Equuscorp Pty Limited v Harris, Equuscorp Pty Limited; Hughes and Equuscorp Pty Limited v Dorney

[2009] VCC 558

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE

CIVIL DIVISION

Case No. CI-93-03274

MC933274

EQUUSCORP PTY LIMITED	Plaintiff
v
JOHN HARRIS	Defendant

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Case No. CI-93-03092

MC933092

EQUUSCORP PTY LIMITED	Plaintiff
v
JOHN ROBERT HUGHES	Defendant

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Case No. CI-93-03096

MC933096

EQUUSCORP PTY LIMITED	Plaintiff
v
IAN WILLIAM DORNEY	Defendant

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JUDGE:	HIS HONOUR JUDGE SHELTON
WHERE HELD:	Melbourne
DATE OF HEARING:	26 and 27 March 2009
DATE OF JUDGMENT:	24 April 2009
CASE MAY BE CITED AS:	Equuscorp Pty Limited v Harris, Equuscorp Pty Limited v Hughes & Equuscorp Pty Limited v Dorney
MEDIUM NEUTRAL CITATION:	[2009] VCC 0558

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REASONS FOR JUDGMENT

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Catchwords: Reinstatement of proceedings – striking out for want of prosecution – re- litigating issues and abuse of process – Equus Corp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 - Caruso v Jafer & Anor. (unreported, 18 June 1998) - Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No.2) [2006] VSC 241 - Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863 - Department of Transport v Chris Smaller (Transport) Ltd (1989) A.C. 1197 - Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2007] VSCA 75 - Australia and New Zealand Banking Group Ltd v Merribee Pastoral Industries Pty Ltd (1998) 16 ACLC 1447.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G Beaumont QC with	Phillip Kotsanis
Mr S J Maiden
For the Defendants Harris	Mr M J Campbell	Eales & Mackenzie Melbourne
and Hughes
For the Defendant Dorney	Mr T Bourke	Baker & McKenzie
HIS HONOUR:

Introduction

1          Equuscorp Pty Ltd (“Equus”) has, in each of these three proceedings, issued a summons seeking that the proceedings which were struck out with a right of reinstatement on 7 February 2001 be reinstated. In each proceeding, Equus also seeks judgment on alternative grounds, or other alternative orders.

2          There is a high degree of similarity between the claims, defences and counterclaims in each of the three proceedings. This is evidenced by the fact that Mr Campbell appeared on behalf of the defendants, Harris and Hughes, and that the same solicitors, Eales & Mackenzie, acted for all defendants, including Dorney, until recently. The hearing before me was confined to the reinstatement applications.

History of the Proceedings and the Glengallan Case

3          In the Harris proceeding, a writ was issued on 25 August 1993 by Equus Financial Services Pty Ltd which subsequently changed its name to Equus. The Statement of Claim annexed alleged a loan agreement dated 26 August 1989 between Harris and Rural Finance Pty Ltd (“Rural”) pursuant to which Rural lent Harris the sum of $43,400. It is further alleged that on 8 January 1991, Rural assigned all its right, title and interest under the loan agreement to Equus absolutely. It is alleged that the defendant defaulted in making payments due under the loan agreement on 26 June 1993, which is when the cause of action alleged accrues. In the writ, Equus claims the sum of $39,948.78, together with interest at the rate of 20 per cent per annum pursuant to the loan agreement from 26 June 1993. The sum claimed outstanding at 26 March 2009 is $136,593.59.

4          Proceedings were issued against Hughes on 11 August 1993, claiming the sum of $47,190.98. There the loan agreement was dated 29 June 1989 and it is alleged that default occurred on 29 June 1992, which is when the cause of action alleged accrues and interest is claimed from this date at the rate of 20 per cent. The sum claimed to 26 March 2009 is $188,795.95.

5          In Dorney, proceedings were also issued on 11 August 1993 for the sum of $26,090.49. The loan agreement was dated 20 December 1989. It is alleged that default was made by Dorney and the cause of action accrued on 20 March 1992. Interest was claimed from that date at the rate of 25 per cent and the sum claimed at 26 March 2009 is $109,510.68.

6          The County Court proceedings moved through interlocutory stages and in due course were ready for hearing.

7          These three proceedings are part of approximately forty similar proceedings which have been issued in Victoria, Queensland and the Australian Capital Territory. In each of these, Equus has brought proceedings, and in some Rural, which is now in liquidation, is also a plaintiff. In each of these proceedings, the defendant borrowed from Rural to finance the acquisition of an interest in an aquaculture managed investment scheme known as the “Red Claw” project. In each of these proceedings, as here, Equus claims to be the assignee of Rural’s interest in those loans and sues to recover principal and interest.

