Pentridge Village Pty Ltd (In Liq) v Capital Finance Australia (No 3)
[2023] VSC 605
•13 October 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2016 02546
| PENTRIDGE VILLAGE PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (ACN 087 151 068) | First Plaintiff |
| WEST HOMES AUSTRALIA PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 004 964 185) | Second Plaintiff |
| v | |
| CAPITAL FINANCE AUSTRALIA LTD (ACN 069 663 136) | Defendant |
| JOHN MALLON | Third Party |
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JUDGE: | Stynes J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 9 and 13 June 2023 |
DATE OF JUDGMENT: | 13 October 2023 |
CASE MAY BE CITED AS: | Pentridge Village Pty Ltd (In Liq) v Capital Finance Australia (No 3) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 605 |
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PRACTICE AND PROCEDURE — Application to dismiss proceeding for want of prosecution within the inherent jurisdiction of the Court — Whether inordinate and inexcusable delay — Where action commenced late in limitation period — Delay in serving proceedings — Failure to proceed with due expedition — Whether substantial risk that it is not possible to have a fair trial — Time at which prejudice is assessed — Where plaintiffs have failed to comply with Court orders — Whether plaintiffs ought to be relieved by defendant’s delay — Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863; Department of Transport v Chris Smaller (Transport) Ltd [1989] AC 1197; Mizzi Pty Ltd v Meredith [2009] VSC 367; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | M Pearce SC with B Mueller | Alexander Law |
| For the Defendant | C Harris KC with E Murphy | Gilbert + Tobin |
| For the Third Party | None | None |
Contents
A.. Introduction
B... Issues to be determined and summary of determination
C.. Background
C.1 The underlying dispute
C.2 Procedural history
C.3 The plaintiffs’ recent change of solicitors
D.. Relevant legal principles
D.1 Dismissal for want of prosecution
D.2 Inordinate and inexcusable delay causing prejudice
E... Issue 1 – Has there been a delay attributable to the plaintiffs
E.1 Alleged delays attributed to the plaintiffs
E.1.1 Delay in serving proceedings
E.1.2 Delay in settling pleadings
E.1.3 Delay in respect of the plaintiffs’ discovery
E.1.4 Delay in preparing lay evidence
E.1.5 Delay in resolving objections to subpoenas
E.2 Alleged delays attributed to the defendant
E.3 Analysis
F... Issue 2 – Is the delay identified in Issue 1 inordinate and inexcusable
F.1 Plaintiffs’ submissions
F.2 Defendant’s submissions
F.3 Analysis
G.. Issue 3 – If the delay has been inordinate and inexcusable, has that delay either given rise to a substantial risk that it is not possible to have a fair trial or otherwise caused serious prejudice to the defendant
G.1 Defendant’s submissions
G.2 Plaintiffs’ submissions
G.3 Analysis
H.. Issue 4 - Does the defendant’s delay in discovery adversely impact the defendant’s application to dismiss for want of prosecution?
I.... Orders
HER HONOUR
A Introduction
In this proceeding the plaintiffs allege that they lost the opportunity to develop parts of the Pentridge Village project in Coburg, Victoria (the ‘Development’), and seek damages of at least $844,891,907.95. Broadly, the plaintiffs’ claims relate to misrepresentations allegedly made by the defendant regarding the continuation of finance for the Development.
These reasons address an application by the plaintiffs for an extension of time to file their lay evidence,[1] and an application by the defendant to have the proceeding dismissed for want of prosecution.[2]
[1]By summons filed on 14 April 2023.
[2]By summons filed on 21 April 2023.
The plaintiffs rely on their counsel’s written and oral submissions and the following materials:
(a)The affidavits and exhibits of Sameh Iskander affirmed on 13 April 2023 (‘First Iskander Affidavit’), and on 18 May 2023 (‘Second Iskander Affidavit’).
(b)The affidavit and exhibits of Leigh Chiavaroli affirmed on 18 May 2023 (‘Chiavaroli Affidavit’).
(c)The affidavits of Sarah-Jane Hunt affirmed on 8 June 2023 and 9 June 2023.
The defendant relies on its counsel’s written and oral submissions and the following materials:
(a)The affidavit and exhibits of Neil McAteer affirmed on 21 April 2023 (‘First McAteer Affidavit’), on 12 May 2023 (‘Second McAteer Affidavit’), and on 6 June 2023 (‘Third McAteer Affidavit’).
(b)Aide memoires on delay and prejudice, both filed on 8 June 2023.
B Issues to be determined and summary of determination
Having regard to the parties’ submissions, both written and oral, the following issues arise for the Court’s determination:
(a)Issue 1 – Has there been a delay attributable to the plaintiffs?
(b)Issue 2 – If so, has that delay been inordinate and inexcusable?
(c)Issue 3 – If so, has that inordinate and inexcusable delay:
(i)given rise to a substantial risk that it is not possible to have a fair trial of the issues in the action; or
(ii)caused, or is likely to cause serious prejudice to the defendant as between the plaintiffs and defendant?
(d)Issue 4 - Does the defendant’s delay in providing discovery adversely impact its application for dismissal for want of prosecution?
For the reasons that follow, I have determined:
(a)in answer to Issue 1, there are four significant periods of delay attributable to the plaintiffs and which could not be ascribed in any significant way to the defendant;
(b)in answer to Issue 2, there has been inordinate and inexcusable delay on the part of the plaintiffs;
(c)in answer to Issue 3, the inordinate and inexcusable delay has prejudiced the defendant and gives rise to a substantial risk that a fair trial cannot be had; and
(d)in answer to Issue 4, any delay caused by the defendant’s provision of discovery does not, in the circumstances, adversely impact its application for dismissal.
As a result of my determination of Issues 1 to 4, it was not necessary for me to go on to determine the following matters which were also raised by the parties for consideration:
(a)Whether the plaintiffs’ default in relation to the preparation of their lay evidence had been intentional and contumelious.
(b)Whether the proceeding should be dismissed on the ground it is an abuse of process.
(c)Whether the time for the plaintiffs to file and serve their lay evidence should be extended to 9 June 2023.
C Background
C.1 The underlying dispute
The parties to the underlying dispute are:
(a)the first plaintiff, Pentridge Village Pty Ltd (‘PV’), a developer of land. PV is in liquidation;
(b)the second plaintiff, West Homes Australia Pty Ltd (‘WHA’), a construction company engaged by PV to undertake the construction of buildings and other works in relation to the Development. WHA was in receivership. I was informed by the plaintiffs’ counsel during the hearing that the receivership had come to an end;[3]
(c)Leigh Chiavaroli, the sole director and company secretary of each of PV and WHA;
(d)the defendant, Capital Finance Australia Ltd (sometimes referred to as ‘CFAL’), a financier that provided banking and credit services to PV; and
(e)the third party, John Mallon, who was employed by the defendant and during the relevant period held the position of Senior Manager, Property Finance, Victoria.
[3]Transcript of Proceeding, Pentridge Village Pty Ltd (In Liquidation) (Receivers and Managers Appointed) v Capital Finance Australia Ltd (Supreme Court of Victoria, Stynes J, 13 June 2023) 2 (‘Day 2 Transcript’).
In summary, the plaintiffs make the following allegations:[4]
[4]In their Second Further Amended Statement of Claim filed on 23 June 2022.
(a)Mr Mallon represented that he had authority to determine whether financing for the Development would be provided and renewed by the defendant (the ‘Authority Representations’). The Authority Representations are alleged to be partly in writing, partly oral and partly implied. The conduct relied on dates back to March 2006. The pleaded particulars reveal that the plaintiffs rely predominantly on words allegedly said by Mr Mallon between October 2008 and February 2010. The Authority Representations are central to the dispute because they form the basis for allegations of misleading or deceptive conduct, deceit and unconscionable conduct for which loss is claimed.
(b)In mid-2005, the plaintiffs, the defendant and others entered into an agreement (the ‘Facility Agreement’) under which the defendant agreed to provide PV with a credit facility in respect of the Development. WHA agreed to act as guarantor. The Facility Agreement was varied by agreement from time to time.
(c)Prior to 2007, PV’s strategy in undertaking the Development was to develop successive individual stages, using the net profits realised from the sale and settlement of apartments to pay down debt owed to a former financier and to assist with funding the Development.
(d)From late 2006 to late 2007, Mr Mallon advised PV that the defendant recommended that PV alter its strategy by developing multiple stages of the Development concurrently, rather than in successive individual stages. He represented to PV and WHA that the defendant would provide PV with sufficient funding to ensure the successful implementation and completion of a multi-stage development (the ‘MSD Financing Representations’).The MSD Financing Representations are alleged to be oral. The plaintiffs rely on words allegedly said by Mr Mallon between February and December 2007.
(e)On 1 December 2007, in anticipation of increased financing enabling a multi-stage development, WHA and PV entered into a number of construction contracts pursuant to which WHA was to construct the multi-stage development in exchange for payment on a costs plus margin (20%) basis.
(f)In late 2007 to early 2008, Mr Mallon prepared a client proposal recommending to the defendant an increase in financing to PV under the Facility Agreement to finance the implementation of the multi-stage development. The defendant provided approval for an increase to the Facility Agreement peak debt and for funding in order to commence the development of concurrent stages.
(g)On or around 15 January 2008, the Facility Agreement was further amended to increase the financing to PV, increase the peak debt limit, and extend the termination date. As amended, the repayment date and expiry of the term of the facility was 30 June 2010.
(h)The Facility Agreement was further varied between June 2008 and November 2009, with such variations limited to how advanced sums were to be allocated.
(i)In reliance on the MSD Financing Representations:
(i)PV proceeded to pre-sell 100% of the apartments for each of the stages in the multi-stage development; and
(ii)PV and WHA commenced development and construction of multiple stages.
(j)From December 2007 to January 2008, the defendant knew or should have known that, amongst other things:
(i)PV had entered into construction contracts with WHA in respect of the multi-stage development;
(ii)PV and WHA were required to complete construction of any pre-sold apartments by late 2010 to early 2011 because the sale contracts included a three year sunset clause. If the purchase was not completed and settled within three years of the date of the contract, the purchaser was not obliged to settle the purchase of the apartment and was entitled to the return of their deposit; and
(iii)construction of various parts of the Development was expected to take at least 18 months from the time of financing in respect of those parts which had been approved by the defendant and construction commenced.
(k)From mid-2008 to late 2009, the defendant knew or should have known that:
(i)the multi-stage development was delayed for various reasons, including delays in the defendant’s approval processes for the release of funds and delays in payments of progress claims, and would not be completed by 30 June 2010, being the expiry date of the facility under the Facility Agreement; and
(ii)an increase in the facility was required to accommodate an accelerated and more intensive construction program.
(l)The matters the defendant is alleged to have known, as referred to in sub-paragraphs 9(j) and 9(k) above, are relevant to and form the basis for other allegations of misconduct for which loss is claimed.
