Dzienciol v Marr
[2000] WASC 193
•28 JULY 2000
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: DZIENCIOL & ORS -v- MARR & ORS [2000] WASC 193
CORAM: MASTER BREDMEYER
HEARD: 6 APRIL 2000
DELIVERED : 28 JULY 2000
FILE NO/S: CIV 2445 of 1992
BETWEEN: MOSZKO MEJER DZIENCIOL
LEAH DZIENCIOL
DKD HOLDINGS PTY LTD
First PlaintiffsBRAY DZIENCIOL
BRUCE ALLAN KENNEDY
Second PlaintiffsAND
CLANAN RICHARD MARR
First DefendantGROSVENOR HILL (WA) PTY LTD
Second DefendantLOGIE BRAE PTY LTD
Third Defendant
Catchwords:
Dismissal of action for lack of prosecution
Legislation:
Law Reform (Contributory Negligence and Tortfeasors Contribution) Act 1947 (WA), s 7(1)(c)
Result:
Application dismissed
Representation:
Counsel:
First Plaintiffs : Mr N W McKerracher QC
Second Plaintiffs : No appearance
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : Mr S Owen-Conway QC
Solicitors:
First Plaintiffs : Tottle Christensen
Second Plaintiffs : No appearance
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : Godfrey Virtue & Co
Case(s) referred to in judgment(s):
Brambles Construction Pty Ltd v Helmers (1965) 114 CLR 213
Dzienciol & Ors v Logie Bray Pty Ltd, unreported; Library No 980078; 25 February 1998
Dzienciol & Ors v Marr & Ors, unreported; SCt of WA; Library No 960623; 30 October 1996
James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1999) 196 CLR 53
Levi v Stirling Brass Founders Pty Ltd, unreported; FCt SCt of WA; Library No 970209; 9 May 1997
Case(s) also cited:
ANZ Banking Group Ltd v Turnbull & Partners Ltd (1991) 33 FCR 265
Archer v Howell (1992) 7 WAR 33
Bargen v State Government Insurance Office (Qld) (1982) 154 CLR 318
Birkett v James [1978] AC 297
Carter v Standen, unreported; SCt of WA; Library No 970271; 28 May 1997
Chan Kin Wan v Sweetman & Thorpe, unreported; FCt SCt of WA; Library No 960456; 14 August 1996
Harvey v R G O'Dell Ltd [1958] 1 All ER 657
Hughes v Gales (1995) 14 WAR 434
Lewandowski v Lovell (No 2) (1994) 11 WAR 124
Nickel v Parks (1948) 49 SR(NSW) 124
Norgard v Rodpat Nominees (1991) 104 ALR 237
Shtun v Zalejska [1996] 1 WLR 1270
Tricon Industries Pty Ltd v Abel Lemon & Co Pty Ltd (No 2) [1998] 2 Qd 551
Ulowski v Miller [1968] SASR 277
MASTER BREDMEYER: This is an application by the third defendant, dated 21 February 2000, to dismiss the plaintiff's claim for want of prosecution. The plaintiffs' action against the first and second defendants has settled and the second plaintiffs are in the process of discontinuing the action. So the action now only concerns the first plaintiffs and the third defendant. The firstnamed first plaintiff is an elderly gentleman who suffers from Altzheimer's disease and lives in a nursing home. His administrator and guardian is his son, Mr Phillip Dzienciol, an architect, who has sworn a number of affidavits in this proceeding. The second named plaintiff, Mrs Leah Dzienciol is the wife of Mr Dzienciol senior and the mother of Mr Phillip Dzienciol. DKD Holdings Pty Ltd is a Dzienciol family company. For ease of reference I will refer to the first plaintiffs as "the plaintiffs". The third defendant is a firm of real estate agents and business brokers trading under the name "Richardson & Wrench, South Perth".
A brief summary of the plaintiffs' claim as pleaded against the third defendant is as follows. In 1989 the Bentley Tavern on Albany Highway, Bentley was a newly erected tavern owned by Narge Pty Ltd ("Narge"). Narge engaged the third defendant as real estate agents to procure the sale of the tavern. The plaintiffs were interested in buying the tavern. The third defendant made representations to the plaintiffs to the effect that:
(a)the projected sales of the Bentley Tavern were $4.3 million per annum (generating a net profit of $863,363) on a high turnover of $3.184 million per annum (generating a net profit of $624,573) on a low turnover;
(b)the Bentley Tavern was a "great buy" at the offer price of $4.25 million;
(c)the extensive land holdings and strategic location made the Bentley Tavern a good investment;
(d)the owner of the Bentley Tavern could expect a rental return in the region of $300,000 per annum; and
(e)the owner of the Bentley Tavern could sell, for a premium of between $1 million and $1.5 million, the leasehold to a person or company who could thereafter operate it successfully.
