Gutteridge Haskins & Davey Pty Ltd v Seaview Properties Pty Ltd

[1990] TASSC 108

Serial No B31/1990
List "B"

COURT:  SUPREME COURT OF TASMANIA

CITATION:Gutteridge Haskins & Davey Pty Ltd v Seaview Properties Pty Ltd [1990] TASSC 108; B31/1990

PARTIES:  GUTTERIDGE HASKINS & DAVEY PTY LTD
  v
  SEAVIEW PROPERTIES PTY LTD

PONTYPOOL CORPORATION PTY LTD
OPOSSUM BAY DEVELOPMENTS PTY LTD
S O F NOMINEES PTY LTD

FILE NO/S:  337/1978
DELIVERED ON:  27 June 1990
JUDGMENT OF:  Underwood J

Judgment Number:  B31/1990
Number of paragraphs:  23

Serial No B31/1990
List "B"
File No 337/1978

GUTTERIDGE HASKINS & DAVEY PTY LTD
v SEAVIEW PROPERTIES PTY LTD, PONTYPOOL CORPORATION PTY LTD, OPOSSUM BAY DEVELOPMENTS PTY LTD S O F NOMINEES PTY LTD

REASONS FOR JUDGMENT  UNDERWOOD J

27 June 1990

1. The plaintiff's application is for an order that the counter–claim by the third and fourth defendants be dismissed for want of prosecution.

1. The plaintiff carries on the business of Consulting Engineers. The third and fourth defendants (hereafter called the defendants) are property developers. Towards the end of 1976, Mr Helliar, a director of the defendants, entered into discussions with officers of the plaintiff with respect to the proposed subdivision of certain lands owned by the defendants and known as the Gellibrand Estate. At that time, a survey of stage 2 of the proposed subdivision had been substantially completed by C L Andrews and Associates. It was agreed between the plaintiff and the defendants that the plaintiff would carry out any remaining necessary survey work, obtain all required local government approvals and provide engineering and construction services to complete the subdivision of stage 2. An estimate of costs was provided and the work commenced. Before it was completed it appeared that the actual costs had already substantially exceeded the estimates and on 6 February 1978, the defendants terminated their agreement with the plaintiff with respect to stage 2 of Gellibrand Estate and other subdivisions which were also in progress.

1. The plaintiff's claim is that the defendants owe it $16,644.82 for work done pursuant to the agreement plus interest. The defendants join issue with respect to this claim but the substantial dispute between the parties arises out of a counter–claim. By this counter–claim the defendants assert that the plaintiff negligently gave certain advice concerning the cost of developing the subdivision and, in substance, negligently managed and controlled the subdivision works. Further and/or alternatively, the defendants counter–claim that the plaintiff is in breach of contract in that the cost of the works far exceeded the agreed costs and that the plaintiff failed to manage and control the development of the subdivision in accordance with the agreed or implied terms of the contract. By reason of the claimed negligence and/or breach of contract the defendants counter claim damages which were eventually particularised in the sum of $426,803.44 plus compound interest. By this application the plaintiff seeks an order that this counter–claim be struck out.

1. The writ claiming $16,644.82 was issued on 2 March 1978. There followed unsuccessful settlement negotiations between the parties and the statement of claim was delivered on 19 September 1978. On 1 June 1979, in conjunction with the delivery of particulars of the statement of claim, the plaintiff put a settlement proposal which was not accepted.

1. On 10 August 1979 the defence and counter–claim was delivered. On 3 October 1979 a reply and a defence to counter–claim was delivered and particulars of the defendants' claim for damages requested. Leaving aside any question of particulars, the pleadings closed at this stage.

1. Between 3 October 1979 and 25 February 1981 neither party took any steps to prosecute their respective claims. Mr Keating, the solicitor for the plaintiff, deposed that the plaintiff's failure to prosecute its claim during this period and the subsequent periods of inactivity by the defendants, was a conscious decision to "let sleeping dogs lie" [my expression]. Mr Skillington, a director of the plaintiff, deposed that:

"During the lengthy periods that the defendant has taken no steps to prosecute its counter claim since the commencement of this action over 11 years ago, the plaintiff has been prepared to let the action lie dormant rather than take any steps to prosecute the action itself. The reason for this was the relatively small amount of the plaintiff's claim compared to the amount of the defendants' counter claim and the staff and resources which the plaintiff would had to have devoted [sic] towards prosecuting its claim and defending the counter claim if it proceeded."

