paragraph 48;
(q) the demands dated 17 January 1991 referred to in paragraph 58;
(r) the letter dated 18 January 1991 referred to in paragraph 62(b);
(s) the demand dated 22 January 1991 referred to in paragraph 64;
(t) the demands dated 19 February 1999 and the covering letters dated 21 February 1991 referred to in paragraph 68;
(u) the notices to pay dated 19 February 1991 referred to in paragraph 73(c);
(v) the demand dated 21 October 1993 (served 16 November 1993) referred to in paragraph 76;
(w) the demand dated 19 April 1994 (served 28 April 1994) referred to in paragraph 78;
(x) the demand dated 21 October 1993 (served 29 November 1993) referred to in paragraph 84;
(y) the notice to pay dated 19 February 1991 and the covering letter dated 25 February 1991 referred to in paragraph 103;
(z) the notice to pay dated 19 February 1991 and the covering letter dated 25 February 1991 referred to in paragraph 106;
(aa) the notice to pay dated 19 February 1991 and the covering letter dated
25 February 1991 referred to in paragraph 109;(bb) the notice to pay dated 19 February 1991 and the covering letter dated
25 February 1991 referred to in paragraph 112;(cc) the notice to pay dated 19 February 1991 and the covering letter dated
25 February 1991 referred to in paragraph 115;11. The Defendants' costs of this application be paid by the Plaintiff on a solicitor and own client basis, but the costs of 9 July 1999 be taxed on a party/party basis.
12. The Defendants' summons filed 28 October 1997 is adjourned to a date to be fixed, to be brought back before the Court on 14 days notice in writing.
13. There is liberty to apply."
Paragraph 11, insofar as it dealt with the costs of 9 July 1999, dealt with costs reserved on that day.
The Master did not otherwise dismiss the summons. But that was evidently his intent.
The plaintiff filed notice of appeal against the whole of the orders made.
The defendants also filed notice of appeal against the orders, and "in particular the refusal by the Master to dismiss the plaintiff's claim or alternatively stay the plaintiff's claim".
The Appeal against Orders made 9 July is not Pursued.
At the hearing before me the plaintiff did not pursue its application for an order extending time within which to appeal against the orders made on 9 July 1999. It agreed that the notice of appeal should, itself, be struck out, the issue of reserved costs having been dealt with in the Master's orders of 17 (not 16) August and therefore being susceptible of agitation in the appeal brought by it against those later orders.
Its position was, in substance, that the propriety of its response to the defendants' letter of 17 May 1999 turned on the resolution of the appeals against the orders made on 17 August 1999.
The defendants did not oppose my striking out the notice of appeal. Their counsel agreed that there had been literal compliance with the Master's order - an order whose key paragraph was framed in vague language which was apt to generate dispute in this particular litigation; and that the issues of substance underlying the appeal were issues to be agitated in the appeals against the 17 August 1999 orders.
I will refuse the application made by paragraph 1 of the plaintiff's summons filed 21 July 1999. I will strike out the notice of appeal against the orders made on 9 July 1999.
The Appeals against the Orders made on 17 August 1999.
The Defendants' Main Submissions.
On the hearing of the appeal against the 17 August orders, Mr Wilson of Queen's Counsel, who appeared with Mr Loewenstein of counsel for the defendants, put as his principal argument the contention that the proceeding should be dismissed for want of prosecution. He also contended, but agreed that the contention was a difficult one, that the proceeding should be permanently stayed as an abuse of process.
If the proceeding was not dismissed or stayed, Mr Wilson submitted, then paragraphs in the statement of claim referring to what was called in argument the "equitable mortgage" claim should be struck out, and the plaintiff should be denied the opportunity of repleading. (Paragraphs 3 and 4 of the Master's orders of 17 August contain most but not all references to that claim. The effect of those paragraphs, in sum, was doubtfully that the plaintiff was not shut out from repleading).
Mr Wilson also submitted that, if the proceeding was not stayed or dismissed, I should make an order for the provision of full particulars of the plaintiff's monetary claim. Paragraph 7 of the Master's orders addresses that issue, though ambiguously. Mr Wilson did not insist upon the need for a reconciliation document such as paragraph 7 mentions, provided that the particulars were themselves complete.
The Plaintiff's Main Submissions.
Mr Sifris of counsel, for the plaintiff, submitted that there was no foundation for my dismissing his client's claim for want of prosecution, nor for my permanently staying it as an abuse of process. He further contended that the Master should not have made paragraphs 3, 4, 7, 8, 9, 11 and 12 of the orders pronounced on 17 August 1999. He submitted that there was nothing wrong with the pleading based upon the equitable mortgage, that the monetary claim had been fully exposed (the most that could be said was that a few minor matters could not be pinned down), that there should be no requirement for the plaintiff to file yet another statement of claim, that the defendants should plead to the present statement of claim, and that, in short, the matter should be progressed to trial.
General Observations.
It is now convenient to note a number of matters. First, since March 1998, as I shall later explain, there has been on foot a single proceeding by which the bank sues Renstel Nominees Pty Ltd, Anthony and Elizabeth Stella, and six other corporations. The corporations and the individuals were, according to the statement of claim, collectively known as "the Stella Group". At relevant times, the plaintiff alleges, Mr and Mrs Stella were directors of and had a controlling interest in the corporations in the group. Further according to the statement of claim, the bank (in fact its predecessor, State Bank of Victoria - I shall refer to the plaintiff simply as "the bank") agreed with Renstel, in October 1988, to provide certain facilities to Renstel for the purposes of Renstel and the group. On three occasions between February and October 1989 the facility agreement was varied. In late 1990 Renstel defaulted. There had been dealings between the bank and members of the group before October 1988. There were dealings thereafter. These dealings were interlinked with the facility agreement. In the event, there were created a series of interlocking obligations whose affect was that one alleged default was able (and likely) to trigger a series of defaults - that is, on the part of the various corporations and individuals comprising the group. The events of late 1990 and early 1991 (as well as later events) did in fact trigger such a series of defaults - whose consequence was that members of the group became liable to the plaintiff for moneys and to loss of possession of property.
Second, subject to the claim based upon the equitable mortgage, and complaint about the adequacy of particulars of the amount claimed, Mr Wilson did not suggest that the statement of claim as now framed did not disclose triable causes of action against the various defendants. Those causes of action have been exposed, in substance, since a statement of claim was filed on 13 March 1998.
This is not a case, then, where the plaintiff has failed to plead a triable issue. Indeed, it appears to me it has not failed to do so even in the case of the company which allegedly gave the equitable mortgage - Renbet Investments Pty Ltd.
Third, long ago the bank took possession of, and sold, most of the properties given as securities by corporate members of the Stella Group. The claim, in essence, is a money claim against all defendants, and a claim for possession of two properties - of one of which Mr and Mrs Stella are the registered proprietors, and of the other of which Renstel is the registered proprietor.
Fourth, from the time when the bank first commenced proceedings against Renstel and the Stellas, in February 1994, there has been pretty well constant activity on the plaintiff's side - much of it in response to matters concerning the form of the statement of claim, particulars and discovery raised for the defendants. This is not a case, then, where the application for dismissal for want of prosecution is based on the plaintiff's inactivity. But that is not fatal to the success of such an application, as
Bishopsgate Insurance Australia Ltd (in liquidation) v. Deloitte Haskins and Sells
(Supreme Court of Victoria, Full Court, 9 September 1994, "reported" in Butterworths
unreported judgments BC 9404806), upon which Mr Wilson much relied, shows.The Submission that the Plaintiff's Claim should be Dismissed For Want of
Prosecution.