The first of those representations was contained in a written brochure of 10 pages prepared by the third defendant on its "Richardson & Wrench" letterhead. The brochure contained a description of the tavern and then detailed projected sales and profit figures. It also contained a disclaimer:
"This information has been compiled from information supplied by the vendor. Whilst we have no reason to doubt its accuracy we accept no responsibility to any party. Accordingly, interested parties should make their own enquiries to verify information contained herein."
The brochure also stated:
"For further information please contact Geoff Rowe or Chris Burns, Richardson & Wrench, South Perth".
Representations (b) to (e) were said to have been made in oral discussions by Chris Burns to Bruce Alan Kennedy, who was a director of DKD Holdings Pty Ltd.
In October 1989 in reliance on the representations it is said that the plaintiffs entered into a contract with Narge to purchase the tavern for $4.2 million. It is said that the representations were misleading and deceptive and false and particulars of that are given. It is clear that the plaintiffs have obtained an expert's report on this and have pleaded a lengthy summary in their claim. The plaintiffs' expert's valuation report is that of Mr Graham Kennedy of Jones Lang Wootton and is dated October 1995. A copy of this report was given to the third defendant in February 1996.
This application by the third defendant to dismiss the plaintiff's action for want of prosecution is the second such application. The first application was brought on 26 August 1996 and was heard by Acting Master Johnston, who dismissed the action in Dzienciol & Ors v Marr & Ors, unreported; SCt of WA; Library No 960623; 30 October 1996. However, his decision was reversed on appeal by the Full Court in Dzienciol & Ors v Logie Bray Pty Ltd, unreported; Library No 980078; 25 February 1998. The leading judgment in that case was delivered by Parker J, with whom Kennedy and Steytler JJ agreed. I adopt the principles of law set out in that case. It is clear from that judgment that up to 25 February 1998 the plaintiffs' inactivity was not sufficient to justify the dismissal of the action against this defendant. The present application was brought two years later, so I need to examine the plaintiffs' actions or inactions in the last two years and consider any additional prejudices suffered by the third defendant in that period.
A summary of the events as revealed by the court file in that two year period is as follows:
06/03/98First defendant's affidavit of supplementary discovery
19/05/98Third defendant's notice of change of solicitors
28/07/98Plaintiffs' summons for springing order for first and second defendants' failure to provide affidavit of particular discovery
31/07/98Second defendant's affidavit of supplementary discovery
07/10/98Plaintiffs' summons for separate trial of liability and quantum
18/11/98Schedule of loss and damage filed by the plaintiffs
18/11/98Plaintiffs granted leave to file and serve a substituted minute of consolidated statement of claim
18/11/98Plaintiffs' summons for separate trial of liability and quantum adjourned sine die.
18/11/98Plaintiffs' substituted minute of consolidation statement of claim.
31/12/98First and second defendant's amended substituted defence to the plaintiff's substituted consolidated statement of claim
06/01/99Third defendant's request for further and better particulars of the plaintiffs' substituted consolidated statement of claim
Third defendant's defence to substituted consolidated statement of claim filed by the third defendant
02/03/99Plaintiffs' further and better particulars of substituted consolidated statement of claim in answer to third defendant's request
13/08/99Plaintiffs' summons for mediation
22/09/99Plaintiffs' summons for mediation adjourned sine die
10/01/00First and second defendants' summons for dismissal of the Plaintiffs' action for want of prosecution
10/01/00Plaintiffs' affidavit of discovery served on first and second defendants
21/2/00Third defendant's application to dismiss for lack of prosecution filed
In support of the application to dismiss the third defendant has filed an affidavit of Mr Geoffrey Terrence Rowe, who at the time he was involved in the Bentley Tavern transaction, was a director of the third defendant. He was one of three directors. He says Mr Christopher Damien Burns was about 25 years of age in 1989 and he worked for the firm as a business broker. He says Mr Burns is now in New Zealand and does not intend to return to Australia. The subject matter of these proceedings arose in 1989 and Mr Rowe says that, given the passage of time, it is becoming more and more difficult for him to remember all the relevant issues and conversations that are particularly relevant to the allegations being made by the plaintiffs against the third defendant. He says it is extremely unfair and prejudicial to him that the plaintiffs should take so long to prosecute their claim. There is significant prejudice to him if the outcome of the case is dependent on his ability to recall matters, bearing in mind the significant time that has elapsed since the events occurred. Further, the fact that Mr Burns is in New Zealand makes it even more difficult for the third defendant to properly defend itself against the plaintiffs' claim.