1. In February 1981 the defendants put and the plaintiff rejected a proposal for settlement. Apart from the delivery by the defendants of two notices of intention to proceed dated 31/3/81 and 27/9/82 and a few communications between the Hobart and Sydney solicitors for the defendants, neither party prosecuted its claim between February 1981 and November 1982.

1. Between 4 November 1982 and 19 November 1984 the defendants took various interlocutory steps, albeit in a rather desultory manner, in the prosecution of the counter– claim. The period between November 1984 and December 1986 was again one during which little was done by either party. The defendants were in default in making further discovery despite two letters of request written during this period. On 22 December 1986 the defendant put a further proposal for settlement. It was rejected. Apart from delivery of yet another notice of intention to proceed on 15 March 1989 the defendants did nothing which would give the plaintiff notice that it was prosecuting the counter–claim. The plaintiff's response on receipt of the notice of intention to proceed was to file this application on 14 April 1989. I understand that the delay in hearing the application has not been the fault of either party. During 1986 and 1987 the defendants' solicitors did take some steps to brief counsel in Sydney but in 1988 the brief was withdrawn and another counsel instructed. It was the latter's advice that led to the issue of the notice of intention to proceed on 15 March 1989.

1. In substance, Mr Brewer's submission is correct that between the end of 1984 and March 1989, apart from making one offer to settle the action, the defendants did very little to prosecute their claim and, when the earlier periods of inactivity are taken into account, it cannot be denied that there has been inordinate delay on the part of the defendants in the prosecution of their counter–claim since it was instituted in August 1979.

1. In addition to inordinate and, it is submitted inexcusable, delay, the plaintiff claims that it has suffered prejudice in three respects namely:

(1)In general terms, the delay has adversely affected the witnesses' memories.

(2)A witness for the plaintiff, Mr Murfet died on 22 December 1986.

(3)By reason of the inordinate delay, the claim for damages by way of compound interest in accordance with the principles enunciated in Hungerfords & Ors v Walker & Ors (1988) 84 ALR 119 has exposed the plaintiff to the risk of suffering judgment for a much greater sum than would have been the case if the counter–claim had been prosecuted diligently.

1. Mr Murfet was a surveyor. He was an employee of the plaintiff. Whether or not he was also a director is unclear. It is common ground that Mr Murfet played a principal role in the initial discussions which led to the formation of contractual relations between the plaintiff and the defendants in 1977. It was claimed by Mr Helliar that as the survey work for stage 2 had been practically completed by another firm, Mr Murfet's role in the development of stage 2 was a minor one. He said that almost all the negotiations between Mr Helliar and Mr Murfet related to the latter's survey work on other subdivision projects. On behalf of the plaintiff it was contended that Mr Murfet was a critical witness and his death had adversely affected the plaintiff's chances of successfully resisting the counter–claim.

1. I do not think that I need canvass in detail all the evidence that was given both by affidavit and from the witness box, concerning the role played by Mr Murfet in the dealings between the parties out of which the counter–claim arises. I am satisfied that Mr Murfet was an important but not critical witness for the plaintiff. The performance of the contractual obligations were fully documented and those documents have been carefully preserved. Mr Keating was unable to identify any document, the probative value of which would be lost or diminished in the absence of evidence from Mr Murfet. On most occasions of discussion relating to the development of Gellibrand Estate stage 2, between officers of the defendants and Mr Murfet, other employees of the plaintiff who are still able to give evidence were present.

1. It was not submitted that had the defendants been diligent the action would not have been heard before Mr Murfet's death. He died of cancer. Mr Murfet was a friend of Mr Keating. Mr Keating became aware of Mr Murfet's illness in September 1986 when he returned from overseas. Consideration was given to preparing formal proofs of evidence for Mr Murfet to sign with a view to them being admitted into evidence pursuant to the provisions of the Evidence Act, s81C in the event that the action proceeded to trial. The decision was not to prepare such proofs. Mr Keating said that at that time the action had been dormant for two years and in any event, he doubted whether Mr Murfet was well enough to make an accurate and detailed proof of evidence. The decision was not unreasonable in the circumstances.

1. The nature of the discretion to be exercised on an application to dismiss for want of prosecution has been authoritatively determined in this State by TheCloser Settlement Board v Thomas [1982] Tas R 179. After rejecting the applicability of the English authorities in Australia, Neasey J said at p186:

"The exercise of discretion in a summons of this kind is to be determined according to the overall justice of the matter, which depends upon all its facts and circumstances. The exercise of the court's discretion is not to be confined by fixed rules. The nature of this exercise of discretion does, however, require close consideration to be given to some of the same factors which are of importance in an application to extend time after the expiration of a statutory limitation period; namely the extent and quality of delay, whether primary responsibility for it lies with the party or his legal advisers, and the extent and nature of prejudice to one party or the other."