(m)From mid-2009 to late February 2010, Mr Mallon represented to PV and/or to WHA that the defendant would renew or rollover the Facility Agreement prior to the date of its expiry on 30 June 2010 on terms no more onerous than the existing Facility Agreement and on terms which would increase the limit of PV’s peak debt by $10 million (the ‘Renewal Representations’). The Renewal Representations are alleged to be partly in writing, partly oral and partly implied. The conduct relied on dates back to the period from July 2009 to February 2010. The pleaded particulars reveal that the plaintiffs rely predominantly on words allegedly said by Mr Mallon.
(n)In mid-February 2010, Mr Mallon’s employment with the defendant was terminated. At that time, the stages included in the multi-stage development were scheduled to be completed by 30 June 2011.
(o)The Renewal Representations were misleading or deceptive, or likely to mislead or deceive, and Mr Mallon did not have reasonable grounds for making them.
(p)As at March 2010, representatives from the defendant informed PV that, amongst other things:
(i)Mr Mallon had left everything at CFAL (ie, the defendant) in a mess;
(ii)the defendant had not approved a variation to or renewal of the Facility Agreement;
(iii)Mr Mallon did not have the authority of the defendant to approve the type of credit facility rollover contemplated by PV;
(iv)the defendant had expected that the stages of the Development under construction were on schedule and that the facility would be repaid by 30 June 2010;
(v)there was no record at the defendant of any credit facility renewal application having been made or approval process having been commenced; and
(vi)before considering whether to renew or rollover PV’s facility, the defendant would first have to reconstruct its file for PV.
(q)Between March and mid-July 2010, the defendant represented to PV and/or to WHA that the defendant would finalise a restructure and extension of the Facility Agreement on terms no more onerous than the Facility Agreement with an extension of time from 12 to 18 months (the ‘Confirmation Representations’). The Confirmation Representations are alleged to be partly in writing, partly oral and partly implied. The pleaded particulars reveal that the plaintiffs rely predominantly on words allegedly said by Rob Moulden and John Degaris of the defendant.
(r)The Confirmation Representations were misleading or deceptive or likely to mislead or deceive.
(s)From 27 October 2009, the defendant had determined not to extend, renew or rollover the Facility Agreement on terms no more onerous than the existing Facility Agreement.
(t)Further or alternatively, between July 2009 and 4 March 2010, and during the period of March to mid-July 2010, the defendant was aware that renewal of the Facility Agreement on terms no more onerous than the existing Facility Agreement was unlikely to occur (the ‘Material Information’).
(u)The defendant was under an obligation to disclose the Material Information to PV or WHA at the earliest opportunity but did not do so until after the Facility Agreement had expired. Its failure to provide the Material Information constituted conduct by the defendant that was misleading or deceptive.
(v)In reliance on the Renewal Representations and in the absence of the Material Information, during the period from 2 July 2009 to the end of February 2010:
(i)PV did not pursue alternative sources of debt and/or equity financing to replace the Facility Agreement; and
(ii)PV and WHA instead directed their efforts to implementing the multi-stage development strategy.
(w)Further or alternatively, acting in reliance on the Confirmation Representations and in the absence of the Material Information from March to mid-July 2010:
(i)PV did not pursue alternative sources of debt and/or equity financing to replace the Facility Agreement; and
(ii)PV and WHA instead directed their efforts to implementing the multi-stage development strategy.
(x)As at 30 June 2010, the defendant had not renewed or rolled over the Facility Agreement, either on terms no more onerous than the existing Facility Agreement, or at all.
(y)In late July 2010, the defendant issued notices of default to PV under the Facility Agreement. Thereafter, PV was in a worse bargaining position than it had been in terms of negotiating re-financing for the Development either with alternative financiers and/or equity partners, or with the defendant itself.
(z)In September 2010, the defendant provided PV and WHA with a draft of a new facility agreement. The terms of the draft facility agreement were more onerous than the terms of the Facility Agreement and did not include an increase in the peak debt limit to $95 million.
(aa)On or around 8 November 2010, PV and WHA executed a new facility agreement (the ‘November 2010 Facility Agreement’). From 15 November 2010, PV undertook the Development with reduced financing and on the terms of the November 2010 Facility Agreement. PV could not comply with, and was in immediate default of, the loan to value ratio set in that agreement. As a consequence, the defendant was not obliged to make advances to PV.
(bb)From around April 2010, significant numbers of purchasers to whom apartments had been pre-sold either rescinded their contracts of sale and refused to settle or sought reduced prices for settlement of their purchases.
(cc)On 17 July 2014, PV and WHA were placed into receivership. On 22 August 2014, PV was placed into liquidation.
(dd)In or around April 2015 the land on which the Development was situated was sold to a property developer.
(ee)PV says that by reason of the defendant’s alleged misleading and deceptive conduct it has suffered loss and damage flowing from:
(i)the lost opportunity to negotiate with alternative financiers or the defendant from the bargaining position it previously held;
(ii)being forced to enter into the November 2010 Facility Agreement with the defendant which exposed it to higher financing costs and other burdens;
(iii)the lost opportunity to continue the multi-stage development to completion with funding from a suitable alternative source; and
(iv)the lost opportunity to develop the land to its full potential.
(ff)WHA says it lost its future entitlement to its builder’s margin through to a completed Development.
(gg)Further or alternatively, relying on the same conduct, it is alleged that the defendant:
(i)acted fraudulently;
(ii)engaged in unconscionable conduct; and/or
(iii)is estopped from resiling from its representations that the Facility Agreement would be rolled over or extended on terms no more onerous than the existing Facility Agreement and on terms including an increase of the peak debt limit and an extension of the term of the agreement to 30 June 2011.
The plaintiffs seek damages of at least $844,891,907.95.[5]
[5]Plaintiffs’ further particulars of loss and damage dated 22 December 2021.
C.2 Procedural history
The plaintiffs commenced this proceeding by filing a writ on 30 June 2016, on the eve of the relevant limitation period.[6] However, the Writ was not served on the defendant until 29 June 2017, being the last day before the Writ would lapse.
[6]Although I note that a live issue in dispute is whether the plaintiffs’ claims are statute barred. See Amended Defence, [139(d)], [139(g)], [141(a)], [147(c)], [148(d)].
Until this year, the proceeding had not progressed beyond the stage of pleadings and discovery. The following table sets out a high level chronology of the main procedural steps taken.
Date Event 2016 30 Jun 2016 Writ and general indorsement of claim filed in the Supreme Court.
The documents were filed by PV and WHA’s then solicitors, Mills Oakley.
2017 29 Jun 2017 First Notice of Change of Solicitor filed on behalf of PV and WHA.
Keypoint Law replaced Mills Oakley.
29 Jun 2017 Writ served on the defendant. 3 Aug 2017 The liquidator of PV and PV entered into a deed with Mr Chiavaroli that purported to assign PV’s right, title and interest in the proceeding to Mr Chiavaroli. 14 Aug 2017 Statement of Claim filed and served by PV and WHA. 27 Oct 2017 Amended Statement of Claim filed and served by PV and WHA. 5 Dec 2017 Defendant requested further particulars of the Amended Statement of Claim. 2018 2 Feb 2018 Second Notice of Change of Solicitor filed on behalf of PV and WHA.
Howard Bear replaced Keypoint Law.
2 Mar 2018 Particulars of the Amended Statement of Claim filed by PV and WHA. 19 Mar 2018 Defence filed by the defendant. 20 Apr 2018 Reply filed by PV and WHA. 7 May 2018 Mr Chiavaroli applied for orders to be substituted for PV as the first plaintiff on the basis that all of PV’s claims and causes of action had been assigned to Mr Chiavaroli (the ‘Substitution Application’) 18 May 2018 First directions hearing.
Orders were made by Connock J adjourning the hearing of the Substitution Application to 18 July 2018.
25 May 2018 Amended Defence filed by defendant. 14 Jun 2018 Reply to the Amended Defence filed by PV and WHA. 23 Jul 2018 Mr Chiavaroli applied, in the alternative to the Substitution Application, to intervene in the proceeding for the purpose of taking responsibility for it on behalf of PV (the ‘Derivative Action Application’). 23 Jul 2018 The defendant applied to strike out part of the Amended Statement of Claim. 24 Oct 2018 Judgment was handed down and Orders were made by Connock J to the effect that:
a) the Substitution Application and Derivative Action Application were dismissed; and
b) parts of the Amended Statement of Claim that pleaded the assignment of statutory claims to Mr Chiavaroli were struck out. The defendant’s application was otherwise dismissed.
The proceeding was listed for further directions on 30 November 2018.
Nov 2018 The plaintiffs applied for an adjournment of the directions hearing scheduled for 30 November 2018 until late February 2019 and informed the defendant, amongst other things, that the plaintiffs were in advanced discussions with a litigation funder. 29 Nov 2018 The directions hearing listed for 30 November 2018 was adjourned to 22 February 2019. 2019 19 Feb 2019 The plaintiffs applied for an adjournment of the directions hearing scheduled for 22 February 2019 and informed the defendant, amongst other things that:
a) PV’s liquidator was to be replaced; and
b) Mr Chiavaroli expected to enter into a litigation funding agreement with the involvement of the new liquidator.
20 Feb 2019 Mr Chiavaroli filed an affidavit deposing, amongst other things, that he needed a further 120 days to replace the liquidator of PV and to execute a suitable funding agreement. 22 Feb 2019 Directions hearing.
Orders were made by Connock J listing the proceeding for further directions on 31 May 2019.
31 May 2019 Directions hearing.
The plaintiffs applied for an adjournment until 5 July 2019. The liquidator of PV had not been replaced at that time.
Orders were made by Connock J that, amongst other things, required the plaintiffs to serve any proposed further amended statement of claim by 19 July 2019. The proceeding was listed for further directions on 9 August 2019.
9 Jul 2019 First change of liquidator.
Brian Silvia of BRI Ferrier replaced Peter Marsden of RSM Australia.
22 Jul 2019 Third Notice of Change of Solicitor filed on behalf of PV.
Lipman Karas replaced Howard Bear. Howard Bear continued to act for WHA.
1 Aug 2019 PV applied for an adjournment of the directions hearing scheduled for 9 August 2019 until 29 November 2019 on the basis that the liquidator of PV required an adjournment. 8 Aug 2019 Orders were made by Connock J, by consent, that:
a) the date by which the plaintiffs were to serve any proposed further amended statement of claim be extended from 19 July 2019 to 4 October 2019; and
b) the directions hearing be adjourned to 6 December 2019.
4 Oct 2019 A proposed Further Amended Statement of Claim was served on the defendant. 13 Oct 2019 The plaintiffs applied for orders to file the proposed Further Amended Statement of Claim. 2020 20 May 2020 Leave was granted to the plaintiffs to file and serve the Further Amended Statement of Claim, which they did.
Leave was also granted to the defendant to join Mr Mallon as a third party to the proceeding.
