Henderson v Hewitt [No 4]
[2008] WASC 135
•10 JUNE 2008
HENDERSON -v- HEWITT [No 4] [2008] WASC 135
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASC 135 | |
| 09/07/2008 | |||
| Case No: | CIV:1163/2000 | 10 JUNE 2008 | |
| Coram: | MARTIN CJ | 10/06/08 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed Proceedings dismissed for want of prosecution | ||
| B | |||
| PDF Version |
| Parties: | KEVIN LESLIE HENDERSON HENDERSON CORPORATION PTY LTD (ACN 009 412 971) ANDREW MALCOLM RUPERT HEWITT GIBRAE PTY LTD (ACN 009 204 371) BARRINGTON PARTNERS (A FIRM) SAMIT PTY LTD (ACN 009 268 222) |
Catchwords: | Practice and procedure Dismissal of action for want of prosecution Long delay Principles applicable |
Legislation: | Rules of the Supreme Court 1971 (WA) |
Case References: | Birkett v James [1978] AC 297 Henderson Corporation Pty Ltd v Hewitt [2005] WASC 165 Hughes v Gales (1995) 14 WAR 434 Lewandowski v Lovell (1994) 11 WAR 124 Meridian Oil NL v Smythe and Others [1999] WASC 173 The Hancock Family Memorial Foundation v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398 Townsend v Collova [2005] WASC 4 Ulowski v Miller (1968) SASR 277 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
HENDERSON CORPORATION PTY LTD (ACN 009 412 971)
Second Plaintiff
AND
ANDREW MALCOLM RUPERT HEWITT
First Defendant
GIBRAE PTY LTD (ACN 009 204 371)
Second Defendant
BARRINGTON PARTNERS (A FIRM)
Third Defendant
SAMIT PTY LTD (ACN 009 268 222)
Fourth Defendant
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Catchwords:
Practice and procedure - Dismissal of action for want of prosecution - Long delay - Principles applicable
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application allowed
Proceedings dismissed for want of prosecution
Category: B
Representation:
Counsel:
First Plaintiff : Mr J R B Ley
Second Plaintiff : Mr J R B Ley
First Defendant : Mr M C Hotchkin
Second Defendant : Mr M C Hotchkin
Third Defendant : Mr M C Hotchkin
Fourth Defendant : Mr M C Hotchkin
Solicitors:
First Plaintiff : Metaxas & Hager
Second Plaintiff : Metaxas & Hager
First Defendant : Hotchkin Hanly
Second Defendant : Hotchkin Hanly
Third Defendant : Hotchkin Hanly
Fourth Defendant : Hotchkin Hanly
Case(s) referred to in judgment(s):
Birkett v James [1978] AC 297
Henderson Corporation Pty Ltd v Hewitt [2005] WASC 165
Hughes v Gales (1995) 14 WAR 434
(Page 3)
Lewandowski v Lovell (1994) 11 WAR 124
Meridian Oil NL v Smythe and Others [1999] WASC 173
The Hancock Family Memorial Foundation v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398
Townsend v Collova [2005] WASC 4
Ulowski v Miller (1968) SASR 277
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- MARTIN CJ:
1 (This judgment was delivered extemporaneously on 10 June 2008 and has been edited from the transcript.)
2 The defendants apply for an order dismissing these proceedings for want of prosecution. In order to place that application in context, it is necessary to consider the history of the proceedings and also the nature of those proceedings. The nature of the proceedings is best assessed by the most recent version of the proposed statement of claim which is a document dated 7 April 2008.
3 I describe it as a proposed statement of claim because an amendment has not yet been made in those terms, but rather the plaintiffs have given notice to the effect that they would seek amendment in those terms if the proceedings remain on foot.
4 The plaintiffs in the proceedings are Mr Kevin Henderson who is the first plaintiff, and Henderson Corporation Pty Ltd, which is the second plaintiff. Henderson Corporation Pty Ltd is a company of which Mr Henderson is a director and shareholder.