What is the plaintiffs' explanation for the delays in the two year period? Mr Phillip Dzienciol is the spokesman for the plaintiffs and has filed an affidavit in opposition to the application and he also relies on three earlier affidavits of his, sworn 10 March 1994, 13 April 1994 and 3 October 1996. He says that since the making of his previous affidavits he has been solely responsible, as the only child in Perth, for the care of his parents. In October 1988 his father's health deteriorated and he was admitted to Brightwater Nursing Home, Subiaco. His father is now 86 years. His mother is aged 79 and, although she lives on her own, requires care and assistance with such things as transport, shopping and daily care. On 29 October 1998 he applied, on behalf of this parents, for them to receive old age pensions. Their applications were initially refused because of their assets which, he says, are fully encumbered to more than the equity owned, excluding the debt claimed by the ANZ, which is denied. He engaged in lengthy negotiations and appeals with Centrelink, which were eventually unsuccessful.
He was also required, under threat of legal proceedings against himself and his parents, to ensure that approximately 50 tax returns on behalf of his parents and their various business interests for the past eight years were lodged with the Commissioner of Taxation. This was a very difficult and time‑consuming task as his parents' financial affairs were left in disarray after the purchase of the Bentley Hotel and his father's significant health decline and total loss of memory.
In 1999, on behalf of his father, he lodged 22 separate applications against Swiss banks in respect of Holocaust claims. The applications were detailed and required him to undertaken time‑consuming research into his father's extensive family and financial history in Poland prior to the Second World War.
In 1999 the Guardianship and Administration Board referred the annual financial returns, which he had previously lodged with the Board on behalf of his father for the years 1993 to 1999, to the Public Trustee for routine audit. Although the Public Trustee found the accounts were in order, their investigations were time‑consuming and he was required to respond to numerous requests for information and further documentation and to attend a special hearing before the Board.
He says that in about 1990 and on behalf of his parents, he entered into an agreement with his brother, Simon Dzienciol, pursuant to which he was advanced funds to his parents, via a corporate entity he owned, sufficient to support the hotel interest payments and pursue their claims against the defendants. The terms of this agreement are referred to in par 15 of his affidavit of 13 April 1994 and the advances were secured against first and second mortgages over his parents' real property. Furthermore, as the funds have to be repaid in US dollars and UK pounds sterling and because of the significant devaluation of the Australian dollar to these currencies since then, his parents will be unable to repay Simon Dzienciol's loans unless they obtain judgment against the defendants. These loans continue to accrue interest and now exceed AUS$1 million. (I add that in a 1994 affidavit it is stated that the loans attract interest at 21 per cent per annum compounded quarterly. In that affidavit he states he believes his brother is likely to support his parents and to secure his own investment by further borrowings to allow this action to proceed. He adds that his brother, however, does not have unlimited resources.) He says that in the event the third defendant is successful in its application, his parents will have no means to defend the action with ANZ and they will have to discontinue their cross‑claim and consent to judgment in that action. Should this occur they will have lost all the real property they have acquired since arriving in Australia, including their home and will be left penniless after 61 years of hard work, severe hardship and tragedy.
He states that his mother is currently suffering from terminal cancer and has only several more months to live and there is a real risk that she will be made homeless if the plaintiffs' claim is dismissed.
Mr Dzienciol then describes his own health and personal circumstances. He says since October 1997 he has had several serious health incidents, including suffering pneumonia with a complication of pleurisy and pericarditis, affecting the heart - together a potentially fatal condition. He said, "I currently again suffer pleurisy with a strong risk of pericarditis and myocarditis". He has also suffered several serious bouts of influenza with bronchial complications.
In addition to those health problems he says that his marriage of 32 years has broken down and his wife left him in January 2000 and now resides in Melbourne. The breakdown occurred over a long period which, together with the sole responsibility of caring for his parents and their financial affairs, has placed him under enormous stress since October 1997 and distracted him from being able to properly conduct this matter.
He says that since without prejudice negotiations with the defendants broke down in late 1999 he has resolved to have this matter entered for trial without further delay and has instructed his solicitors to brief senior counsel for the purposes, amongst other things, of getting a further opinion and having the matter entered for trial without further delay.
A further affidavit in opposition to the application has been filed by Mr Julian Atkinson, a solicitor in the firm employed by the plaintiffs. He describes the steps which have been taken in the action since the handing down of the Full Court's decision in February 1998 and the filing of this application in February 2000. I have previously chronicled the steps taken according to the court file. I will now highlight the more significant steps taken by the plaintiffs towards getting the action ready for trial and will omit steps taken which are really irrelevant to that, for example, the filing in April 1998 of the plaintiffs' bill of costs in respect of their successful appeal against Acting Master Johnston's order. On 23 February 1998 I ordered that the first and second defendants to file a supplementary affidavit of discovery. On 23 June 1998 the plaintiffs supplied the third defendants' new solicitors with certain documents discovered by the plaintiffs. These documents had previously been inspected by the third defendants' former solicitors. On 28 July the plaintiffs filed a chamber summons seeking a springing order to enforce the order for discovery made by me on 23 February.