8          In February 1996, Equus and the defendants, as well as defendants in other proceedings, agreed to deferring the hearing of the three proceedings (“the stay agreement”) pending the outcome of a case in the Supreme Court of Queensland between Equus and Glengallan Investments Pty Ltd (“the Glengallan case”). This was a claim for in excess of $2.5 million and proceedings were issued in 1992. The plaintiff states that this was a test case. The defendants dispute this, stating that it was rather just for guidance. It appears to me that nothing really turns upon precisely why the parties were prepared to await the outcome of the Glengallan case. The precise effect of the stay agreement is fundamental to this application and I consider it in greater detail later in this judgment.

9          In the Glengallan case, White J, in the Queensland Supreme Court, dismissed Equus’ action on the grounds that it had no standing to sue because the Deed of Assignment from Rural was ineffective. On 19 May 1994, the Queensland Court of Appeal set aside White J’s order. On 6 March 1996, Rural entered a creditor’s voluntary winding-up.

10        On 25 November 1997, Equus made application to His Honour Judge Keon- Cohen of this Court for a trial date to be set for the three proceedings. Equus submitted that the stay agreement envisaged an early resolution of the Glengallan case which had not occurred and therefore the stay agreement was at an end. The defendants submitted that the stay agreement was still on foot. Judge Keon-Cohen accepted the defendant’s submission, refused Equus’ application and adjourned the directions hearings to 19 November 1998. On 6 March 1998, the Court of Appeal dismissed an appeal by Equus against Judge Keon-Cohen’s decision.

11        Meanwhile, on 5 February 1998, the Queensland Supreme Court granted Equus leave to join Rural as a plaintiff and further ordered that five of the other Queensland Red Claw proceedings be heard together with the Glengallan case.

12        On directions hearings in these three matters on 19 November 1998, 17 June 1999 and 30 March 2000, the matters were further adjourned. Finally, on 7 February 2001, an order was made by Her Honour Judge Harbison of this Court that each of the proceedings “be struck out with a right of reinstatement”. The order further stated:

“Note that this course has been taken as it is not possible to ascertain when related proceedings will be finally determined in the Supreme Court of Queensland.”

13        Presumably this was done to save the expense and inconvenience of the solicitors for the parties regularly having to appear on directions hearings. It is pursuant to the reserved right of reinstatement contained in these orders that the present application is now brought.

14        Meanwhile, between February 2000 and September 2001, Helman J heard the trial of the Glengallan case over a period of twelve days. On 30 November 2001, he delivered judgment in favour of the defendants. In May 2002, the Queensland Court of Appeal heard an appeal brought by Equus and Rural. It delivered judgment on 27 September 2002, finding for Equus and Rural on some issues, and for the defendants on others. Equus and Rural appealed to the High Court in respect of matters upon which it was unsuccessful. The High Court allowed the appeal and remitted the proceeding back to Helman J to determine three remaining issues – Equus Corp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471.

15        On 3, 4 and 5 May 2005, Helman J heard further argument, and on 28 July 2005, delivered judgment, deciding the three remaining issues in favour of Equus and Rural.

16        The Queensland Court of Appeal heard an appeal from Helman J’s decision brought by the defendants, on 20 and 21 February 2006. On 7 June 2006, the Court of Appeal dismissed the appeal. On 8 December 2006, the High Court refused the defendants special leave to appeal from the Queensland Court of Appeal’s decision.

17        It appears that there was no contact between Equus or their solicitor and the defendants between November 2001 and October 2006.

18        On 31 October 2006, Phillip Kotsanis, an in-house solicitor employed by Equus, wrote to the defendants’ solicitors, Eales & Mackenzie, advising that the Glengallan case had been resolved. In an affidavit sworn in the Harris and Hughes matters on 15 August 2008 and in the Dorney matter on 11 September 2008, Kotsanis states that although the special leave application to the High Court had not been determined, the managing director of Equus was of the view that the application was certain to fail. The letter stated that in Equus’ view there was no defence available to the defendants and that it sought to reactivate the proceedings. It also sought consent orders to judgment against the defendants for the sum outstanding, including interest, and costs. Nothing occurred then until 4 April 2007 when Equus wrote to each of the defendants indicating that if they did not consent to judgment then Equus would apply for judgment in the Supreme Court of Victoria in a proceeding against one John Percival, who was a party to the stay agreement. That proceeding had been dismissed by Beach J “with a right of reinstatement” on 2 February 2001. The letter stated:

“. . . .