I turn to the defendants' contention that the plaintiff's claim should be dismissed for want of prosecution. Mr Wilson submitted that the plaintiff's conduct since the inception of the litigation "cannot be characterised as anything other than an abuse of process incorporating inexcusable and inordinate delay", there being "palpable prejudice to the defendants". In support of that submission he contended that:
7.1 Court proceedings have been orchestrated to cause the maximum inconvenience and cost to the Defendants;
(i) multiple proceedings have been issued where one would have sufficed;
(ii) proceedings have been issued and held back whilst orders and costs have been made and incurred respectively in progressing the extant proceeding;
(iii) numerous and excessive appeals have been lodged against the orders of the court;
(iv) every costs order in favour of the Defendants has been subjected to excessive objection on item by item basis by the CBA on taxation including requiring strict proof of the giving of a letter by the Defendants' solicitors to the Plaintiffs' solicitors to which they have in fact replied.
7.2
The Plaintiff the CBA has been in constant breach of numerous court orders including the present order of the Master which it seeks to appeal which required them (sic) to deliver a Third Further Amended Statement of Claim by the 17 September 1998 (sic) in respect of which no stay or variation of the order was sought.
7.3
Amongst the orders ignored are orders directed to the format of the CBA's pleading and notwithstanding Master's orders striking out the pleading (in respect of which orders some have not been appealed) the CBA continues to ignore the order and simply plead in the fashion previously successfully objected to and accordingly struck out;
7.4
The delay in properly prosecuting the case - including issuing the 1997 proceeding on the very last day before the limitation-period expired - leads one to the conclusion that a fair trial of the Plaintiff's claim would be difficult;
7.5
The CBA has delivered eight Statement (sic) of Claim (four of which have been delivered in the consolidated proceedings) as well as various versions of Further and Better Particulars of those claims. At the very least reasonable inference is that the CBA has great problem articulating at least two critical aspects of its claim, the equitable mortgage and the required detail of the make up of the monetary claim.
7.6 The Plaintiff has never placed any material before the Court explaining its
course of conduct".
In order to understand those submissions I must refer to a number of aspects of the chronology of the matter. In piecing together the chronology I have had recourse to documents and transcript on the court file.
According to the plaintiff's claim the facility agreement which is at the heart of the proceeding was made in October 1988. It was an agreement in writing. That agreement, varied three times in writing in 1989, and supported by the giving of a cross guarantee and indemnity which was also in writing, was breached in late 1990; and the bank exercised its rights from early 1991 - making both written and oral demands for payment.
The causes of action upon which the plaintiff relies crystallized, on its case, in mid-January 1991.
On 17 February 1994 the plaintiff commenced separate proceedings against Renstel and the Stellas. Those proceedings sought possession of land of which the particular defendant was the registered proprietor, and a money sum. The plaintiff could have commenced a single proceeding. Mr Sifris agreed that there was no reason why this could not have been done. He agreed that it would have been desirable.
An order for consolidation was made, apparently on the application of the bank, by O'Bryan, J. on 30 May 1996. That meant that new pleadings had to be delivered.
The course taken by the plaintiff in initially commencing two proceedings, led, no doubt, to some duplication of work and thereby extra cost; and the later consolidation was, no doubt, productive of some delay, and of increased cost. I do note in passing, although it is not the defendants' job to do the plaintiff's work, that the defendants' side never made any suggestion, as I understand it, that the proceedings should be consolidated. Rather, the defendants simply filed separate defences and counterclaims; and discovery proceeded.
By February 1995 one of the two statements of claim had been amended to allege a later demand and failure to pay, a defence and counterclaim and a reply and defence to counterclaim had been delivered in each matter, and notices for discovery had been given by the plaintiff and by the defendants.
Discovery was thereafter given by the parties during 1995. Mr Wilson complained that the discovery given by the plaintiff had grown greatly in the intervening years. No doubt that is so. It is in part explicable by the joinder of other members of the Stella Group as defendants later on. The material before me suggests that it is also in part explicable by the rigorous - I forbear from saying zealous - attention to discovery paid by the defendants' advisers.
On the plaintiff's side affidavits of documents were first sworn in April 1995, supplementary affidavits a month later, and further supplementary affidavits in January 1996. Then, in the consolidated proceeding, an affidavit was filed on 30 August 1996, and supplementary affidavits were filed in September that year, and in July and December 1997.
The affidavits of January 1996 were late filed. On 14 November 1995, in the Renstel matter, a Master ordered that a further affidavit be filed by 1 December 1995. That order also, temporarily, precluded the plaintiff from making a summary judgment application. There was an appeal from the order generally. It was heard on 27 November 1995 - that is, only a few days before the further affidavit was due. It succeeded on the summary judgment application issue and failed on the discovery issue. It could not be said that the plaintiff's appeal was shown to be unfounded.
The application before the Master in which the orders of 14 November 1995 were made had been adjourned part heard to 14 December 1995. By the latter date the plaintiff had not filed a supplementary affidavit of documents. An order was made for filing and service of such a document by 22 January 1996; and as well that the plaintiff provide further and better particulars of three paragraphs of its statement of claim in the Renstel matter. Supplementary affidavits of documents in both matters were filed on 22 January 1996, so also further and better particulars of claim.
On 14 February 1996 a Master ordered in the Renstel matter that still further discovery be made by the plaintiff. An affidavit was required by 14 March 1996. The plaintiff forthwith appealed. The appeal was not heard until 21 March 1996. In the meantime the defendant had given notice of default - on 15 March 1996. The fact of the appeal did not relieve the plaintiff from the obligation of complying with the Master's orders. But in practical terms, having regard to the date fixed for the hearing of the appeal, the course adopted by the plaintiff was not unreasonable.
On 21 March 1996 Beach, J. referred both the appeal and applications for summary judgment for hearing by a Judge.
The applications for summary judgment were heard by O'Bryan, J. in May 1996. It is said that they occupied three days. His Honour dismissed the applications and granted leave to defend in each matter. He ordered that costs be costs in the proceeding. At the same time he ordered, without determination of the merits of the Master's orders made on 14 February 1996, that the appeal against those orders be allowed. He ordered that the two proceedings be consolidated, and by orders he set up a timetable for further pleadings, discovery and inspection.
The appeal from the Master's orders of 14 February 1996, albeit that it was resolved without formal determination of its merits, could not have been said to have been unjustified.
The failure of the applications for summary judgment did not imply that they were without merit. Had they been palpably without merit, an order for costs adverse to the plaintiff might well have been made.
The plaintiff complied with the timetable for delivery of a pleading in the consolidated proceeding, as did the defendants. The plaintiff also complied with the timetable in delivering an affidavit of documents on 30 August 1996. That was supplemented as I earlier noted, by a further affidavit of documents filed on 18 September 1996.
The defence and counterclaim filed by the defendants in the consolidated proceeding radically altered the counterclaims pursued in the earlier proceedings. Specifically, the counterclaimants now included not only Renstel and the Stellas but four of the remaining corporate members of the Stella Group - including Renbet. It is very likely, I think, that the joinder of those corporations was irregular: see Williams, Civil Procedure Victoria, paragraph 10.01.15.