5 There are four defendants. They are Mr Andrew Hewitt who was at material times an accountant, Gibrae Pty Ltd (Gibrae) and Samit Pty Ltd (Samit), both companies effectively under the control of Mr Hewitt, and Barrington Partners, a firm, of which Mr Hewitt was a partner at relevant times between 1992 and 1997.
6 After describing the parties and their respective positions, the proposed amended statement of claim refers to the retainer of Barrington Partners by the plaintiffs in about 1990. In par 11 of the proposed pleading it is asserted that by about 1992 a relationship of trust and confidence had developed between the plaintiffs and some of the defendants, that is, Hewitt and Barrington Partners. It is said that that relationship of trust and confidence gave rise to fiduciary obligations.
7 It is then pleaded that there was advice and representations given in 1993, and there are pleas as to the state of knowledge of Mr Hewitt and Barrington Partners at the time those representations were made in 1993. It is also said that Barrington Partners knew that Mr Hewitt had made the representations and had given the advice alleged at the time, that is to say, in 1993.
8 It is also proposed to plead that in about mid 1993, an oral agreement was made between Mr Henderson and/or his company Henderson
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- Corporation and Mr Hewitt and/or Gibrae to the effect that there would be a share trading agreement between those parties on the terms that are alleged. Paragraph 21 further proposes to plead that Barrington Partners became aware of the agreement immediately after it was made in mid 1993.
9 There are then pleas proposed as to share trading undertaken pursuant to the agreement and transactions between June 1993 and August 1994 are identified. However, as I understand the plaintiffs' case, it is not put that these transactions definitively identify the entire scope of trading under the purported agreement. It is then said that the agreement was terminated by notice dated 25 January 2000.
10 Breaches of the oral agreement are proposed to be pleaded, as are breaches of the fiduciary duties said to have been owed to Henderson and Henderson Corporation by Mr Hewitt, and also breaches of the fiduciary duties said to have been owed to Henderson Corporation and Henderson by Barrington Partners. Those breaches of fiduciary duties include acting in a circumstance in which there was a conflict of interest, preferring their own interests to the interests of the client, failing to protect the client from the conduct of their partners which placed them at risk and failure to account.
11 It is also proposed to plead that the defendants, other than Barrington Partners and Hewitt, that is, the two companies with which Mr Hewitt was associated, were knowingly involved in the breaches of fiduciary duty by each of Hewitt and Barrington Partners.
12 These proceedings were commenced by a writ issued on 14 February 2000. That writ was not served until 21 December 2000. Issue was taken as to the delay in service of the writ during the year 2000. In response, Mr Henderson swore an affidavit saying that service was held up because he was seeking a further document in order to provide that document to his legal advisers for the purposes of preparation of the statement of claim.
13 At all events it is the case that the writ was not served until December 2000. The writ identified the four parties who are presently parties to the proceedings and they all appeared. The statement of claim was filed on 14 February 2001, pleading a breach of contract between Henderson Corporation and Hewitt.
14 As that was the only cause of action relied upon by an application made on 15 March 2001 it was sought to amend the writ and the statement
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- of claim to omit Mr Henderson, Gibrae, Samit and Barrington Partners as parties to the proceedings. Leave to make those amendments was granted on 20 March 2001. Thereafter the only parties remaining to the proceedings were Henderson Corporation and Mr Hewitt.
15 There were a number of defences filed by Mr Hewitt in terms that appear to have been somewhat unsatisfactory but at all events a defence in terms that was regarded as satisfactory and further particulars to that defence were provided by 25 July 2002. So between early 2001 and the middle of 2002 it is clear that any delay was attributable to Mr Hewitt and not to the plaintiffs.
16 On 15 October 2002, apparently at a status conference, the plaintiffs' solicitors advised the registrar that the plaintiffs were contemplating rejoining at least one defendant to the proceedings, being the defendant Gibrae Pty Ltd. Of course, Gibrae had been made a party by the writ but had then been deleted. The registrar ordered that any application for leave to amend the writ to join additional parties be made by 12 November 2002 and adjourned the status conference to 19 November 2002.