10 Jul 2020 Defence to the Further Amended Statement of Claim and Third Party Notice filed by the defendant. 12 Aug 2020 The defendant applied for security for its costs. 19 Sep 2020 Defence to the Third Party Notice filed by Mr Mallon. 22 Sep 2020 Amended Defence to the Third Party Notice filed by Mr Mallon. 2 Nov 2020 Second change of liquidator.
Benjamin Conrad and Andrew Schwartz of AS Advisory replaced Brian Silvia.
3 Nov 2020 Fourth Notice of Change of Solicitor filed on behalf of PV.
Howard Bear replaced Lipman Karas. Howard Bear continued to act for WHA.
26 Nov 2020 Orders were made by Connock J, by consent, for discovery to occur by 26 February 2021 and mediation to occur by 26 March 2021. 2021 8 Feb 2021 Orders were made by Efthim AsJ, by consent, requiring the plaintiffs to provide $1,025,000 as security for the defendant’s costs to the first day of trial. 16 Apr 2021 Orders were made by Connock J, by consent, extending the date for discovery from 26 February to 31 May 2021. 16 Jun 2021 Orders were made by Connock J, by consent, extending the date for discovery to 28 June 2021. 13 Jul 2021 WHA’s solicitor provided by email ’an index to Tranche 1 of the Plaintiffs discovery’ and access to a file of 7,276 documents. 21 Jul 2021 Solicitor for the third party filed a Notice of Ceasing to Act. 8 Sep 2021 Fifth Notice of Change of Solicitor filed on behalf of PV and WHA.
Piper Alderman replaced Howard Bear.
18 Sep 2021 The plaintiffs served their first affidavit of documents. Piper Alderman provided a letter that listed the documents from Tranche 1 (provided by Mr Bear on 13 July 2021) over which privilege was claimed. 22 Sep 2021 Third change of liquidator.
Sule Arnautovic replaced Benjamin Conrad and Andrew Schwartz of AS Advisory.
6 Oct 2021 The plaintiffs served their second affidavit of documents (for Tranches 2 and 3 of the plaintiffs’ discovery). 8 Oct 2021 Directions hearing.
Orders were made by Connock J extending the date for discovery from 28 June to 22 October 2021.
13 Dec 2021 Orders were made by Connock J, by consent:
a) requiring the plaintiffs to file and serve further and better particulars of their alleged loss and damage by that day, 13 December 2021;
b) timetabling the exchange of lay and expert evidence, the preparation of a court book, a list of issues, an agreed chronology of the relevant facts and events, and opening submissions; and
c) adjourning the directions hearing until 3 June 2022.
Most significantly, for the purpose of the defendant’s application, those Orders required the plaintiffs to file and serve their lay evidence by 20 April 2022.
13 Dec 2021 Further and better particulars of their alleged loss and damage were filed by the plaintiffs. 2022 23 Feb 2022 The parties mediated. Mar to
May 2022Subpoenas were issued by the Court at the request of the defendant to numerous addressees. 24 Mar 2022 The plaintiffs’ solicitors informed the defendant’s solicitors that the plaintiffs had entered into a funding agreement on 18 March 2022. The funding agreement was subject to the approval of the creditors and the Court. Apr to
May 2022The plaintiffs objected to the inspection by the defendant of documents produced under subpoenas. 28 Apr 2022 Directions hearing.
Orders were made by Connock J requiring the plaintiffs to provide further and better particulars of their Further Amended Statement of Claim.
The matters addressed at the directions hearing relevant to this application are set out below at paragraphs 71 to 73 below.
24 May 2022 Sixth Notice of Change of Solicitor filed on behalf of PV and WHA.
AJ & Co Lawyers (‘AJ & Co’) replaced Piper Alderman.
2 Jun 2022 Further and better particulars of the Further Amended Statement of Claim provided by the plaintiffs. 3 Jun 2022 Directions hearing.
Orders were made by Connock J granting the plaintiffs leave to file a Second Further Amended Statement of Claim, and revising and extending the timetabling orders made on 13 December 2021.
Relevantly, the date by which the plaintiffs were to file their lay evidence was extended from 20 April 2022 to 19 August 2022.
23 Jun 2022 Second Further Amended Statement of Claim was filed by the plaintiffs. 1 Jul 2022 Amended Defence to the Second Further Amended Statement of claim was filed by the defendant. 30 Sep 2022 Fourth change of liquidator.
Robert Allan Jacobs replaced Sule Arnautovic.
7 Oct 2022 Directions hearing.
The matters addressed at this directions hearing relevant to this application are set out below at paragraph 87 below.
13 Oct 2022 Orders were made by Connock J extending the date by which the plaintiffs were to file their lay evidence from 19 August 2022 to 23 January 2023. 14 Oct 2022 Orders were made by Barrett AsJ timetabling the exchange of materials in relation to the plaintiffs’ objections to documents produced under subpoena. 31 Oct 2022 The defendant discovered over 10,000 documents. This discovery is addressed at sub-paragraph 138(h) below. 2023 10 Feb 2023 Directions hearing before me.
The matters addressed at the directions hearing relevant to this application, and the Orders made, are set out at paragraphs 13 and 14 below.
1 Mar 2023 Hearing of subpoena objections application before Barrett AsJ.
His Honour ordered that the defendant’s costs of the subpoena objections were payable forthwith to be taxed on an indemnity basis.
8 Mar 2023 AJ & Co filed a Notice of Ceasing to Act on behalf of PV and WHA. 17 Mar 2023 Seventh Notice of Change of Practitioner filed on behalf of PV and WHA.
Alexander Law replaced AJ & Co. This change is addressed further at section C.3 below.
At the first directions hearing before me on 10 February 2023, it was clear that there had been significant delays in the proceeding. In the Orders made that day, the following was recorded in ‘Other Matters’:[7]
C. On 13 December 2021, the Court made timetabling orders in the proceeding. By order 2 of those Orders, subject to any further order, and any lay evidence of conversations relating to agreements or representations being given orally, lay evidence in the trial is to be given by witness statement.
D. The Orders made on 13 December 2021 were amended by Orders made 3 June 2022, the effect of which was to, among other things, extend the timetable at the plaintiffs’ request. The defendant did not consent to the extension sought by the plaintiffs.
E. The Orders made on 3 June 2022 were amended by Orders made 13 October 2022, the effect of which was to, among other things, extend the timetable at the plaintiffs’ request. The defendant did not consent to the extension sought by the plaintiffs.
F. By email to the Court dated 31 January 2023, the plaintiffs foreshadowed an application to further extend the timetable. On 9 February 2023, the plaintiffs proposed 2 June 2023 as the date for their lay evidence. The defendant did not consent to the extension sought by the plaintiffs, submitting that any extension should be brief, to 23 March 2023 (being the date first proposed by the plaintiffs).
G. As set out in these Orders, the Court has determined to grant the plaintiffs’ further extension of time, however has made orders for the making of a want of prosecution application in the event of non-compliance. The defendant is to notify chambers as soon as is convenient of the making of any such application (see order 4).
[7]Orders made by Stynes J on 10 February 2023, paragraphs (C)–(G) of Other Matters.
By those Orders, I granted the plaintiffs an extension to file and serve their lay evidence to 14 April 2023.[8] The Orders further provided that if the plaintiffs failed to file their evidence by that date, the defendant could, by 21 April 2023, apply to have the proceeding dismissed for want of prosecution[9] (the ‘Dismissal Application’) in which case:
(a)the plaintiffs were required to file and serve any affidavit and submissions in response to the Dismissal Application by 5 May 2023; and
(b)the defendant was required to file and serve any affidavit and submissions in reply by 12 May 2023.
[8]Orders made by Stynes J on 10 February 2023, order 3.
[9]Orders made by Stynes J on 10 February 2023, order 4.
The plaintiffs failed to file their lay evidence by 14 April 2023. The defendant subsequently filed its summons for the Dismissal Application on 21 April 2023 in accordance with the Orders.
The plaintiffs failed to file their submissions and affidavit materials for the Dismissal Application by 5 May 2023. They did not warn the Court that they were not going to file that material by the due date. Instead, the plaintiffs wrote to the Court 12 days after their evidence and submissions were due. I granted an additional indulgence and directed by email dated 17 May 2023 that submissions and affidavit material be filed and served by no later than 4:00pm the next day, on 18 May 2023. The plaintiffs failed to comply, instead filing affidavit material late on 18 May 2023 and submissions on 19 May 2023.
There were further defaults by the plaintiffs in relation to the defendant’s security for costs application which was also the subject of my Orders made on 10 February 2023. By those Orders, I fixed the hearing of the application before Efthim AsJ on 20 March 2023 and required the plaintiffs to file and serve any affidavit material and written submissions opposing the application by 4:00pm on 3 March 2023.[10] In summary:
(a)by email dated 24 February 2023, the plaintiffs’ then solicitors, AJ & Co, sought an extension to 10 March 2023 to file their materials;
(b)the defendant agreed to an extension to 6 March 2023;
(c)by letter dated 7 March 2023 to the defendant’s solicitors, the plaintiffs’ new solicitors, Alexander Law, then sought a further extension and an adjournment of the hearing. The defendant did not consent to the further extension or the adjournment of the hearing;
(d)on 16 March 2023, Alexander Law served a report of the plaintiffs’ cost consultant. On Friday, 17 March 2023 at 6:15pm, they served an affidavit exhibiting that report;
(e)at the commencement of the hearing on Monday, 20 March 2023, the plaintiffs appeared before Efthim AsJ and applied for an adjournment. An adjournment was granted to 1 May 2023;[11]
(f)following the hearing, on 25 May 2023, Efthim AsJ ordered that the plaintiffs provide further security in the sum of $1 million by 26 June 2023.[12] By its affidavit of Ms Hunt filed on 8 June 2023, the plaintiffs foreshadowed a need to seek an extension of time for the provision of that security;
(g)ultimately, the time for payment was extended to 14 August 2023;[13] and
(h)I have been informed by recent correspondence from the defendant’s solicitors, copied to the plaintiffs’ solicitors, that the ordered security was not provided by the due date or at all.
[10]Orders made by Stynes J on 10 February 2023, order 9.
[11]Orders made by Efthim AsJ on 20 March 2023, order 1.
[12]Orders made by Efthim AsJ on 25 May 2023, order 1.
[13]Orders made by Efthim AsJ on 17 July 2023, order 1.
C.3 The plaintiffs’ recent change of solicitors
It is apparent from the written submissions that the plaintiffs’ application for an extension of time to file their lay evidence was precipitated by the plaintiffs’ most recent (and their seventh) change of solicitors, and the delays in the handover of files from the former solicitors to the new solicitors.
On 8 March 2023, a notice of ceasing to act was filed by the plaintiffs’ former solicitors, AJ & Co.
On 10 March 2023, the plaintiffs’ current solicitors, Alexander Law, obtained an authority to act for the plaintiffs. A week later, on 17 March 2023, Alexander Law filed a notice of change of solicitor.
Also on 17 March 2023:
(a)Alexander Law sent a letter to AJ & Co requesting the delivery up of the plaintiffs’ files;[14] and
[14]First McAteer Affidavit, Exhibit NM-7, 874.