In any event, each of those corporations alleged by the counterclaim that the bank had wrongfully taken possession of and sold property of which it was the registered proprietor. Damages under statute and at common law were claimed, and if necessary a taking of accounts. The damages were not particularised.
The plaintiff made a request for further and better particulars of the counterclaim to which I have just referred. It was dated 27 September 1996.
The defendants made a request for further and better particulars of the bank's reply and defence to counterclaim. It was dated 31 October 1996.
Neither the plaintiff nor the defendants speedily responded to those requests. They did not do so until after Teague, J. had made orders on 8 May 1997 on the return of a notice issued by the court (that notice had been issued in the course of his Honour's work as Judge Administrator of the Litigation Support Group).
His Honour set a timetable for dealing with a number of outstanding interlocutory matters. Those matters included providing responses to the requests to which I referred a few moments ago, giving further discovery, and having inspection of documents. All of this was to be done by very early in July 1997, for his Honour also ordered (I was told from the Bar table that the parties had agreed to this) that a mediation be conducted by 15 July 1997.
The outstanding matters in respect of which his Honour made orders were matters requiring the attention both of the plaintiff and the defendants.
Neither side complied with the timetable. The plaintiff's side was somewhat speedier than the defendants' side in doing what was required.
The defendants' further and better particulars of counterclaim, so far as quantification of the counterclaim is concerned, were in substance silent.
I was told that a mediation was not held. Having account of the defendants' inability to quantify their counterclaim, a mediation would have been a waste of time.
Particulars quantifying the counterclaim were eventually filed in late November 1997. Alternative "scenarios" were developed. As I understand the particulars, the defendants counterclaimed for some $16.3 million plus other unquantified damages.
Pausing for a moment in the chronology, it appears to me that soon after mid-1997 the plaintiff had the matter pleaded and ready at least for mediation, if not trial. There was no outstanding attack on the pleadings. It had never been said that they did not raise triable issues. The plaintiff had several times been late in complying with orders. The circumstances do not indicate any particular blameworthiness on its part. The plaintiff had several times appealed from orders made by the Masters. Its appeals had been attended by some success. The plaintiff had made further discovery from time to time. From a vantage point at that time the plaintiff appears to have had its house in order considerably better than did the defendants. I do not attribute that disparity to any serious default by the plaintiff. The most that can be said is that the commencement of separate proceedings and their later consolidation may have been a distraction; and that additional discovery made by the plaintiff may have inhibited the defendants' preparation of the matter to some extent.
On 28 October 1997 the defendants filed a further summons by which further and better particulars of the plaintiff's monetary claim, further and better particulars of its reply and defence to counterclaim, and further discovery were sought. In the last connection it relied upon an 18-page document headed "Deficiencies in Bank's Discovery" and a letter to the plaintiff's solicitors from the defendants' solicitors dated 17 July 1997. The first of the requests was made four and a half years after the plaintiff first commenced proceedings.
On 28 November 1997 a Master made orders favourable to the defendants on its summons filed 28 October. The plaintiff was required to take steps by 30 January 1998. It did so.
Now it is necessary to go back in time. In January 1997, very shortly before the limitation period was to expire, the plaintiff had issued a writ against the corporate members of the Stella Group (other than Renstel, which was already a defendant). The statement of claim in that matter relied upon the alleged obligations of those defendants arising out of the facility agreement, and arising out of dealings between the bank and those defendants which were interconnected with that agreement.
It is very likely, I think, that the writ was issued in order to protect the plaintiff from becoming statute-barred against those defendants in circumstances where most but not all of them were now (on the face of the documents) counterclaimants against it in the consolidated proceeding.
The writ, having been issued, was not served forthwith. It was not in fact served until January 1998, a copy having been provided to the defendants' solicitors on Christmas Eve 1997.
This matter was drawn to the attention of the Master in February 1998 on an application by the defendants for a permanent stay of the 1997 proceeding. It is said that the Master expressed himself dismayed that neither he nor the defendants' solicitors had earlier been told of the existence of the proceeding. The Master accepted that there may have been good cause to issue the writ. He observed that he himself had raised the possible irregularity of the corporations in the Stella Group being counterclaimants in the consolidated proceeding. He accepted, in substance, the desirability of the corporations being parties to the claim as well as to the counterclaim. He ordered that there be a permanent stay of the 1997 proceeding, but that the plaintiff should have leave to add the corporate defendants as additional defendants to the consolidated proceeding, and that further pleadings be delivered within a short timeframe. He precluded the defendants' reliance on the Limitation of Actions Act. He ordered that the plaintiff pay costs thrown away on a solicitor and client basis.
From those orders the plaintiff unsuccessfully appealed.
Mr Wilson placed much reliance on the "secret" proceeding. It was unnecessary, he submitted, to commence a third proceeding. It was secretive. It led to a need to replead and so wasted time.
Mr Sifris agreed that it would have been better for the plaintiff to have sought leave to join the corporations as defendants in the existing proceeding. He did not deny that this could have produced a saving of time and cost.
Mr Sifris informed me from the Bar table that the proceeding had been commenced on the advice of senior counsel. He offered an explanation why there had been delay in service.
Bearing in mind the fact that the plaintiff had long since taken possession of and sold property of the corporations in question, it is not at all surprising that they were not originally made defendants to the plaintiff's claim. Commencement of a proceeding in order to protect the plaintiff from becoming statute-barred against the particular corporations, they being counterclaimants against the plaintiff in the existing proceeding, was, I consider, a prudent step. But the unanswered questions (I should not act upon the explanation given by Mr Sifris from the Bar table) are why the particular defendants were not added as parties to the existing proceeding, and why there was delay in service.
The plaintiff should, I think, be criticised for the course it took. Mr Sifris was right to agree that the course adopted led to delay and added cost. But I could not, myself, accept the description of what the plaintiff did as "sharp practice". Speaking generally, the plaintiff had nothing to gain by making the particular corporations defendants to its claim. Their property was gone; and, I was informed, some of them at least were then defunct. They were not a likely source of meeting a judgment. It is true that the plaintiff was arguably able to contend, in the event of default by Renbet, that moneys owed by it fell due without notice. But if that was the plaintiff's real point, the particular defendant would likely have been joined years earlier.
An amended writ and statement of claim was due by 12 March 1998. The same were delivered and filed on 13 March 1998. I do not regard that default as an instance of "constant breach of numerous court orders".
On 7 April 1998 the Master ordered that by 17 April the defendants deliver to the plaintiff a memorandum setting out all their complaints as to the amended statement of claim; and that the plaintiff's response be filed and served by 23 April. An order in that form, having regard to the history of the matter, was bound to lead to a complaint of no small order. In this instance the complaint was restricted to a mere six pages.
The plaintiff responded; but its response was in vain. The defendants complained that the amended statement of claim was "embarrassing and difficult to plead to".
On 29 May 1998 the Master ordered after what has been described as "extended argument" that the entire statement of claim be struck out. He gave the plaintiff leave to file and serve a further amended statement of claim on or before 29 May 1998. He made wide-ranging costs orders against the plaintiff.
I accept, of course, the correctness of the Master's orders. It is not for me to say that what he ordered to be struck out included claims against the original defendants to which no objection had ever hitherto been taken; and that, in substance, the complaint about the claims formulated against the added defendants was really quite limited.
