Meridian Oil Nl v Smyth
[2007] WASC 179
•3 AUGUST 2007
MERIDIAN OIL NL -v- SMYTH & ORS [2007] WASC 179
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WASC 179 | |
| Case No: | CIV:1208/1995 | 1 AUGUST 2007 | |
| Coram: | MASTER SANDERSON | 3/08/07 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | MERIDIAN OIL NL PETER MARK SMYTH DAVID ALEC ANDREW FLEMING CHRISTOPHER PAUL McDONALD MAIN MICHAEL JOHN FULLER CECIL DENNISTON BURNEY LINDSAY GERALD DAVEY CAMERON ROSS PHILIP GLOSSOP RICHARD WEBB |
Catchwords: | Practice and procedure Application to strike out for want of prosecution Turns on own facts |
Legislation: | Nil |
Case References: | Hancock Family Memorial Foundation Ltd v Fieldhouse (2005) 30 WAR 398 Noye v Thoy [2007] WASC 6 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
PETER MARK SMYTH
First Defendant
DAVID ALEC ANDREW FLEMING
Second Defendant
CHRISTOPHER PAUL McDONALD MAIN
Third Defendant
MICHAEL JOHN FULLER
Fourth Defendant
CECIL DENNISTON BURNEY
Fifth Defendant
LINDSAY GERALD DAVEY CAMERON
Sixth Defendant
ROSS PHILIP GLOSSOP
Seventh Defendant
- RICHARD WEBB
Eighth Defendant
Catchwords:
Practice and procedure - Application to strike out for want of prosecution - Turns on own facts
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr C G Colvin SC & Mr M C Hotchkin
First Defendant : Mr J C Vaughan
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
(Page 3)
Solicitors:
Plaintiff : Hotchkin Hanly
First Defendant : Freehills
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Case(s) referred to in judgment(s):
Hancock Family Memorial Foundation Ltd v Fieldhouse (2005) 30 WAR 398
Noye v Thoy [2007] WASC 6
(Page 4)
1 MASTER SANDERSON: This is the first defendant's application seeking to have the action against him dismissed for want of prosecution. In support of the application, the first defendant produced a document entitled the amended chronology. A copy of that document is attached to these reasons. It sets out in summary form the steps that have been taken since the issue of the writ in March 1995. At present, neither the plaintiff nor the first defendant have provided the other with discovery. There is no indication from the plaintiff when its list of discovered documents will be available.
2 At the commencement of the hearing, I asked Senior Counsel for the plaintiff if he could give an estimate as to when the matter might be ready for trial and how long any trial might take. Counsel was not in a position to answer either of these two questions with any certainty. He was not able to say when discovery by the plaintiff might be complete. What he did say was that he anticipated that the trial could take place in 2008 and that it would take "more than a month".
3 There was no dispute between the parties as to the legal principles applicable in an application such as this. Both parties referred to the Court of Appeal decision in Hancock Family Memorial Foundation Ltd v Fieldhouse (2005) 30 WAR 398. In any case concerning dismissal of applications for want of prosecution, consideration has to be given to whether there has been intentional default by the plaintiff, whether there has been inordinate or inexcusable delay and whether such delay will give rise to a substantial risk that it is not possible to have a fair trial or is likely to cause or has caused serious prejudice to the defendant. The discretion to dismiss for want of prosecution is to be exercised judicially, but is otherwise open. The principles referred to in the cases should be seen as guidelines with the discretion to be exercised having regard to the circumstances of the particular case.
4 There are, however, five matters that will usually be relevant to the exercise of the discretion. They are the length of the delay, the explanation for the delay, the hardship to the plaintiff if the action is dismissed and the cause of action is left statute-barred, the prejudice to the defendant if the action is allowed to proceed notwithstanding the delay and the conduct of the defendant in the litigation. Counsel for the first defendant also referred to the decision of Master Newnes (as his Honour then was) in Noye v Thoy [2007] WASC 6. After analysing the general principles, the learned Master said (at [44] - [46]):
(Page 5)
- "While the relevant delay is that which occurs after the issue of the writ, a late start makes it more incumbent upon the plaintiff to proceed with all due speed, and a pace which might have been excusable if the action had been started sooner may be inexcusable in light of the time that has already passed before the writ was issued …
Delay can be constituted by a failure to prosecute an action in a way which would enable the interlocutory steps to be concluded within a reasonable time. There may, therefore, be a want of prosecution during a period in which the plaintiff is involved in continuing unsuccessful attempts to establish a proper pleading … Generally, therefore, delay is not to be measured simply by the amount of activity by the plaintiff but rather by the amount of progress that the plaintiff has made.
