Palindrome Holdings Pty Ltd v Wass

[2009] NSWSC 797

CITATION:	Palindrome Holdings Pty Ltd v Wass [2009] NSWSC 797
HEARING DATE(S):	31 July 2009
JUDGMENT DATE :	1 September 2009
JUDGMENT OF:	Davies J
DECISION:	(1) Dismiss the proceedings (2) Order the Plaintiff to pay the costs of the motion and the proceedings.
CATCHWORDS:	GUARANTEE AND INDEMNITY - the contract of guarantee - construction and effect - nature of a guarantee - when cause of action accrues against guarantor - necessity for a demand. PROCEDURE - judgments and orders - summary dismissal - whether no reasonable cause of action - whether case so weak it could not succeed at trial. LIMITATION OF ACTIONS - contracts, torts and personal actions - when time begins to run. CORPORATIONS - legal capacity and relations with outsiders - execution of documents - whether directors bound themselves personally as guarantors by signing as directors of the corporation.
LEGISLATION CITED:	Civil Procedure Act 2005 Imperial Acts Application Act 1969 Limitation Act 1969 Statute of Frauds Uniform Civil Procedure Rules
CASES CITED:	Ankar Pty Limited v National Westminster Finance (Australia) Limited (1987) 162 CLR 549 Ariadne Steamship Co Ltd v James McKelvie & Co [1922] 1 KB 518 Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 Cheney & Wilson v Duncan [2001] NSWCA 197 Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd & Others (1989) 21 NSWLR 160 Clyde Industries Ltd v Dittes (unreported, NSW Supreme Court, 5 June 1992) Custom Credit Corporation Limited v Simcock (unreported, Supreme Court of WA, 13 April 1995) Equity Nominees Ltd v Tucker (1967) 116 CLR 518 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 124 Hillebrand v Penrith Council [2000] NSWSC 1058 Moschi v LEP Air Services Ltd [1973] AC 331 Re Taylor (1995) 130 ALR 723 Samson v Zucker (unreported, Court of Appeal, 11 December 1996) Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
TEXTS CITED:	O’Donovan and Phillips, The Modern Contract of Guarantee, (3rd Ed) p36
PARTIES:	Palindrome Holdings Pty Ltd (Plaintiff) Ian Phillip Wass (Defendant)
FILE NUMBER(S):	SC 07/12864
COUNSEL:	C A Sweeney QC (Plaintiff) D J Barnett (Defendant)
SOLICITORS:	Gells Lawyers (Plaintiff) Foulsham & Geddes (Defendant)

- 34 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

DAVIES J

TUESDAY 1 SEPTEMBER 2009

12864/07 PALINDROME HOLDINGS PTY LTD V IAN PHILLIP WASS

JUDGMENT

1 This is an application by the Defendant to do the following:

“(a) File and serve an amended defence;
(b) Dismiss the proceedings generally pursuant to Rule 13.4 UCPR;
(c) Alternatively to (b), dismiss the proceedings for want of due dispatch pursuant to Rule 12.7 UCPR.”

2 The proceedings were commenced on 7 June 2007 by a Statement of Claim. The Claim is for the payment by an alleged guarantor of the sum of $530,910 together with interest at two per cent per month ($16,182 per month) for 93 months as at the date of issue of the Statement of Claim. At that time the interest was said to amount to $1,504,926.

The claim made

3 The Statement of Claim is pleaded this way:

(a) A company called Aus Ag Resources Limited (“AAR”) sought a loan of $500,000 for its business operations in Queensland from two companies being Palindrome Holdings Pty Limited (the Plaintiff) and International Alliance Insurances Limited (“IAIL”);
(b) IAIL offered to provided to AAR a promissory note for $500,000 at an interest rate of two per cent per month but subject to personal guarantees being provided by two of the directors of AAR, namely, Clarence Stevens and the Defendant Phillip Wass;

(c) on about 7 May 1999, AAR signed a promissory note to IAIL for $500,000 and Stevens and Wass signed as guarantors (“the First Promissory Note”). A loan of $500,000 was made;

(d) in late July 1999 AAR requested IAIL to allow the time for the payment of the promissory note to be extended and to waive the personal guarantees of the directors on the basis that a mortgage security over a nominated property would be provided;

(e) in late July 1999 IAIL agreed to extend time for the payment of the promissory note on the basis that a mortgage security would be given to IAIL but did not agree to waive the personal guarantees of Stevens or of Wass.

(f) by letter of 12 August 1999 from AAR, Stevens and Wass to IAIL, the terms proposed by IAIL were accepted, and they affirmed the Promissory Note with a face value of $530,910 (“the Second Promissory Note”) and continuing guarantees of Stevens and Wass.

(g) AAR subsequently entered into administration and was ultimately placed into liquidation without having repaid the amounts in the promissory notes;

(h) by Deed of Assignment dated 8 December 2006, IAIL assigned to the Plaintiff all its rights, title and interests under the First and Second Promissory Notes and the guarantees;

(i) by letter dated 11 December 2006, Wass was given notice of the Deed of Assignment and in the same letter demand was made by the Plaintiff on Wass for the sum of $530,910 together with interest.

The history of the proceedings

4 On 4 December 2007, the principal Registrar of the Court sent a letter to the solicitors then acting for the Plaintiff pointing out that the proceedings were eligible for dismissal under Rule 12.8 UCPR. This Rule permits the Court of its own motion to make an order dismissing the proceedings if it appears from the Court’s records that for over five months no party to the proceedings has taken any step in the proceedings.

5 The solicitors responded by pointing out the difficulty of effecting service of the Statement of Claim on the Defendant and informed the Court that the proceedings had not been served until 1 December 2007. A Notice of Appearance by the Defendant was then filed on 15 January 2008.

6 On 1 April 2008 the principal Registrar wrote again to the solicitors acting for the Plaintiff threatening dismissal under Rule 12.8. A response was received on 29 April 2008 pointing out that there was ongoing correspondence between the solicitors for the two parties.

7 On 26 June 2008 the principal Registrar wrote again to the solicitors acting for the Plaintiff threatening dismissal under Rule 12.8. The letter in reply by the Plaintiff’s solicitors said that the Plaintiff wanted to file an Amended Statement of Claim, and requested a Directions hearing 28 days after that was done.