The plaintiff was a little more than a fortnight late in delivering a repleaded statement of claim. By summons filed 3 August 1998, it sought extension of time for delivery nunc pro tunc, as well as adjustment of the dates for filing of other pleadings. An explanation for the delay in filing the amended statement of claim was offered in an affidavit sworn by Richard William Short on 3 August 1998. The affidavit contraindicates any suggestion that the plaintiff's side was intendedly dilatory. It shows that there had been delay in having the statement of claim settled because counsel was interstate, that the defendants' solicitors had agreed to extensions amounting to about a fortnight, but had required the plaintiff to make application for extension of time after the plaintiff's solicitors sought to deliver the statement of claim several days after the end of the agreed period of extension. It sets out a tale of conduct on the part of so-called "commercial" solicitors which may be fashionable, but which is to be deplored.
In the event, on 5 August 1998 the Master ordered that the further amended statement of claim dated 15 June 1998 "be removed from the court file", that the plaintiff serve on the defendants by 26 August a copy of any proposed further amended statement of claim on which it sought to rely, and that the plaintiff pay the defendants' costs of the day on a solicitor and client basis. As I understand it, the Master took the view that the document was really no different to the statement of claim which he had struck out in May 1998.
The plaintiff appealed. On 18 August 1998McDonald, J. allowed the appeal, and set aside the Master's order. He ordered that the plaintiff file a further amended statement of claim by 19 August 1998, made orders for other pleadings, ordered the plaintiff to pay the costs of the hearing on 5 August on a solicitor and client basis, and ordered that the costs of the proceeding be costs in the cause.
A transcript of a mention of the matter before McDonald, J. on 23 September 1998 shows that his Honour did not adjudicate upon the status of the pleading which the plaintiff had delivered in mid-June, and which the Master had ordered to be removed from the file on 5 August 1998. Regardless, the appeal could not be regarded as having been unjustified; or as having failed to produce an outcome somewhat favourable to the plaintiff.
The plaintiff filed its further amended statement of claim on 19 August 1998 in accordance with the time requirements of the orders made by McDonald, J.
On 4 September 1998 the defendants' solicitors advised the plaintiff's side that their clients would be seeking orders to have the plaintiff's claim stayed, or the statement of claim filed on 19 August struck out.
A summons was filed on 18 September 1998. The hearing of the application was fixed for 24 September 1998. The defendants sought and obtained an order that the timetable for the filing of a defence and counterclaim set by the order of McDonald, J. be extended. The plaintiff's solicitors can be criticised for not consenting to the late-filing of the pleading. It seems likely that this was tit for tat in light of the conduct of the defendants' solicitors several months earlier.
On 23 September 1998, as I noted a moment ago, an oral application was made to McDonald, J. in respect of the orders he had pronounced on 18 August. This interchange occurred in the course of submissions by Mr Loewenstein for the defendants:
"HIS HONOUR: ... It just seems to me, when I look at this file, that it is about time that both parties got to reality and stopped fighting bushfire skirmishes throughout it and your client wants to prosecute its counterclaim, from my recollection, some $12 million, is it?
MR LOEWENSTEIN: Yes, Your Honour.
HIS HONOUR: And the plaintiff wants to".His Honour did not, I think, have as close a connection with the matter as I now have. His Honour's reference to "both parties" did not, understandably, focus upon the relative responsibility of the parties for the overall delay. The history of the matter, however, to the point in the chronology reached thus far, and its history thereafter, leads me to strongly agree with the sentiment that reality should have intervened.
The defendants' summons brought on for hearing on24 September 1998 was in many respects similar to the summons dealt with by the Master on 17 August 1999. The Master did not dismiss the plaintiff's claim, did not grant a permanent stay, did not strike out or set aside the statement of claim, did not dismiss the proceeding for the plaintiff's failure to comply with earlier orders, did not stay the proceeding until costs orders in favour of the defendants were met (some of the costs, at least, had not then been taxed). Dismissal or permanent stay would, of course, have left the counterclaim alive.
What the Master did do was to provide the defendants with yet another opportunity to seek further and better particulars of the statement of claim, delaying the obligation of the defendants to file a defence and counterclaim for a period of weeks after the plaintiff's response to any such request. He ordered that costs referable to the application for further and better particulars be paid by the plaintiff on a solicitor and client basis.
The defendants filed a request for further and better particulars of the statement of claim on 2 October 1998. A document of modest length, it ran to a mere 19 pages.
The plaintiff had, on the face of it, a pretty substantial success on 24 September 1998. Nonetheless, it appealed against the orders that had been made. That appeal was settled, the defendants' costs of the appeal being reserved; the plaintiff agreeing, apparently, to provide further and better particulars of claim. I am unclear whether the settlement of the appeal dealt with the costs order made by the Master. It cannot be said, on what I know, that the appeal was fruitless.
The plaintiff filed further and better particulars of the amended statement of claim on 22 October 1998. They set out, inter alia, an enormous amount of detail as to the way in which the plaintiff calculated its claim. Arguably, the material provided in many respects went much further than rules of pleading and particularisation required. But the defendants' side perceived it to be inadequate.
A detailed analysis of the pleading and the further particulars was prepared. Ominously, the letter accompanying the analysis said this:
"The complaints relating to discovery referred to in the analysis are referable only to the matters raised by the pleadings and should in no way be taken to be all of our complaints in relation to your client's discovery".
The analysis extended to 34 pages.
Despatch of this analysis was followed up in quick time by a further application by the defendants to dismiss or stay the plaintiff's claim; or for lesser orders.
On 9 February 1999 the Master ordered that the plaintiff serve on the defendants a response to the analysis by 9 March. The plaintiff filed particulars within that time; but the defendants' side did not accept their adequacy. The strike-out application came on for hearing on29 March 1999. It had been adjourned over from November 1998.
The Master, again, did not order that the proceeding be dismissed or permanently stayed. He did conclude, according to the "Other Matters" section of the authenticated order, that "The pleading as to 'equitable mortgage' is deficient". His main concern, I think, was that there was no allegation of an agreement between the bank and Renbet whereby the latter agreed that the security it provided by way of the equitable mortgage (entered into in 1983) should be security for the grant of the facility to Renstel in 1988.
The Master ordered that a second further amended statement of claim be filed on or before 30 April 1999. A second further amended statement of claim was filed on 30 April. The defendants' side objected that the document was not underlined so as to reveal amendments. A marked copy was thereafter provided.
The defendants' side then objected that deficiencies existed in the second further amended statement of claim.
On 2 July 1999 the defendants' solicitors filed the third strike-out application made on their clients' behalf in ten months.
On 9 July 1999, on oral application by the defendants, the Master ordered that the plaintiff respond to the defendants' catalogue of alleged deficiencies in the second further amended statement of claim by 2 August 1999. He delayed the time for the defendants to file and serve a defence and counterclaim.
On 26 July 1999, notwithstanding that the strike-out application was on foot, the defendants consented to an application by the plaintiff to have the matter entered into the Long Cases List.
On 17 August 1999, as I noted much earlier, the Master refused to dismiss or stay the proceeding, but ordered that certain paragraphs be struck out and that other paragraphs be amended. Those orders, now appealed from by both parties, were made at the end of a two-day hearing.
