Monaveen Pty Ltd v ABB Service Pty Ltd
[2007] WASCA 273
•20 DECEMBER 2007
MONAVEEN PTY LTD -v- ABB SERVICE PTY LTD [2007] WASCA 273
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WASCA 273 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:64/2007 | 5 NOVEMBER 2007 | |
| Coram: | MARTIN CJ WHEELER JA PULLIN JA | 19/12/07 | |
| 22 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed | ||
| B | |||
| PDF Version |
| Parties: | MONAVEEN PTY LTD (Receivers and Managers Appointed) (Administrator Appointed) ABB SERVICE PTY LTD |
Catchwords: | Appeal Practice and procedure Dismissal for want of prosecution Significant delay in prosecuting the proceedings Whether acceptable to assess merits of the plaintiff's case |
Legislation: | Supreme Court Act 1935 (WA), s 60(1)(f) |
Case References: | Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 Cox v Journeaux (No 2) (1935) 52 CLR 713 Ex parte Bucknell (1936) 56 CLR 221 Hart v Hall & Pickles Ltd [1969] 1 QB 405 House v The King (1936) 55 CLR 499 Hughes v Gales (1995) 14 WAR 434 Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516 Monaveen Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2004] WASC 5 Monaveen Pty Ltd (Receivers and Managers Appointed) Administrator Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263 (S) Monaveen Pty Ltd (Receivers and Managers Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263 The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : MONAVEEN PTY LTD -v- ABB SERVICE PTY LTD [2007] WASCA 273 CORAM : MARTIN CJ
- WHEELER JA
PULLIN JA
- Appellant
AND
ABB SERVICE PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : TEMPLEMAN J
Citation : MONAVEEN PTY LTD (Receivers and Managers Appointed) (Administrator Appointed) -v- ABB SERVICE PTY LTD (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263 (S)
File No : CIV 2302 of 1998
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Catchwords:
Appeal - Practice and procedure - Dismissal for want of prosecution - Significant delay in prosecuting the proceedings - Whether acceptable to assess merits of the plaintiff's case
Legislation:
Supreme Court Act 1935 (WA), s 60(1)(f)
Result:
Appeal allowed
Category: B
Representation:
Counsel:
Appellant : Mr G H Murphy SC
Respondent : Mr K J Martin QC & Ms R J Lee
Solicitors:
Appellant : Talbot Olivier
Respondent : Minter Ellison
Case(s) referred to in judgment(s):
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Cox v Journeaux (No 2) (1935) 52 CLR 713
Ex parte Bucknell (1936) 56 CLR 221
Hart v Hall & Pickles Ltd [1969] 1 QB 405
House v The King (1936) 55 CLR 499
Hughes v Gales (1995) 14 WAR 434
Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516
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Monaveen Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2004] WASC 5
Monaveen Pty Ltd (Receivers and Managers Appointed) Administrator Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263 (S)
Monaveen Pty Ltd (Receivers and Managers Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263
The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398
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1 MARTIN CJ: Monaveen Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) (Monaveen) applies for leave to appeal from the decision of the primary judge dismissing its claim against ABB Service Pty Ltd (ABB) for want of prosecution.
2 Leave to appeal is required because an order to dismiss proceedings for want of prosecution is, strictly speaking, interlocutory in nature (Supreme Court Act1935 (WA), s 60(1)(f): Hughes v Gales (1995) 14 WAR 434, 437; Hart v Hall & Pickles Ltd [1969] 1 QB 405, 411). However, in this case, if the order dismissing Monaveen's claim for want of prosecution is allowed to stand, its effect will be to finally determine Monaveen's claim, as any fresh claim commenced by Monaveen could be defeated by a plea under the Limitation Act 2005 (WA). In those circumstances, the criteria normally applied to the grant of leave to appeal from interlocutory decisions are relaxed, and leave is ordinarily granted: see Ex parte Bucknell (1936) 56 CLR 221, 225 - 226. As Monaveen's grounds of appeal are plainly arguable, leave to appeal should be granted.
History of the proceedings
3 It would be generous (to Monaveen) to describe the history of these proceedings as tortuous. The chronology provided to this Court setting out the steps which have been taken in the course of these proceedings runs to 18 pages. It reveals a litany of protracted interlocutory disputation and procrastination which would not be tolerated or permitted under the court's contemporary approach to case management.
4 The events which have given rise to Monaveen's claim occurred in the latter part of 1996, 11 years ago. In July 1996, ABB entered into a contract with BHP Direct Reduced Iron Pty Ltd (BHP) for the construction of materials handling facilities and overland conveyors associated with the construction of a hot briquetted iron plant at Boodarie, near Port Hedland.