(b)AJ & Co rejected that request, stating, amongst other things:[15]
The funding provided by your clients to this Firm has been sporadic and indeed we did not have any funding between early November 2022 and mid-January 2023. As you are aware, your clients’ refused to provide further funding in relation to this matter to our Firm to prepare for the hearing before Justice Efthim and to draft witness statements by 14 April 2023, despite being put on notice on 17 February 2023 that we could not prepare for the hearing before Justice Efthim without funding to engage a costs assessor.
…
On 6 March 2023 we received an email from your clients pointing out that if this matter was struck out as a result of the failure to provide lay evidence to the court by 14 April 2023, your client would sue each member of this Firm individually and the Firms’ indemnity insurer. Again, this insistence to prepare lay statements was against the background that on several occasions your clients refused to meet to prepare their witness statements for several months and refused to provide funding.
…
We also draw to your attention, that your clients prior to our Firm being engaged, had engaged Piper Alderman and refused to pay their outstanding fees and Counsels fees of over $300,000. Piper Alderman claimed a lien over their file and accordingly, we have not been able to obtain their files while we were acting in this matter.…
[15]First McAteer Affidavit, Exhibit NM-7, 876.
This correspondence was drawn to my attention by the defendant.[16] The issues have not been addressed in detail by the plaintiffs although the plaintiffs’ counsel submitted that the allegations contained in that correspondence were unelaborated and were rejected by the plaintiffs.[17]
[16]First McAteer Affidavit, [116].
[17]Day 2 Transcript 32.
What then transpired is that Alexander Law filed a summons on 23 March 2023 seeking the delivery up of the files (the ‘Handover Application’). That application was successful. On 3 April 2023, Efthim AsJ ruled that AJ & Co was obliged to deliver up the plaintiffs’ files after finding that, having terminated the retainer for good cause due to the unpaid fees, AJ & Co’s lien over the files is subject to the obligation to hand over the file to the new solicitors until the end of the litigation.[18]
[18]First Iskander Affidavit [16]; Order made by Efthim AsJ on 5 April 2023, paragraphs (B)-(C) of Other Matters.
After a further hearing on 5 April 2023, Efthim AsJ ordered AJ & Co to deliver up the plaintiffs’ files and documents by 14 April 2023.[19]
[19]Order made by Efthim AsJ on 5 April 2023, orders 1–2.
Alexander Law claims that in the time it has been on the record acting for the plaintiffs since 17 March 2023, it has dedicated significant resources to successfully prosecuting the Handover Application, as well as preparing the plaintiffs’ lay evidence for this proceeding and getting up to speed on the matter with the documents it does have available.
On 28 March 2023, Alexander Law sent to the defendant’s solicitor a letter requesting consent to the extension of the deadline for the filing of the plaintiffs’ lay evidence by six weeks.[20] The request was refused.[21]
[20]First McAteer Affidavit, Exhibit NM-7, 887.
[21]First McAteer Affidavit, Exhibit NM-7, 890.
At around 11:00pm on 8 June 2023, the eve of the hearing of this application, the plaintiffs delivered eight witness statements, three outlines of evidence and the related tender bundle. The plaintiffs are still considering the possibility of making an application under ss 63 and 67 of the Evidence Act 2008 (Vic) for leave to rely on a witness statement given by Peter Chiavaroli who died last year.[22]
D Relevant legal principles
[22]Day 2 Transcript 44.
D.1 Dismissal for want of prosecution
The Court has inherent power to dismiss a proceeding for want of prosecution.[23] This discretionary power is incidental to the Court’s jurisdiction to hear and determine a proceeding,[24] and to make any order or give any direction to ensure the just adjudication of litigation in the Court.[25] In exercising that power, the Court must seek to give effect to the overarching purpose of civil litigation recognised by s 7(1) of the Civil Procedure Act 2010 (Vic) (‘CPA’).[26] The CPA itself provides broad supplemental powers to the Court, including the power to dismiss a proceeding for a party’s contravention of any overarching obligations.[27]
[23]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 24.05; Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863, 873 [26]-[27] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]) (‘Bishopsgate’); Weston v Publishing and Broadcasting Ltd (2011) 83 ACSR 206, 315-316 [499] (Ward J) (‘Weston’). See also Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256, 263-264 [5]–[6], 438 [49] (Gleeson CJ, Gummow, Hayne and Crennan JJ); AMP General Insurance Ltd v Victorian Workcover Authority (2006) 15 VR 175, 184 [40] (Maxwell P and Neave JA) (‘AMP v VWA’).
[24]Knörr v CSIRO [2014] VSCA 84, 18 [53] (Neave and Osborn JJA, Sifris AJA) citing Duncan v Lowenthal [1969] VR 180, 182; Exell v Exell [1984] VR 1, 7–8; Muto v Faul [1980] VR 26; Bishopsgate (n 23).
[25]Civil Procedure Act 2010 (Vic) s 8(1)(a); see also Chan v Chen [2013] VSC 538, [39] (Digby J) (‘Chen’).
[26]Chen (n 25) [39] (Digby J).
[27]Civil Procedure Act 2010 (Vic) s 29(1)(f).
The Court of Appeal of Victoria in Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells[28] adopted the principle stated by Lord Griffiths in Department of Transport v Chris Smaller (Transport) Ltd (‘Chris Smaller’)[29] that the discretion to dismiss a proceeding for want of prosecution may be exercised where the Court is satisfied either:[30]
(a)that the plaintiff’s default has been intentional and contumelious, for example disobedience to a peremptory order of the Court or conduct amounting to an abuse of Court process; or
(b)that there has been an inordinate and inexcusable delay by the plaintiff or their solicitor and that:
(i)such delay gives rise to a substantial risk that it is not possible to have a fair trial of the issues in the action; or
(ii)the delay has caused or is likely to cause serious prejudice to the defendant, as between the plaintiff and defendant, or between the defendant and a third party.
[28]Bishopsgate (n 23) 872 [25], 873 [28] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
[29][1989] AC 1197, 1203 (Lord Griffiths) (‘Chris Smaller’).
[30]Bishopsgate (n 23) 872 [24]-[25], [28] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]) quoting Chris Smaller (n 29), 1203 (Lord Griffiths).
However, those principles are not immutable or incapable of adaptation to the circumstances of the case.[31] The exercise of the Court’s discretion to dismiss a proceeding for want of prosecution is not fettered by rigid rules.[32] Ultimately, the guiding principle for the exercise of the discretion is that an order for dismissal will be made if the justice of the occasion demands it.[33] Whether justice demands exercise of the discretion will involve a balancing of the prejudice to the respective parties.[34]
[31]Bishopsgate (n 23) 873 [28] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]) citing Alginates (Australia) Pty Ltd v Thomson & Carroll Pty Ltd [1970] VR 570, 574 (Smith J) and McKenna v McKenna [1984] VR 665, 675 (McGarvie J).
[32]Weston (n 23) 316 [499] (Ward J) citing Stollznow v Calvert [1980] 2 NSWLR 749, [5]-[7] (Moffitt P, Hope JA agreeing at [24] and Mahoney JA agreeing at [25]) and Witten v Lombard Australia Ltd [1968] 2 NSWR 529; 88 WN (Pt 1) (NSW) 405, 411–412.
[33]Shepperdson v Lewis [1966] VR 418, 419 (O’Bryan J); Masel v Transport Industries Insurance Co Ltd (1995) 2 VR 328, 332 (Brooking, Teague and Hedigan JJ) ('Masel’); Imaging Applications Pty Ltd & Anor v Vero Insurance Limited & Ors [2008] VSC 178, [107] (Vickery J).
[34]Weston (n 23) 316 [501] (Ward J).
Nevertheless, the Court of Appeal of this state has since accepted that the remarks of Lord Griffith in Chris Smaller are ‘extremely useful and important guidelines and in the great majority of cases will be found sufficient to dispose of the case.’[35] While the Court did leave open the possibility that notwithstanding satisfaction of those guidelines, justice may demand refusing an application to dismiss a proceeding for want of prosecution, it recognised that such an determination would be ‘extremely unlikely in practice’.[36]
[35]Masel (n 33) 336 (Brooking, Teague and Hedigan JJ).
[36]Masel (n 33) 336 (Brooking, Teague and Hedigan JJ).
Where delay has occurred, the extent and impact of, and explanation for, the delay are relevant factors in the Court’s analysis. Relevant delay is not confined to periods of inactivity, and can include a failure to prosecute an action in a way that enables interlocutory steps to be concluded within a reasonable time.[37]
[37]Bishopsgate (n 23) 876-877 [36] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
Proper and fair expedition is ‘all the more necessary’ in a complex case, ‘lest it become out of control and remain a never-ending threat to the defendant’.[38]
[38]Bishopsgate (n 23) 879 [41] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
A plaintiff’s ‘pre-issue’ delay in commencing the proceeding is a relevant factor. Although a plaintiff is entitled to wait the full limitation period before commencing their action, the longer the delay in issuing proceedings, the more insistent courts have been that the plaintiff proceed thereafter with expedition,[39] especially in circumstances where a plaintiff is aware of its potential rights.[40]
[39]Bishopsgate (n 23) 874-875 [32], 883 [50] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
[40]Bishopsgate (n 23) 880 [42] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
In Brisbane South Regional Health Authority v Taylor, McHugh J made the following relevant observations about the impact of delay in commencing proceedings on the availability of evidence (citations omitted):[41]
The enactment of time limitations has been driven by the general perception that ‘[w]here there is delay the whole quality of justice deteriorates’. Sometimes the deterioration of quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist even without the parties or anybody else realising that it exists. … ‘[W]hat has been forgotten can rarely be shown’. So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now ‘knowing’ that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance … The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.
[41](1996) 186 CLR 541, 551 (McHugh J, Dawson J agreeing at 544) (‘Taylor’).
If a plaintiff has left the issue of proceedings until very late in the limitation period’, the Court should look at post-Writ delay critically and it may ‘more readily [be] regarded as inordinate and inexcusable than would be the case if the action had been commenced soon after the accrual of the cause of action’.[42]
[42]Bishopsgate (n 23) 875 [32] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]) quoting Chris Smaller (n 29) 1207-8 (Lord Griffiths).
Case management considerations and questions of the proper use of court resources are also matters that can be taken into account in determining applications for the dismissal of proceeding.[43]
[43]Cappelleri v Cappelleri [2020] VSC 306, [46] (Derham AsJ) (‘Cappelleri’); Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (‘Aon’).
Other factors relevant to the exercise of the Court’s discretion to dismiss a proceeding for want of prosecution include:
(a)whether a plaintiff was warned about the effects of its delay by the defendant or by the Court. Where the application for dismissal depends on delays involving more than mere inactivity, warnings can have ‘particular significance’ and ‘the plaintiff cannot say that it was not given fair warning about its dilatory conduct’;[44] and
(b)the hardship to the plaintiff if dismissal of the proceeding would leave the plaintiff’s cause of action statute barred.[45]
[44]Bishopsgate (n 23) [51] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
[45], 280 (Bray CJ); Jones & Harvey Industries Group Pty Ltd [2019] WADC 214, [32] (Scott DCJ); Cappelleri (n 44) [47] (Derham J); see also Chen (n 25) [60] (Digby J).