It is our view that the Judgments in the Glengallan case should be applied to this proceeding to render your defence unsustainable and we propose reinstating this proceeding and applying for summary Judgment against you.

Please let us know if you consent such a course, in which event appropriate orders can be made by consent without further expense which will ultimately be borne by you.

If you do not consent to this course, then to avoid unnecessary time and duplication of work we propose making one application in Supreme Court of Victoria proceeding no 7219 of 1996 between Equuscorp Pty Ltd against Mr John Percival (which we assume you are aware will give rise to similar issues) and using that as a test application for this proceeding (and other proceedings in which similar issues arise). We propose that once a decision is made on that application, the parties could then consider their position.

If we do not hear from you in relation to this letter within 14 days, we will embark on the course foreshadowed above.”

19        In fact, application was not made to the Supreme Court until September 2007. Eales & Mackenzie also acted as solicitors for Percival on the application. The application was heard before Master Evans on 16 April 2008, and on 18 April 2008, he delivered judgment, refusing to reinstate the proceeding. Equus appealed against that decision. The appeal was settled on 13 May 2008, when consent orders were made that the appeal be allowed, that the proceeding be reinstated and that the claim and counterclaim be struck out with no order as to costs.

20        The summonses before me were issued in the case of Harris and Hughes on 15 August 2008 and in the case of Dorney on 12 September 2008.

The Law

21        In Caruso v Jafer & Anor. (unreported, 18 June 1998), Mandie J stated that a proceeding would not be reinstated if, upon reinstatement, it would be struck out for want of prosecution. This statement of principle was accepted by Hargrave J in Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No.2) [2006] VSC 241, at paragraph 86.

22        I turn then to consider the principles upon which a court should act in determining whether to exercise the power to dismiss a proceeding for want of prosecution. These are discussed at length in Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863. There, Tadgell and Ormiston JJ, with whom Brooking J concurred, accepted, at p.872, the statement of Lord Griffiths in Department of Transport v Chris Smaller (Transport) Ltd (1989) A.C. 1197, at 1203:

“The power should be exercised only where the court is satisfied … (a) that there has been an inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (b) that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants, either as between themselves and the plaintiffs, or between each other, or between them and a third party.”

23        Their Honours further stated, at p.874, that:

“…plaintiffs are obliged to move with greater speed if they have left the

issue of proceedings until very late in the limitation period.”

presumably because there is potentially greater prejudice to the defendant with the lapse of time since the cause of action arose. At p.875, their Honours stated that while prejudice to the defendant must be established, it is not necessary for the defendant to allege prejudice upon affidavit. The Court may infer it from all the circumstances of the case.

24        Their Honours further stated, at pp.875-876:

“…In each case, however, one must look at each of the elements of prejudice asserted and examine the time at which it is likely to be suffered, always making due comparison between prejudice which the defendant has suffered or will be likely to suffer because of inordinate and inexcusable delay and any prejudice it might have suffered in any event. So far as likely prejudice to the conduct of a fair trial is concerned the critical time is the time at which the action is likely to be heard. … In each case due allowance should be made for the time which any action will ordinarily take to reach final determination. …”

25        In Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2007] VSCA 75, Buchanan JA, with whom Ashley JJA and Kellam AJA agreed, stated:

“In my opinion, in this case the trial judge acted upon a wrong principle and failed to take into account a material consideration in failing to address the question of the existence of prejudice which was attributable to the delay for which the appellant was responsible, and which the respondent was required to establish. His Honour appears to have made the mistake identified by Hedigan AJA in Spitfire Nominees Pty Ltd v Ducco in that he —

‘… simply grossed up the period of delay as elapsed time, instead of, as was the judicial obligation, considering what the net delay occasioned was and what prejudice, if any, was sustained as a consequence of that, rather than the elapsing of time.’

There was no evidence that the delay for which the appellant could be blamed prevented or impeded a fair trial. Further, in the circumstances of this case, I do not consider that the mere lapse of time since the occurrence of the events the subject matter of the proceedings is likely to have affected the respondent’s ability to present its defence to the appellant’s claims.”

The Stay Agreement

26        It is necessary to consider the effect of the stay agreement in some detail since the extent of the delay suffered by the defendants is dependent upon its construction.