5 Also in July 1996, ABB entered into a subcontract with Monaveen for the supply of labour, equipment and materials relating to the construction of civil works associated with the overland conveyors, stackers and reclaimers to be constructed in association with the hot briquetted plant.
6 Monaveen performed work and supplied materials pursuant to the subcontract during the latter months of 1996. Disputes arose with ABB. On 24 February 1997, ABB terminated the subcontract. On 28 February
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- 1997, a receiver and manager of Monaveen was appointed. On 23 October 1997, an administrator of Monaveen was appointed.
7 Monaveen commenced these proceedings by issuing a writ against ABB on 19 August 1998. However, that writ was not served on ABB. On 17 November 1999, a concurrent amended writ was issued, and that writ was served on ABB on 14 December 1999. On 24 December 1999, ABB issued a conditional appearance. Monaveen filed and served a statement of claim on 1 March 2000.
8 On 22 March 2000, ABB applied to strike out Monaveen's statement of claim. That application marked the commencement of a dispute between the parties with regard to the adequacy of Monaveen's pleading which persisted for seven years. The delay and expense, which has been occasioned by the disputes with regard to Monaveen's statement of claim, has been entirely disproportionate to the significance of those issues to the just resolution of Monaveen's claim. Most, if not all, of the responsibility for that delay must be attributed to Monaveen.
9 Because Monaveen was in receivership and administration, it was ordered to provide security for ABB's costs. Monaveen had difficulty complying with those orders, which resulted in further interlocutory disputes. Monaveen's proceedings have been stayed on a number of occasions, because of its inability to provide the requisite security. There have also been lengthy periods of total inactivity on Monaveen's part, due apparently to an inability to fund the prosecution of the action.
10 On 8 September 2003, ABB applied to dismiss the action for want of prosecution. That application was heard on 17 October and 19 December 2003.
11 The primary judge dismissed that application in a decision delivered on 22 January 2004 (Monaveen Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2004] WASC 5). In his reasons for decision, the primary judge analysed the various periods of delay, and Monaveen's explanations for them. He found that the delay had been inordinate. He also found that the dominant cause of the delays was Monaveen's inability to fund the action. He observed that the question of whether that delay was excusable depended to an extent on the outcome of the action, because Monaveen asserted in the action that its impecuniosity was attributable to ABB.
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12 On the subject of prejudice to ABB, the primary judge found that ABB would be prejudiced by reason of two of its key witnesses having left its employment. However, he observed that as they had left its employment during 2000, the delay in prosecuting the action was not the cause of that prejudice. His Honour also referred to the general prejudice resulting from the passage of time and the consequential fading of memory on the part of witnesses. However, as he observed, it is not uncommon for complex engineering cases to take many years to come to trial (at [69] - [71]).
13 The primary judge also observed that ABB was protected to a certain extent by the orders for security for costs which had been made. He also gave considerable weight to the fact that Monaveen's claim was statute-barred. Weighing all relevant considerations, his Honour came to the conclusion, after some hesitation, that the action should be allowed to proceed (at [86] - [87]).
14 Despite Monaveen's action having been almost dismissed for want of prosecution, Monaveen was apparently content to allow almost the entirety of 2004 to be occupied with sporadic and occasional correspondence on the subject of revisions to its statement of claim. Those revisions were almost entirely concerned with the precise balance of account as between Monaveen and ABB at particular points in time.
15 Much of 2005 was occupied with the same issues, which included apparent discrepancies between the statement of claim and particulars that had been given, and between the figures included in the statement of claim and the figures on coversheets to progress claims submitted by Monaveen to ABB.
16 On 1 June 2005, ABB applied for an order increasing the security for costs to be provided by Monaveen. Such an order was made by the primary judge on 29 June 2005. The order made was in terms that Monaveen's proceedings be stayed after 28 July 2005, unless before that date Monaveen posted additional security.
17 The additional security was not, in fact, posted until 7 September 2005. Accordingly, ABB took the position that, even though the additional security had been provided, the effect of the order previously made was to stay the proceedings. The latter part of 2005 was also occupied with protracted correspondence relating to the details, particularly the figures, contained in Monaveen's statement of claim.
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18 On 25 January 2006, ABB applied for an order dismissing Monaveen's claim unless within 14 days of the order, Monaveen applied to lift the stay imposed by the order of the primary judge made on 29 June 2005, filed and served further and better particulars, and applied to amend its statement of claim.
19 The parties were offered a hearing date of 8 February 2006 for that summons, but Monaveen's counsel was not then available. Because of the commitment of the primary judge to a long trial commencing on 13 February 2006, and other difficulties, it was not possible to list that application until 26 July 2006.