D.2 Inordinate and inexcusable delay causing prejudice
Adopting the guidelines of Lord Griffith in Chris Smaller with respect to dismissal of a proceeding for want of prosecution on the ground of inordinate and inexcusable delay, two elements must be satisfied:[46]
(a)first, that there has been an inordinate and inexcusable delay; and
(b)second, that the defendant has demonstrated prejudice arising or likely to arise from the delay. This involves assessing the unfairness of the delay caused by the plaintiff’s behaviour, and its effect on the defendant, as measured by prejudice.[47]
[46]Bishopsgate (n 23) 880 [44] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
[47]Bishopsgate (n 23) 878 [39] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
For the second element concerning prejudice, the Court must be satisfied that there is either:[48]
(a)a substantial risk that a fair trial cannot be had; or
(b)some other type of serious prejudice caused by the plaintiff’s delay.
[48]Bishopsgate (n 23) 879 [40] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
It is likely that a fair trial of a proceeding cannot occur where, due to a lapse of time, questions of fact cannot be tried fairly as a result of: [49]
(a)the loss or destruction of important documentary evidence or other material;
(b)the disappearance or death of a witness; or
(c)the degradation of witnesses’ memories.
[49]See eg, Chen (n 25) [42] (Digby J); see also Bishopsgate (n 23) 879 [40] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]); Taylor (n 41) 551 (McHugh J, Dawson J agreeing at 544).
Prejudice can include a defendant being kept at risk in respect of the subject matter of the action, for example, where the cause of action involves the personal honesty or reputation of the defendant.[50]
[50]Bishopsgate (n 23) 875-876 [34], 887 [60] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
It is necessary to look at each of the elements of prejudice asserted (actual or potential) and examine the time at which it is likely to be suffered, always making due comparison between prejudice which the defendant has suffered or will be likely to suffer because of inordinate and inexcusable delay, and any prejudice it might have suffered in any event.
So far as likely prejudice to the conduct of a fair trial is concerned, the critical time is the time at which the action is likely to be heard.[51] In the case of prejudice resulting from a defendant being kept at risk in respect of the subject matter of the action, the relevant period will extend from the time the action is brought to the time that it is likely to be heard. In each case, due allowance should be made for the time which any action will ordinarily take to reach final determination. [52]
[51]Bishopsgate (n 23) 875 [34] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
[52]Bishopsgate (n 23) 875-876 [34]–[35] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
Prejudice is to be assessed having regard to ‘what is in contest between the parties, who the witnesses will be, and how much reliance is to be placed on oral evidence on the one hand and documentary evidence on the other’.[53]
[53]AMP v VWA (n 23) 185 [45] (Maxwell P and Neave JA).
The ill effects of litigation and non-compliance with case management guidelines can impact corporations and are relevant to the consideration of prejudice. As stated by the majority of the High Court in Aon Risk Services Australia Ltd v Australian National University:[54]
But it should not be thought that corporations are not subject to pressures imposed by litigation. A corporation in the position of a defendant may be required to carry a contingent liability in its books of account for some years, with consequent effects upon its ability to plan financially, depending upon the magnitude of the claim. Its resources may be diverted to deal with the litigation. And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, have to bear the strain of impending litigation and the disappointment when it is not brought to an end. The stated object in the Court Procedures Rules, of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings.
[54]Aon (n 43) 214 [101] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).
A defendant may choose to file evidence of prejudice affecting them. The Court can also infer from all the circumstances that prejudice likely has been or will be suffered by the defendant.[55] The Court will assess the past consequences leading up to the present, as well as the likely consequences that will be caused in future before the action is finally determined.[56]
E Issue 1 – Has there been a delay attributable to the plaintiffs
[55]Bishopsgate (n 23) 875 [33] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
[56]Bishopsgate (n 23) 885 [55] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
E.1 Alleged delays attributed to the plaintiffs
The plaintiffs stand ready to file and serve their lay evidence.
Notwithstanding that readiness, the defendant presses its dismissal application based on delays from the start of the proceeding. In particular, the defendant relies on the following periods of delay which it attributes to the plaintiffs and says are sufficient to enliven the Court’s discretion to dismiss the proceeding for want of prosecution:
(a)Delay in serving proceedings.
(b)Delay in settling pleadings.
(c)Delay in respect of the plaintiffs’ discovery.
(d)Delay in the preparation of lay evidence.
(e)Delay in resolving subpoena objections.
It is convenient to address each period of delay in turn and set out here the relevant chronology of events in an attempt to corral the large volume of material relied on.
E.1.1 Delay in serving proceedings
The Writ was issued on 30 June 2016, the eve of the relevant limitation period.[57]
[57]I again note that a live issue in dispute is whether the plaintiffs’ claims are statute barred.
The plaintiffs served the Writ on the defendant on 29 June 2017, being the last possible day before the Writ would lapse.
Waiting the full period allowed for commencing proceedings and serving the originating motion is significant to my consideration of the other delays described in the following paragraphs, as I discuss further in these reasons.
E.1.2 Delay in settling pleadings
While the generally indorsed Writ was issued on 30 June 2016, it wasn’t until nearly four years later, when the Further Amended Statement of Claim was filed on 20 May 2020, that the claims now made by the plaintiffs were substantially articulated.
The following events occurred in the period between service of the Writ and the filing of the Further Amended Statement of Claim:
(a)On 14 August 2017, the plaintiffs filed and served their Statement of Claim, comprising 12 pages and 34 paragraphs.
(b)On 27 October 2017, the plaintiffs filed and served their Amended Statement of Claim, comprising 38 pages and 95 paragraphs and containing multiple new claims.
(c)On 5 December 2017, the defendant requested the plaintiffs provide particulars of the Amended Statement of Claim.
(d)On 2 March 2018, the plaintiffs filed particulars of the Amended Statement of Claim.
(e)On 19 March 2018, the defendant filed its Defence to the Amended State of Claim.
(f)On 20 April 2018, the plaintiffs filed their Reply to the Defence to the Amended Statement of Claim.
(g)On 7 May 2018, Mr Chiavaroli applied for orders to be substituted for PV, the first plaintiff, on the basis that all of PV’s claims and causes of action had been assigned to Mr Chiavaroli.
(h)On 25 May 2018, the defendant filed an Amended Defence to the Amended Statement of Claim.
(i)On 14 June 2018, the plaintiffs filed a Reply to the Amended Defence to the Amended Statement of Claim.
Between May 2018 to 24 October 2018, the plaintiffs’ attention was directed to the application to substitute Mr Chiavaroli as first plaintiff.
Between 24 October 2018 to October 2019, progress of the matter stalled. That period of delay is attributable to the plaintiffs’ pursuit of funding and a new liquidator and then, from August 2019 there is evidence that time was required:[58]
(a)for PV’s newly appointed liquidator to familiarise himself with the matter;
(b)to overcome difficulties experienced by the new solicitors obtaining documents and information from the former solicitors; and
(c)to finalise the proposed amendments to pleadings.
[58]Letter from Lipman Karas to Gilbert + Tobin dated 1 August 2019 (First McAteer Affidavit, Exhibit NM-7, 171-174).
The matter returned to Court during this period on 22 February and 31 May 2019 and the transcripts of those directions hearings record a number of matters relevant to this application, in particular the causes of delay relied on by the plaintiffs.
At the directions hearing on 22 February 2019, WHA asked that the directions hearing be adjourned until late June 2019 to enable litigation funding to be procured and to allow for the replacement of PV’s liquidator. PV did not appear at the directions hearing. For the purpose of that directions hearing Mr Chiavaroli deposed that PV’s liquidator “would not conduct these proceedings”. Connock J ordered an adjournment to 31 May 2019. Counsel for WHA relevantly submitted:[59]
(a)‘[n]ow, it’s safe to say, Your Honour, that the matter has stalled somewhat since Your Honour’s judgment in October last year’;
(b)litigation funding had not been finalised; and
(c)‘[t]he current liquidator has expressed that he has no intention of taking carriage of the proceedings’ and ‘he won’t take any action to be replaced … until there’s an indemnity for past costs due to adverse cost orders’.
[59]Transcript of Proceeding, Pentridge Village Pty Ltd (In Liquidation) (Receivers and Managers Appointed) v Capital Finance Australia Ltd (Supreme Court of Victoria, Connock J, 22 February 2019) 1-3.
At the directions hearing on 31 May 2019, counsel for WHA sought a further adjournment and submitted that while a funding offer had been obtained, it was conditional on the current liquidator being replaced.[60]
[60]Transcript of Proceeding, Pentridge Village Pty Ltd (In Liquidation) (Receivers and Managers Appointed) v Capital Finance Australia Ltd (Supreme Court of Victoria, Connock J, 31 May 2019) 1, 12, 15 (’31 May 2019 Transcript’).
The defendant objected to any further adjournments and asked for self-executing orders to be made dismissing the matter in the event the plaintiffs failed to meet the deadline for the filing of any proposed further amended pleading.[61] In that context, counsel for WHA submitted that he was ‘not in a position to warrant or to suggest what steps [PV] could take within any time, because, at the [then] present time, the liquidator, who [had] control of proceedings, [did] not wish to conduct the litigation’.[62] In that context the following relevant submissions were made by counsel for WHA:[63]
It’s openly acknowledged, the delay in the conduct of this proceeding is entirely unsatisfactory; I made that plain in the submissions that I sent to Your Honour, and maintain that position now. But we know at least this: that Mr Marsden will not any longer be the liquidator of [PV] by 30 June.
[…]
–I just wish to state clearly for the transcript that there’s never been any suggestion that the delay – or any criticism levelled at the defendant in respect of the delay. And the points, with respect, my friend made as to the normal prejudices that occur when delays of this type are encountered are, with respect, well made. Those prejudices are real.
[…]
–… I understand the submission – and it’s well made – that [the proceeding] does relate to representations made a long time ago, in relative terms. And that does prejudice the defendant.
The difficulty with a self-executing order is how to ensure that [PV] is not adversely or unduly, I should say, prejudiced in providing an amended pleading, when it presently doesn’t have the ability – or at least anyone interested in it – to instruct my instructors or any other lawyer to draw an amended pleading.
[61]Ibid, 7-8, 14.
[62]Ibid, 6.
[63]Ibid, 6, 14, 16.
On 4 October 2019, a proposed Further Amended Statement of Claim was served on the plaintiffs but not filed. On 6 November 2019, Connock J extended the time by which the plaintiffs were to serve any further version of the statement of claim to 6 November 2019. It was not until six months later, on 20 May 2020, that the plaintiffs filed their Further Amended Statement of Claim.