17 No application to join additional parties was made by 12 November 2002 and it seems that the plaintiffs' solicitors failed to attend the status conference listed for 19 November 2002. On 21 January 2003 a registrar of the court ordered that the matter be submitted to mediation and that the plaintiffs achieve entry for trial six weeks after the date of mediation if the matter was not resolved.
18 The case evaluation conference was relisted for 1 May 2003. On that date the then solicitors for the plaintiffs advised the Court that they would be applying to get off the record. Such an application was made on 16 May 2003. It appears that over the period in late 2002 and early 2003 a dispute had arisen between the plaintiffs and their then solicitors.
19 In May 2003 the case evaluation conference was relisted for 10 June 2003. It is not clear from the records what happened on that occasion but at all events on 15 July 2003 a notice of appointment of solicitor was filed by Metaxas and Vernon on behalf of the plaintiffs in place of the plaintiffs' previous solicitors.
20 On 22 October 2003 there was a further case evaluation conference. There was no appearance for the second plaintiff at that conference, at that time the only plaintiff to the proceedings. This was because, as Mr Metaxas says in an affidavit sworn on 25 March 2008, his firm had only just started acting for the plaintiffs and there had been a suggestion
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- that the conference be adjourned for two weeks to allow him to familiarise himself with the pleadings in the action. Mr Metaxas says that at that time he had only just received the plaintiffs' files and documents from Jackson McDonald.
21 The matter was adjourned to 5 November 2003 and then further adjourned to 26 November 2003. On that occasion, the solicitors for the plaintiff notified the registrar that consideration was being given to rejoin the parties which the amendment to the writ had deleted and orders were made allowing the plaintiffs 30 days within which to apply for joinder of those parties. At this conference, the registrar also cancelled the mediation orders made on 21 January 2003.
22 It seems that Mr Henderson was made aware of the order that any application for the joinder of additional parties had to be made within 30 days. In fact no application was made to join additional parties within that time. Mr Metaxas has sworn affidavits of 21 February 2005 and 11 May 2005 in which he has provided an explanation for the failure to proceed with the application which was foreshadowed in the proceedings before the registrar.
23 It is fair to summarise those affidavits by saying that they acknowledge that the default in bringing that application was the responsibility of his firm and the failure of an employee of Mr Metaxas to get on with the steps that were required. Mr Metaxas says that he did not become aware of that until July or August 2004 but at all events the application was not made to amend the writ and statement of claim until 14 September 2004. So, as Simmonds J observed in a decision to which I will refer shortly, there is a period between 25 July 2002 and 14 September 2004 in which the plaintiffs had all the material that was needed in order to identify the course to be followed, but over that period no application was made to rejoin the parties that it was proposed to rejoin, or to amend the statement of claim.
24 The explanations given for that delay are the dispute between the second plaintiff and its former solicitors and the default on the part of the plaintiffs' new solicitors. Those are not matters for which the defendants bear any responsibility and they are, I think, part of the context in which this application comes to be determined.
25 At all events the application to amend the written statement of claim and to rejoin the defendants did not come before the court until 23 February 2005. On that occasion the hearing was vacated because the
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- master before whom it came declared a conflict of interest and unfortunately the same thing occurred again when the matter came before another master on 21 March 2005.
26 The matter was next listed for hearing before Jenkins J on 12 May 2005. However, the day before that hearing was due to take place the plaintiff filed and served amended minutes of the proposed writ and proposed statement of claim. When the matter came before Jenkins J on 12 May 2005, she directed that the plaintiffs comply with the requirements of O 59 r 9 of the Rules of the Supreme Court 1971 (WA), that is, that there be conferral in relation to the revised minute which had been filed the day before that hearing was due to take place.