On 7 October 1998 the plaintiffs filed a chamber summons for separate trials on liability and quantum. Prior to this the plaintiff's solicitors had written to the third defendants on four occasions seeking their consent to this proposal. The application was opposed by all defendants. The application was listed for a special appointment on 18 November 1998 which, by consent, was adjourned sine die on the basis that the application would be reviewed and reconsidered when the parties had completed discovery and exchanged experts' reports.
On 18 November 1998 an order was made the plaintiffs have leave to file a substituted consolidated statement of claim. This order was made necessary by an oversight by the plaintiffs' solicitor to file a statement of claim consequent to the Full Court's dismissal of the third defendant's strike‑out application on 9 March 1998. However, the third defendant's solicitors had been provided with a minute of the proposed substituted consolidated statement of claim some time prior to November 1998. The first and second defendants filed defences to that new claim on 31 December 1998 and the third defendant filed a substituted defence on 6 January 1999.
Between January and 29 October 1999 there were a number of "without prejudice" discussions between the plaintiffs and the third defendant for the purposes of settling the matter. On 6 January 1999 the third defendant requested particulars of the substituted statement of claim. Those particulars were provided on 2 March 1999. On 11 June and 15 July the plaintiffs' solicitors wrote to the defendants' solicitors seeking the defendant's consent to have the matter mediated. On 16 July 1999 the third defendants' solicitors wrote saying that they were not willing to mediate because the plaintiffs had failed to comply with a letter of request of 6 January 1999, repeated in a conversation on 11 June 1999, explaining why no mention of the equitable lease between the plaintiffs and Warwelt Pty Ltd appears in Mr Kennedy's valuation report dated 23 October 1995. They said an explanation on that was critical "to any meaningful settlement negotiations taking place before discovery". That letter also contained a warning:
"We are concerned that the plaintiffs have not taken any step to advance their case for about eight months (when their case has been dismissed for want of prosecution on two occasions already), and they appear unwilling to respond to our request for an explanation of what appears to us to be a fundamental deficiency with the expert report provided to us in support of their claims.
If the plaintiffs are not prepared to provide us with a response to the questions raised in our letter to you dated 6 January 1999 please let us know, and the third defendant will consider its position on that basis".
The reference there to applications to dismiss for want of prosecution on two previous occasions needs some explanation. The second of those applications was the one heard by Acting Master Johnston in October 1996, which resulted in a dismissal of the action but which was overturned on appeal, as I have stated. The first application dated 20 February 1996 was an application by the third defendant for orders that the action be dismissed as between the firstnamed first plaintiff on the third defendant on the grounds that the proceedings were instituted by the firstnamed first plaintiff without a next friend when he was a person who, by reason of mental disorder, was incapable of managing his own affairs. That chamber summons was programmed to a special appointment but was never heard. I assume that it was not heard because Mr Phillip Dzienciol got himself appointed as administrator under the Guardianship and Administration Act 1990 (WA) which solved the problem. The plaintiffs' solicitors referred the query to Mr Kennedy, the valuer, on 20 July 1999. The solicitor for the third defendant, by letter dated 13 August 1999, complained he still did not have an answer to the query on the valuer's report.
On 25 August 1999 the plaintiffs filed a chamber summons seeking orders for mediation. Negotiations took place between the parties' solicitors on 22 September 1999 and the summons was adjourned sine die. Between September and December 1999 Mr Paul Tottle of the plaintiff's firm of solicitors met with Mr Phillip Dzienciol on a number of occasions to discuss the progress of the matter and to provide him with advice on how to proceed with the matter. In this period Mr Tottle had a number of "without prejudice" telephone conversations with Mr Cobby of the third defendants' solicitors, which I assume came to nothing.