Before me, Mr Wilson submitted that there were two problems with the second further amended statement of claim. First, it did not plead the "equitable mortgage" claim properly. He did not contend that the defendants did not understand the claim; nor that the claim could not properly be articulated. He submitted, however, that the obligation lies on a plaintiff to plead its claim. It is not enough that the defendants understand what the plaintiff wants to say. He relied on Bishopsgate in that connection. He submitted also that the plaintiff had resolutely failed to address the disclosed problem.
Second, Mr Wilson submitted, the statement of claim does not adequately articulate the plaintiff's monetary claim.
Each of those two submissions was developed by junior counsel.
I will deal with the detail of the two submissions a little later. At present it suffices to say that in my opinion there is a pleading fault in respect of the equitable mortgage. It is a matter easily remedied. If it had ever been more than a gambit, it would have been raised in connection with the pleading concerning other corporate members of the Stella Group. The fault concerns only a few paragraphs of the statement of claim. It is a fault which involves an issue of characterisation, and the use of particulars to allege what should be an allegation of fact.
As to the second submission, it is only necessary at this stage to say that the particulars of monetary claim, which might well be considered to go beyond the plaintiff's obligation to plead and particularise its claim, are in a very minor respect deficient.
There is, in my opinion, no basis for concluding that such faults as now exist in the statement of claim and particulars expose the plaintiff as having been guilty of inordinate and inexcusable delay. I am bound to say, in that connection, that the defendants' side cannot be said to have been free of fault in the fiasco which the proceeding has become particularly since March 1998.
It appears to me, regardless of the defendants having in some instances succeeded on applications, that there has been an unhealthy explosion of complaint where, had complaint been focussed, it is more likely that any problems would have been isolated and dealt with expeditiously. Even before me, in argument, submissions made for the defendants, by junior counsel, seemed at times designed to obfuscate rather than clarify the matters in issue.
I should give a few examples. First, on 29 March this year junior counsel for the defendants complained, in effect, that his clients did not know what was the equitable mortgage upon which the plaintiff relied. Three different documents had been discovered. It was confusing. Asked by the Master whether the documents had been compared, counsel said no. Before me, on 18 October this year, junior counsel again referred to there being "three copies of an equitable mortgage". Asked by me if there were any differences in them he first said he didn't want to be dogmatic, but didn't think so; but then he said he couldn't recall if there were differences.
Second, in the course of discussion about the adequacy or otherwise of particulars of the plaintiff's claim to monetary loss, junior counsel for the defendants complained that the accounts referred to in the particulars were "not accounts opened by" his clients. In fact the particulars themselves reveal that the bank changed account numbers in the course of its administration.
Third, junior counsel complained about the lack of detail in respect of particular entries in the particulars of monetary loss. What was meant, he wondered, by reference to a credit of $124,482.70 on 5 January 1990 said to constitute loan repayments from "securities sect". What did "sect" mean? When I suggested it was not hard to work out that "sect" might mean "section", counsel replied: "Possibly" and then "We don't know. It probably is". No-one had taken instructions from Mr Stella whether he knew what such a large credit related to. The same situation applied, it seems, in respect of a credit to the account of over $125,000 five weeks later.
According to a schedule compiled by the defendants' side, the costs charged to the clients simply in respect of matters where a successful interlocutory battle has been won now exceed $125,000. In an affidavit sworn in 1998 the defendants' solicitor said he was instructed by his clients that they had spent in excess of $300,000 in fighting the bank's claims since the commencement of the proceedings. The precise amount which the defendants have incurred by way of costs for services rendered them by their solicitors and counsel is not known to me; but all the indications are that it is very large indeed.
I simply do not understand how it can be that the matters to which I referred a moment ago can have escaped attention when a large amount of legal costs have been incurred. A short period of exercise of brainpower, and in the case of the third matter a consultation with the client, should surely have removed the difficulties which, according to junior counsel for the defendants, his clients faced in connection with the matters.
Let me turn from the chronology - in the course of which I have dealt with a number of the matters advanced by Mr Wilson in support of his principal submission - to the contention that the plaintiff has subjected every costs order in favour of the defendants to unusual and excessive objection - this with an overall purpose of orchestrating the proceeding to cause maximum inconvenience and cost to the defendants.
It is the case that the defendants have obtained a series of costs orders, a number of them on a solicitor and client basis. It is also the fact that, of those orders which survived appeal, not all have yet been taxed. Again it is the fact that, according to the schedule provided by the defendants, insofar as costs have been taxed, the amount claimed has been $113,905.50, and the amount allowed has been $80,160.45, (that is, about 70%). Further again, it is the case that the defendants' cost consultant has deposed that the conduct of the taxation by the plaintiff's side has been unusually ferocious.
I can conclude, notwithstanding the very considerable extent to which costs have been taxed off, that the plaintiff's side has made the taxation exercise very difficult. That said, I do not discern out of that circumstance anything more than a desire to ensure, having regard to the way that the litigation has been conducted, that the defendants recover not one cent more than their entitlement. In particular, I reject any suggestion that I should infer that the plaintiff has been intent upon ruining the defendants - by reason of there being a difference between costs charged and taxed - in order to deprive them of the opportunity of conducting a sound and valuable counterclaim.
Findings Pertinent to the Application to Dismiss the
Plaintiff's Claim for Want of Prosecution.
It is possible now to draw together the findings that I have already expressed, and to make other findings in connection with the matters advanced for the defendants.
First, it is the case that the plaintiff caused unnecessary costs to be incurred by commencing two proceedings in 1994. There is no evidence, in my opinion, that running the two proceedings side by side caused any delay, save that when the proceedings were consolidated there was a need to replead and to provide affidavits of documents in the consolidated proceeding.
Second, it is the case that at all times between February 1994 and March 1998 the plaintiff had on foot, whether in two proceedings or one, statements of claim which raised triable issues against the then defendants. There was never any attempt to have the statements of claim or parts thereof struck out. Only two amended statements of claim were delivered in that period - one of which was the statement of claim delivered subsequent to the consolidation of the two original statements of claim.
Third, issues did arise between the parties concerning discovery and particulars of claim in the period between February 1994 and October 1997. They were not out of the ordinary. Both sides failed to comply with requests as speedily as they should have done.
Fourth, the plaintiff several times appealed against Masters' orders in the period in question. Its appeals were attended by some success.
Fifth, the parties apparently consented to mediation in May 1997. That implies a considerable state of preparedness at the time. Even so, the defendants' counterclaim was at that time far from completely exposed.
Sixth, the defendants' summons filed 28 October 1997 raised issues which were in some respects quite stale. That is so notwithstanding the defendants obtained favourable orders on the return of that summons.
Seventh, it is likely that the defence and counterclaim filed in the consolidated proceeding, in which most of the corporations within the Stella Group became, at least on the face of the document, counterclaimants, very likely led to the issue of the third writ just within time.
Eighth, the plaintiff would better have joined the corporations as additional defendants, and the reason why it did not in any event serve the document promptly has not been explained. There can be no doubt that, understandable as the plaintiff's course was in commencing the proceeding against the additional defendants, the delay in service meant that there was delay overall.
Ninth, at all times since delivery of an amended writ and statement of claim on 13 March 1998 the plaintiff has pleaded triable issues. That is so even though a Master ordered that the statement of claim delivered on 13 March be struck out. A comparison of the content of that document with the content of the statement of claim in its present form makes the point good.