8 On 24 July 2008 an Amended Statement of Claim was filed which elaborated the events associated with the obtaining of the Second Promissory Note. In particular, a number of telephone discussions between Mr Francken on behalf of IAIL and Mr Stevens on behalf of AAR were particularised. In that regard, para 10 of the Amended Statement of Claim read as follows:

“10. A short time thereafter, in about late early July 1999, IAIL responded and offered, subject to signed documentation being received by it for :
a. the time for payment of the Promissory Note being extended or a fresh Promissory Note for the due sum being entered into;
b. time for payment of expenses and interest then due being extended;
on the basis that
c. a mortgage security would be given to IAIL or as it directed over a nominated property as further security .
but IAIL did not agree to waive the required that there be continuing personal guarantees of Stevens and of Wass.
Particulars:
The response was oral, by Mr Francken to Stevens, by telephone call with approximately one week of the request referred to in Paragraph 9.
On or about 12 August 1999 mid July 1999 by letter from AAR oral statements and writing, including a further Promissory Note signed by Stevens and Wass personally and on behalf of AAR and a letter dated 14 July 1999 to IAIL, the terms proposed by IAIL were accepted and they affirmed:
d. the Promissory Note, expenses and interest due from AAR was an obligation with a face value then of $530,910 to which interest would accrue at 2% per month (“the Second Promissory Note”) ; and
e. the continuing guarantees of Stevens and Wass (“the Guarantees”).
f. All necessary completed documentation would be forwarded to IAIL .
Particulars:
(A) To the extent there were no (sic) statements, they were oral between Stevens on behalf of Wass, Stevens and AAR on the one hand and Mr Francken on behalf of IAIL on the other.
(B) To the extent there were written statements, they were contained in a Promissory Note of issue date 12 July 1999, title details of property available for mortgage and letter dated 14 July 1999 of AAR, Wass and Stevens enclosing documents and confirming continuing affirmation by Wass and Stevens of their guarantee. To the extent the acceptance of the agreement was implied, it was by reason of subsequent conduct by which the mortgage over certain property of AAR was mortgaged in favour of Palindrome and the forbearance of IAIL to act upon the Promissory Note in 1999 prior to AAR being placed in administration.
(C) Subsequently, AAR took the steps necessary to enable a mortgage to be given in favour of IAIL or as directed over the nominated property and was notified that the nominated mortgagee of IAIL was Palindrome.”
(The parties agree that in particular (A) the word “written” should appear before the word “statements”.)

9 A Defence was filed on 26 August 2008 which amounted in substance to the Defendant saying that he did not know and could not admit most of the allegations in the Amended Statement of Claim and denying that he was indebted.

10 On 11 September 2008, Foulsham & Geddes, the solicitors for the Defendant wrote to the Plaintiff’s solicitors enclosing an Amended Notice to Produce. The documents required to be produced were these:

(1) The First Promissory Note signed by Aus Ag Resources Limited (“AAR”) on or about 7 May 1999 referred to in paragraph 7 of the Amended Statement of Claim;

(2) The guarantees signed by Stevens and Wass referred to in paragraph 7 of the Amended Statement of Claim;

(3) The Direction by AAR referred to in paragraph 8 of the Amended Statement of Claim;

(4) The deposit slip, payment slip, EFT slip or other document evidencing the payment of $500,000 referred to in paragraph 8 of the Amended Statement of Claim;

(5) The IAIL cheque butt and bank statement evidencing the payment of $500,000 referred to in paragraph 8 of the Amended Statement of Claim;

(6) The further Promissory Note of issue date 12 July 1999 signed by Stevens and Wass referred to in paragraphs 10 and 10(B) of the Amended Statement of Claim;

(7) The letter of AAR dated 14 July 1999 referred to in paragraph 10(B) of the Amended Statement of Claim;

(8) The notification to AAR that the nominated mortgagee of IAIL was Palindrome referred to in paragraph 10(C) of the Amended Statement of Claim;

(9) Mortgage dealing 703660868 executed by AAR on 12 August 1999 and by Palindrome on 27 August 1999 referred to in paragraph 11 of the Amended Statement of Claim;

(10) Letter to AAR dated 11 August 1999 referred to in Recital H of a Deed of Assignment between International Alliance Investments Nominees Limited, IAIL and the Plaintiff dated 8 December 2006.

The documents were required to be produced by 25 September 2008.

11 Thereafter, the proceedings came before Registrar Bradford on 20 November 2008. The Plaintiff filed its DCM document which did nothing more than reproduce the paragraphs in the Amended Statement of Claim. Orders were made as follows:

(1) The Plaintiff to produce for inspection the documents listed in paragraphs 1 to 10 of the Amended Notice to Produce for inspection by 27 November 2008;
(2) each party exchange categories of documents for discovery for 4 December 2008;
(3) each party file verified list of documents on or before 18 December 2008;
(4) the plaintiff to file and serve all witness statements on which it proposes to rely by 12 February 2009;
(5) the proceedings be listed for a further Directions hearing on 19 February 2009;

(6) liberty to apply on three days notice.

12 On 20 November 2008 Beazley Singleton, the solicitors for the Plaintiff, wrote to Foulsham & Geddes producing documents in answer to paragraph 6 and 7 of the Amended Notice to Produce but did not produce the documents in the other paragraphs.

13 Thereafter, the Plaintiff failed to comply with Orders 2, 3 and 4 made by Registrar Bradford on 20 November 2008.

14 The matter was listed for a Status Conference before Registrar Bradford at 9:00am on 19 February 2009. On that day (but, seemingly, at 9:10am) Beazley Singleton sent a fax to Foulsham & Geddes saying that their retainer was terminated on 4 February 2009 and they were not aware who had been retained. No one appeared for the Plaintiff at the Status Conference and the matter was stood over to 5 March 2009.

15 On 24 February 2009 the solicitors for the Defendant filed a Motion seeking dismissal of the proceedings pursuant to Rule 13.6 (which allows dismissal if there is no appearance by or on behalf of the Plaintiff at a hearing at which the Plaintiff has had due notice), alternatively for want of due dispatch pursuant to Rule 12.7. The Motion was returnable on 5 March 2009. On 4 March 2009 a Notice of Change of Solicitor was filed noting that the Plaintiff had appointed Michael Gerard Coffey of Gells Lawyers to act for the Plaintiff.

16 On 5 March 2009 when the matter came before the Court the proceedings were stood over to 19 March 2009 with the Plaintiff ordered to pay the Defendant’s costs of that day.