On 8 December 1999 the third defendants' solicitor requested that the plaintiffs give discovery on oath. A list of the plaintiff's documents had been prepared by the previous solicitors in February 1996 and had been provided to the third defendants' previous solicitors in February 1996. On 15 December 1999 Mr Dzienciol instructed his solicitor to brief senior counsel for the purpose of providing advice on the merits of the case and on what steps had to be taken to have the matter entered for trial. Mr Atkinson, the solicitor concerned, was away on leave from 17 December 1999 to 4 January 2000. On his return he served an affidavit of discovery on the third defendant on 7 January 2000. He also attempted to brief senior counsel but, due to the holiday period, was unable to do so until 15 January. He met with Mr Pringle QC and his client on 19 and 25 January 2000. Mr Pringle asked to be briefed with certain additional papers which were provided to him on 28 January. He obtained one of those documents from Ms Louise Harwood of the third defendants' firm. Mr Pringle was also asked to meet with the plaintiff's lay witnesses, Bruce Kennedy and Eva Wilczewsky. Mr Pringle and Mr Atkinson met with Ms Wilczewsky on 2 February, but was unable to meet with Mr Bruce Kennedy until 9 February as Mr Kennedy's daughter had committed suicide on 31 January and he was too distressed to meet with them. Mr Pringle delivered an opinion in two parts on 10 February and a second on 17 February. Mr Dzienciol and Mr Atkinson met with Mr Pringle again on 22 February. On 22 February 2000 the plaintiff's solicitors wrote to the third defendants' solicitors, undertaking to carry out the following steps:
"1.Amend the statement of claim to seek interest and to discontinue the claims in respect of the action against Custom Credit and trading losses. A minute of proposed amended statement of claim will be served once it is received from senior counsel.
2.Seek leave of the court to discontinue the action by the second plaintiffs. They enclosed a consent minute.
3.Inspect your client's discovered documents. The letter noted that the third defendant had to provide its discovery by 2 March 2000.
4.Serve subpoenas on a limited number of persons.
5.Administer interrogatories and serve a notice to admit. We propose to do this once we have inspected your client's documents."
I note that that letter setting out those steps was dated 22 February and this application to dismiss was filed on 21 February but not served on the plaintiff's solicitors until 24 February. It was served without any affidavits in support. The plaintiffs' request to the third defendant for discovery on 12 May 1995 was ignored. By letter dated 24 March 2000 the plaintiff's solicitors complained that although they had given discovery on 7 January 2000, the third defendant had not yet provided discovery. However, as previously stated, on 24 February 2000 the plaintiffs were also served with a copy of the third defendants' application to strike out the statement of claim. I can understand the third defendant not wanting to give discovery until this present application is determined.
Mr Atkinson states that in February and March 2000, settlement discussions took place between the plaintiffs and the first and second defendant and settlement was reached with those defendants on 29 March 2000. The plaintiffs have prepared a proposed amended statement of claim which deletes the second plaintiff and the first and second defendants and deletes the causes of action pleaded against the first and second defendants. It also deletes one of the representations said to have been made by the third defendant, namely that Bentley Tavern was surrounded by a strong residential and commercial area which would supply steady patronage to the Bentley Tavern. The deletion of the causes of action against the first and second defendants reduces significantly the length of the pleading and will likewise reduce the expected length of the trial. The first defendant, Mr Marr, was a valuer employed by the second defendant and he valued the tavern in September 1989 at $4.55 million. Damages were sought against the first and second defendants for negligence and misleading and deceptive conduct.
The action against the third defendant commenced on 13 November 1992 in relation to causes of action which arose in late 1989. The plaintiff's inactions in the progress of the action up to February 1998 have been excused, as it were, by the Full Court in the judgment mentioned. In the two‑year period since then and the bringing of this application, the plaintiffs obtained an order and later a springing order for discovery of particular documents from the first and second defendants. In October 1998 the plaintiffs applied for a separate trial of liability and quantum but did not pursue that application. In November 1998 they obtained leave and filed a substituted minute of consolidated statement of claim. (I should explain that initially separate actions were brought by the plaintiffs against the first and second defendants and against the third defendant.) In March 1999 the plaintiffs provided further and better particulars to the third defendant at its request. In August 1999 the plaintiffs applied by summons for mediation. Some discussions were held between the parties but the application for formal mediation was not pursued. In January 2000 the plaintiffs gave discovery to the third defendant. Also in January 2000 the first and second defendants brought a summons to dismiss the plaintiff's action for want of prosecution. That resulted in, or coincided with, discussions which went on between those parties and resulted in a settlement of that part of the action in March 2000. In mid‑December Mr Dzienciol instructed his solicitor to brief senior counsel on the merits of the claim and the steps needed to get it to trial and that was done eventually in January and I have described the steps taken pursuant to that initiative. Those steps were largely taken before the third defendant filed its present application.
The plaintiffs' prosecution of this case is entrusted to Mr Phillip Dzienciol. I consider that some of Mr Dzienciol's explanations offered for the delay in the past two years are good and some are bad. His devotion of time to the care of his aged and infirmed parents is a reasonable explanation for some of the delay. His own health and marriage problems are also reasonable partial explanations for the delay. I also consider that his attention to the 50 outstanding tax returns and to the accounts required by the Guardianship and Administration Board were also reasonable. He was compelled to attend to those matters. However, his devotion of time to applying for old‑age pensions for his parents and lodging the 22 separate applications for Holocaust claims against Swiss banks, is not a reasonable explanation for the delay. He chose to pursue those two matters on behalf of his parents in priority to the prosecution of this case. After the granting of the appeal by the Full Court in February 1998 it was incumbent upon the plaintiffs and their solicitors to proceed with this case promptly. That was not done.