20 In the meantime, on 17 July 2006, Monaveen brought an amended application for an extension of time within which to provide the security for costs which had been ordered to be provided by July 2005 (being the security which had, in fact, been provided in September 2005). On 19 July 2006, ABB brought another application to dismiss Monaveen's claim for want of prosecution. On 24 July 2006, Monaveen applied for leave to amend its statement of claim, reply and defence to counterclaim.
21 ABB's application to dismiss Monaveen's action for want of prosecution was first mentioned before the primary judge on 28 July 2006, and adjourned for substantive hearing. That hearing took place on 3 November 2006. On 23 November 2006, the primary judge delivered reasons for forming the view that the application should be adjourned until he had considered Monaveen's application to amend its pleadings (Monaveen Pty Ltd (Receivers and Managers Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263).
22 In those reasons, the primary judge analysed the steps that had been taken by each party since the delivery of his previous decision on ABB's first application to dismiss Monaveen's claim for want of prosecution in January 2004. Speaking very generally, much of that time was occupied with intermittent correspondence passing between the solicitors for the parties quibbling about the terms of Monaveen's pleadings. After reviewing the various steps taken, his Honour concluded that the length of the delay in the prosecution of the action since January 2004 should be regarded as approaching 18 months (at [63]). His reasons do not reveal how he calculated that period. Given that 34 months had elapsed since his decision dismissing ABB's appeal for want of prosecution, the assessment seems, on its face, to be generous to Monaveen.
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23 On the subject of prejudice, the primary judge noted that one significant circumstance had changed since his decision in January 2004, in that ABB's former project manager had left its employment in December 2004. However, because the primary judge did not know the extent to which that project manager would be available to ABB to assist in the presentation of its defence, he concluded that it was impossible for him to assess the extent of the prejudice suffered by ABB in that regard (at [73]).
24 In this regard, his Honour observed that even if the action had been entered for trial in, say, the first quarter of 2004, it would probably not have been allocated a trial date until after the project manager had left ABB's employment (at [78]). Accordingly, his Honour seems to have concluded that ABB's prejudice in this regard could not be attributed to Monaveen's delay in prosecuting the proceedings.
25 Although in the result nothing seems to turn on this approach, I digress to observe that, in this respect, his Honour seems to have posed the wrong question. The question was, with respect, not whether Monaveen's delay in prosecuting the action since January 2004 had caused substantial prejudice to ABB, but, rather, whether Monaveen's delay in prosecuting the action since its inception had caused that prejudice. In my respectful view, it was erroneous in principle for his Honour to compartmentalise his assessment of prejudice by reference to events preceding the first application to dismiss for want of prosecution and the events succeeding that application. Otherwise, a defendant would be unfairly prejudiced by bringing an unsuccessful application to dismiss for want of prosecution, because events occurring prior to that application would be excluded from consideration in any subsequent application.
26 On the subject of prejudice generally, his Honour observed at [79]:
The extent of hardship to the plaintiff if the action is dismissed, while a matter to be considered, is not easy to gauge. The plaintiff's claim is now statute barred: but that is only one factor. Clearly, if it could be said that the action was bound to succeed, its dismissal would work a considerable hardship. Conversely, if the action was highly speculative, it might be a kindness to the plaintiff to dismiss it, thereby limiting the plaintiff's exposure to an order for costs.
27 In the result, his Honour concluded that the case was 'borderline' (at [86]). He considered that Monaveen's delay since January 2004 had been inordinate, but excusable because Monaveen's solicitors had placed
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- too much weight on the apparent willingness of ABB's solicitors to negotiate with regard to the pleading issues.
28 His Honour also observed that the amendments to the pleading had been formulated, Monaveen had completed its discovery and ABB had almost completed its discovery. Accordingly, subject to completion of those issues and the exchange of expert evidence, the action could be entered for trial in the near future (at [88]).
29 His Honour concluded that he should adjourn the application to dismiss for want of prosecution until he had considered Monaveen's application to amend the pleadings. The reason for that course is found in the following observation at [91]:
If it transpires that the plaintiff's pleadings are still defective, or that its case has very little merit, the balance would swing into the defendant's favour. That result would demonstrate that the delay since January 2004 had been inexcusable: and it would be unjust to the defendant to permit the action to proceed.
30 I digress to observe that it is difficult for me to see, as a matter of logic, how an assessment that Monaveen's case had very little merit, could of itself, support the conclusion that its delay since January 2004 had been inexcusable. Whether or not a particular delay is excusable must be assessed having regard to the cause for that delay. In this case, because of the time spent debating the precise form of Monaveen's pleading, the adequacy of Monaveen's pleading was relevant to the question of whether the delay was excusable. But in this case, the primary judge was foreshadowing an inquiry which went further and extended to an assessment of the relative strength or weakness of Monaveen's claim.