17 On 19 March 2009 Consent Orders were made as follow:

1. The Defendant’s Notice of Motion filed on 24 February 2009 be dismissed.
2. The Plaintiff to pay the Defendant’s costs incidental to the Notice of Motion.
3. The Plaintiff to produce for inspection the documents listed in paragraphs 1 to 5 inclusive and 8 to 10 inclusive of the Amended Notice to Produce for Inspection dated 11 September 2008 by 9 April 2009.
4. The Plaintiff to serve a verified list of documents in accordance with the categories of discovery set out in the letter from the Defendant‘s solicitors to Beazley Singleton dated 2 December 2008 by 16 April 2009.
5. The Defendant to inspect the Plaintiff’s discovered documents by 23 April 2009.
6. The proceedings to be listed for a further Directions hearing on 23 April 2009.

7. Liberty to apply on three days notice.

18 On 9 April 2009 Gells Lawyers sent copies of certain documents to Foulsham & Geddes. These are the documents contained in Exhibit PJD1.

19 The documents produced were said in an affidavit by Mr Paul Dillon, the solicitor for the Defendant, not to have included the documents listed in paragraphs 1, 2, 3, 4, 5, 8 and 10 of the Amended Notice to Produce dated 11 September 2008. Certainly, the documents did not include the First Promissory Note nor any guarantees signed by Stevens and Wass. In fact, the letter referred to in paragraph 10 of the Amended Notice to Produce was amongst the documents produced.

20 On 16 April 2009 Foulsham & Geddes wrote to Gells Lawyers pointing out that the Plaintiff was in default of Order 3 of the Orders made on 19 March 2009 in that it had not produced the documents listed in paragraphs 1, 2, 3, 4, 5, 8 and 10 of the Amended Notice to Produce dated 11 September 2008. The following day, Foulsham & Geddes wrote to Gells Lawyers pointing out that the Plaintiff was in default of Order 4 made on 19 March 2009.

21 On 20 April 2009 Foulsham & Geddes wrote again to Gells Lawyers referring to the letters of 16 and 17 April and asking them to explain why the Plaintiff had not complied with Orders 3 and 4 and when the Plaintiff proposed to do so. The letter put the Plaintiff on notice that at the Directions hearing on 23 April the Defendant would request the Court to make an order of its own motion dismissing the proceedings under Rule 12.7.

22 In response, Gells Lawyers sent a letter dated 20 April 2009 to Foulsham & Geddes saying that they had prepared a list of documents for verification and then went on to say:

“We have served you with a copy of the material documents in our client’s possession so the contents of the list are now known to you.”

23 At the Directions hearing on 23 April 2009 the following Orders were made:

(1) The Defendant have leave to file and serve a Notice of Motion by 30 April 2009 for:

(a) an order that the proceedings be dismissed for want of due dispatch pursuant to UCPR Rule 12.7;
(b) alternatively, pursuant to UCPR Rule 13.4, an order that the proceedings be dismissed generally on the basis that no reasonable cause of action is disclosed against the defendant;
(c) an order that the defendant have leave to file and serve an Amended Defence.


(2) The Defendant to serve any affidavits in support of the Notice of Motion and the proposed Amended Defence by 7 May 2009.

(3) The proceedings be listed for further Directions on 8 May 2009.

(4) Liberty to apply on three day’s (sic) notice.

24 The Defendant filed the Notice of Motion on 30 April 2009 and that is the Notice of Motion with which I am concerned. There was a further Directions hearing on 8 May 2009 where directions were given for the service of affidavits to be read at the hearing of the Notice of Motion. It is to be noted that by this stage the Plaintiff had still not provided a verified list of documents in accordance with the Court’s Order, most recently made on 19 March 2009 but originally made on 20 November 2008.

25 One such affidavit served by the Plaintiff was an affidavit by Paul Hannah sworn 2 June 2009, Mr Hannah being the sole Director and Secretary of the Plaintiff. In relation to documents in the Plaintiff’s possession or available to the Plaintiff, the affidavit relevantly says:

“[15] Later [i.e. after a conversation with Mr Stevens in May 1999], I received by post a copy of the signed original Promissory Note for a loan of $500,000 and a copy letter from Aus Ag Resources Ltd on its letterhead and signed by Mr Stevens and the Defendant, Mr Wass, both as Directors of Aus Ag. …
[16] To the best of my recollection I sent the documents to IAIN [International Reliance Investments Nominees Ltd] which I was aware had advanced $500,000 to Aus Ag. I did not retain a copy of the documents but I recall the contents of the two documents.
[17] I have undertaken extensive searches in an effort to locate the original Promissory Note of May 1999 and the accompanying letter from the Aus Ag or copies of them. I have been unable to find them.
[18] My enquiries in Australia and New Zealand to locate copies of material documents have contributed to the delay in the Plaintiff complying with Orders for verified discovery of documents.
[19] As a consequence of further recent searches to relevant documents I have located copies of documents relating to the loan wrongly filed. Amongst the documents I have located was a copy of the proposed Promissory Note sent to me by Mr Francken in May 1999. A copy of the proposed Promissory Note is annexed and marked “A”. I recognise the facsimile number for Mr Francken’s companies printed at the top of the document along with the date it was sent by him and received by me.”


I shall return to the contents of annexure “A” presently.

Defendant’s Notice of Motion

26 At the outset Mr Sweeney, who appeared for the Plaintiff, did not oppose the grant of leave to the Defendant to file an Amended Defence and, accordingly, I granted that leave. That Amended Defence pleaded the bases for the claims made by the Defendant in relation to the dismissal sought under Rule 13.4 UCPR, i.e. denials that he signed anything as a guarantor, and a plea of the Limitation Act.

27 The Defendant seeks summary dismissal on two bases; first, that there is no evidence upon which a court could conclude, even at an interlocutory stage, that a guarantee of the kind alleged was ever entered into, and secondly, if there was a guarantee, the limitation period expired on 12 August 2005 prior to the commencement of the proceedings.

28 As an alternative, the Defendant seeks that the proceedings be dismissed for want of due dispatch which includes the failures to comply with court orders, some of which were not rectified by the time the application was heard by me.

29 It is convenient to look first at the issue of whether or not there is sufficient evidence of a guarantee and then to consider the question of the limitation period on a claim based on any guarantee.