27        In an affidavit sworn by the three defendants’ then solicitor, Michael Deane Hehir of Hehir & Co of Canberra, on 22 November 1997, in opposing Equus’ application before Judge Keon-Cohen on 25 November 1997 for the fixing of a trial date, he referred to a telephone conversation with Equus’ then solicitor, Alan Herskope, on 21 February 1996. What he stated was a contemporaneous file note of that conversation made by him reads as follows:

“FILE NOTE

PERCIVAL AND EQUUS

Telephone call to me by Alan Herskope wanting to speak with me. I said that I was tied up but I would get back to him. Subsequently I rang him back at 10.45am. He told me that he was with Nick Russo who said ‘hello’ in the background. I made a suitable response.

Herskope said that so far as the Percival action events had overtaken it and I said what did he mean. He said that I was aware of his situation and l said yes I was, and also that statements by agreement had yet to be filed. As against this the Glengallen (sic) case in Brisbane had been put on a fast track arrangement and almost certainly would be heard by October this year. He then said the way our matter was going it could not be heard before that and I said that depended on the parties really and whether or not they complied with orders or whether they agreed to extend time. He said in any event even if we abided by orders from here on we could not be heard prior to October.

He said the obvious benefit to our clients was that Glengallen (sic) (that is the big boys) would bear the cost. I said it might be that Glengallan might look to others to contribute to the costs if it was going to be the test case. He said my clients would not be prejudiced and I said interest was running. He said Glengallen (sic) would be a suitable test case and I said I doubted that that was accurate. In particular, my defences went far further than Glengallen (sic). He replied no, my defences were the same. I replied no, my defences were the same as to about the initial 14 grounds. After then I had raised many other defences including defects in the prospectus and the like and I was fairly sure that they were not in the Glengallen (sic) defence. He then asked me could I get instructions and I pointed out that I was interstate and he said what about getting instructions within the next couple of days. I said it would be difficult I had to contact not only Percival but those people who had agreed to find him. I said leave the matter with me and I would see what could be done, but at this stage I was not committing myself to anything pending receipt of instructions.

10 minutes
21.2.96 - 10.50am.”

28        Hehir further deposes that on 29 February 1996, he again had a telephone conversation with Equus’ solicitor and made a contemporaneous file note, which reads as follows:

“FILE NOTE PERCIVAL Telephone call in from Alan Herskope. What was the situation. I said

we would agree to a halt on the Percival and all other matters including
Brisbane subject to the following:

1. their reply was to be amended to abandon the references to the Taxation Administration Act.

2.        as our defence went further than the Glengallen (sic) defence, in the event of Equus being successful we would have to reserve our rights to argue those matters covered in our defence and not covered in the Glengallen (sic) defence.

Herskope said, okay, leave it with him - he was finishing up and I could expect Ken Rose to get back to me. I said did that mean that Gadens were taking these matters over and he said no, Ken Rose would just be co-ordinating.

4.40pm - 29.2.96.”

29        On 10 May 1996, Gadens Ridgeway, by then acting for Equus, wrote to Hehir as follows:

“EQUUS FINANCIAL SERVICES LIMITED -v- PERCIVAL and

MISCELLANEOUS LITIGATION AGAINST OTHERS

As you are aware we act for Equus in relation to various litigation commenced either by our office or by Equus’ then Melbourne solicitor, Mr Alan Herskope, in different jurisdictions and locations throughout Australia in respect of which you act for various defendants. The litigation arises out of enforcement by our client of loan agreements assigned to it by Rural Finance Pty Ltd, primarily in relation to ‘Red Claw’ project loans.

Our instructions are that Mr Herskope has now gone to the Bar in Victoria. We are further instructed that in or about February last, an agreement was reached between Mr Herskope on behalf of Equus and you on behalf of various defendants that the Percival case in Victoria and the other cases in either Queensland or elsewhere are to be put on hold pending the outcome of the Glengallan litigation with Equus in the Queensland Supreme Court.

The advice we had from Mr Herskope is such agreement is subject to the following:

1.        That as the pleadings in the Percival case (in its defence and counterclaim) go further than the pleadings in the Glengallan case, Percival and any other defendants who raise additional alleged grounds of defence reserve their rights in that regard;

2. That in conformity with the Glengallan case the pleadings in the Equus Reply relating to breaches of the Taxation Administration Act will also be abandoned in relation to similar claims made against the other defendants at present.

Our understanding of the parties that you represent, whom these arrangements would be binding on, are the following:

1.       Feldon;

2.       Horton;

3.       Hasell;

4.       Widdup;

5.       Saeck; and

6.       Percival.

Should there be other parties that we have omitted, please advise and formally confirm your agreement in relation to these arrangements.