Where there has been substantial delay, that delay of itself may lead to an inference of serious prejudice without specific evidence of prejudice … Where a claim is made against individuals relating to their probity or competence, especially their professional competence, it is not hard to infer that the defendant against whom allegations are made is under a heavy burden. It is then easier still to infer serious prejudice of a relevant kind …"
5 Before dealing with matters relevant to the exercise of the discretion, it is appropriate to make some comments about the chronology and the way that this matter has proceeded. The writ itself was issued in March 1995. The allegations put against the first defendant by the plaintiff relate to events which happened in 1987 and 1988. Of course, there were relevant background matters which happened even before that date. But it is clear that there was a late start in this matter. Further, once the writ was issued, it was not served until a week or so before the 12-month validity was exhausted.
6 The first statement of claim was served on the first defendant on 30 July 1996. The eighth and final version of the statement of claim was filed on 27 March 2003. In other words, it took almost seven years for the plaintiff to settle its statement of claim. Having said that, it must be acknowledged that this is a complicated action. The present statement of claim runs to 61 pages and 120 paragraphs. It details a Byzantine-like web of transactions which, it is said, occasioned the plaintiff loss. Moreover, the plaintiff was attempting to reconstruct transactions which
(Page 6)
- had taken place over many years and where the detailed knowledge of precisely what happened was held by the defendants. It is proper, then, to balance what is an extraordinary period of time to settle a statement of claim against the evident difficulties faced by the plaintiff in drawing the pleading.
7 This is the third application the first defendant has brought to dismiss for want of prosecution. The very fact of these applications must have informed the plaintiff's solicitors that they needed to move the action along. It also demonstrates the first defendant has not been entirely idle, content to let a sleeping dog lie.
8 After the plaintiff filed its statement of claim on 27 March 2003, the first defendant did not file a defence until 2 March 2004. Counsel for the first defendant conceded that this period should not be held against the plaintiff. This concession, properly made, is of some consequence. What finally tipped the balance in the Hancock case (supra) was that there was a period when the plaintiff had delayed pursuing its action with the acquiescence of the defendant. In this case, it would have been open to the plaintiff to insist that the first defendant file his defence in a timely fashion. It did not take that step. Nonetheless, in looking at the delay, there is a period of almost a year between March 2003 and March 2004 which should not be counted against the plaintiff.
9 During the course of his submissions, Senior Counsel for the plaintiff spent some time dealing with the provision of security for costs by the plaintiff. The application for security was first made in May 2003. I dismissed that application and from that decision the first defendant appealed. The appeal was upheld and on 31 May 2004, I made an order for security and stayed the action pending provision of the security. Exactly two years later security was provided by the plaintiff and the stay was lifted. The events in relation to the security are set out in the affidavit of Andrew Walker Buchan sworn 28 June 2007.
10 The decision of the Court of Appeal was delivered on 9 March 2004. The Court referred the matter back to Masters' Chambers for the amount and form of security to be set. On 24 March 2004, the first defendant's solicitors wrote to the plaintiff's solicitors inviting the plaintiff's solicitors to make an offer in relation to the form and amount of security, failing which they would have the matter re-listed in chambers. No agreement could be reached and the matter came on, on 31 May 2004. I ordered security in an amount of $90,000, such security to be in a form agreed
(Page 7)
- between the parties and, failing agreement, in a form ordered by the Court. Liberty to apply generally was granted.