In short, it is apparent that the delays to the pleading and repleading of the plaintiffs’ claims were caused by:
(a)the unwillingness of PV’s then liquidator to prosecute the proceedings;
(b)the application brought by the plaintiffs to substitute Mr Chiavaroli as first plaintiff; and
(c)delays in obtaining litigation funding.
E.1.3 Delay in respect of the plaintiffs’ discovery
On 26 November 2020, orders were made by consent requiring the parties to make discovery by 26 February 2021. Connock J made orders:
(a)on 16 April 2021 extending the date for compliance to 31 May 2021; and
(b)on 16 June 2021 further extending that date to 28 June 2021.
The plaintiffs delivered their first tranche of discovery informally on 13 July 2021. Following a preliminary review of those documents, it became apparent to the defendant’s solicitors that some of the documents produced may be subject to legal professional privilege. The defendant’s solicitors wrote to the plaintiffs’ solicitor on 14 July 2021 informing him of this.
On 8 September 2021, the plaintiffs filed a notice of change of solicitor, replacing Howard Bear with Piper Alderman.
On 18 September 2021, the plaintiffs served their first affidavit of documents along with a letter identifying documents within the first tranche of discovery provided on 13 July 2021 over which the plaintiffs claimed privileged.
On 6 October 2021, the plaintiffs served a second affidavit of documents.
The defendant submits that the inadvertent discovery of privileged documents on 13 July 2021 (which was not rectified until 18 September 2021) delayed the defendant in being able to properly inspect the discovered documents.
E.1.4 Delay in preparing lay evidence
On 13 December 2021, Connock J ordered that the plaintiffs file and serve their witness statements by 20 April 2022.[64] The orders were made by consent but were not complied with. The plaintiffs gave no warning of the delay nor offered any explanation for it to the Court or the defendant ahead of the due date. The default was raised by the defendant with the plaintiffs on 27 April 2022, the day before a scheduled directions hearing.
[64]Order made by Connock J on 13 December 2021, order 3.
On 28 April 2022, at the directions hearing before Connock J, counsel for the plaintiffs said that:
(a)the plaintiffs had executed a funding agreement, that the funding agreement was subject to court approval and, as a consequence, there had been a delay to the provision of further and better particulars and lay evidence;[65] and
(b)pending the timetabling of the application for approval of the funding agreement, it was difficult to provide a concrete commitment on the extension required, although he foreshadowed an extension in the order of three months.[66]
[65]Transcript of Proceeding, Pentridge Village Pty Ltd (In Liquidation) (Receivers and Managers Appointed) v Capital Finance Australia Ltd (Supreme Court of Victoria, Connock J, 28 April 2022) 2 (’28 April 2022 Transcript’); First McAteer Affidavit, Exhibit NM-7, 313.
[66]28 April 2022 Transcript, 17-18; First McAteer Affidavit, Exhibit NM-7, 328.
Relevant to this application, transcript of the directions hearing records the following exchanges:[67]
HIS HONOUR: Mr Di Stefano, for me to have to raise the matter with the parties in this way, or the plaintiff in this way, the order not having been complied with, and being made on 13 December 2021, which, on the face of it, records that they were by consent — but even if it had not been so, they’re court orders. They’re not, you know, optional suggestions. Why has it not been incumbent upon the plaintiffs to bring this matter to the attention of the court, and if it is now foreshadowing that such an extension is required, there’s not material before the court that fully explains why that is sought, the basis upon which it’s sought, why the orders haven’t been complied with?
MR DI STEFANO: I accept that, Your Honour; and if I can respond to that in stages. The first point is that the plaintiffs are currently, as I stated, without a clear visibility — and I don’t mean that to over-egg it being unclear; but just to say that we cannot be certain around the timetabling of the approval application. In those circumstances, I accept we probably should have written and said the current orders’ not going to be met, and we’ll correspond with you further about that; however - - -
HIS HONOUR: It was only in December that they were agreed to on the basis that the work would and could be done; and to say that you don’t have full visibility, from the court’s perspective, it probably couldn’t be more opaque to me at the moment as to what and why this has occurred; but is the upshot of that, you’re currently not in a position to assist me about that, said not critically of you?
[67]28 April 2022 Transcript, 17; First McAteer Affidavit, Exhibit NM-7, 328-329.
I note there was no discussion at that time of any significant problems caused by COVID-19 restrictions, despite that issue being raised later by the plaintiffs as I examine further in these reasons.
By letter dated 6 May 2022, the plaintiffs’ then solicitors, Piper Alderman, addressed the extension of time required for the provision of lay evidence, amongst other things, and the reasons for the proposed extension.[68] They said that ‘the delays in complying with Orders … are almost solely attributable to funding constraints’ but noted that an in principle agreement with the funder was reached in early March.
[68]Letter from Piper Alderman to Gilbert + Tobin dated 6 May 2022; First McAteer Affidavit, Exhibit NM-7, 345-348.
By letter in response dated 19 May 2022, the defendant’s solicitors set out, amongst other things, the numerous delays the defendant asserted were attributable to the plaintiffs and the prejudice suffered by the defendant as a result.[69] Specifically it was stated:[70]
18 As previously raised in Court, these ongoing delays cause prejudice to the defendant in circumstances where the proceeding was commenced almost 6 years ago and is based largely upon oral representations alleged to have been made as early as March 2006. In such circumstances, the memories of witnesses and parties to the proceeding will, inevitably, have faded and will continue to fade. Additionally, most relevant persons involved from CFAL have left its employ, and with the passing of time it becomes more difficult to locate previous employees and expect them to recall events from so long ago, in respect of which they have had no involvement for many years. Additionally, and unfortunately, one such potential witness is significantly unwell.
19 These matters present genuine difficulties in defending a very sizeable claim for loss and damage; now quantified at in excess of $800M by the plaintiffs further and better particulars of loss and damage dated 22 December 2021.
20 The defendant has also been prejudiced in respect of the costs of having to make applications and address matters that should not fall to be addressed, had the plaintiffs been prompt in compliance with the timetable and requests for particulars, or at minimum kept the defendant informed about the reasons for delay. Orders for costs do not remedy the defendant’s prejudice while such costs remain unpaid until the unknown conclusion of this matter.
21 Further, prejudice is not just sustained by the defendant, but also by the Court in the administration of justice where delays to the expeditious hearing of the matter continues to be a drain on court resources in circumstances where the proceeding has been on foot for almost 6 years and yet, discovery was only provided late last year (over 5 years after the generally endorsed writ was filed).
22 In 2019, as a result of continual adjournments sought by the plaintiffs, limited evidence that the plaintiffs were progressing the matter and the previous statements that had been made by or on behalf of the plaintiffs in relation to the state of funding (which remained ambiguous), the defendant sought a self-executing order for dismissal of the proceeding. This was resisted by the plaintiffs on grounds that “there was a funding proposal”.
23 Notwithstanding this, it was only on 24 March 2022 – almost 3 years later – that the defendant was notified that any such funding agreement had been entered into.
[69]Letter from Gilbert + Tobin to Piper Alderman dated 19 May 2022; First McAteer Affidavit, Exhibit NM-7, 351-356.
[70]Ibid, 353-354.
The reference to the unwell witness was a reference to Larry Mahaffy who subsequently passed away.
Six days later, on 24 May 2022, a notice of change of solicitor was filed by AJ & Co who replaced Piper Alderman.
The new solicitors sought an extension to the order made by Connock J on 13 December 2021 for the plaintiffs to file their lay evidence, from 20 April 2022 to 19 August 2022. The following reasons were given for the extension:[71]
(a)AJ & Co had been provided with part but not all of the former solicitors’ file and had not yet been provided with the parties’ discovery (despite having sought access);.
(b)I funding approval proceeding, filed on 10 May 2022 and initially set down for its first return on 27 May 2022, had to be adjourned due to AJ & Co recently taking over the file.
[71]First McAteer Affidavit, Exhibit NM-7, 361-369.
It was not until a directions hearing on 3 June 2022 that the plaintiffs’ default in failing to file their lay evidence on 20 April 2022 was procedurally addressed. Connock J granted an extension despite the defendant’s objections but asked the plaintiffs why the Court and other parties had been kept in the dark about the matters that lead to the plaintiffs failing to comply with the timetabling orders. Senior counsel for the plaintiffs explained that delays were ‘primarily due to funding constraints’ but acknowledged that ’[i]t’s pretty clear, your Honour, there was a pens down period’ and that ‘it wasn’t appropriate that the court be kept in the dark’.[72] He noted his instructions that the plaintiffs’ solicitors had funding to prepare lay evidence by 19 August 2022 and that if the court approved the funding agreement then there would be sufficient funding for the rest of the proceeding.[73]
[72]Transcript of Proceeding, Pentridge Village Pty Ltd (In Liquidation) (Receivers and Managers Appointed) v Capital Finance Australia Ltd (Supreme Court of Victoria, Connock J, 3 June 2022) 1-3 (‘3 June 2022 Transcript’).
[73]Ibid, 2.
Orders were made, amongst other things, extending the date for the plaintiff’s lay evidence to 19 August 2022, the Court having accepted the date proposed by the plaintiffs.[74] The Court did not make a self-executing order, which the defendant had requested.
[74]Order made by Connock J on 3 June 2022, order 3.
The plaintiffs did not comply with that order. By letter to the defendant’s solicitors dated 21 July 2022, the plaintiffs proposed an extension to the timetable of six weeks.[75]
[75]Letter from AJ & Co to Gilbert + Tobin dated 21 July 2022; First McAteer Affidavit, [84], Exhibit NM-7, 411-412.
By that letter, the plaintiffs’ solicitors gave the following reasons for the extension sought:[76]
(a)The defendant refused to provide them with the defendant’s discovery in circumstances where Piper Alderman, the plaintiffs’ previous solicitors, would not release its files. Piper Alderman did not release its files to the new solicitors for several weeks. This issue had been a subject of discussion during the directions hearing on 3 June 2022. The plaintiffs’ senior counsel had explained that his instructing solicitors expected to be provided with access to that discovery by 10 June 2020. He said “I’m not certain of why that’s being held onto but I suspect if I was to [sic] enquiry it’d be the usual reasons solicitors don’t release their file.”[77] Connock J queried whether, if the plaintiffs did not get the discovery by that date, the defendant’s solicitors may provide the documents to the plaintiffs.[78] The defendant’s senior counsel submitted that for the defendant’s solicitors to be asked to hand over documents to circumvent a lien that may be held by another firm would put them in a very invidious position.[79] Connock J acknowledged that whether or not there was a lien was a proper matter to be considered.[80]
(b)The plaintiffs’ concerns about the adequacy of the defendant’s discovery. This issue and the delays that may be attributable to the defendant are addressed further below.
(c)Mr Chiavaroli testing positive to COVID-19 which prevented the plaintiffs’ solicitors from meeting with him to prepare his witness statement.
(d)Other potential witnesses having had the flu and/or COVID-19 which similarly hampered the obtaining of witness statements.
[76]Letter from AJ & Co to Gilbert + Tobin dated 21 July 2022; First McAteer Affidavit, [84], Exhibit NM-7, 411.