We apologise for not having followed up this matter earlier. The cause of the delay was not that of either our client Equus or Mr Herskope, but due to the writer’s other commitments in the last few months.

In any event, we should be pleased to receive your advices in relation to the above at your early convenience.”

30        Hehir responded to Gadens Ridgway on 14 May 1996 as follows:

“RE: PERCIVAL AND ORS -v- EQUUS FINANCIAL SERVICES

LIMITED

Thank you for your facsimile letter of 10 May 1996.

We note your advices as to your firm taking over the conduct of liquidation by Equus Financial Services Limited consequent upon Mr Herskope, the then solicitor for the company, going to the Bar in Victoria. However, this seems to be somewhat inconsistent with the Notice of Change of Practitioner received by us in the matter of Percival and a copy of which is attached to this letter. You might be good enough to confirm that the notice of change is procedural only and that, in essence, your firm will be conducting this litigation on behalf of the Plaintiff.

We confirm that there was an agreement between Mr Herskope and the writer and that agreement is as set out in paragraph 2 of your letter and is subject to matters (1) and (2) as set out in the 3rd paragraph of your letter.

Turning now to the parties whom this arrangement binds we make the following comments:

(1) Messrs Felden, Hasell and Mr & Mrs Horton are, in fact, the subject of proceedings in the District Court in Queensland and in which your firm acts. Our understanding is that in the conversation between Mr Herskope and the writer he was conveying the intent of his client that these matters should be held in abeyance pending a decision in the Glengallen (sic) litigation. We confirm that there are other clients to whom the arrangement applies and these are set out in the first part of the Schedule to this letter. There are other clients for whom we acted but who, at the time of the agreement with Mr Herskope, we no longer had instructions or had declined to act and they are set out in the second part of the Schedule. Our understanding is that the arrangement between Mr Herskope and Mr Hehir does not affect these matters contained in the second part.

SCHEDULE 1

Dorney Ian
Felden, Hans
Fripp, Ian
Harris, John
Hasell, Alastair
Horton, David & Peggy
Hughes, John
Lenton Pty Limited
Lynch, Richard
NPP Nominees Pty Limited
Saeck, Otto
Wafter, John & Helen
Widdup, Garry
Slack, David
Loveridge, Ian.

. . . .”

It will be noted that Dorney, Harris and Hughes are referred to in this
Schedule.

31        Equus contends that the stay agreement was effective until 8 December 2006, when the High Court refused the defendants special leave to appeal on the basis that it was only then that there was finality in the Glengallan case. The defendants in each of the three proceedings contend that stay agreement was only to operate until judgment in the Glengallan case was delivered by the Supreme Court of Queensland on 30 November 2001.

32        The relevance, of course, is that if Equus is correct, then there has only been delay since 8 December 2006, or perhaps, more correctly, 31 October 2006, when Equus wrote to the defendants’ solicitors. On the defendants’ construction of the stay agreement, the delay to be considered by me would be from 30 November 2001.

33        As I indicated during the course of the hearing, if the parties were running the Glengallan case as a “test case”, or something similar, a judgment which was subject to appeal was of little assistance, since it could be reversed. The letter of 10 May 1996 from Gadens Ridgeway to the defendants’ solicitor refers to “the outcome of the Glengallan litigation with Equus in the Queensland Supreme Court”. There could hardly have been said to be an “outcome” of the Glengallan case at any time prior to 8 December 2006.

34        Although there are limits upon the extent to which post contract conduct can be looked to in ascertaining the meaning of an agreement, the reference in Judge Harbison’s order of 7 February 2001 to the proceedings being “finally determined” in the Supreme Court of Queensland is consistent with the stay agreement being effective until 8 December 2006.

35        In my view, the proper construction of the stay agreement is that it was effective until there was finality in the Glengallan case on 8 December 2006.

36        In the course of the hearing, I suggested the possibility that the stay agreement might have contained an implied term that the Glengallan case would be disposed of in a relatively short space of time even if not by November 1997 when the matter was before Judge Keon-Cohen. The file note of 21 February 1996 refers to it as being “on a fast track arrangement and almost certainly would be heard by October this year”. I queried whether, had the parties been told in February 1996 that the Glengallan case would take almost eleven years to finalise, they would have entered into the stay agreement.

37        I note that the barrister who appeared for Equus before Judge Keon-Cohen on the hearing of the application on 25 November 1996, Franz Johann Holzer, in an affidavit sworn 26 February 1998 in relation to the appeal from Judge Keon-Cohen’s order, deposed that the stay agreement:

“was predicated on the basis that there would be a speedy disposition of the Queensland litigation, which at the time of the agreement, was anticipated to be by October 1997.”