31 Monaveen's application to amend its pleadings was heard on 20 and 21 February 2007. On 29 March 2007, the primary judge delivered his reasons for concluding that Monaveen's claim should be dismissed for want of prosecution (Monaveen Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263 (S)). This is, of course, the decision under appeal.
32 In his reasons, the primary judge characterised the issue in the following terms at [6]:
The real issue in this application is not whether the proposed Amended Minute of Further Re-Amended Statement of Claim ('the Statement of Claim') discloses a cause of action, but whether the action has any
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- prospects of success. For that reason, a considerable amount of documentary evidence was adduced at the hearing. By this means, the defendant sought to demonstrate that the action was not viable: and the plaintiff sought to demonstrate that it was.
33 His Honour then refers to the fact that, since the application to amend the pleadings was lodged in July 2006, Monaveen has accepted a number of criticisms which ABB had been advancing in respect of that pleading, and amended its proposed pleading accordingly. He also enunciated an adverse view with regard to the terminology proposed by Monaveen in its statement of claim with regard to the amounts claimed in its progress claims.
34 He then referred to Monaveen's amended table showing the amounts it claimed were outstanding from time to time. The amendments were made to accommodate assertions made by ABB. His Honour drew the following conclusion from those concessions at [21]:
It is therefore clear that for nearly seven years (the statement of claim having been filed on 1 March 2000) the plaintiff has persisted in a claim which it now acknowledges to be incorrect. This is despite the fact that on 5 November 2002, Mr Kenneth Hetherington (who is, in effect, the plaintiff's alter ego) swore an affidavit in which he said that he had assisted counsel for the plaintiff to compile the particulars which are summarised in the table referred to above (in its original form) and that:
'It is compiled from company records and to the best of my knowledge and belief the details therein are true and correct.'
- His Honour continued at [26] - [27]:
There is, therefore, no adequate explanation for the inordinate delay in formulating amendments to the statement of claim, so as to deal with objections made by the defendant which are now accepted as being valid, and issues to which I referred in the 2004 decision. In these circumstances, I consider the delay to be inexcusable.
That conclusion is sufficient to justify dismissal of the action for want of prosecution. However, even after the lengthy delay, I would hesitate to take that course if it appeared that the plaintiff had reasonable prospects of success.
His Honour then turned to an evaluation of Monaveen's prospects of success, expressing the view that 'the action has very little merit' (at [29]).
35 His reasons for arriving at that conclusion are limited to an evaluation of Monaveen's claim that it executed an amendment to the subcontract under economic duress. He evaluated that claim from the
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- perspective of a table of balances due from one party to the other from time to time over the relevant period. Following that analysis, he observed:
49 In the 2004 decision, after some hesitation, I did not dismiss the action for want of prosecution. I gave 'considerable weight to the fact that the claim is now statute barred and to the plaintiff's contention that its impecuniosity has been caused by improper conduct on the part of the defendant' (par 87).
50. The picture which emerges from the analysis referred to above, casts a different light on the defendant's conduct. I accept that it does not answer the plaintiff's case that money was withheld improperly in the early stages of the sub-contract: and that if payment had been made, the plaintiff would have been able to maintain credit arrangements with its creditors, thereby avoiding the need to make the substantial payments demanded subsequently, and the loss of control over its affairs which resulted from the first and second amendments.
51. However, it must now be accepted that although the defendant was faced with excessive progress claims, it made significant over-payments to the plaintiff. In my view, the inference to be drawn from the plaintiff's table is that the defendant wanted to keep the plaintiff in business so as to enable the sub-contract works to be completed. This was clearly to their mutual advantage.
52. I do not say that the plaintiff's case is unarguable, or is doomed to failure. However, it now appears to be a very much weaker case. In my view, there is likely to be a finding that the plaintiff was not driven into insolvency by the improper conduct of the defendant but because (despite the substantial overpayments it received) it was unable to pay its creditors.
53. In the 2006 decision, I considered the matters relevant to the exercise of the discretion to dismiss an action for want of prosecution: see pars 63 - 91. I was unable to reach a decision because of the outstanding pleading issues. It was therefore difficult to form a view about the plaintiff's prospects of success (par 80) and therefore, to gauge the hardship to the plaintiff if the action was dismissed. I concluded:
'If it transpires that the plaintiff's pleadings are still defective, or that its case has very little merit, the balance would swing into the defendant's favour. That result would demonstrate that the delay since January 2004 had been inexcusable: and it would be unjust to the defendant to permit the action to proceed.'