11 By letter dated 8 October 2004 - just over four months after the order was made - the plaintiff's solicitors wrote to the first defendant's solicitors stating the plaintiff intended to provide security by way of bank guarantee and enquiring whether the form of security could be agreed. No response was received by the plaintiff's solicitors. They wrote again on 23 November 2004 referring to the earlier letter and seeking a response. The first defendant's solicitors responded by letter of 24 November 2004 agreeing in principle to security being provided by way of bank guarantee, but subject to the guarantee being in acceptable terms and provided by a major Australian bank. The solicitors requested a draft of the proposed bank guarantee be provided to them. In no way could it be said that the first defendant's solicitors' response was unreasonable.
12 The plaintiff's solicitors next wrote to the first defendant's solicitors on 31 May 2005. They enquired whether the first defendant's solicitors had any objection to the guarantee facility being issued in favour of the Supreme Court of Western Australia. Why they should have made such a request is unclear. In any event, on 13 June 2005, the first defendant's solicitors wrote back repeating what they had said in their letter of 24 November and asking again for a draft of the proposed bank guarantee.
13 On 29 June 2005, the plaintiff's solicitors sent a copy of the draft guarantee to the first defendant's solicitors. Two days later, on 1 July 2005, the first defendant's solicitors wrote back to the plaintiff's solicitors pointing out that the guarantee was not acceptable - the first defendant was not named as principal, the guarantee was not unconditional and it was not from a major Australian bank. Further correspondence passed between the parties between 15 August 2005 and 28 November 2005 as to the form of the guarantee. There seems to have been a remarkable amount of discussion over what was a relatively straightforward guarantee for a modest sum. Nonetheless, it must be acknowledged that the parties were constantly negotiating and neither party appears to have held up the negotiations unduly. By 29 November 2005 then, the form of the guarantee had been settled. However, it was not until 31 May 2006 that the executed bank guarantee was delivered to the first defendant's solicitors. No explanation is proffered for the six-month delay between the settling of the terms of the guarantee and the provision of the executed document.
(Page 8)
14 In my view, it cannot reasonably be said that the plaintiff dealt with the provision of security for costs in a timely fashion. At no stage did the solicitors for the first defendant make any unreasonable requests, or delay unreasonably in dealing with correspondence. (There was a hiatus between the plaintiff's solicitors' letter to the first defendant's solicitors on 8 October 2004 and the first defendant's solicitors' response on 24 November 2004. But that six-week period is the only time when the first defendant's solicitors did not respond in a timely fashion to correspondence from the plaintiff's solicitors.) I would accept that the correspondence passing between the parties was conducted in good faith and with the intention of agreeing the form of guarantee without reverting to the Court. But it remains the fact that it took exactly two years from the date of my making an order for the plaintiff to provide the guarantee.
15 Turning then to consideration of the facts measured against the applicable principles, there is nothing to suggest that there has been intentional default by the plaintiff in this case. That is to say, there has been no tactical decision not to take action for one reason or another. The affidavit of Ian Leslie Veale sworn 28 June 2007 and filed in opposition to the application indicates that a certain amount of work has been undertaken to get the case ready for trial over the years. Nor is this a case where the plaintiff has ignored any order of the Court. Both of those factors must weigh in the plaintiff's favour.
16 In my view, there is no doubt that the delay in this matter has been inordinate and inexcusable. After 12 years, discovery is still to be completed. Moreover, the fact that there was a late start necessitated that the plaintiff make haste. It simply has not done so.
17 In reaching this conclusion, I am mindful, as I have mentioned earlier, of the considerable difficulties standing in the plaintiff's way. This is a complex case involving allegations of fraudulent conduct where knowledge must be established and in circumstances where the only way that it can be established is by the use of documents. There are thousands of documents. The plaintiff has already provided some of these documents to the first defendant's solicitors. They run into 17 lever arch files. In response to third party subpoenas issued by the plaintiff, dozens of boxes of documents have been produced - so many that they could not be accommodated by the Court. So in no sense would I underestimate the size of the task facing the plaintiff. But the fact remains that 12 years have passed and in terms of getting the case ready for trial, very little has been achieved. In my view, it must be said that the delay has been inordinate and inexcusable.