38        He further deposed:

“It now appears likely that the Queensland litigation will not be heard and

determined for at least another eighteen months.

His Honour rejected my submissions on behalf of the plaintiff and did not consider that there was any prejudice in continuing the stay of the proceeding pending the outcome of the Queensland litigation, given that if the plaintiff is ultimately successful, it would be entitled to interest pursuant to the agreement upon which it sued.”

39        My suggestion was not taken up by either Mr Campbell, who appeared for the defendants Harris and Hughes, nor Mr Bourke, who appeared for the defendant Dorney.

40        I therefore conclude that the defendants are not entitled to rely on any delay prior to 31 October 2006. On that day Equus’ solicitor wrote to the defendants’ solicitors seeking to have the matters reinstated. It is clear that by then neither party was relying on the stay agreement.

The Period after 31 October 2006

41        As indicated, there was no step taken in the three proceedings before me from 31 October 2006 until 15 August 2008 in the case of Harris and Hughes, a period in excess of twenty one months, and four weeks later in the case of Dorney. Were I to reinstate the three proceedings, they would, in all probability, not be heard prior to mid 2010. While the County Court, at present, is in the fortunate position of being able to fix a trial date at very short notice, the defendants have indicated that they wish to amend their Defences and Counterclaims. Further, the taking of statements from potential witnesses after the passage of so many years could take some little time. The defendant, Harris, in an affidavit sworn 7 November 2008 states that he has been informed by his solicitor that discovery required to be made of the records held by the receivers of the Red Claw Project, if they exist, will be extensive. These are complex matters, the complexity being aggravated by the effluxion of time. On reflection, I was somewhat optimistic when I indicated during the hearing of the applications that trials of the actions could be held by the end of this year. There would thus be a delay of over three and a half years between 31 October 2006 and the trial of the three proceedings. It is not suggested that the defendants are in any way responsible for this delay. It appears that the delay was caused primarily by the unilateral decision of Equus to pursue the Percival matter in the Supreme Court and then not doing so until September 2007.

42        I note that in Bishopsgate it was held that a twenty-two month period was of some significance to the Court in dismissing the proceeding for want of prosecution. There the plaintiff was still having difficulties in finalising its Statement of Claim and it would be some time before the matter was finally determined.

43        Each case, of course, must be considered on its own facts. Here, the plaintiff in each instance was relying upon an agreement made in 1989, allegedly breached in 1992 in the case of Dorney and in 1993 in the case of Harris and Hughes, and in respect of which proceedings were issued in 1993. The comment in Bishopsgate that plaintiffs are obliged to move with greater speed if the issue of proceedings has been left until very late in the limitation period is apposite. Here, with the alleged breaches occurring in 1993, any limitation period has long since expired. Given the excessive period of time which has passed since the alleged breaches, Equus was under an obligation to “move with greater speed”, not in the leisurely fashion it did. In an affidavit sworn 11 September 2008, Phillip Kotsanis seeks to explain the delay in pursuing the Percival matter as follows:

“It took some time to file the application because substantial work was required to understand the precise effects of the judgments in the Glengallan case on the Victorian proceedings before the relevant documents could be prepared and filed. Nick Russo, the managing director of Equus at that time, passed away in January 2007 and at that time I had only a basic understanding of the complex judgments in the Glengallan case (which had been run by Gadens, not me). Equus had to retain new junior and senior counsel to prepare the application due to the unavailability of the Queensland counsel who had appeared for Equus in the Glengallan case.”

44        This did not, in my view, adequately explain a delay of almost twelve months in proceeding in the Percival matter, particularly for Equus, which Master Evans described as “a professional litigator” (Equus Corp Pty Ltd v Percival 2008] VSC 116, at paragraph 2). In any event, the reason for the delay in the Percival matter is really irrelevant to the issue of delay in the three proceedings before me. Again, it is, in my view, not to the point that the defendants’ solicitors, Eales & Mackenzie, were aware that steps were being taken to activate the Percival case and that it was to be run as a further test case.

45        In the circumstances, I conclude that there has been an inordinate and inexcusable delay on the part of Equus and/or its lawyers since 31 October 2006.

46        The next question is whether such delay “will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants”?

47        In determining whether it is possible to have a fair trial of the issues in the action, it is necessary to determine what these issues are. Many of the matters which were in issue between Equus and the three defendants were determined in the Glengallan case.