27 There was then more correspondence in relation to the terms of the proposed pleading and further suggested amendments and submissions which culminated in a hearing before Simmonds J on 1 July 2005. Simmonds J delivered his decision in relation to that application on 29 July 2005 - see Henderson Corporation Pty Ltd v Hewitt [2005] WASC 165. In that decision, he referred to the delays which had taken place and in particular to the delays between 25 July 2002 and 14 September 2004 - see particularly [124] of his Honour's reasons for decision.
28 In earlier paragraphs of those reasons for decision, see for example [113] - [117], Simmonds J made clear that the delay which had taken place gave rise to a need for the action to be prosecuted with all due speed.
29 It is also clear from the reasons for decision given by Simmonds J that the delay over the two years to which I have referred was a matter that weighed heavily in the balance in determining whether or not leave would be granted in the terms sought. Nevertheless, despite that matter weighing heavily against the plaintiffs' application for leave, for reasons given by Simmonds J, leave was granted, although not to amend in terms of the pleading that had been filed. Rather, leave was given to file a further amended pleading within a reasonable time, reserving to the defendants the opportunity to apply to strike out amendments other than those which had been debated in the course of the hearing before Simmonds J.
30 It is significant that by those reasons delivered in July 2005, the plaintiffs and their advisers were put on notice that the court regarded these proceedings as matters that needed to be prosecuted with all due
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- speed, and indeed that failure to prosecute the matters with all due speed in the past had almost led to the refusal of the application to amend the written statement of claim and to join additional defendants.
31 The defendants appealed from the decision of Simmonds J and while that appeal was awaiting hearing there was correspondence between the parties with respect to the terms of the further minute of amended statement of claim which was produced by the plaintiffs following the decision of Simmonds J. It was essentially agreed between the parties that the issues that were flagged in correspondence between them with respect to the adequacy of that pleading would be postponed until the determination of the appeal, because if the appeal was successful obviously that would impact upon the form of the pleading.
32 The decision dismissing the appeal was delivered in November 2006. Despite the appeal having been dismissed, and that being then the opportune time at which to resuscitate the question of the pleading, no step was taken by the plaintiffs to get the proceedings in order, to get a statement of claim on foot and to move the proceedings forward until the matter was called back by the court of its own motion in January 2008. This was some 14 months after the delivery of the decision of the Court of Appeal.
33 In that time the only issue that had been pursued by the plaintiffs was the question of taxation of costs; a matter which in my view was irrelevant to the steps which obviously had to be taken to prosecute the action with the speed to which Simmonds J had referred.
34 When the matter was brought back on at the motion of the court in January 2008, the solicitors for the defendants foreshadowed the bringing of this application. The plaintiffs provided an amended substituted statement of claim on 21 February 2008, however, it was not until April 2008 that the amended statement of claim in the form in which the plaintiffs would advance it if these proceedings were allowed to remain on foot was provided.
35 Returning to that proposed pleading, the significance of the amendments sought is that they would, if allowed, assert duties that on the plaintiffs' case, had to be performed by the members of Barrington Partners between 1993 and January 2000. Over that period the members of Barrington Partners, an accounting firm, changed from time to time and so the ascertainment of the knowledge of each of those partners and of precisely when the duties that are said to have been breached arose for
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- performance will affect the responsibility of the individual partners prospectively grouped under the name Barrington Partners.
36 It is also significant to observe that the issues in respect of the fiduciary relationship will necessitate evidence being given as to the nature of the relationship between the parties in 1992 and 1993. The issues in respect of the knowledge of Barrington Partners would require evidence to be given of the knowledge of each of the members of that firm between 1993 and 2000, and the issues in respect of the oral agreement will require evidence to be given of a conversation that is said to have taken place in 1993, some 15 years ago.
37 I turn then to the submissions of the parties. The principles that are to be applied in the determination of an application such as this are well known. They are collected in cases such as Birkett v James[1978] AC 297, Lewandowski v Lovell(1994) 11 WAR 124, Hughes v Gales(1995) 14 WAR 434, Meridian Oil NL v Smythe and Others[1999] WASC 173, Ulowski v Miller(1968) SASR 277 and The Hancock Family Memorial Foundation v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398.