1. Immediately prior to that passage, his Honour referred with approval to Witten v Lombard Australia Ltd (1968) 88 WN (Pt1) (NSW) 405 and Calvert v Stollznow both at first instance and on appeal. The latter is reported at [1980] 2 NSWLR 749, but the former appears to remain unreported, which is to be regretted. From the copy of the judgment made available to me, the description "most valuable", accorded it on appeal by Moffitt, P (p750) does not do justice to Cross J's analysis of principle and English and Australian authority which I have found most illuminating. With respect to the principle which governs the exercise of the judicial discretion the following expression, "the court must decide whether or not on balance justice demands that the action should be dismissed", per Salmon LJ, in Allen v Sir Alfred McAlpine & Sons Ltd & Anor [1968] 2 QB 229 at p269, appears to be common both in the United Kingdom and Australia, although differences appear to have arisen between the two countries as to the weight which ought to be put on the matters which require consideration on a proper exercise of the discretion. See Allen v McAlpine (supra) at p245; Fitzpatrick v Batger & Co Ltd [1967] 2 All ER 657; Tolley v Morris [1979] 1 WLR 205 (CA); Stollznow v Calvert (supra); Ulowski v Miller [1968] SASR 277 and in Tasmania, Thomas' case (supra); W Coogan & Co (Hobart) Pty Ltd v Reid & Ors, Crawford J, B15/1989.

1. In Thomas' case, Cosgrove J, after accepting that each case must turn on its own facts, said at p195:

"[An applicant]s should be able to assert and establish at least –

(a)     that his opponent has delayed for a significantly long time;

(b)    that, viewed against the background of the whole matter, including the conduct of both the applicant and his opponent, that delay is inexcusable; and

(c)     that in all the circumstances it would be unjust to the applicant to allow the action (or counter claim) to proceed and that the justice of the case requires that the action (or counter claim) be dismissed."

1. In his judgment in Calvert v Stollznow (supra), Cross J referred to the following matters:

(i)Prejudice if the action is allowed to proceed

(a)the length of delay since the cause of action arose

(b)the delay between the cause of action and commencement of proceedings

(c)the degree to which circumstances have changed since the relevant events occurred

(d)changes in the insurance position (I have some reservations about the relevance or at least, the weight of this factor)

(e)the prior attitude of the defendant (or plaintiff in the case of a counter–claim)

(ii)the prejudice to the plaintiff (defendant) if the action (counter–claim) is dismissed

(a)the plaintiff's (defendant's) personal degree of fault for the delay

(b)the explanation and/or excuse for the delay

(c)the degree to which the party in default has kept the other informed of the cause of the delay.

In the present case there appears to be little or no explanation for the periods of delay although there is no suggestion that the defendants were personally to blame for it. It might be inferred that the size and complexity of this litigation was a factor deterring the solicitors for the defendants from coming to grips in timely fashion with the relevant material. Viewed overall, the plaintiff's attitude throughout was to let the litigation rest, in the hope that the defendants would abandon the counter–claim. However, each time the defendants took a step to indicate that this was not to be the case, the plaintiff responded without giving any indication to the defendants that if the counter–claim was to proceed it must be pursued with diligence as delay was causing prejudice and an application to dismiss for want of prosecution would be made in the event of continued default. I make no apology for setting out the following rather lengthy passage from the judgment of Cross J in Calvert v Stollznow (supra) for I consider the views he expressed apposite to the present application:

"I realise that Lord Salmon has at least twice said that the defendant is entitled to let a sleeping dog lie in the hope that it will expire. Yes he is. But in my respectful opinion the defendant cannot – or should not – have it both ways. A defendant faced with litigation which the plaintiff is not actively pursuing has an election. He can either press the plaintiff to get on with the action; ie he may cause a letter to be sent to the plaintiff's solicitors to that effect or he may approach the court in a proper case – and if it is a proper case he can do so at no cost to himself – for an order that the plaintiff take the next necessary procedural step reasonably quickly; or he may allow the matter to lie. But if he chooses silently to acquiesce in the delay in the hope that it will eventually result to his financial advantage, in the sense that the matter will 'die', ie if he seeks and hopes to advantage himself by that delay, is he then entitled to point to that delay, which he could have taken steps to prevent, as prejudicial to him – though in some fashion not prejudicial to the plaintiff – and seek to achieve by a court order striking the matter out what he hoped, wrongly as it turned out, to achieve by deliberately lying silent himself? In my opinion, no.