The time devoted to negotiations and settlement of the action against the first and second defendants is a good explanation for part of the delay. That settlement has benefited the remaining parties as the trial of the action will now be shortened. Mr Dzienciol's instructions to his solicitors to obtain the advice of senior counsel in December 1999 was a worthwhile initiative. It involved the incurring of extra expense and demonstrates his willingness at that time to get on with the case.
What is the prejudice which the third defendant has suffered through this additional two‑year delay? Firstly, Mr Burns, who is a key witness, as he is the one who is said to have made the oral representations, is in New Zealand. Mr Monaco, a partner in the firm of solicitors for the third defendant has stated in an affidavit:
"Christopher Damien Burns is in New Zealand and from a perusal of our records, no‑one from my office has had any contact with him for at least the last two years, his present whereabouts in New Zealand are not certain."
That is not really firm evidence of prejudice. There is no statement there that they have not got a witness statement from Mr Burns. The allegations against him were pleaded in the first statement of claim filed in April or May 1994. Mr Burns left for New Zealand prior to the filing of the writ. If the third defendant has not got a statement from Mr Burns by now, then that is its fault. The affidavit of Mr Monaco does not state what enquiries have been made to locate Mr Burns' present whereabouts. Mr Geoffrey Rowe says in an affidavit of 1 April 2000 that Mr Burns does not intend to return to Australia. If so, I comment he can be subpoenaed.
Secondly, Mr Rowe has deposed that, with the passage of time, it is becoming more and more difficult for him to remember all the relevant issues and conversations that took place in relation to the sale of this tavern in 1989. I have no doubt that is true, but again there is no firm evidence that he has not given a statement to his solicitors which can be used to refresh his memory. What evidence will he give? I assume that he will be the third defendant's main witness. According to the defence of the third defendant, the latter was asked by the plaintiffs to lease the hotel. The third defendant prepared a brochure for that purpose containing the plaintiffs' terms for a lease. The brochure contained the oral terms for lease given by the plaintiffs to the third defendant, eg term 20 years, premium $1.6 million, initial rent $5000 per week. The third defendant was involved in negotiations to lease the tavern to Warwelt Pty Ltd ("Warwelt"). The agreement to lease, called "the Warwelt contract", was partly written and partly oral. The third defendant's solicitors have a copy of the written part headed "Basis of Agreement". The third defendant pleads that the plaintiffs' decision to purchase the tavern was in reliance on the Warwelt contract and not on the third defendant's representations. Warwelt leased the tavern pursuant to the Warwelt contract. It is obvious from the detailed pleading that the third defendant has the pleaded documents - the Warwelt contract and the Warwelt lease.
The third defendant pleads that in par 30A of its defence that if it did make the representations (which is denied) then it had reasonable grounds for making the representations relied on by the plaintiffs and 16 particulars of that are given. For example, it is pleaded that Bill Walker was a director of Narge, the vendor. He had extensive experience of owning and operating hotels in Perth. He had operated the Bentley Hotel which had formerly been on the site. He provided the projected sales and other financial information to Mr Rowe and that was the information put in the brochure. The third defendant says it had no reason to doubt the accuracy of that information, and that similar information was found in the first defendant's valuation of the hotel at $4.55 million. The third defendant no doubt has the evidence to support the 16 particulars. None of those particulars require valuation evidence for proof, save for particular (m) where the third defendant expressly relies on the first defendant's valuation of $4.55 million in September 1989.
The Warwelt lease failed. Warwelt failed to pay the premium of $1.45 million, which was payable in instalments, and the appointed rent. The third defendant pleads that these failures contributed to the plaintiffs' loss and that they failed to make adequate enquiries as to the ability of Warwelt to perform its obligations under the 20‑year lease.
I have described the third defendant's pleaded defence in some detail. I consider it is not a defence which depends significantly on recollection of conversations. It depends largely in documents. The third defendant also relies on its disclaimer quoted above which is a matter for legal argument. It also pleads that the Trade Practices Act claim is time‑barred which is also a matter for legal argument.