30 I note, although it is scarcely necessary to do so, that in coming to a view about whether the proceedings should be dismissed summarily under Rule 13.4, the determination is governed by the principles set out by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 124 at 128 and 129. Those principles were extensively discussed along with comparable interlocutory procedures under the Rules by Cross J in Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 at 943-946. In particular, Cross J said (at 944):

“Where the Court is asked to reject the plaintiff’s case, either under its statutory rules or its inherent jurisdiction, the fundamental principle is that prima facie a plaintiff is entitled to have his case come to trial; an application to deprive him of that right will succeed only in the clearest of cases. True, the Court will not look nearly at the suggested weakness of the plaintiff’s case but – go to a less extent – at the suggested strength of the defendant’s case; and, true, forensic argument and subsequent judicial reflection are not necessarily inconsistent with the firm conclusion that the cause of action should not be allowed to proceed. But fatal defects in the plaintiff’s case must be very clear before the Court will intervene in this fashion.”

Is there evidence of a guarantee?

31 What is undisputed is that the signed form of the First Promissory Note is not able to be produced. However, Mr Hannah annexed to his affidavit as annexure “A” (as I have noted above) a copy of the Promissory Note that was intended to be signed. The Promissory Note was as follows:

“ PROMISSORY NOTE
Number: OF1
Principal Sum: $510,204.08
Issue price: $500,000.00
Issuer: The Oil Fields Pty Limited
Ausag Resources
Issuer Address: 8 ^th Floor, 67 Albert Avenue
Chatswood, NSW 2067 Australia
Payee: International Alliance Investments Nominees Ltd
Payee Address: Utrecht, the Netherlands
Issue Date: 7 May 1999
Repayment Date: 17.00 hours on 11 June 1999 (NSW time)
Interest rate: 2 % per month
Interest rests: monthly

Interest Payment
Date(s): Monthly in advance for the first time on 11 June 1999 except if this note has been repaid in full.

________________________________________________

FOR VALUE RECEIVED, the issuer promises to pay the Principal Sum to the order of Payee at issuer Address on the Repayment Date with interest thereon to be paid in the meantime at the rate with the rests and on the interest Payment Date(s) set out above. This Note is given to evidence an advance made by the Payee to the Issuer on the terms herein.

Upon default in payment of any interest when due the Principal Sum and all interest accrued thereon shall, at the option of the Payee, become immediately due and payable, without demand or notices, and interest shall thereupon accrue and be recoverable on the Principal Sum from day to day. In case the Principal Sum shall not be paid when due on the due date or a renewal thereof the Issuer further promises to pay all costs of collection and reasonable attorney’s fees on a full indemnity basis.

Any notice, demand election or other communication permitted or required hereunder shall be written in English and sufficiently served if delivered personally or if sent by telegram, telex, facsimile or prepaid security post to the addressee at its address appearing hereon or as such other address as may from time to time be notified in writing to the sender and such notice, demand or other document shall be deemed to have been delivered at the time of delivery or, if service is effected in any other manner as aforesaid, at the time when it would in the ordinary course be delivered.

This Note shall be governed by and construed in accordance with the laws of the Commonwealth of Australia which shall be the forum of any proceeding.

The Issuer and all indorsers, sureties, and guarantors hereof, hereby jointly and severally waive presentment, demand for payment , notice of dishonour, notice of protest and protest, and all other notices or demands in connection with the delivery, acceptance, performance, default , indorsement, or guarantee of this instrument .

Issued on the Issue Date.

Executed by the Issuer by being signed by the persons below who as a Director of the Issuer is authorised to sign.

Signature Signature

Name: Title: Name: Title:”
(emphasis added)

32 Two things should be noted about this document. First, the words “Ausag Resources” shown in italics alongside the reference to the “Issuer” were in handwriting on the document. In that regard it is to be noted that The Oilfields Pty Limited was the ultimate holding company of AAR. Secondly, the payee is International Alliance Investments Nominees Limited (“IAINL”), a different company from IAIL which is referred to in the Statement of Claim.

33 It is important to note what is pleaded in respect of this First Promissory Note. Paragraph 7 of the Statement of Claim (and the Amended Statement of Claim where the paragraph is unaltered) reads:

“On or about 7 May 1999, AAR signed a Promissory Note to IAIL for $500,000 plus expenses and interest at the rate of 2% per month (“the First Promissory Note”) and Stevens and Wass signed as guarantors of the obligation under the Promissory Note (“the guarantees”).”

34 The Second Promissory Note (annexure “B” to Mr Hannah’s affidavit) was in identical terms except for the details at the top which read:

“ PROMISSORY NOTE
Number: OF2
Principal Sum: $530,910.00
Issue Price: $520,500.00
Issuer: AusAg Resources Limited
Issuer Address: 8 ^th Floor, 67 Albert Avenue
Chatswood, NSW 2067 Australia
Payee: International Alliance Investments Nominees Ltd
Payee Address: Utrecht, the Netherlands
Issue Date: 12 July 1999
Repayment Date: 17.00 hours on 12 August 1999 (NSW time)
Interest Rate: 2% per month
Interest Rests: Monthly
Interest Payment
Date(s): Monthly in advance for the first time on 12 August 1999 except if this note has been repaid in full.”

35 The Second Promissory Note has the signatures of Mr Stevens and Mr Wass next to where the word “Signature” appears at the end of the document. Underneath those signatures their names are printed in block capitals and in each case their title is said to be “Director”.

36 It is to be noted again that the payee in the Second Promissory Note is IAINL.

37 There is a letter dated 14 July 1999 (annexure “C” to Mr Hannah’s affidavit) written on the letterhead of AAR addressed to Mr Francken at IAIL which reads:

“Dear Niko
PROMISSORY NOTE
We refer to your discussions with Mr C J Stevens and attach the duly signed documents as discussed. The guarantors again confirm their obligations.
The originals are in the post.

Yours sincerely


AUSAG RESOURCES LIMITED”

The signatures of Mr Wass and Mr Stevens appeared underneath the reference to “AUSAG RESOURCES LIMITED” and underneath each signature their name was written in capital letters under which the word “Director” was placed.

38 In his affidavit Mr Hannah says:

“[24] I had read the signed promissory notes of May 1999 and July 1999 and their accompanying letters on or about the dates they bore. Those relating to July 1999 are copied as Annexure “B” and “C”. I recall that the terms of the signed May 1999 promissory note were virtually the same as the document Annexure “B” save that the date was May 1999, the amount to be repaid was $510,000 and the repayment date was sometime in June 1999.

[25] I recall the letter of May 1999 signed by Mr Stevens and the Defendant Mr Wass, was in similar terms to Annexure “C” except the letter was dated May 1999.”