Considerations of justice transcend all other considerations in these matters. Of course, justice is best done if an action is brought on while the memory of the witnesses is fresh. But surely imperfect justice is better than no justice at all. Circumstances often delay litigation and the system tolerates it."

1. In this State, the above passage should be read with the provisions of the Rules of Court O32A, r8 which specifically provides that in cases of undue delay, the party not in default may apply to a judge for directions and on such an application all appropriate orders to achieve a speedy disposition of the case can be made. In Thomas v The Closer Settlement Board (supra), Neasey J referred to this aspect of the matter and said at p188:

"In deciding such an application, however, the nature and content of our pre–trial rules is certainly a relevant consideration. The indicated remedy for a defendant where the plaintiff delays in setting down is not a summons to dismiss; rather it is that he should take the next step himself, which he has as much opportunity as the plaintiff to do. A defendant's right to 'let the sleeping dog lie', to which many of the cases elsewhere refer, still exists here, but where the defendant seeks to avail himself of it and to have an action dismissed for want of prosecution by the plaintiff, the defendant's own conduct in relation to the trial rules will in my view be under review as well as the plaintiff's."

1. Bearing steadfastly in mind the overall justice of the matter it can be noted that it was not suggested that the defendants did not have an arguable case, nor that they were not serious in pursuing it and further, although I have no information with respect to any of the several settlement proposals that were made, the inference is clear that they did not embrace a payment by the defendants to the plaintiff. At no stage in the proceedings did the plaintiff avail itself of the provisions of the Rules of Court to seek orders which would compel the defendants to bring the counter–claim on for a hearing or face an order for dismissal. The plaintiff deliberately elected not to make any such application but to leave the proceedings in abeyance whenever the defendants gave it the opportunity to do so in the hope that the defendants would ultimately not proceed with the counter–claim. The plaintiff's decision, which was adhered to throughout, to "let sleeping dogs lie" if it could, was made in the knowledge that the defendants were at liberty to prosecute the counter–claim on serving a notice of intention to proceed. Notwithstanding that the dogs did sleep for lengthy periods, there were intermittent growls indicating that the death of the counter–claim was unlikely, but the plaintiff did nothing, until this application was filed, to alert the defendants to the existence of any prejudice, nor did it take any step to bring this matter to a conclusion as is provided for by O32A, r8. In the circumstances, the defendants' delay, although inordinate and largely inexcusable, does not by itself amount to sufficient reason for dismissing the counter–claim.

1. With respect to the claims of prejudice there is, of course, what is often referred to as general prejudice arising from the delay but as Neasey J points out in Thomas' case at p189, prejudice of this nature is not necessarily confined to the plaintiff.

1. There is substance in the argument that the death of Mr Murfet, seven years after the counter–claim was instituted, is a matter of prejudice to the applicant. It cannot be denied that he would have been an important witness for the plaintiff. However, by reason of the preservation of documentation and the availability of other witnesses it has not been shown that the prejudice arising from the untimely death of Mr Murfet is sufficiently serious to warrant making the order sought. It was not shown that his evidence was the only evidence available to the plaintiff with respect to any substantial issue raised by the pleadings.

1. In his capable argument, Mr Brewer for the applicant, produced some interest calculations to demonstrate that an award of interest over the last six years as part of the damages for breach of contract or negligence would very substantially inflate the award that might have been made had the counter–claim been determined in timely fashion. However, during the delay, the plaintiff has had the use of any money which is ultimately found to be due to the defendants. Further, on these proceedings it cannot be said that the defendants will recover full compound interest on any judgment sum from the date the cause or causes of action arose until the date of judgment in accordance with the principle enunciated in Hungerfords v Walker (supra). If interest is recoverable on the basis of foreseeability (supra, p215) it may be arguable that the loss during at least part of the period of delay was not foreseeable. Further, it may be arguable that interest was lost over part of the period as a result of the defendants' failure to mitigate their loss by timely prosecution of their claim. Cf the position in the United Kingdom where an award of interest, permitted by statute, involves the exercise of a discretion: Birkett v Hayes & Anor [1982] 1 WLR 816; General Tire and Rubber Co v Firestone Tyre & Rubber CoLtd [1975] 1 WLR 819.

1. After carefully weighing all the relevant matters and taking into account all the circumstances of the case I have reached the conclusion that the overall justice of the matter calls for an order dismissing the application. Order accordingly.