38 Those cases establish that there is no particular checklist that a court goes through in order to ascertain whether it is appropriate to exercise a discretion by dismissing the proceedings, and that the matters that are relevant to the exercise of that discretion will turn very much upon the individual circumstances of the case. Factors that are often considered in relation to the exercise of the discretion include the length of the delay, the explanation for the delay, the hardship to the plaintiffs arising from dismissal of the action, the prejudice to the defendants arising from the delay and the conduct of the defendants.
39 Turning then to assess those factors relevant to this case, it seems to me that the relevant delays for which the plaintiffs are responsible are, in my view, most particularly the delay between the commencement of the writ and service of the writ in the year 2000, the delay between the middle of 2002 and September 2004 in which there was little or no action taken in relation to the amendment to the statement of claim, and the delays following the delivery of the decision of the Court of Appeal in 2006 where again there was no action taken to move these proceedings forward by finalising the statement of claim. Those delays must be evaluated in the context of proceedings in which the matters in issue all took place a long time ago; that is to say, between 1992 or perhaps 1993, and 1996, or perhaps 1997. They are also to be evaluated in a context in which the
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- court had made it clear in the course of the reasons delivered in 2005 that all due speed was needed to prosecute these proceedings because of the delays that had already occurred.
40 It seems to me that the length of delays in this case are substantial. The factors to which I have referred, namely that the facts which give rise to the proceedings occurred so long ago and that a clear and explicit warning had been given by the court to the plaintiffs as to the consequences of delay, exacerbate the significance of the length of the delays for which the plaintiffs are responsible.
41 It is the fact that despite having all the material needed to formulate the statement of claim which the plaintiffs wished to pursue in these proceedings by the middle of 2002, in April 2008 the plaintiffs are still only at the point where there is a proposed amended statement of claim. If this application is dismissed, almost six years will have elapsed without the plaintiffs finalising the terms of their claim.
42 I accept, as I have indicated, that not all the delay during that period is attributable to the plaintiffs, but the fact is that despite these proceedings having been on foot for more than eight years, almost six years has elapsed since the plaintiffs were armed with all the information they needed to get their house in order and bring forward the statement of claim which they wish to pursue.
43 In relation to the explanation for the delay, I have gone through and evaluated the explanations for the delay. It seems to me that as counsel for the plaintiffs readily conceded, the most utterly inexcusable delay is the most recent period of delay between the delivery of the decision of the Court of Appeal in November 2006 and April of 2008, which is when the proposed amended statement of claim was brought forward.
44 That is a period of about 18 months, for which there is no acceptable explanation. When that period is put on top of the periods of delay that preceded that period of delay, it seems to me that the delays on the part of the plaintiffs in this case are properly characterised as inordinate and inexcusable.
45 Turning then to the question of the hardship to the plaintiffs arising from dismissal of the action, it is clear that the contract claim will be statute-barred if these proceedings are dismissed. There might also be a question as to whether the claims for breach of fiduciary duty are also statute-barred by analogy to the contract claim.
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46 It is unnecessary for me to resolve that possibly difficult question today and I do not purport to do so. I will evaluate this application on the assumption that dismissal of these proceedings would effectively preclude the plaintiffs from commencing other proceedings seeking the same relief and that, therefore, when evaluating the hardship to the plaintiffs I start from the presumption that allowance of this application will put them out of their claim once and for all. However, I emphasise that I am not deciding that issue, lest it become an issue in subsequent proceedings.
47 I turn now to the prejudice to the defendants. There is, of course, what has been referred to in the previous decisions as presumptive prejudice arising from long delay. That is the prejudice which the law presumes, as a result of the inevitable impact upon the terms of the accuracy with which witnesses can recall relevant events the further in time they are removed from the trial. In this case, the period between relevant facts and today, being a period of 15 years, exacerbates the significance of the presumptive prejudice arising from the delays for which the plaintiffs are responsible.