39 On 8 December 2006 a Deed was entered into between IAINL, IAIL and the Plaintiff whereby IAINL assigned to the Plaintiff for the sum of AUD$10 the “Chose in Action” which was defined in the Deed as meaning:

“The rights of [IAINL] to recover the sum due both under the further Promissory Note and from the guarantor IPJ Wass, being the amount of AUD$530,910 together with interest at the rate of two per cent (2%) per month from 12 August 1999 and continuing.”

40 Recital H read:

“By letter dated 11 August 1999 Aus Ag Resources was directed to pay the Promissory Note to a nominated beneficiary, International Alliance Insurances Limited.”

41 The letter of 11 August 1999 was written by IAIL (Mr Francken) and was said to be copied to the Defendant care of AAR. The letter said:

“As you know the above Promissory Note dated 12 July 1999 for the amount AUD$530,910 matures tomorrow (17:00 hours NSW time).

It is made payable to our investment nominee company. Kindly transfer the amount due to us as follows:

Amount: AUD$530,910
Beneficiary: International Alliance Insurances Limited

…

If the PN is not paid or replaced by another suitable security of even or better quality then we have no option but to instruct our solicitors to proceed to collection against the payor (sic) and the guarantors Messrs Stevens and Wass.”

42 The Defendant submits that the Court should be satisfied that the Plaintiff’s claim cannot succeed because there is no evidence that the Defendant ever guaranteed the Promissory Notes. The Defendant points first to paragraph 7 of the Amended Statement of Claim which alleges that the First Promissory Note was signed by Stevens and Wass as guarantors. The Defendant then points to the Second Promissory Note and what is said to be the intended First Promissory Note (set out in para 31 above) and says that neither of those documents contains any form of guarantee.

43 The Defendant further points to the fact that Mr Hannah’s own evidence is that the First Promissory Note was in virtually identical terms to the Second Promissory Note except for some particulars at the top concerning the amount and the dates. The Defendant also points to the fact that Mr Hannah says that the letter of May 1999 accompanying the First Promissory Note was in the same terms as the July letter except for the date.

44 The Defendant says that the Second Promissory Note was signed only by AAR since it is made clear that the signatures of Stevens and Wass are the signatures of AAR’s Directors. It can be inferred that AAR alone signed the First Promissory Note in the same way.

45 The Defendant submits that although the letter of 14 July 1999 says “ the guarantors again confirm their obligations” that letter is only signed by AAR and not by the guarantors as such, but in any event it does not identify who the guarantors are nor what their obligations were.

46 The question whether documents signed by persons who are directors of a company should be held to bind them personally, perhaps as guarantors or in some other way, has been discussed in a number of cases but the most thorough analysis is that of Giles J (as his Honour then was) in Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd & Others (1989) 21 NSWLR 160. His Honour examined in detail the differing views of the three Lord Justices in Ariadne Steamship Co Ltd v James McKelvie & Co [1922] 1 KB 518 together with subsequent cases which have commented on those approaches, and then concluded (at 174):

“In the result, I conclude that the proper approach is to inquire whether there is to be found an intention that the signatory be personally bound to the contract evidenced in the document, meaning thereby not a subjective intention but an intention to be found objectively, notwithstanding a qualification attached to the signature. That intention, or lack thereof, is to be found upon the construction of the document as a whole, including but not being limited to the qualification attached to the signature, in the light of the surrounding circumstances to the extent to which evidence thereof is permissible. The inquiry is not limited to consideration of the signature and its qualification in order to determine whether or not the signature indicates an assent to be personally bound.”

47 Although some of the earlier cases discussed by Giles J had as their issue the question of whether a contract was binding on an agent who signed for a principal, Clark Equipment concerned a factoring agreement in respect of a company’s debts where surrounding circumstances indicated that the directors were to provide personal guarantees for the company. The form of agreement in that case made no provision for execution by any guarantor. The signature of the key directors (O’Sullivan and Mould) appeared alongside an attestation clause which read:

“SIGNED by R G O’Sullivan for and on behalf of KIYOSE HOLDINGS PTY LTD”

and then the common seal of Kiyose Holdings was affixed with the further signature of Mr Mould. It is noteworthy that the Agreement itself contained a clause providing that Messrs O’Sullivan and Mould thereby guaranteed to the purchaser the obligations of the company.

48 Giles J said that there were a number of reasons for declining to find an intention that Messrs O’Sullivan and Mould were personally bound by the agreement. The first of those reasons (the only relevant one for present purposes) was that the form of the signing clause made it clear that Mr O’Sullivan was signing for and on behalf of the company and Mr Mould was the person in whose presence the signing took place. Nothing in that suggested a personal undertaking on behalf of either of those persons. His Honour thought also that the addition of the common seal of the company pointed to Messrs O’Sullivan and Mould having signed simply in their capacity as directors of that company.

49 His Honour said (at 176):

“To conclude that signature by Messrs O’Sullivan and Mould as the act of Kiyose in executing the factoring agreement should be taken as signature personally binding them because there was a clause in the factoring agreement in the fulfilment of which it would have been appropriate to find signature in their personal capacities would fail to give due recognition to there having been simply a want of execution by them.”

50 In a similar way, the execution clause in the Second Promissory Note and the way it had been executed points strongly against the signatures being the signatures of Stevens and Wass as guarantors or in any way binding them personally. The execution clause says:

“Executed by the Issuer [i.e. Aus Ag Resources Limited] by being signed by the persons below who as a Director of the Issuer is authorised to sign.”

Then, as I have earlier indicated, the word “Director” has been written next to the printed word “Title” underneath the signature of each person.

51 But in any event, there is nothing so explicit in the Promissory Note concerning a guarantee as was to be found in the factoring agreement in Clark Equipment. Indeed, the only reference to guarantors at all is the statement:

“The Issuer and all indorsers, sureties, and guarantors hereof, hereby jointly and severally waive presentment, demand for payment, notice of dishonour, notice of protest and protest, and all other notices or demands …” (emphasis added)

52 That certainly sounds as if the guarantee is contained within the document, or at least that the guarantors are themselves signing the document with the guarantor’s obligations to be found elsewhere, but it seems to me that that statement provides no basis, even when the Promissory Note is read as a whole, (as Clark Equipment determines the proper test is) for reaching the view that Stevens and Wass have signed other than as Directors of AAR.

53 Some support for the Defendant’s argument is to be found also in the judgment of Windeyer J in Equity Nominees Ltd v Tucker (1967) 116 CLR 518 at 526.