[77]3 June 2022 Transcript, 5.
[78]Ibid, 20.
[79]Ibid.
[80]Ibid, 20-21.
By letter dated 22 July 2022, the defendant’s solicitors responded that the reasons given by the plaintiffs for their delay were unacceptable and setting out reasons why. They informed the plaintiffs’ solicitor that they did not consent to the extension sought and reminded them of the ongoing prejudice to the defendant caused by the plaintiffs’ delays noting in particular that a potential witness for the defendant, Mr Mahaffy, had passed away.[81] They did, however, propose a six week extension subject to conditions including a self-executing order in the event that the plaintiffs failed to comply with the new timetable. The conditions proposed were unacceptable to the plaintiffs.
[81]Letter from Gilbert + Tobin to AJ & Co dated 22 July 2022; First McAteer Affidavit, Exhibit NM-7, 414-417.
On 12 August 2022, the plaintiffs’ then solicitors, AJ & Co, filed an affidavit outlining the reasons why the plaintiffs required an extension of time to file lay evidence to 28 October 2022,[82] including:
[82]Affidavit of Jonathan Hitchcock dated 12 August 2022; First McAteer Affidavit, Exhibit NM-7, 420-452.
(a)the defendant filed its Amended Defence to the Second Further Amended Statement of Claim which introduced previously unpleaded allegations concerning Mr Mallon;[83]
[83]Ibid, 7, 421-422.
(b)Mr Chiavaroli having been unwell due to COVID-19 infection;[84]
[84]Ibid, 422.
(c)Mr Peter Chiavaroli passing away on 25 July 2022. Mr Peter Chiavaroli was described as the figurehead of his family, and his sons Leigh and Damian had been mourning since his death;[85]
[85]Ibid, 423.
(d)the plaintiffs’ former solicitors, Piper Alderman, had not provided AJ & Co access to the plaintiffs’ online discovery database. It was explained that Piper Alderman continued to maintain a lien over its file. The reasons for this were said to be privileged;[86]
[86]Ibid, 423.
(e)the defendant failed to make discovery of the following categories of documents which the plaintiffs’ solicitors identified as being necessary for the plaintiffs to review prior to filing their evidence:[87]
(i)the personal file of Mr Mallon, including his file notes;
(ii)documents concerning the investigation conducted into Mr Mallon’s conduct by the defendant;
(iii)an employment agreement for Mr Mallon;
(iv)documents evidencing any commissions or bonuses paid to Mr Mallon;
(v)internal records concerning correspondence with the quantity surveyor for the project; and
(vi)documents concerning the defendant’s attempts to obtain documents from Lloyds International Pty Ltd (‘Lloyds’); and
(f)the plaintiffs had not had the opportunity to review and consider documents produced to the defendant pursuant to various subpoenas issued to third parties.[88]
[87]Affidavit of Jonathan Hitchcock dated 12 August 2022; First McAteer Affidavit, Exhibit NM-7, 422, 424.
[88]Ibid, 424-425.
For the reasons set out in sub-paragraphs 138(a) to 138(i) above, I am satisfied that the plaintiffs’ delay to the preparation of lay evidence in the periods from April 2022 to August 2022 and 7 October 2022 to March 2023 was inexcusable.
In my view, and taking into account the fact that the plaintiffs chose to delay commencing proceedings and to delay serving the Writ on the defendant, the two periods of inexcusable delay identified in paragraph 139 above are individually and together inordinate.
G Issue 3 – If the delay has been inordinate and inexcusable, has that delay either given rise to a substantial risk that it is not possible to have a fair trial or otherwise caused serious prejudice to the defendant
G.1 Defendant’s submissions
The defendant contends that the plaintiff’s inordinate and inexcusable delays give rise to a substantial risk that it is not possible to have a fair trial and has caused serious prejudice to the defendant.
Evidence of prejudice has been given by the defendant’s solicitor, Mr McAteer.
First, he has deposed to the difficulties of locating and securing the cooperation of various witnesses. In summary, he says that:
(a)when Westpac acquired the defendant, the defendant no longer operated the property business of which the Pentridge Facility formed part. Very few employees of the defendant that were involved with the Pentridge Facility transitioned across to Westpac. Only two current employees of Westpac have been identified, both having only high-level involvement in the matters the subject of the dispute;[199]
(b)the plaintiffs name five individuals in particulars to the pleading as having made alleged representations: Mr Mallon, Mr Moulden, Mr Wither, Mr Degaris and Ms Spano;[200]
(c)Mr Mallon affirmed an affidavit of documents saying he has lost relevant documents that he had retained after departing CFAL in February 2010;[201]
(d)attempts to locate Mr Wither have been unsuccessful;[202]
(e)Mr Moulden has been contacted multiple times but in a call on 2 March 2023 he told Mr McAteer that he was not willing to cooperate in the preparation of a witness statement.[203]
(f)Mr Degaris and Ms Spano agreed to cooperate in the preparation of witness statements subject to their recollection of events;[204]
(g)a further potential witness, Mr Mahaffy, died in July 2022.[205] Documents indicate he was directly involved in dealing with PV after the facility with PV was transferred to Lloyds in around March 2011 which involved efforts to lower the loan to value ratio of the facility. Mr McAteer expected that evidence of these matters would be significant in the valuation of any loss claimed by the plaintiffs; and
(h)another potential witness for the defendant is Mr D’Rosario who was, from April 2010, closely involved in assisting the first plaintiff to prepare cash flows in support of requests for credit approval. Attempts to locate him have failed.[206]
[199]First McAteer Affidavit, [143].
[200]Ibid, [144].
[201]First McAteer Affidavit, [145] and quoting the affidavit of documents affirmed by John Mallon on 27 October 2021: Exhibit NM-7, 985-987.
[202]First McAteer Affidavit, [147].
[203]Ibid, [148].
[204]Ibid, [149].
[205]Ibid, [150].
[206]Ibid, [150]-[153].
The defendant contends that, had this proceeding been commenced shortly after the events in question and prosecuted with diligence, then:
(a)it would be more likely that Mr Moulden (who remained in the defendant’s employ until December 2012) would have cooperated;
(b)the defendant may have been able to locate and speak with Messrs Wither and D ’Rosario;
(c)the defendant may have been able to call Mr Mahaffy as a witness; and
(d)the recollection of Mr Degaris and Ms Spano as to relevant events is likely to have been better.
Second, Mr McAteer deposes to the difficulties experienced by the defendant in relation to locating relevant documents as a result of effluxion of time and changes in ownership of the defendant. He outlines the steps taken to locate documents in his affidavit evidence, which include:[207]
(a)initial investigations undertaken as early as July 2016 after learning of the existence of the Writ in July 2016 by a telephone call from the then liquidators of PV. That initial investigation produced only seven boxes of hard-copy documents. Initial attempts to locate relevant HR records revealed that the records of any previous employees of the defendant, such as those involved with the Pentridge Facility would, if they existed, be held by the defendant’s previous owner Lloyds;
(b)a Lloyds representative was contacted and confirmed they would not release confidential materials to a third party unless under a legal obligation to do so; and
(c)initial investigations of legacy IT systems were unproductive (as described in sub-paragraph 100(a) above) until subsequent enquiries were made in 2022.
[207]First McAteer Affidavit, [155].
Notwithstanding the effort made to locate relevant documents, Mr McAteer deposes that the defendant’s records are not or may not be complete and gives examples of various deficiencies he has identified.[208] Those examples support the proposition that key documents may have been lost, including documents that may:
(a)enable the defendant to verify if certain correspondence discovered by or relied on by the plaintiffs was sent; and/or
(b)contradict a number of allegations made in the plaintiffs’ claim.
[208]Ibid, [157]-[163].
Third, Mr McAteer deposes that the plaintiffs’ response to discovery requests made by the defendant reveals that the plaintiffs may also have lost key documents. Examples include:[209]
(a)documents referred to in the plaintiffs’ further and better particulars;
(b)some original file notes recording conversations which form the basis of oral representations relied on by the plaintiffs. Typed notes that purport to be prepared from the handwritten notes have been discovered but the original notes have been discarded; and
(c)native form of spreadsheets relevant to the plaintiffs further and better particulars of loss and damage, such as:
(i)the spreadsheet underpinning the forecast profit for the multi-stage development which is now only available in pdf format; and
(ii)the document supporting WHA’s claim for the unpaid builders margin, which was also only provided in pdf format.
[209]First McAteer Affidavit, [166].
The defendant submits that it is thereby prejudiced in its defence of the plaintiffs’ claim by being denied both the ability to test the veracity of copy documents that have been produced, and being denied access to relevant documents that otherwise would have been discoverable.[210]
[210]Day 2 Transcript, 92.
Fourth, the defendant submits that as a result of the plaintiffs’ delays it has been denied the ability to claim contribution from a third party in respect of the alleged loss ($809,099,507) relating to part of the development. Specifically, it says:
(a)in this proceeding PV seeks loss of opportunity from July 2010 to earn profit from the Development and WHA seeks damages for alleged loss of opportunity to profit from the Development as builder;
(b)that same damage is claimed by PV and WHA against the defendants (referred to as the CVS Lane Parties) to a separate proceeding referred to as the Daimleigh Proceeding;[211]
(c)the very significant overlap in the damages sought in both cases only became apparent when the particulars of loss and damage in this case were filed on 22 December 2021 and the particulars of loss and damage in the CVS Lane case were filed in April 2022.[212] That is when a comparison could be made; and
(d)but for the plaintiffs’ delay in issuing this proceeding and their delay in formulating their claim for damages in the Daimleigh Proceeding, the defendant would likely have been able to claim contribution under Part IV of the Wrongs Act 1958 (Vic) (‘Wrongs Act’) from the CVS Lane Parties in respect of any liability it may have to the plaintiffs in this litigation. However, pursuant to s 24(4) of the Wrongs Act, any claim for contribution from the CVS Lane Parties is statute barred.[213]
[211]Day 2 Transcript, 95.
[212]Ibid, 95.
[213]Day 1 Transcript, 72.
In addition to the prejudice identified by Mr McAteer, the defendant’s counsel submitted that further prejudice arises in the following circumstances:
(a)The defendant, as a corporate defendant, being placed at risk in relation to a claim of at least $844 million for many years.[214]
(b)the professional reputations of the individuals said to have made misrepresentations and to have acted fraudulently hangs in abeyance as does the defendant’s corporate reputation.[215]
(c)Prejudice can readily be inferred from the very long period of time that has elapsed since the relevant events, noting that this case overwhelmingly depends upon conversations and matters that were allegedly known to the defendant or of which it had notice.[216]
[214]Defendant’s Outline of Submissions, [31], [35]; Transcript Day 2, 54-55.
[215]Defendant’s Outline of Submissions, [35]; Bishopsgate (n 23) 887 [60] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
[216]Defendant’s Outline of Submissions, [31]; Day 1 Transcript, 26.