- 54. In my view, for the reasons given in the 2006 decision and above, the plaintiff's delay in prosecuting its claim has been inordinate and inexcusable. The plaintiff has made no proper effort to deal with what have now been shown to be proper objections to significant aspects of the claim. And even at this stage, the statement of claim is defective in the way it refers to the progress claims.
55. In all the circumstances, I consider that the appropriate course is to refuse the plaintiff leave to amend and to dismiss the action for want of prosecution.
Grounds of appeal
36 Monaveen advances eight grounds of appeal. However, in the course of argument, counsel for Monaveen proposed that those grounds should be taken as advancing three central propositions, and to the extent that they advanced other propositions, the grounds were not pressed. Those three central propositions are:
(i) although the primary judge was correct to find that the delay had been inordinate, he erred in finding that the delay was inexcusable;
(ii) alternatively, if the primary judge was correct to find that the delay was inexcusable, he failed to properly bring to account his finding that the delay had not occasioned material prejudice to ABB;
(iii) the primary judge erred by bringing to account his assessment that the plaintiff's case was weak because:
(a) an assessment of the strength of the plaintiff's case is irrelevant to the determination of an application for dismissal for want of prosecution;
(b) alternatively, the weakness of the plaintiff's case is only relevant to the determination of an application for want of prosecution if it is concluded that the case is not arguable, and therefore constitutes an abuse of process;
(c) the primary judge erred in any event, by only assessing the strength of Monaveen's claim based on economic duress, and making no assessment whatever of Monaveen's other claims, which were independent of its claim based on economic duress.
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38 For the reason I have already mentioned, in my opinion, there is force in the assertion that the primary judge erred, by concluding in the reasons for decision he delivered in March 2007, that Monaveen's delay had been inexcusable. In his reasons delivered on 23 November 2006 (Monaveen Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263), he had arrived at a contrary conclusion, based upon his evaluation of the communications passing between the solicitors for the respective parties. His Honour's change of position appears to have been brought about as a result of:
(a) his view that Monaveen's case was weak; and
(b) the concessions made by Monaveen in its revised pleading, in which it accepted the correctness of some of the figures which had been asserted by ABB for some time.
39 As I have already mentioned, I am unable to see how an assessment of the relative strength or weakness of Monaveen's case bears any logical connection to the question of whether its delay was excusable. That question is to be assessed by an analysis of the various reasons for the delays, and the reasonableness of Monaveen's conduct in respect of those delays. My observations below in respect of Monaveen's third proposition, concerning the findings made in respect of the strength of its case, are also relevant to this aspect of Monaveen's first proposition.
40 In relation to Monaveen's amended statement of claim, its belated acceptance of some of the figures propounded by ABB was explained in the affidavit material by the undertaking of a review of the progress claims under the direction of new counsel, who had been brought into the case in July 2006. Of course, a narrowing of the issues between the parties was likely to facilitate preparation for trial, rather than impede it. Further, his Honour's criticisms of the formulation of the pleading in relation to the progress claims is, with respect, a minor point which Monaveen, in any event, justifies because, although one figure is given on the summary sheet, the accumulation of the detailed claims made in the sheets attached to the summary sheet produces a different (and larger) figure.
41 Accordingly, having found, in his reasons published in November 2006, that Monaveen's delay was excused by its solicitors' impression that ABB's solicitors were prepared to negotiate with regard to the terms of Monaveen's statement of claim, in my opinion, his Honour erred when, in
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- his reasons delivered in March 2007, he concluded that delay was inexcusable when the only differences were that:
(a) the negotiations between the solicitors had come to fruition by Monaveen making concessions, and
(b) his Honour had formed a view as to the relative weakness of Monaveen's claim.
42 Turning to Monaveen's second proposition, which concerns the question of prejudice to ABB, although there is no notice of contention from ABB to this effect, as I have suggested, it seems to me that his Honour's assessment of the prejudice to ABB was unduly favourable to Monaveen. By compartmentalising his assessment of prejudice into discrete periods, and then assessing whether any particular prejudice was attributable to delay during that particular period, his Honour erred by failing to take account of the cumulative prejudice suffered by ABB as a result of Monaveen's continuing delays. Accordingly, I am not disposed to accept Monaveen's second proposition.