54 The Plaintiff relies also on a letter of 14 July 1999 (set out in para 37 above). However, that letter presents a number of problems. First, the letter is addressed to IAIL notwithstanding that the payee of the Promissory Note was IAINL. That may, however, be something which the Plaintiff can overcome by proof that the contract was with IAIL notwithstanding the identity of the payee of the Promissory Note.

55 Secondly and more significantly, the letter is signed by AAR. The key signatures of Wass and Stevens identify them as Directors and the letter has that company’s name printed as the author of the letter and it is on its letterhead. I accept that the effect of Giles J’s decision in Clark Equipment is that the view of Atkin LJ in Ariadne, that one looks simply to any qualification attached to the signature as the determining factor, does not represent the law, and it is necessary to construe the whole document. The part of the letter which impacts on the qualifications to the signatures is the statement “the guarantors again confirm their obligations”. On one view, when taken as a whole, the letter might be taken to be an acceptance by the guarantors, who for that purpose one would have to presume were Wass and Stevens, that they had provided guarantees. On the other hand, the letter does not identify the guarantors and does not stipulate what the obligations are.

56 One is then driven back to paragraphs 24 and 25 of Mr Hannah’s affidavit (para 38 of above) which must be taken as saying that when the First Promissory Note was signed in May 1999, there was a letter “in similar terms” to the letter of 14 July 1999 except it was dated May 1999.

57 Accepting that statement as being correct, that letter still leaves unanswered the question of who the guarantors were, what their obligations were, and indeed where there was a document of guarantee signed by these guarantors. It cannot have been the Promissory Note, whether the First or the Second, because no guarantee is contained within its terms. It cannot be the letter itself because in its terms it confirms obligations which must be found elsewhere.

58 In this regard, it is to be noted that a guarantee ought to be able to be identified in clear terms. Although the common law did not insist on writing the Statute of Frauds provided that no action could be brought upon a guarantee unless there was a note or memorandum in writing and signed by the party to be charged. However, in New South Wales the Imperial Acts Application Act 1969 s 8(1) had the effect of repealing the Statute of Frauds. Nevertheless, O’Donovan and Phillips, The Modern Contract of Guarantee, 3^rd ed, (1996) LBC at 36 say:

“The guarantor’s offer must be clear and definite… . Vague or equivocal statements will not suffice; they must be promissory and show an intention to be legally bound. Nor will a mere overture to provide a guarantee constitute an offer capable of acceptance. The central question is whether or not it is sufficiently clear from the documentation and surrounding circumstances that there is an intention to enter a legally binding obligation.”

59 In a similar vein, the joint judgment in the High Court in Ankar Pty Limited v National Westminster Finance (Australia) Limited (1987) 162 CLR 549 at 561 said:

“At law, as in equity, the traditional view is that the liability of the surety is strictissimi juris and that ambiguous contractual provisions should be construed in favour of the surety. … A doubt as to the status of a provision in a guarantee should therefore be resolved in favour of the surety…”

60 If the evidence on this application was the totality of the evidence at the final hearing of the matter it is likely that the Plaintiff would be unsuccessful on the basis that it would have failed to show the Defendant entered into a guarantee of the Second Promissory Note. The matter is pleaded in terms that provides that the guarantee was contained in the Promissory Note, which it clearly is not and, in any event, on the state of the evidence on this application the Plaintiff does not identify a guarantee by the Defendant whether in writing or otherwise.

61 Nevertheless, I have come to the view, that it is inappropriate for that matter to be determined on an interlocutory application for summary dismissal. Despite the best efforts of the Defendant to flush out all of the evidence on which the Plaintiff would rely (the Amended Notice to Produce, the orders for Discovery, the requirement that the Plaintiff serve its witness statements) I am not persuaded that there may not be other evidence relevant to the existence of the guarantee. The person conducting the negotiations, apparently, on behalf of the alleged guarantors was Clarence Stevens and there is no evidence on this application from him. It is conceivable that evidence might be obtained from Mr Francken of conversations that he had which might throw some light on the existence or otherwise of a guarantee from the Defendant.

62 Neither Mr Hannah nor Mr Wass was cross-examined at the hearing of this application and the evidence that might emerge from such cross-examination might also throw light on the issue.

63 There is contemporaneous evidence suggesting that the Promissory Note may well have been guaranteed. The letter of 14 July is reasonably clear evidence of that although, I accept, that it does not identify who the guarantors are. An inference is certainly available, however, that because the confirmation of the guarantor’s obligations is to be found in a letter signed by the Directors of AAR, those Directors might be the guarantors. Again, the appropriate inference seems to me to be a matter for the trial in the light of all other evidence that is given.

64 There is other contemporaneous evidence which suggests the belief on the part of the Plaintiff that the Defendant had given a guarantee (see the letter of 11 August 1999) although some other documents suggest, perhaps, that it was Stevens only and that the Defendant was not a guarantor (see, for example, letters of Paul Ward-Harvey & Co., Solicitors to Mr Hannah, of 3 May and 29 May 2002).

65 I have considerable sympathy for the position of the Defendant, particularly with the efforts it has made to require the Plaintiff to produce all its evidence to see if the case the Plaintiff brings is a viable one. There is no doubt that the Plaintiff has failed to comply with orders of the Court and, if the reason for disobedience with those orders is an inability to comply with them, there has been no explanation put forward by the Plaintiff to explain that inability. I shall return to this matter later in the judgment.

66 I decline to dismiss the proceedings on the basis that there is no reasonable prospect that a guarantee will be able to be proved.

Is the claim statute barred?

67 The Defendant relies on the following matters to say that the limitation period (being six years from the accrual of the cause of action by virtue of s 14 Limitation Act) expired before the commencement of the proceedings:

(a) The Second Promissory Note was payable at a specified time being 12 August 1999. It was not payable on demand. The liability of the guarantor, therefore, arose on the default of the principal debtor.

(b) The Plaintiff does not plead that the guarantee was payable on demand (although I note that it does plead that a demand was made).

(c) The terms of any guarantee have not been proved but what seems clear from the terms of the Promissory Notes is that the guarantors are said to have waived demand for payment.

(d) It is well established that the cause of action against the guarantor arises at the moment of the debtor’s default. In this regard, the Defendant relies on what is said by Lord Diplock in Moschi v LEP Air Services Ltd [1973] AC 331 at 348.