48        In Australia and New Zealand Banking Group Ltd v Merribee Pastoral Industries Pty Ltd (1998) 16 ACLC 1447, at 1453-1454, Beaumont J, with whom Branson and Finkelstein JJ concurred, stated:

“Where issues have been litigated exhaustively in sample cases, it is an abuse of process for a litigant, who was not a party in one of the sample cases, to attempt to re-litigate the same, or substantially the same, issues on the same evidence … Even more fundamental ‘considerations’ arise for Australian courts in the case of a decision of the High Court.”

It would thus be inappropriate for me to allow the defendants to re-litigate identical issues already resolved in the Glengallan case. The practical effect of this is that were the issues in the three proceedings before me only the issues resolved in the Glengallan case, I should not dismiss these proceedings for want of prosecution on the basis that the defendant could not have a fair trial since these matters would not be in issue.

49        There are, however, additional matters in issue between Equus and the defendants which were not resolved by the Glengallan case even though most issues between the plaintiff and the defendants were resolved there.

50        As conceded by Mr Maiden in his reply on behalf of Equus, there are three outstanding issues between Equus and the defendants. Firstly, there is a claim for misleading and deceptive conduct in relation to the existence and the future existence of crayfish ponds. Mr Beaumont, one of Her Majesty’s Counsel, who with Mr Maiden appeared for the plaintiff, submitted that since causation was not pleaded, this claim was not sustainable. Mr Maiden, however in his final address resiled from this stance. Secondly, there is a defence of promissory estoppel, first suggested by Holmes J in the Queensland Court of Appeal in Equus Corp Pty Ltd v Glengallan Investments Pty Ltd [2006] QCA 194, at paragraph 117ff, and thirdly, in the case of Harris and Hughes, what was described as the “breach of partnership deed, prospectus and code” defence articulated in paragraphs 25 to 28 of their Proposed Amended Defence and Counterclaim.

51        I turn to consider whether it is possible to have a fair trial of these issues. Each of the defendants has sworn an affidavit recently in relation to this.

52        Harris, in an affidavit sworn 7 November 2008, deposes that he is now aged seventy-two and three years ago he was diagnosed with prostate cancer. He states:

“I undertook surgery for it and am now in the process of waiting and

watching to see whether I have beaten this cancer.”

53        He states that at trial he would wish to call Anthony James Johnson and Hans Felden, whom he states were agents of Rural. He states that he has not had contact with them for many years and does not know whether they are still alive, where they reside and whether Hehir took proofs of evidence from them. Harris states that in 2000 or 2001, he was advised that the Glengallan case had been successfully defended and therefore matters were at an end.

54        The plaintiff’s solicitor, Dean Anthony Jones of Eales & Mackenzie, in an affidavit sworn 27 November 2008, deposes that throughout this proceeding his firm had acted as Victorian agent for Hehir & Associates and acted as “a post office box”, not taking any active part in the defence of the proceedings. He states that his firm had not until recently met or had any dealings with Harris. Jones stated that when he contacted Harris in August 2008, Harris stated that he understood the Glengallan case had been successfully resolved in 2000 or 2001 and that he had not had any contact regarding the matter since then.

55        He states that his firm received no instructions from Hehir & Associates in relation to the matter for a number of years and that his agency file was destroyed. He could not say when this occurred but states:

“We did not have a file in relation to this proceeding on our system in

2007.”

56        When the Percival matter was reactivated, he attempted to make contact with Hehir, only to find that he had retired and moved to Norfolk Island. Hehir told him that he had no files in relation to any of the defendants for whom he acted, but stated that the files may have been sent to another solicitor in Queensland, Iain Marshall. Jones stated that he contacted Marshall, who told him that he did not have any files in relation to the matter. Thus, Jones deposes he was unable to locate the defendants’ file with Hehir & Associates, which may have contained witness statements and other relevant documents.

57        In an affidavit sworn 23 March 2009, Kotsanis deposes that in other Supreme Court proceedings in Victoria in which Equus is plaintiff, Eales & Mackenzie, as agents for solicitors in Queensland, filed a statement of Anthony James Johnson and also that he had located Felden in Sydney.

58        Hughes, in an affidavit sworn 19 March 2009, states that he is now aged sixty- five. He deposes that in December 1999, he suffered a severe heart attack and that although he survived it, its effects –

“are still affecting me severely. I am genuinely ‘weak’ in a physical

sense.”

59        He further states:

“As a result of the heart attack, I have developed Type 2 Adult Onset Diabetes. I am insulin dependant. My medical practitioners have advised me that the condition has been brought upon by the combination of the heart attack and business-related stress. I try now to lead a calm or sedate lifestyle as my medical advice is that, as a result of my heart condition and Diabetes, my life expectancy has been reduced enormously and that increased stress could lead me to suffer a further heart attack which may prove fatal.”