(Page 9)
18 There must now be a substantial risk that it will not be possible to have a fair trial of this action. The fact that so long has passed leads to the inference that the first defendant will be prejudiced. That inference arises as a consequence of the delay itself. But in this case there is more. Two persons who were intimately involved with the transactions attacked in the proceedings, Mr Greenham and Mr Bayly, both died in 1988. The fifth defendant died in 2002. Another individual, who the first defendant says was a potential witness, a Mr Lofting, died in 1996. The first defendant also says that he has lost touch with a number of individuals whose evidence might be relevant to the action. As a consequence, he says, his position is prejudiced.
19 On behalf of the plaintiff it is said that this is a commercial case and, like so many commercial cases, it is likely to be determined on documents. Furthermore, it is said that while some witnesses may no longer be available, many are still in a position to give evidence.
20 The difficulty in assessing the relevance of persons who may be available to give evidence is that it is not possible to ascertain at this stage of the proceedings who the likely witnesses will be and what evidence, if any, they might be able to give which is relevant to the dispute. But it must be acknowledged, as the first defendant says in his affidavit of 1 June 2007, that losing contact with persons involved in the impugned transactions is likely to affect his ability to defend the proceedings. Properly considered, it seems to me that this fact further supports the first defendant's claim that his position is prejudiced by the delay.
21 There is no doubt that if this action is dismissed for want of prosecution there will be hardship to the plaintiff. The action will undoubtedly be statute-barred, the significant costs which must already have been incurred will all be wasted and the plaintiff will doubtless be left to carry the first defendant's costs. This is a factor which must weigh heavily in the plaintiff's favour.
22 Finally, there is the question of the conduct of the first defendant in the litigation. I have already mentioned that there was a 12-month period when the first defendant was at fault because he did not file his defence. But, in my view, that is the only instance where the first defendant was at fault. In the context of the overall delay in these proceedings, it is hardly significant.
(Page 10)
23 Determination of this action requires a balancing exercise. In the Hancock case (supra), at the conclusion of their reasons, Steytler P and Owen JA put the position this way (at 422 - 423):
"Where, then, does the balance lie? It is necessary, as we have already said, to stand back and decide what the interests of justice require. In the end we have come to the conclusion that the appellant ought not be denied the chance of a trial on the allegations made against the respondent. It is, in our view, a close run thing. There is much to be said for the respondent's position. But it follows inevitably from our conclusion that he acquiesced for a time in the appellant's declared course of conduct, that he contributed in some measure to the delays, and therefore to any prejudice that he might suffer."
24 There is little to be gained in comparing the fact situation in one strike out application with another. The facts are so different and the determination is so dependent upon the facts that, apart from statements of principle, little can be drawn from the cases. However, it is to be noted that in Hancock, the action had been on foot for eight years and still no acceptable statement of claim was in existence. During that period, the Court concluded that the defendant had acquiesced in a delay of two months between April and June 1996 and a period of nine months between October 2002 and July 2003. As the Court notes, that accounts for roughly one year in an action which had been on foot for seven years. The Court concluded in that instance that the delay was not unreasonable.
25 Here, the delay is 12 years. As with the Hancock case, one year must be attributed to the actions of the first defendant and cannot be held against the plaintiff. Furthermore, this case is further advanced than the Hancock case and with discovery complete there must be a reasonable prospect it could be heard next year.
26 On balance, I am satisfied that this action should proceed. Two factors, in particular, have led me to this conclusion. First, the prejudice to the plaintiff if the action is struck out for want of prosecution. The allegations made by the plaintiff against the first defendant are grave. They relate to the first defendant's actions during the time when he was one of its officers. An action by a corporation against a former officer which has the potential to benefit shareholders is not to be lightly dismissed. Second, the plaintiff has been making some progress. True it is that there have not been any significant "steps" in the proceedings as that phrase is sometimes used. But the affidavit of Mr Veale makes it
(Page 11)
- plain that efforts are continuing to ready the case for trial. With a tight timeframe and careful case management, the action might be heard in 2008.
27 For these reasons, I would dismiss the first defendant's application. I will hear the parties as to the form of orders and as to costs.
(Page 12)
ATTACHMENT
AMENDED CHRONOLOGY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Page 13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
2
1