68 In Moschi Lord Diplock said at 348:

“It is because the obligation of the guarantor is to see to it that the debtor performed his own obligations to the creditor that the guarantor is not obliged to notice from the creditor of the debtor’s failure to perform an obligation which is the subject of the guarantee, and that that creditor’s cause of action against the guarantor arises at the moment of the debtor’s default and the limitation period then starts to run."

69 This was said in the context of an explanation from Lord Diplock about the exact nature of a guarantee where the defence by the guarantor was that the guarantee only obliged him to guarantee the payment of each instalment due under the principal contract. However, when there was default in an instalment the creditor accepted what it said was a repudiation of the contract. The creditor then sued the guarantor for the whole amount due. The guarantor said that all that was left after the repudiation of the contract was accepted was the claim for damages and that he did not guarantee to pay damages.

70 In those circumstances, Lord Diplock went on to say (at 348):

“It follows from the legal nature of the obligation of the guarantor to which a contract of guarantee gives rise that it is not an obligation himself to pay a sum of money to the creditor, but an obligation to see to it that another person, the debtor, does something: and that the creditor’s remedy for the guarantor’s failure to perform it lies in damages for breach of contract only. That this was so, even where the debtor’s own obligation which was the subject of the guarantee was to pay a sum of money, is clear from the fact that formerly the form of action against the guarantor which was available to the creditor was in special assumpsit and not in indebitatus assumpsit:”

The analysis was agreed by Lord Simon.

71 It was not, however, Lord Reid’s view. He thought there were two sorts of guarantees – one where a person might undertake no more than that if the principal debtor fails to pay any instalment he would pay it. Alternatively, the guarantor might undertake that the principal debtor will carry out his contract. If the principal debtor breaks his own contract he also puts the guarantor in breach of his contract of guarantee and then the creditor can sue the guarantor not for the unpaid instalment but for damages (see at 344-345).

72 Lord Reid’s view was the view of Mason CJ in Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 256, and the other members of the High Court either agreed with Mason CJ or (in the case of Gaudron J) expressed her own opinion agreeing with Lord Reid.

73 The law of Australia must be, therefore, that the analysis of Lord Diplock is not the correct analysis when the obligation of the guarantor is under consideration. However, Mr Barnett of counsel, who appeared for the Defendant, argues that that disapproval by the High Court in Sunbird Plaza is only a disapproval of the explanation given by Lord Diplock for the principle that the guarantor is not entitled to notice or demand before his liability arises. Mr Barnett says that principle is not challenged by what is said in Sunbird Plaza.

74 In my opinion, this submission should be accepted for the following reasons. First, the enquiry in Sunbird Plaza was whether the events had occurred which gave rise to any liability in the principal debtor – in that case when the balance of the purchase price was payable under a contract for the sale of land. It is true that that involved a consideration of the guarantor’s obligations under the guarantee (and hence the reference to, and approval of, Lord Reid’s analysis in Moschi) but the case was not concerned with establishing when (in the sense of a timing issue) as opposed to whether (in the sense of ascertaining if the principal debtor had defaulted at all) the guarantor’s liability arose.

75 Secondly, after having said that his own view of the matter accorded with that expressed by Lord Reid, Mason CJ said (at 256):

“There are, however, two common classes of guarantee of the payment of instalments by the principal debtor. The first is an undertaking by the guarantor that if the debtor fails to pay an instalment he will pay. This is a conditional agreement. The guarantor's obligation to pay arises on the debtor's failure to pay. The second is an undertaking by the guarantor that the debtor will carry out his contract. Then a failure by the debtor to perform his contract puts the guarantor in breach of his .” (emphasis added)

In either case, the liability of the guarantor, in the absence of any requirement for a demand, arises on either the failure or the breach by the principal debtor.

76 Thirdly, O’Donovan and Phillips say (at 486-487):

“ Is a demand necessary? A guarantor is liable upon the principal debtor’s default. … There is no necessity for the creditor to make a demand upon the guarantor before enforcing the guarantee, unless the terms of the guarantee so require.”

The authority that they cite supports this conclusion.

77 In Clyde Industries Ltd v Dittes (unreported) NSW Supreme Court, 5 June 1992 Cole J said:

“The obligation under a guarantee, and thus the cause of action, arise upon default of the principal debtor unless the guarantee contains a condition precedent to liability, such as the making of demand upon the guarantor.”

78 In Re Taylor (1995) 130 ALR 723 Burchett J (at 725):

“The general rule as to whether a demand is necessary before liability attaches under a guarantee is stated in Rowlatt on the Law of Principal and Surety (4 December 1982) at p 115, as follows:

‘A surety has not, unless his contract so provides, any right to require a demand to be made upon him before action. If a surety gives a bond conditioned to be void on the payment of a similar sum ‘on demand’, or covenants or promises to pay the principal debt ‘on demand’, a demand must be made upon him before he can be sued. His obligation is to pay the collateral sum, and differs from a promise to pay on demand a present debt owing by the promisor. In the latter case an action can be brought once without any other demand than the writ.’

The broad proposition, that the surety whose contract did not stipulate for notice became immediately liable when due payment was not made, is supported, with reference to a guarantee of payment under a bill of exchange, by the judgment of Lindley LJ in Barber v Mackrell (1892) 68 LT (NS) 29 at 31; see also Bank of Montreal v Hache (1982) 38 NBR (2d) 54 at 57-8; G Andrews and R Millett, Law of Guarantees (1992) p.163.”

79 This was also the approach of Scott J in Custom Credit Corporation Limited v Simcock (unreported, Supreme Court of WA, 13 April 1995).

80 In my opinion, the law is as stated in O’Donovan and Phillips. Further, the disapproval by the High Court in Sunbird Plaza of Lord Diplock’s analysis was not a disapproval of the principle that the guarantor’s liability arises on the failure to pay, or the breach, by the principal debtor. \

81 On the state of the evidence concerning the existence of any guarantee by the Defendant (as discussed earlier in this judgment) can it nevertheless be said that any guarantee given was not payable on demand with the result that the proceedings are out of time? In some respects, it might be thought that a refusal to dismiss the proceedings summarily on the basis that the Plaintiff had not proved the Defendant gave a guarantee would necessarily mean that dismissal based on the limitation period in these circumstances could not also succeed. However, it seems to me that there are significant differences which justify a clear view that the proceedings are brought out of time.

82 First, the Amended Statement of Claim does not plead that a demand was necessary for a claim to be made under the guarantee. The fact (as pleaded) that a demand was made says nothing about the need for such demand.