Tenth, it is true, as the defendants submit, that the plaintiff has delivered eight statements of claim and various sets of further and better particulars. That is not, however, an indication that the plaintiff has had any general difficulty in formulating its claim. The chronology which I have set out shows how the number is made up and the circumstances in which fresh statements of claim have been delivered. The most that can be said in favour of the defendants is that in one respect the pleading of the equitable mortgage has been and remains defective, and that in a minor respect there is a continuing defect in the massive particularisation of the plaintiff's monetary claim.
Eleventh, ever since March 1998 the defendants' side has maintained an unrelenting attack on the statement of claim extant at the time, any further and better particulars that have been supplied and the plaintiff's claim generally. It is undoubtedly the case that the attacks on the statement of claim have been attended by some success. It is equally the case that the plaintiff has not always been unsuccessful in appeals brought against orders made by the Master. I reject entirely the suggestion that the pattern of appeals shows that they were actuated by a desire to string the proceeding out and financially break the defendants.
Twelfth, it is a feature of the defendants' conduct of this litigation that in the space of ten months three applications to dismiss the plaintiff's claim for want of prosecution, to permanently stay the proceeding, or otherwise to obtain radical relief, were commenced. None of them succeeded before the Master, despite the fact that over a period of time he had made a number of orders on pleadings and discovery issues that were favourable to the defendants. From the third of those decisions the plaintiff now appeals.
Thirteenth, I consider that there has been and there continues to be a defect in the equitable mortgage pleading. It has not been remedied despite the fact that on 29 March this year counsel for the bank, when a significant aspect of the defect was drawn to his attention, said it would be remedied (see the discussion in the transcript at pp.29-33 on that day). The failure to remedy the defect has, no doubt, been productive of continued complaint; and delay for which the plaintiff must bear blame. That is so even though it might well be thought that the complaint, for reasons earlier discussed, has been a gambit; and a complaint somewhat obscured by the breadth of the attack made by the defendants' side on a number of fronts.
Fourteenth, in my opinion the expansive particularisation by the plaintiff of its monetary claim - evident when particulars were first sought and provided, and further evident in schedules sub-joined to the statements of claim of 13 March 1998 and 19 August 1998, in further and better particulars filed on 22 October 1998, and in schedules to the statement of claim filed on 30 April 1999 - is decisive evidence of the plaintiff's attempts to provide available material and get the matter on for trial. The material has been in much the same form, I add, for about 12 months now. I do not accept what I consider were the extravagant complaints made about those particulars. Rather, in one respect I consider that the particulars should properly be supplemented.
Fifteenth, it is true that on occasions the plaintiff has been late in complying with orders. I have described some of those instances in the course of the chronology. I do not accept the contention that the plaintiff "has been in constant breach of numerous court orders".
Counsel for the defendants made a point of saying that the plaintiff had not complied with the Master's orders of 17 August from which orders it now appeals. It is true that the plaintiff has not done so. On the other hand, in practical terms not only, to the plaintiff's knowledge, was it appealing against those orders; but so also the defendants were appealing against the Master's refusal to dismiss or permanently stay the plaintiff's claim. The plaintiff should have sought an order extending time for compliance with the order to replead. Very likely, in the circumstances, such an order would have been made. The defendants' point, I consider, is in reality pretty insubstantial.
Sixteenth, the plaintiff has put the defendants to strict proof in taxation of their costs. But to that, as I said a little earlier, I ascribe no sinister motive.
Seventeenth, the statement of claim filed on 30 April 1999 (including the schedules thereto) is in almost all respects a pleading upon which the plaintiff should be able to go to trial. In substance, it is very like the statement of claim delivered in March 1998.
Eighteenth, it remains the case that, nearly six years after the proceedings were commenced, there are still no complete pleadings; and there is extant, so the defendants say, a continuing issue about discovery.
What, then, is the reasonable time elapse before the matter could be got on - for the likely time of final disposition is pertinent to resolution of the defendants' application?
In my opinion, the answer to that question must depend in the first instance on the firmness of the hand that guides the proceeding - that is, making the assumption that the plaintiff's claim is not presently dismissed or stayed. In that connection, I consider, given Judge control, that pleadings in the matter could and should be completed within 45 days from today. It is not as if a painting is to be made on a blank canvas.
I further consider that, with a firm hand, any dispute that there may be about further discovery should be disposed of within a very short period of close of pleadings.
In setting that timetable I do not ignore the problems that have hitherto occurred. But neither do I ignore the power and capacity of a Judge of this court to ensure that there is adherence to a timetable.
The final part of the answer to the question that I posed a few moments ago must depend on the further steps needed to prepare the claim and counterclaim for trial, and the court's own timetable for trying long cases (the length of the hearing of both claim and counterclaim has not yet been estimated).
So far as further preparation is concerned, no doubt the defendants, and perhaps the plaintiff, would want to adduce expert evidence. So, in the defendants' case, I assume that there would need to be accounting evidence to support the alleged loss and damage. Other than expert evidence, court books - confined to key documents - would need to be prepared. I see no reason to think that witness statements would be an advantage.
So far as the court's calendar is concerned, having conferred with the Listing Master I understand that even a very lengthy trial could be accommodated in the second half of next year. In that event, the period between the making of the facility agreement and trial would be about 12 years, the period from alleged breach to trial about 10 years, and the period from commencement of the proceedings to trial about six and a half years.
Dismissal for Want of Prosecution.
Principles and Conclusions.
The question to be resolved is whether upon the circumstances as I have found them I should be satisfied that the justice of the occasion demands that the plaintiff's claim be dismissed for want of prosecution - to paraphrase the guiding principle stated by O'Bryan, J. in Shepperdson v Lewis [1966] V.R. 418 at p.419, often cited with approval, recently in Masel & Ors v Transport Industries Insurance Co. Ltd. & Ors [1995] 2 V.R. 328 at p.322 and in Spitfire Nominees & Anor v Ducco [1998] 1 V.R. 242 at p.246.
Guidelines, not rigid rules, have been developed in order to aid consideration of the critical issue. An important formulation is that made by Lord Griffiths in Department of Transport v Chris Smaller (Transport) Ltd [1989] 1 AC 1187 at p.1203, a formulation cited with approval in Bishopsgate (supra) at 17-18. That formulation, which I adopt as a useful tool in approaching the critical issue, was central to the defendants' submissions.
I am certainly not satisfied that there has been any default by the plaintiff which "has been intentional and contumelious, for example, disobedience to a peremptory order of the court or conduct amounting to an abuse of process of the court".
There has been no disobedience to peremptory orders, as that expression should be understood. See Williams Civil Procedure Victoria, paragraph 24.01.25.
Further, having regard to the concept of abuse of process as it has been explained in Hamilton v Oades (1989) 166 CLR 486 at p.502, Williams v Spautz (1992) 174 CLR 509, and State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Australian Torts Reports 81-423, there has been no such abuse by the plaintiff. I reject without hesitation any suggestion that the proceeding has been brought or continued by the plaintiff for the predominant purpose of obtaining some advantage for which it is not designed, or for some collateral advantage beyond what the law allows. In that context I reject the suggestion that the proceeding has been conducted in the way it has in order to break the defendants financially and so preclude them from pursuing a counterclaim of merit. I likewise consider that this is not an occasion on which it could be said that the prosecution of the plaintiff's claim has otherwise worked an injustice upon the defendants, the proceedings being "seriously and unfairly burdensome, prejudicial or damaging", or "productive of serious and unjustified trouble and harassment". There is no doubt that the proceedings have been prolonged, and that the interlocutory processes have been tortuous. For that situation the plaintiff bears some responsibility in respect of discrete periods. But beyond that I could not go.