43 However, because, for reasons which I will shortly develop, this court should itself exercise the discretion to determine whether or not Monaveen's proceedings should be dismissed for want of prosecution, I should note the findings by the primary judge which are relevant in this regard. They are that ABB will suffer the general prejudice suffered by any party to litigation which is substantially delayed, through the fading of memory. In this case, that delay is substantial, being a period of more than 11 years. ABB will also suffer the particular delay occasioned by the fact that none of the employees primarily engaged in the administration of the subcontract with Monaveen are any longer employed by it. However, the evidence does not establish the precise extent of the latter prejudice because it does not establish the extent to which those employees might, nevertheless, be available to ABB.
44 Turning, then, to Monaveen's third proposition, for the reasons which follow, I would allow Monaveen's appeal on this ground.
45 Monaveen first submits that an assessment of the strength of its case is either irrelevant to the application to dismiss its claim for want of prosecution, or, alternatively, only relevant if it is concluded that its case was not arguable, and therefore an abuse of process. Although there is no direct authority to support the proposition that an assessment of the strength of a plaintiff's case is irrelevant to a determination as to whether the action should be dismissed for want of prosecution, oblique support
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- for that proposition is to be found in the decision of Brennan CJ and McHugh J in Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516 in which they observed, in the context of an application for an extension of time within which to enter an appeal for hearing at [7], 521:
If the [applicant] fails to comply with a particular rule, the rules of court may entitle the respondent to strike it out. But the merits of the appeal are not a relevant consideration where the application concerns an extension of time for taking a step in prosecuting the appeal unless, unusually, the Court can be satisfied that the appeal is so devoid of merit that it would be futile to extend time. The merits are examined at the end of the process, not during its course. It would lead to strange consequences if consideration of the merits was a prerequisite for extending the time for each and every step in the conduct of the appeal, just as it would lead to strange consequences if consideration of the merits was a factor to be determined in considering extensions of time for every step in ordinary actions. (one footnote omitted)
In the footnote to those observations (fn 37), their Honours noted:
Significantly, in Birkett v James [1978] AC 297 at 319, Lord Diplock made no reference to the merits of the case when stating the principles applicable for determining whether an action should be dismissed for want of prosecution.
47 Monaveen also placed reliance upon a passage in the judgment of Malcolm CJ in Hughes v Gales, where his Honour observed at 437:
In such a case the court merely determines the question whether the action has been prosecuted with due diligence. There is no judgment on the merits.
- However, with respect, in my opinion, the better construction of that passage is that the Chief Justice was referring to the effect of an order dismissing an action for want of prosecution, rather than the matters properly taken into account in determining such an application.
48 Support for Monaveen's alternative proposition, to the effect that the merits are only relevant if it is concluded that no arguable case can be
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- found (by analogy) in the passage from the decision of Brennan CJ and McHugh J in Jackamarra which I have already set out.
49 However, if that principle is translated to proceedings at first instance, it will be observed that if it is concluded that the plaintiff's claim is so devoid of merit as to be futile (that is, that the case is unarguable), then an application to dismiss for want of prosecution would be irrelevant and unnecessary, because the proceedings could, in any event, be dismissed, either under the rules of court relating to summary judgment, or within the inherent jurisdiction of the court to prevent the abuse of its processes. It therefore seems to me that a principle to the effect that the merits of a plaintiff's case can be taken into account when determining whether it should be dismissed for want of prosecution, but only if it is concluded that the plaintiff's case is not arguable, is somewhat pointless because, in that circumstance, delay will be irrelevant.
50 Nor do I think that the fact that there have been cases in which no reference has been made to the merits of the plaintiff's case when considering an application to dismiss for want of prosecution leads to the conclusion that an assessment of the merits could never be relevant to such a determination. However, it seems to me that it will be an exceptionally rare case in which such an assessment will be a significant factor.
51 If undertaking such an assessment in the context of an application to dismiss proceedings for want of prosecution, the court should, of course, bring to account the principles often enunciated in the context of applications for summary judgment which caution the court against a hasty or premature assessment of the merits of a case based on only documentary materials which are not subjected to the scrutiny afforded by a trial. If the court concludes that the plaintiff's case is not arguable, then, as I have observed, delay and want of prosecution become irrelevant. However, if the court concludes that the plaintiff's case is arguable, and would be time-barred if dismissed, then the prejudice to the plaintiff through the dismissal of an arguable cause of action must be brought to account. Accordingly, although the range of circumstances in which applications for dismissal for want of prosecution is infinitely variable, and there might conceivably be a circumstance in which an assessment of the merits of the plaintiff's case could become relevant, in some way, such a case would, I think, be rare and exceptional.