48 The issues that arise in the case turn upon such things as oral agreements, knowledge and the proper characterisation of the relationship between parties back in 1993. Of course, as the authorities make clear, fiduciary relationships are of many and varied kinds and the proper characterisation of the duties arising from that relationship turns critically upon the evaluation of all the particular characteristics of the individual relationship. I refer in that regard to the observations of Le Miere J in Townsend v Collova [2005] WASC 4 (at [173] - [174]).
49 So in this case, the defendants, particularly Barrington Partners and Mr Hewitt, will have their rights and obligations determined by reference to a characterisation of the nature of the relationship which existed some 15 years from today. I emphasise that I do not approach this case on the basis that the entire period of 15 years is delay for which the plaintiffs are responsible, but the consequences of the delays for which the plaintiffs are responsible has to be evaluated in the context of that 15-year period.
50 The defendants also point to specific prejudice in relation to the loss of documents, and in the affidavit of Mr Throssel, reference is made to a conversation which he had with the prospective witness, a Mr Carreira, who was apparently an employee of Barrington Partners. Mr Throssel deposes that Mr Carreira has said that he prepared share trading spreadsheets every day, or almost every day, and left them at reception for Mr Henderson to pick up. Mr Throssel says that Mr Carreira told him that
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- the spreadsheet was updated daily from any new contract notes, and the daily price was taken from the financial review.
51 The plaintiffs have given discovery in these proceedings and have not discovered any such spreadsheets. Mr Henderson has deposed to a fire which occurred in 1996, which destroyed a number of the documents of Henderson Corporation. There arises a fair inference that there may well be documents that are material to the ascertainment of such things as the performance of the duty to account, which Mr Henderson and his company assert, that may not be available because of the effluxion of time.
52 Of course, the fire in 1996 occurred before these proceedings commenced, and it cannot be said that the delays to which I have referred have any causal nexus to the fire. However, the example given by Mr Throssel of the evidence to be given by Mr Carreira emphasises the risk of the sort of prejudice that can be suffered by litigants where significant delays of the kind that have befallen this case are encountered.
53 In my view, the prejudice to the defendants if this case was to proceed is significant because of the substantial delays for which the plaintiffs are responsible and the nature of the issues that would have to be tried, and the significant prospect that it may be difficult, if not impossible, to reconstruct the relevant events.
54 The last issue to which I refer is the conduct of the defendants. There are undoubtedly periods within these proceedings for which delays are attributable to the defendants: most significantly, the period between the provision of the statement of claim in early 2001 and the provision of the defence in the middle of 2002.
55 There are other periods of time, most notably the period while the appeal was on foot, where although I would not attribute fault to the defendants for that period, neither should they be held to the plaintiffs' account. But this is not one of those cases in which the conduct of the defendants has materially contributed to the delay.
56 The plaintiffs submitted that the defendants could and should have filed defences following the delivery of the decision of Simmonds J. I do not accept that submission. It was clear from the correspondence that the plaintiffs proposed to amend the statement of claim, and various minutes were produced of the document which they proposed to advance. Due to the appeal, that document was never finalised to the point where an application to the court was made, until April 2008, by which time the
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- defendants had moved to dismiss the proceedings. In those circumstances, I think it would be unreasonable to conclude that the defendants should have filed defences to a pleading which they knew the plaintiffs wished to alter.
57 Weighing the various considerations to which I have referred, it seems to me that this is a case in which there has been inordinate and inexcusable delay. As I have observed, more than eight years after the writ was issued, there is still no statement of claim in final form and the plaintiffs have had the capacity to put it in final form for almost six years.
58 While not all that period is delay for which the plaintiffs are responsible, that is the sad current state of these proceedings. It seems to me that those delays for which the plaintiffs are responsible have very likely caused substantial prejudice to the defendants and prejudiced the capacity for there to be a fair trial of these proceedings. For those reasons, it seems to me that I should accede to the application and dismiss the proceedings and make appropriate costs orders.
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