I turn to the second limb of the Chris Smaller guidelines. In that connection Mr Wilson pressed upon me a number of matters. First, there may be inordinate and inexcusable delay even though there has been activity on the part of the plaintiff: Bishopsgate at 27-28. Second, that in considering delay and its relationship to the likely prejudice to a fair trial, regard must be had to the period which will elapse until trial, not simply the time elapsed until the application for dismissal is heard: Bishopsgate at 25. Third, that where a proceeding is late commenced, the plaintiff is obliged to move with greater than usual speed. In substance, a long delay before issue will have the effect of any post-issue delay being looked at critically by the court, and being more readily regarded as inordinate and inexcusable; and a defendant will have only to show something more than minimal prejudice additional to any prejudice resulting from delay before issue: Bishopsgate at 22-23. Fourth, the prejudice has two aspects: prejudice in the proper conduct of the defence, and prejudice in being kept at risk in respect of the subject matter of the litigation. The first aspect of prejudice involves the notion that the delay will give rise to a substantial risk that it is not possible to have a fair trial of the proceeding. The latter aspect includes the effect upon a defendant's reputation of being kept at risk in a proceeding by reason of a plaintiff's delay. Fifth, that upon the question of prejudice, whilst it is not for the plaintiff to disprove the same, it is open to a defendant to point to undisputed facts and ask the court to draw necessary logical inferences from them: Bishopsgate at 24.
I have of course taken into account, in considering the second limb of the Chris Smaller guidelines, that what is in issue is delay on the part of the plaintiff - that is, net delay: See Spitfire at 248. The court must consider, if there has been delay, whether it has been in whole or in part attributable to the conduct of the plaintiff. Only when relevant delay has been isolated can consideration be given to the question whether it was inordinate or inexcusable.
So also I have borne in mind the principle that it is not for a defendant to stimulate a plaintiff into action; just as I have borne in mind the proposition that unreasonable delay after an earlier, unsuccessful application for dismissal may justify the making of an order on a later application: Queensland Trustees Ltd v Drysdale Hendy & Co. (a firm) [1992] 2 Qd.R. at 623.
In my conclusions I have isolated matters in respect of which I consider the plaintiff has been at fault, and which have caused delay. I have identified that delay. I certainly do not regard the plaintiff's conduct as having been responsible for much of the time that has elapsed since commencement of the proceeding. Notwithstanding the defendants' success from time to time on interlocutory applications, I am of the firm opinion that much of the time spent since February 1994 has been occupied in manoeuvrings for which the plaintiff should not be held accountable; and as well occupied by the ordinary processes of litigation. I have explained earlier my reasons for reaching those conclusions. In the event, I am not at all satisfied that the plaintiff has been guilty of inordinate delay.
But even if the delay which in my earlier conclusions I have attributed to the plaintiff should be regarded as inordinate, I would be reluctant to conclude that, considered in all the circumstances, it should be regarded as inexcusable.
It might be said, against the plaintiff, that the period of greatest delay on its part was the period of delay occasioned by failure to serve the third writ promptly. I have said that the plaintiff did not explain that delay; and so it might be counted against it. On the other hand, for reasons which I have given there is no reason to believe that the plaintiff had any intention of joining the corporations named as defendants in the third writ until the counterclaim of 1996 was launched; for there was no point in the plaintiff, which had taken possession of the property of those corporations, doing so. The plaintiff's action in commencing the proceeding was shown to be, in my opinion, an understandable response to an improperly commenced counterclaim. From that seed, not itself attributable to any default by the plaintiff, emanated the delay, occasioned by delay in service of process, for which the plaintiff might properly be held responsible.
Having regard to the conclusions that I have so far expressed, little needs to be said about the question of prejudice. Bearing in mind that what must be considered is prejudice attributable to the plaintiff's delay, and having regard to the conclusion I have reached about the extent of that delay in the overall course of the matter, I would not be satisfied that the defendants had demonstrated prejudice of either kind.
The matter can be summarised this way: this is not a case in which the justice of the occasion demands an order for dismissal. I would go further and say that it is very far from being such a case.
The Application to Stay for Abuse of Process.
What I have said in connection with the application for dismissal for want of prosecution, and my earlier conclusions, makes it clear that this application must fail.
The Order Striking Out or Ordering the Amendment of Paragraphs of the
Statement of Claim.
It is not clear to me, reading paragraphs 3 and 4 of the orders of 17 August 1999, whether the Master intended to deny the plaintiff the right to replead. Mr Wilson contended that was so; but that if it was not, then I should order (if I did not dismiss or stay the proceeding) that there be striking out, without leave to replead.
Mr Sifris, for the plaintiff, submitted that I should not make any orders corresponding with those in paragraphs, 3, 4, 7, 8, 9, 11, and 12 of the orders made on 17 August. But that if I ordered any paragraphs to be struck out, I should grant leave to replead.
I have said that in my opinion the plea in respect of the equitable mortgage requires repleading. I should now say why.
There is no doubt the plaintiff seeks to allege that securities provided for the facility which was granted in October 1988 included securities that had earlier been given to it by various corporate members of the Stella Group - including an equitable mortgage given by Renbet in 1983 - the corporate members agreeing with the bank that those securities should be securities for that facility. That has been the plaintiff's position ever since the corporations in the Stella Group were joined as defendants and the 13 March 1998 statement of claim was delivered. See particularly paragraphs 35 and 38 of that document; see next paragraphs 39, 40 and perhaps 43 of the statement of claim filed 19 August 1998 and paragraphs 39, 40 and perhaps 43 of the statement filed on 30 April 1999.
The plaintiff has alleged, throughout, that Renbet and the other corporate members of the Stella Group guaranteed the facility; see now paragraphs 25(g) and (h), 43 and 48. For the most part the guarantees there identified were given after the making of the facility agreement. In that connection, the plaintiff pleads that they were given in consequence of those corporations agreeing to the terms of the facility agreement and variations thereto.
As I read the statement of claim, the plaintiff is entitled to contend that, whether or not the corporations were parties to the facility agreement and variations thereto, in fact they executed the cross-guarantee and indemnity referred to in paragraph 48, as well as the other guarantees referred to in paragraphs 25(g) and (h). In those circumstances, default by Renstel would trigger the default provisions of those securities, and arguably, by reference to paragraph 24(b) or (c), the money secured by the equitable mortgage given by Renbet would then become due and payable without demand.
Be that as may, there is, as I said a few moments ago, no doubt that the plaintiff wishes to plead, by paragraph 39, that Renbet (I focus upon that corporation) was in some way made party to the facility agreement so that in a direct way the equitable mortgage became a security for that agreement.
The problem then is, using the second further amended statement of claim as the exemplar, that whilst it has always been alleged that the facility agreement provided that certain securities would be provided, and that the agreement was agreed to and accepted by the corporations which had given the securities, it has always been said that the facility agreement was made between the bank and Renstel; and whilst alleging that the corporations signed the agreement, it has been alleged that they did so in their capacity as guarantors (see paragraphs 39 and 43). Moreover, the allegation of signature by those corporations has, at least since August 1998, appeared, in part, as a particular of the making of the facility agreement (now as a particular to paragraph 39).