52 This is not such a case. Monaveen's claims based on economic duress are of a kind which it is inherently difficult to evaluate in advance
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- of trial. An assessment of the strength of such a claim based on a limited amount of evidence in advance of trial is an undertaking fraught with risk. This case provides an example of the risks involved. The primary judge seems to have undertaken his assessment of the strength of Monaveen's case based on an allegation of economic duress largely by reference to the table of balances due from one party to another at different points in time. That table shows that, at different points in time, Monaveen had, in fact, been paid more than it claims was owing by ABB. However, its claim that economic duress caused it to execute the first amendment to the subcontract is based upon a very particular point in time during which it asserts that ABB withheld a payment of $1.2 million until Monaveen agreed to vary the subcontract. In his reasons, the primary judge has failed to direct particular attention to that period of time, or to Monaveen's outstanding claim for $1.2 million. Rather, he seems to have been more heavily influenced by the fact that Monaveen belatedly accepted that some of the figures it had previously advanced were incorrect. The correction of those figures did not, however, lead to the conclusion that Monaveen's claim was futile - as his Honour specifically recognised when he found that the claim was arguable.
53 The observation of the primary judge that there was likely to be a finding that Monaveen was driven into insolvency because it was unable to pay its creditors is another example of the risks which attend premature assessment of the merits. Any assessment of the cause of insolvency is a necessarily complex undertaking. It requires assessment of all the assets and undertakings of the insolvent party, the lines of credit available to it, the terms of trade with creditors and so on. It is difficult to see how such an assessment could be undertaken with confidence on the basis of the documentary materials available to the primary judge.
54 Accordingly, in this case, in my opinion, the primary judge erred in the manner in which he undertook his assessment of the strength of Monaveen's case, and by giving that assessment significant weight in his conclusion that Monaveen's claim should be dismissed for want of prosecution.
55 The primary judge also erred in the third respect identified by Monaveen in support of its third proposition, in that he only evaluated that part of Monaveen's claim which was based on economic duress. Monaveen's statement of claim advances a number of causes of action which do not depend in any respect upon its assertion that it was subjected to economic duress. There are, for example, claims by Monaveen for variations to the subcontract which, in themselves, are said to give rise to
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- claims approximating $1 million. Given the significance which the primary judge attached to his assessment of the weakness of Monaveen's claim, he has, with respect, erred by failing to undertake any evaluation of those aspects of the claim which were unaffected by the alleged economic duress.
56 For these reasons, in my opinion, the exercise of the discretion of the primary judge miscarried through the manner in which he assessed, and took account of, his assessment of the weakness of Monaveen's claim. For that reason, his determination must be set aside, and this court can, and in my opinion in this case should, itself undertake that determination (House v The King(1936) 55 CLR 499). In addition to the issue of prejudice to ABB to which I have already referred, it is relevant to observe that the pleadings in the case are now in order, save for one relatively minor issue which could be resolved quickly, and which is of no great moment. Discovery is almost complete, and counsel for ABB accepted that if Monaveen's action is restored, there is no reason why directions could not be made for the exchange of evidence, including expert evidence, with a view to a trial taking place around the middle of 2008.
57 Other factors relevant to the exercise of the discretion include the substantial expenditure which Monaveen has incurred in prosecuting its claim to this point, the fact that dismissal of its claim for want of prosecution would, effectively, determine it for all time, and the fact that ABB has the protection of security for costs which Monaveen has posted.
58 Weighing all the competing factors, and notwithstanding Monaveen's inordinate delay in prosecuting the proceedings to this point, on balance, the better view is that these proceedings should be allowed to continue, on the basis that they will be case managed to a trial in the near future.
59 However, this conclusion should not be seen as providing any endorsement or approval of the professional practices which have led to an inordinate waste of money and time (about seven years!) during which legal practitioners debated the finer points of pleading and other interlocutory niceties. This case provides a vivid example of the reasons why this court has adopted the principle of proportionality in relation to interlocutory disputes - that is, an approach to the management of cases prior to trial which requires that the time and expense involved in the resolution of an interlocutory dispute be proportional to the contribution which resolution of the dispute would make to the just determination of the case. Practitioners should bear that principle firmly in mind, and
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should not expect that practices of the kind which are evident in this case will be sanctioned or approved by the court in future. However, as this approach to the management of cases is of relatively recently adoption, it would be harsh and unfair to bring it to bear upon Monaveen, and to penalise Monaveen for events which occurred many years before the adoption of these principles of case management, by now dismissing its claim without an adjudication of its merit.
60 For these reasons, in my opinion, Monaveen should be granted leave to appeal from the decision of the primary judge, that appeal should be allowed, and the order made dismissing Monaveen's action for want of prosecution set aside. ABB's application to dismiss Monaveen's claim for want of prosecution should be dismissed. The court should further direct that the case be entered into the commercial and managed cases list.