A third matter of prejudice is said to arise from the fact that the action has settled against the first and second defendants. The third defendant in par 32 of its present defence pleads that, if the plaintiff suffered any loss or damage, which is denied, that loss or damage was caused or contributed to by the conduct of the first and second defendants, as alleged in the statement of claim; in other words, by the wrong valuation of those defendants. It was open to the third defendant to have issued a contribution notice at any time under O 19 r 8. The third defendant's pleading suggests that such a step should have been taken. The third defendant said that it had no idea that the action against those defendants might be settled and has not filed a contribution notice against those defendants and it now says it is time‑barred. It can no longer do so. This was a critical factor in the Full Court's decision in Levi v Stirling Brass Founders Pty Ltd, unreported; FCt SCt of WA; Library No 970209; 9 May 1997 dismissing the plaintiffs' action for lack of prosecution. There was grave prejudice to the defendants in that case because, as a result of the plaintiffs' delays, the defendants' claim against a third party, a firm of accountants, would be time‑barred.
I do not think that argument is correct in relation to this case. The right to contribution is against a fellow tortfeasor is given by s 7(1)(c) of the Law Reform (Contributory Negligence and Tortfeasors Contribution) Act 1947 (WA) ("the Law Reform Act"). The right to contribution is sui generis and is not a cause of action in tort. The Law Reform Act does not impose any limitation period in which a tortfeasor is to make a claim for contribution. See Brambles Construction Pty Ltd v Helmers (1965) 114 CLR 213. Furthermore, s 38(1)(c)(vi) of the Limitation Act 1935 (WA) does not apply to a claim for contribution under s 7(1)(c) of the Law Reform Act: James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1999) 196 CLR 53 at 65 ‑ 66 and, in any event, a cause of action for contribution against a fellow tortfeasor does not arise until the judgment has been entered against a defendant: see James Hardie at 65, 66. I note that Brambles Construction was not cited to the Full Court in Levi v Stirling Brass Founders.
Whether the third defendant's claim for contribution against the first and second defendant is time‑barred or not, the third defendant has pleaded that the plaintiffs' loss was caused, or contributed to, by the negligent valuation of the first and second defendants. The third defendant will now have to prove that as a part of its defence. Prior to settlement of the plaintiffs' action against the first and second defendants, the third defendant could have sat back and let the plaintiff prove it. The third defendant says this will require it to address evidence as to the state of knowledge of the first and second defendant as pleaded in par 27 and par 28 of the consolidated statement of claim of 18 November 1998. It is there pleaded that it was reasonably forseeable that persons who relied upon the valuation would suffer loss if the valuation was negligently prepared and further, that Marr and Grosvenor Hill knew, because they were so informed by Mr Hedley O'Meara of Bruton/Warwelt and by Mr Ray Weir of Austrafin, that:
"(a)the valuation was to be used by Custom Credit for the purposes of assessing and determining applications for finance relating to the Bentley Tavern and would be relied upon by Custom Credit for this purpose;
(b)the valuation would be relied upon by persons who applied to Custom Credit for finance in relation to the Bentley Tavern …"
Mr Clavey, solicitor for the first and second defendants, has deposed in an affidavit sworn by him on 11 February 2000 in support of an application by those defendants to have the plaintiffs' action dismissed against them, of difficulties locating Mr Hedley O'Meara. In March 1998 he had a telephone conversation with Mr O'Meara in New Zealand and later sent him a proof of evidence which was not returned. He has since been unable to contact Mr O'Meara or to ascertain his address. He has his mother's address but she said she has had a disagreement with her son and is uncertain of his current whereabouts. In February 2000 Mr Clavey arranged for a search to be conducted of the State and Commonwealth electoral rolls in Australia but was unable to ascertain Mr O'Meara's address.
Granted that Mr O'Meara's apparent disappearance represents a problem for the third defendant, that is not as serious as it may look. There is no suggestion that Mr Ray Weir is not available to give the same evidence, and Mr Marr, the first defendant, is a valuer still practising in Perth and is also available to give evidence. He has deposed in par 14 of an affidavit sworn by him on 11 February 2000 that:
"14.1The valuation was to be prepared for Hedley O'Meara for the use of Bruton Developments in relation to its application for finance to Custom Credit; and
14.2I have no recollection of an invoice being sent to the secondnamed second plaintiff [Mr Bruce Kennedy] for the cost of the valuation as alleged."
Mr Marr has deposed in the same affidavit that an invoice of $6270 for the valuation was sent to Bruton. He has attached documentary evidence of that. Overall I consider that the likely absence of Mr O'Meara from the trial will not prejudice significantly the third defendant in its presentation of this part of the case.