60        Hughes stated that he had been advised many years before, wrongly, that the Glengallan case had been successfully defended, and had put the matter out of his mind.

61        He states that potential witnesses he would wish to call are Anthony James Johnson, Richard Lynch, Gary Widdup and Frank Merlino. He further states that apart from Widdup he does not know whether the other witnesses are alive or dead and if alive where they live and whether Hehir took proofs of evidence from them.

62        In an affidavit sworn 23 March 2009, Kotsanis repeats what he said with respect to Johnson and also refers to a statement taken from Lynch in the same Supreme Court proceedings by solicitors in Queensland and filed by Eales & Mackenzie as agents for those solicitors. Jones, on 19 March 2009, swore a similar affidavit in these proceedings, as in the Harris proceedings. He states that he first spoke to the defendant on 9 October 2008. He was unable to establish contact earlier since the defendant had moved home.

63        Dorney, in an affidavit sworn 20 March 2009, deposes that he has only a hazy recollection as to matters deposed to by him in affidavits sworn on 18 April 1994 and 13 May 1994 in support of an application to set aside judgment entered in default. He states:

“My memory of events surrounding this proceeding has faded

significantly.”

64        He states that he had little contact with Hehir. After judgment was set aside, he states that he paid a small sum of money to Hehir & Associates, who told him they were conducting a “representative action on behalf of defendants against Equus”. He states that he did not even know about the stay agreement. It was also his understanding that the Glengallan case had been successfully resolved against Equus in 2001. He cannot recall how he became aware of this. He states that he only became aware that the Glengallan case had not been resolved against Equus in October 2008 when contacted by Dean Jones. He states in his affidavit (paragraph 42(b)):

“I am no longer able to accurately refute or deny any of the substance of the allegations that are contained in the plaintiff’s Statement of Claim. Additionally, it is difficult to provide complete and fulsome instructions in relation to a Further Amended Defence and Counterclaim other than to reply and/or comment on the documents that have previously been filed in the proceedings by me.”

65        He states that potential witnesses on his behalf are Gary Deaves, Timothy Glenniw, Mark Bavin, Christopher Unwin, Mark McLean and Wayne Boudrie, who were co-workers at the MI Group, a United Kingdom based insurance company. He stated that he was no longer in contact with these people and he believed that most of them had returned to the United Kingdom with the exception of McLean and Unwin.

66        Kotsanis, in an affidavit sworn 23 March 2009, indicates that he has located McLean in Sydney and Boudrie in Toorak. He states that Deaves is a sales director of a London-based company called Alpha Gold Financial Services, so I presume he is resident in England. Kotsanis gives vague details with respect to Unwin’s employment.

67        In accordance with the comments of the Court of Appeal in Bishopsgate and Tenth Vandy, I am only concerned with the period of delay from 31 October 2006 to mid 2010. Many of the matters referred to in the affidavits of each of the defendants and Jones are not specific to this period but are based upon the overall delay since the events giving rise to these proceedings arose approximately twenty years ago. Still, it is appropriate, in my view, to infer that the problems outlined above would have been aggravated, and not just minimally, since 31 October 2006 and that imperfect recollections of witnesses would have worsened since then. This passage of a few years is, in my view, particularly pertinent to the defendants, Harris and Hughes, in view of their advancing years and indifferent health. Imperfect recollections of these two defendants in particular, and of witnesses generally, would be readily exploited under cross-examination. Although it was thought by the defendants that some potential witnesses may no longer be alive or be unable to be contacted, whereas in fact this is no longer so, still, statements have to be taken from them. Mr Maiden urged me to infer that because Harris and Lynch gave detailed statements in the other proceedings to which I have referred, that they would have a good recollection in respect of matters concerning the proceedings before me. I note that in these matters, Byrne J stated:

“It was apparent that Mr Lynch had some difficulty in recalling the events

of two decades before.”

I am not prepared to draw the inference sought.

68        As to serious prejudice to the defendants, the affidavit material refers to many irrelevant matters and also to problems caused by the delay generally rather than since 31 October 2006. However, the stress to the defendants Harris and Hughes on account of their age and indifferent health are, in my view, relevant matters to take into consideration under this head.

69        In all the circumstances, for the reasons indicated, I am of the view that the three proceedings before me would be struck out for want of prosecution were they reinstated. I therefore refuse Equus’ application to reinstate the three proceedings.

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