61 WHEELER JA: I agree with the Chief Justice.
62 PULLIN JA: I agree with the Chief Justice that the appellant should be granted leave to appeal, the appeal should be allowed and the order which was made dismissing the appellant's action for want of prosecution should be set aside. The respondent's application to dismiss the claim for want of prosecution should be dismissed.
63 Templeman J in his reasons of 23 November 2006, Monaveen Pty Ltd (Receivers and Managers Appointed) Administrator Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263, said:
This is undoubtedly a borderline case. The plaintiff's delay since January 2004 has been inordinate, in my view. The action has not received the attention necessary to progress it in a proper manner. But I can see that the plaintiff's solicitors might have placed too much weight on the apparent willingness of the defendant's solicitors to negotiate on the various pleading issues. To that extent, the delay is excusable.
In all the circumstances, I have come to the conclusion that I should not dismiss the action for want of prosecution without giving the plaintiff a final opportunity to amend its pleadings as it wishes to do.
The amendments have been formulated. The plaintiff has completed its discovery: and the defendant has almost done so. Subject to these matters and the exchange of expert evidence, the action could be entered for trial in the near future. [86] - [88].
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64 His Honour then said:
If it transpires that the plaintiff's pleadings are still defective, or that its case has very little merit, the balance would swing into the defendant's favour. That result would demonstrate that the delay since January 2004 had been inexcusable: and it would be unjust to the defendant to permit the action to proceed. [91]
65 On 29 March 2007, (Monaveen Pty Ltd (Receivers and Managers Appointed) Administrator Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263 (S)) his Honour indicated that he had heard the appellant's application to amend and, having done so, his Honour said at [52]:
I do not say that the plaintiff's case is unarguable, or is doomed to failure. However, it now appears to be a very much weaker case.
- and at [54] - [55] concluded:
In my view, for the reasons given in the 2006 decision and above, the plaintiff's delay in prosecuting its claim has been inordinate and inexcusable. The plaintiff has made no proper effort to deal with what have now been shown to be proper objections to significant aspects of the claim. And even at this stage, the statement of claim is defective in the way it refers to the progress claims.
In all the circumstances, I consider that the appropriate course is to refuse the plaintiff leave to amend and to dismiss the action for want of prosecution.
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- kind on the part of the plaintiff. There was no suggestion that the court in this case should reconsider the principles stated in Hancock.
67 It may be observed that in Hancock's case, there is no suggestion that on an application to strike out the plaintiff's claim, that the merits of the plaintiff's case should be examined. However, it seems clear enough that if the plaintiff's case is 'untenable' (see Batistatos [47]) then the plaintiff's case may be struck out as an abuse of process, not because of delay but because the case is so 'manifestly faulty' (Batistatos [47]) that it would 'inflict unnecessary injustice' upon the defendant: Cox v Journeaux (No 2) (1935) 52 CLR 713 (referred to in Batistatos [53]).
68 A summary determination that a plaintiff's case is untenable is not to be made in cases where there is not a high degree of certainty about the ultimate outcome. In Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552, Gaudron, McHugh, Gummow and Hayne JJ said this at [57]:
Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way. (Reference omitted).
69 In Cox v Journeaux (No 2), Dixon J said at 720:
A litigant is entitled to submit for determination according to the due course of procedure a claim which he believes he can establish, although its foundation may in fact be slender.
70 In this case his Honour did not conclude that the appellant's case was untenable. His Honour merely expressed the opinion that one of the pleaded causes of action was 'a very much weaker case' ([52]) than had previously been contended by the appellant. This assessment was made on limited materials in the context of a claim involving complex evidentiary issues. I agree with the Chief Justice that it is difficult to see how such an assessment could be undertaken with confidence on the basis of the documentary materials before his Honour. In my opinion his Honour erred not only by attempting the exercise on the limited material before him, but also for taking into account his opinion that the appellant's case was 'weaker', as a point in favour of dismissing the action.
71 I also agree with the Chief Justice that his Honour also only evaluated part of the appellant's claim and expressed no view about other
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- causes of action which were pleaded. His Honour had earlier determined that the delay was excusable and the conclusion about the weak nature of one aspect of the appellant's claim was erroneously taken into account and should not have led his Honour to dismiss the action.
72 These errors mean that leave to appeal should be granted, the appeal allowed and the order dismissing the appellant's action should be set aside. The respondent's application before the primary judge should have been dismissed.
73 I also agree with the Chief Justice's comment that the debate about the statement of claim has led to an inordinate waste of time. The expectation is that a case in the commercial and managed cases list will not be permitted to languish in this way.
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