The third defendant has further argued that it is unlikely to advance its position by asking Mr Marr for his recollections of events which occurred in late 1989 because he has deposed in the same affidavit that he has little recollection of those events. Consequently, it may be impossible for the third defendant today to prove that any loss or damage suffered by the plaintiffs was caused by the negligence of the first and second defendants. I do not consider that the third defendant is likely to be prejudiced significantly by the settlement of the action with the first and second defendants. The third defendant should be able to illicit from the plaintiff's principal witnesses that they were given a copy of Mr Marr's valuation and that they relied on it and they will be able to call Mr Marr, to support his valuation which, in effect, supports the representations said to have been made by the third defendant. He has not deposed to the loss of any records, and I would not expect him to have lost any, given that this case was running against him until March of this year. In his affidavit of discovery sworn on 7 September 1994 he has discovered various sales reports, sales analysis etcetera which would appear to be some of the source material which he used in preparing his valuation. I note that he no longer has his diaries for 1989 and 1990, but I do not consider that will detract from his evidence on the valuation. I note too that he gave a proof of evidence to his solicitor in December 1992 and a further proof in May 1994. I note from an affidavit sworn by Mr Marr on 16 February 1994 that he had then been a valuer for 24 years and for the past 15 years had concentrated on the valuation of licensed premises. I consider that he is likely to be a capable witness for the third defendant in this action as the figures in his valuation support the third defendant's figures in its sales brochure. For example, Mr Marr's valuation estimated gross sales at $4,316,000 per annum to produce a net profit of approximately $800,000 per annum. The third defendant's brochure projected annual sales on a high turnover of $4.3 million per annum, generating a net profit of $863,363, or sales of $3.184 million per annum on a low turnover generating a net profit of $624,573 per annum.
The plaintiffs in support of their claim for misleading and deceptive conduct against the third defendant have pleaded the falsity of the representations in par 24 of the consolidated statement of claim and have repeated them with some deletions in par 13 of the proposed amended statement of claim - which relates to the third defendant only. In pleading the falsity of these representations the plaintiffs have pleaded out the details of their expert report obtained from Mr Graham Kennedy in October 1995. The third defendant has argued that it will now be extremely difficult, if not impossible, for it to call detailed and accurate evidence in relation to these matters as it has no practical means of compelling access to or production of relevant financial records of comparable establishments which may exist, if any. Its counsel argued that these records are critical to the third defendant's ability to prepare adequately its defence. Further, the allegations in par 24 encompass matters much wider than the relevant financial records of other establishments in other suburbs, including: levels of patronage; premium trading periods; emerging patterns of trade pre and post the introduction of random breath testing in 1989; the previous trading history of the Boomerang Hotel which no longer exists; arterial road locations and the comparability of those to that of the Bentley Tavern; the capacity of other establishments for drive‑in trade; the size, quality and location of the dining areas in other establishments in 1989; the overall size of the Bentley Tavern compared with other establishments; the design of public bar areas, lounge and bistro areas; the proportion of sales achieved through drive‑in sales, bar sales, food sales and sundry items in each of the various establishments and other matters. The third defendant has said that the length of time which has now elapsed gives rise to an overwhelming inference of the likelihood of serious prejudice because the third defendant will not be able to obtain appropriate evidence in relation to any of these matters.
There is no actual evidence from the third defendant that it does not have an expert's report to justify its representations. If it has not, then I consider that is its problem, that is the way which the third defendant has chosen to run this case. These allegations have been in the pleading since 1994. As previously stated, the third defendant proposes to rely on the expert valuation of Mr Marr in 1989. It can also rely on the evidence of Mr Bill Walker who was, in effect, the owner of the previous hotel on the site and who, according to the third defendant's defence, had extensive experience in the management and operation of hotels in Perth, having owned and operated, among others, the Manning, Council Club, Floreat, Mermaid and Bentley Hotels from time to time. It is pleaded that Walker provided certain financial and other information regarding the Bentley Tavern development which I presume found its way into the third defendant's sales brochure. Independently of the valuation evidence, the third defendant will also rely on its defence of a disclaimer placed in the brochure and the other defences mentioned, eg the incompetence and lack of financial standing of the lessee chosen by the plaintiffs to run the tavern. As previously stated, the third defendant negotiated the lease to the lessee.
I do not consider that the plaintiffs' delays since the Full Court's ruling by the plaintiffs have been contumelious. They have not been in disobedience to any peremptory order of the court and I do not consider that the plaintiffs' conduct amounts to an abuse of process. Their settlement of the action with the first and second defendants has been good progress in the overall determination of their case. Also their decision to engage senior counsel in late 1999, which was followed through by a number of conferences and obtaining his advice, shows a serious commitment to get the action against the third defendant tried. The plaintiffs' delays in the presentation of this case against the third defendant since its inception have been inordinate and unreasonable. However, I have considered the matters of prejudice raised by the third defendant in its affidavits and argument but am not persuaded that these matters of alleged prejudice will give rise to a substantial risk that it is not possible for this defendant to have a fair trial of the action. I do not consider that the third defendant has made out a case that it is has suffered serious prejudice because of the delays of the plaintiffs. I propose to dismiss this application.
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