I had the advantage of reading the facility agreement. It may well be open to the plaintiff to plead that Renbet was a direct party to it; and that as a party it agreed that existing securities it had provided should constitute securities for the facility which was to be provided to one of the members of the group to the advantage of the group as a whole. In the case of the other corporate members of the Stella Group I anticipate that the plaintiff would seek to allege that there was a collateral agreement by which, in consideration of a facility made available to Renstel for use to the advantage of the group, the corporate members of that group agreed that existing securities - mortgages and guarantees - should constitute securities for the provision of that facility. Perhaps that is the way that the plaintiff might wish to plead the claim against Renbet also, rather than plead that Renbet was a direct party to the facility agreement.
Either way, paragraph 39 is defective as it is presently drafted; and paragraph 43 is probably incomplete.
Although focus was placed in argument on paragraph 39, I consider that for the pleadings to be complete the plaintiff needs to amend the paragraphs which plead the first variation (see particularly paragraphs 45 and 46), the second variation (paragraphs 50 and 51) and the third variation (paragraphs 52 and 53).
I do not agree with Mr Wilson's submission, having regard to all the circumstances, that the plaintiff should be precluded from repleading what is, in reality, the import of the facility agreement - a document signed by Mr Stella as a director of each of the corporations, and a document long discovered and referred to in the statement of claim of March 1998; from pleading the way in which, the plaintiff alleges, the corporate members of the Stella Group became parties to the facility agreement or made agreements with the bank collateral thereto. Nor do I consider that the plaintiff should be precluded from repleading those paragraphs of the statement of claim which deal with the variations to the facility agreement so far as those paragraphs concern the involvement of the corporate members of the group.
I consider that the appropriate course is to give leave to the plaintiff to amend the pertinent paragraphs as it may be advised within about seven days of this date. It is very likely that the amendments will require additional paragraphs. The grant of leave to amend does not preclude there being additional paragraphs.
I do not agree, contrary to the Master's conclusion, that any of paragraphs 23, 24, 25(h), 40(a) or 99(a) should be struck out (see paragraph 3 of the orders made on 17 August); nor do I consider that any of them requires amendment.
Again, I do not consider that any of paragraphs 54, 99(a), 102, 102(a) or the prayer for relief requires amendment (see paragraph 4 of the orders).
I referred earlier to there being one matter which the plaintiff needed to address in respect of the particularisation of its monetary claim. It is this: a question arises as to the rate of interest charged on the overdraft account and on the bills matured account from time to time. The plaintiff has said, in respect of the former account, that the rate charged was "on a daily debit balance at 0.85% above the bank's variable corporate overdraft base rate". It is not clear to me that there has been an explanation of the rate charged in respect of the latter account. The plaintiff should provide, in simple form, the "variable corporate overdraft base rate" operative from time to time since the alleged default; and the rate of interest charged on the bills matured account from time to time since 18 January 1991.
The length of the statement of claim including annexures filed on 30 April 1999 is of the order of 185 pages; the statement of claim proper runs to 45 pages. I see no reason why amendment of relatively few paragraphs of the statement of claim and the provision of a list of interest rates should presently require the preparation, filing and service of a third further amended statement of claim. It would be a thorough waste of money. It will be sufficient for the plaintiff to notify the defendants' solicitors in writing of the amendments made pursuant to leave, and as to the interest rates charged from time to time.
It is obvious indeed that the pleadings must be completed, and speedily. If the issue is not sufficiently opened up by the appeals from the orders made on 17 August 1999, then it is opened up by the plaintiff's summons filed 21 July 1999, and I intend to deal with it.
Orders
Subject to anything that counsel may wish to say, I will make orders in accordance with these minutes:
A On the plaintiff's summons filed 21 July and the plaintiff's notice of appeal
filed 22 July 1999 -
(1) application made by paragraph 2 of the summons refused; (2) appeal struck out; (3) plaintiff pay defendants' costs, including reserved costs.
B
On the plaintiff's notice of appeal filed 24 August 1999, the defendants' notice of appeal filed 24 August 1999 and the defendants' summons filed 2 July 1999 -
(1)
for the date of making the orders which were made on 17 August 1999 in this proceeding (being by a slip in the order as authenticated noted as having been made on 16 August), there be substituted for the date "16 August 1999" the date "17 August 1999";
(2) appeal by the plaintiff allowed; (3) appeal by the defendants dismissed; (4)
set aside the orders made on 17 August 1999 and in lieu thereof, upon the defendants' summons filed 2 July 1999, the following orders be made and directions given:
(i) grant leave to the plaintiff to amend paragraphs 39, 43, 45, 46, 50, 51, 52 and 53 to replead the matters alleged generally by those paragraphs, including the particulars thereto, as it may be advised, notification in writing of such amendment to be filed and served by 4 p.m., 29 October 1999;
(ii) direct that the plaintiff provide details of the interest rates charged from time to time upon the overdraft account and the bills matured account commencing at the date of alleged default in the first instance, and on 18 January 1999 in the second instance, notification in writing of such details to be filed and served by 4 p.m., 29 October 1999;
(iii) pursuant to Rule 36.07 of Chapter 1 of the Rules, the order of 24 September 1998 be amended by adding to it the words "the transcript be permitted on the basis that the plaintiff pay the costs of transcript including costs of provision of same to the court and the defendants";
(iv) the order made 24 September 1998 for transcript extend to completion of the hearing of the application made on the defendants' summons filed 2 July 1999;
(v) liberty to apply reserved on 48 hours' notice in writing to the opposing party or parties;
(vi) summons otherwise dismissed;
(vii) defendants pay plaintiff's costs.
(5) Defendants pay the plaintiff's costs of the appeals instituted by both the
plaintiff and the defendants.
C On the plaintiff's summons filed 21 July 1999 order that:
(1)
any request for further and better particulars of the second further amended statement of claim, but limited to the subject matter of any amendment to paragraphs 39, 43, 45, 46, 50, 51, 52 and 53 of that statement of claim, be filed and served by 4 p.m., 5 November 1999;
(2)
further and better particulars in response to any request made pursuant to paragraph (1) hereof be filed and served by 4 p.m., 12 November 1999;
(3) the defendants file and serve a defence and any counterclaim by 4 p.m.,
24 November 1999;(4) the plaintiff serve its reply (if any) and any defence to counterclaim by
4 p.m. on 3 December 1999;(5) the defendants' summons filed 28 October 1997 be listed for final
determination at 10 a.m., 13 December 1999 before me;(6)
any affidavit upon which the defendants seek to rely in support of an order for further discovery by the plaintiff be filed and served by 4 p.m., 7 December 1999;
(7)
any affidavit upon which the plaintiff seeks to rely in connection with an application for further discovery by the defendants be filed and served by 4 p.m., 10 December 1999;
(8)
any summons by which the plaintiff seeks further discovery from the defendants, together with any affidavit in support, be filed by 4 p.m., 7 December 1999, any such summons to be returnable before me at 10 a.m., 13 December 1999;
(9)
any affidavit upon which the defendants seek to rely in connection with an application by the plaintiff pursuant to paragraph 8 hereof be filed and served by 4 p.m., 10 December 1999;
(10) otherwise adjourn the plaintiff's summons filed 21 July 1999 for
hearing before me at 10 a.m., 13 December 1999;(11) liberty to apply reserved on 48 hours' notice in writing to the opposing
party or parties;(12) costs reserved. ---
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