83 Secondly, the Amended Statement of Claim pleads that the guarantee is to be found in both the First and Second Promissory Notes because both of those Notes were signed personally by Stevens and the Defendant as guarantors as well as being signed by them on behalf of AAR. Plainly, on the face of the Promissory Notes no guarantee is contained within them, and that was accepted by Mr Sweeney. However, the evidence which might be available at the trial (discussed in paras 61-63 above) is evidence which may cast light only on the fact of the guarantee rather than its terms. As noted, oral evidence from, for example, Mr Francken or Mr Stevens may throw light on the circumstances of the signing of documents by the Defendant which may place a different complexion on the signing of those documents, with the result (following Clark Equipment) that an inference may be open that such signed documents as are available might constitute a guarantee. There is nothing either pleaded in the Amended Statement of Claim or the evidence of Mr Hannah which suggests any other terms to the guarantee nor any other documents embodying terms of the guarantee.

84 Thirdly, Mr Sweeney says, because of the absence of a guarantee within the Promissory Notes, he relies on the letter of 14 July together with other evidence of surrounding circumstances that may be given at the trial to show who the guarantors were. He says further that it will be argued that “confirm their obligations” in that letter will mean something in particular for the time for payment under the guarantee. Once again, although it may be appropriate for evidence to be given of the surrounding circumstances touching the signing of that letter, it is not suggested that other terms and conditions of the guarantee will be identified.

85 I have already made mention of the attempts made to obtain copies of any other documents associated with the guarantee by the Defendant. As I have noted, Mr Hannah has detailed the only documents he has managed to find after extensive enquiries. Moreover, the letter from Gells Lawyers of 20 April 2009 (para 22 above) says that the Defendant has been served with “a copy of the material documents in our client’s possession”. From this it can reasonably be inferred that no more documents will be available at the hearing of the matter.

86 Fourthly, if the Plaintiff establishes that the Defendant gave a guarantee it would do so, at least, partly upon the basis of the giving of the Promissory Notes. Again, paragraph 7 of the Amended Statement of Claim pleads that the guarantee is to be found in the Promissory Notes. Those Promissory Notes expressly provide that the guarantors waive demand for payment and all other notices or demands in connection with default under the Promissory Notes. If the Plaintiff proves that the signatures on the Promissory Notes bind Stevens and the Defendant as guarantors then the waiver will operate against the need for a demand.

87 When all of those matters are taken together, along with the general principle that unless the guarantee specifies that the debt is payable on demand by the guarantor no demand is necessary, it seems to me that any guarantee established to have been given by the Defendant will have become due and payable on 12 August 1999 when default was made under the Second Promissory Note. Any further evidence that will be adduced at the hearing will, in all likelihood, only be oral evidence and will only throw light on the circumstances in which the relevant documents were signed but will not consist of any further documentary evidence to show that any guarantee had a term which required a demand before payment was due.

88 The Plaintiff urges upon me the caution expressed by the joint judgment in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 at 533 where it was said:

“We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.”

89 Three things should be said about that warning. First, in one sense it merely reiterates that test established by General Steel Industries for determining whether or not the case is appropriate for summary judgment or summary dismissal.

90 Secondly, regard must be had to the circumstances in which the statement was made. Limitation questions “of the kind under consideration” in Wardley may well be inappropriate for interlocutory determination. The case not only involved an application for leave to amend the Statement of Claim, but involved questions of when damage first occurred, questions which it was likely would involve issues of fact that could only be properly determined at a trial. So, the warning itself made reference to the fact that in many cases “insufficient is known of the damage sustained by the Plaintiff”. That is not the issue in the present case and, for the reasons I have given, any further factual evidence will go only to the existence of the guarantee and not its terms.

91 Thirdly, despite the warning Courts frequently entertain applications for summary dismissal based on limitation defences. Some examples of such cases since Wardley include Cheney & Wilson v Duncan [2001] NSWCA 197 and Samson v Zucker (unreported, Court of Appeal, 11 December 1996).

92 I bear in mind the warning given in Wardley in the joint judgment, and I am mindful of the principles in General Steel. However, in my opinion, this is an appropriate case to make an order dismissing the proceedings pursuant to Rule 13.4 UCPR on the basis that the limitation period for the commencement of the proceedings expired before the commencement of the proceedings. In such circumstances, there is no reasonable cause of action within the meaning of the Rules: Hillebrand v Penrith Council [2000] NSWSC 1058 at 27-29.

Want of due dispatch

93 In the light of my conclusion that the matter is appropriate for summary dismissal it is not strictly necessary to consider the alternative basis upon which the Defendant claims the proceedings should be dismissed. However, in case I am wrong in my earlier view I will say something about the matter.

94 There is little doubt, in my opinion, that there have been unacceptable delays and unacceptable failures, which are largely unexplained, for compliance with Court orders. An order was made for the filing of witness statements by 12 February 2009 but this was never complied with. Mr Coffey, the solicitor for the Plaintiff, informed me from the bar table that when an earlier strike out application was resolved by Consent Orders and Directions were made on 19 March 2009 regarding discovery, he took the view that the earlier orders for the filing of witness statements were no longer in force. It is fair to say that Mr Coffey’s firm only came into the proceedings in February 2009, some months after the relevant order was made.

95 On one level I can understand his belief (and I do not doubt that he had the belief) that the order with regard to witness statements was no longer in force. The matter appears to have been overlooked the Defendant when the Orders were made on 19 March 2009 and subsequently. There is, however, no explanation as to why that order (amongst others) was not complied with by 12 February 2009. If it had been, the position with regard to this application and these proceedings might have been very different.

96 I have set out in some detail the course of events with regard to the proceedings. As unacceptable as the failures are, I do not think it is an appropriate matter to dismiss the proceedings for want of due dispatch. Sufficient has happened, even if it is only as a result of the present application by the Defendant, to indicate that, but for the limitation issue, the proceedings should go to trial, and that they can be appropriately case managed by a Judge of the Court to ensure that the Plaintiff has a last chance to comply with Directions and Orders made to bring the proceedings to a final hearing in the near future.

97 If I am wrong on the limitation issue, there would be little point in dismissing the proceedings because the Plaintiff would be able to commence fresh proceedings with the incurring by both sides of unnecessary costs in the process. Consistent with s 56 Civil Procedure Act 2005 the better course is to ensure that the proceedings are brought on for a final determination in the near future rather than dismissing them pursuant to Rule 12.8.

98 The Orders of the Court are as follows:

(1) Dismiss the proceedings.

(2) The Plaintiff to pay the costs of the motion and the proceedings.

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