The defendant argues that the position of the defendant is in stark contrast to that of the plaintiffs.[217] The statement of claim reveals that Leigh and Damian Chiavaroli were heavily involved with the Development at the relevant time. Leigh has been actively involved in the proceeding from commencement. Further, there is evidence (identified in paragraph 132 above) that the plaintiffs were contemplating a claim as early as 2010. They put together a complaint to the Financial Ombudsman Service which that they didn’t proceed with.[218] They knew what they wanted to complain about. They were in a position to preserve their contemporaneous notes of relevant conversations. The plaintiffs have produced such file notes although they are unable to produce the original documents in every case. By comparison, the defendant who will seek to challenge the veracity of those notes must do so in circumstance where it has no contemporary file notes of its own.[219]
[217]Defendant’s Outline of Submissions, [34].
[218]Day 2 Transcript, 72.
[219]Ibid, 92.
G.2 Plaintiffs’ submissions
In relation to the issue of prejudice, the plaintiffs submit, in summary:
(a)in this case there is no prejudice to the defendant beyond that normally encountered in litigation of this kind, namely the dimming of memories, the lack of documents and the unavailability of witnesses.[220] These are primarily problems for the plaintiffs who bear the burden of proof;[221]
(b)the main prejudice relied on is the dimming of memories but, in this case, the disputes will almost invariably be resolved in favour of the party whose evidence of the old conversations most closely matches the contemporaneous documents;[222]
(c)there is no evidence (except in relation to Mr Mahaffy) that any of the witnesses who are not available, would have been available if the trial had been earlier;[223]
(d)it cannot seriously be suggested that Westpac is suffering stress and strain as a result of this litigation.[224] It is part of the business of a large trading bank to be engaged in litigation of this kind and it ought not be concluded that it imposes any stress or strain on the bank as an institution;
(e)to the extent it is said that Mr Mallon is prejudiced by the ongoing proceeding, he is a third party joined by the defendant. It is not a prejudice to the defendant, it is to a third party.[225] If the defendant is concerned for Mr Mallon’s mental health, it can discontinue the third party proceeding; and
(f)to the extent there is alleged to be prejudice due to the defendant’s inability to join the CVS Lane Parties, that submission does not withstand scrutiny.[226] The damages claimed in this proceeding for equitable compensation are the same damages that have been claimed from the outset for misleading and deceptive conduct. That is how it was put when the Writ was served on them and if they thought that somebody else had caused the same damage, they had the period allowed under the Wrongs Act to join that party.
[220]Ibid, 47.
[221]Ibid, 37-39, 47.
[222]Ibid, 34.
[223]Day 2 Transcript, 38.
[224]Ibid, 41-42.
[225]Ibid, 43.
[226]Ibid, 43-44.
G.3 Analysis
The question of prejudice is to be looked at from the viewpoint of the defendant having to conduct its case many years after the conduct forming the subject of the complaint, and in particular by comparing the defendant’s position with what it would have been if the case had been tried promptly.[227]
[227]Bishopsgate (n 23) 886 [57] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
In Bishopsgate, Tadgell and Ormiston JJ affirmed the following remarks of Lord Diplock in Birkett v James regarding prejudice in the context of applications of this nature where the plaintiff has waited the full limitation period to commence proceedings (emphasis added):[228]
To justify dismissal of an action for want of prosecution some prejudice to the defendant additional to that inevitably flowing from the plaintiff’s tardiness in issuing his writ must be shown to have resulted from his subsequent delay (beyond the period allowed by Rules of Court) in proceeding promptly with the successive steps in the action. The additional prejudice need not be great compared with that which may have been already caused by the time elapsed before the writ was issued: but it must be more than minimal . . .
[228]Bishopsgate (n 23) 874 [32] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]) quoting Birkett v James [1978] AC 297, 323.
If this proceeding is permitted to continue and the plaintiffs’ lay evidence is filed, at least the following steps will need to be taken ahead of trial:
(a)the filing of the defendant’s lay evidence;
(b)the exchange of reply lay evidence; and
(c)the staggered exchange of expert evidence.
The defendant estimates that a trial with an estimated duration in excess of 20 days is unlikely to be heard until late 2024 or even early 2025. Assuming that any new timetable for procedural steps will be complied with going forward, I find no reason to disagree with that estimate.
The Writ was issued on June 2016. The claims made are based on conduct which occurred between 2006 and 2010. If a trial were to occur towards the end of 2024, witnesses would then be tested on their recollection of events dating back between 14 to 18 years. If the new timetables are extended or otherwise interrupted by additional interlocutory steps, which could reasonably be expected in relation to a trial of a claim of this quantum and complexity, the trial may be delayed further.
There is undisputed evidence of the difficulties experienced by the defendant in relation to locating and securing the cooperation of various witnesses (see paragraph 143 above).
Even absent that evidence, it is fair to say that a delay to a trial to a date some 14 to 18 years after the critical events will have an adverse impact on the memories of the witnesses, particularly those that have moved on from the positions they held at the relevant time and who have not had ongoing and regular involvement with the subject matter of the claims made. The position of the defendant’s witnesses stands in stark contrast to that of Mr Chiavaroli, who deposes to his intimate involvement with the prosecution of the plaintiffs’ claims and review of discovered documentation.
The plaintiffs’ counsel argued that the prejudice caused by dimmed memories would be minimal, submitting that the dispute will almost invariably be resolved in favour of the party whose evidence of old conversations most closely matches the contemporaneous documents. No doubt there will be some contemporaneous documents relevant to the facts in dispute. However, the claims made are predominantly based on oral representations. The recollections of the individuals involved in the relevant conversation will be important to the determination of those claims. The prejudice to the defendant lies in the fact that they will be required to lead evidence of conversations which occurred so many years ago.[229]
[229]Mizzi Pty Ltd v Meredith [2009] VSC 367, [30] (Byrne J).
In relation to documentation, there is undisputed evidence of the difficulties experienced by the defendant in locating relevant documents as a result of the effluxion of time and changes in ownership of the defendant (see paragraph 145 above). Further, there is evidence that some relevant, if not key documents, may be missing, making the conduct of the defence more difficult (see paragraph 147 above).
Furthermore, there is the prejudice suffered by the defendant by reason of being placed at risk for years in relation to a serious claim against it. As stated in Bishopsgate, ’there is no direct evidence but the inference of additional prejudice caused by the plaintiff’s delays is one which may be drawn as a matter of common-sense from the circumstances of this particular claim’.[230] I reject the proposition that a large corporation suffers no prejudice as a result of a claim against it for a sum in excess of $800 million that remains undetermined after seven years.
[230]Bishopsgate (n 23) 887 [60] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
I also reject the proposition that the prejudice to Mr Mallon is not a matter to be taken into account. The defendant has joined him to the proceeding. It is not suggested that joinder was anything but reasonable. Having done so, it is appropriate, in my view, for the defendant to draw the Court’s attention to the heavy burden he bears where a claim is made relating to his professional competence exposing him to liability for a significant sum.
There would always have been a period of years that the defendant and third parties had to bear this burden but I am concerned with the additional and unnecessary burden imposed as a result of the plaintiff’s inordinate and inexcusable delays.
The prejudice to the defendant and third party which has been identified must of course be weighed with the prejudice to be suffered by the plaintiffs if the application is successful. If dismissed, the plaintiffs’ claims will be statute barred. In that circumstance, dismissal should not be ordered lightly. However, the primary consideration in the application is the fairness to the defendant in light of inordinate and inexcusable delay on the part of the plaintiffs.[231]
[231]Bishopsgate (n 23) 888 [62] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
Further, the plaintiffs were warned about the effect of their delay upon the defendant on the following occasions:
(a)On 7 April 2021, in an email from the defendant’s solicitors to the plaintiffs’ then solicitor, Howard Bear, in response to Mr Bear’s email seeking an extension of three months for the completion of discovery. The defendant’s solicitor wrote: ‘[w]e remain concerned about the extensive delays in relation to this matter and your client’s constant requests for additional time. These delays are prejudicial to our client, particularly given the events complained of are so long ago’.[232]
(b)On 27 April 2022, the defendant’s solicitors wrote to the plaintiffs’ then solicitors, Piper Alderman, noting that the plaintiffs had failed to file and serve their lay evidence as required by 20 April 2022 and the absence of any explanation for this failure. They wrote ‘your clients’ failure in this regard compounds their continuing failure to respond to the request for further and better particulars served upon you on 22 February 2022. Each failure is causing our client material prejudice in its ability to take instructions and to prepare its witness statements’.[233]
(a)On 19 May 2022, the defendant’s solicitors sent a letter to the plaintiffs’ then solicitors, Piper Alderman, which amongst other things set out the history of the plaintiffs’ delays in the proceeding and the prejudice caused to the defendant by those delays.[234]
(b)At the directions hearing on 3 June 2022, senior counsel for the defendant requested a self-executing order. While the order was not made, the request for it served as a warning to the plaintiffs about the steps the defendant would take if faced with further delays.[235]
(c)On 22 July 2022, the defendant’s solicitors wrote to the plaintiffs’ then solicitors, AJ & Co, in response to the plaintiffs’ request for a further extension of time, reiterating that the plaintiffs’ delay prejudiced the defendant and referring to the letter of 19 May 2022, set out the history of delay and the ongoing prejudice and informing AJ & Co of the recent death of a potential witness, Mr Mahaffy.[236]
(d)At the directions hearing before me on 10 February 2023, the defendant again sought a self-executing order. While that order was not made, orders were made timetabling the Dismissal Application in the event that the plaintiffs failed to comply with the order to file their lay evidence.
[232]Email from Gilbert + Tobin to Howard Bear dated 7 April 2021; First McAteer Affidavit, [45] and Exhibit NM-7, 178-179.
[233]Letter from Gilbert + Tobin to Piper Alderman dated 27 April 2022; First McAteer Affidavit, [72] and Exhibit NM-7, 308-310.
[234]The relevant content of this letter is extracted at paragraph 75 above.
[235]Affidavit of Gerard Breen sworn 2 June 2022; First McAteer Affidavit, [80] and Exhibit NM-7, 360-386.
[236]Letter from Gilbert + Tobin to AJ & Co dated 22 July 2022; First McAteer Affidavit, [86] and Exhibit NM-7, 413-417.
Significantly, at the directions hearing on 31 May 2019, counsel for WHA acknowledged that the delay in the conduct of the proceeding was entirely unsatisfactory and that the ’points made by [c]ounsel for the [d]efendant regarding normal prejudices that occur when delays of this type are encountered are, with respect, well made. Those prejudices are real.’[237]
[237]31 May 2019 Transcript, 6, 14, 16.
In those circumstances, the plaintiffs cannot say that they were not given fair warning about their dilatory conduct and the consequences of it.[238]
[238]Bishopsgate (n 23) [51] (Tadgell and Ormiston JJ, Brooking J agreeing at 865 [1]).
I am satisfied that the difficulties faced by the defendant in having to defend a claim based on conduct occurring so many years earlier is significantly increased by the inordinate and inexcusable delays of the plaintiffs. This is a complex case and there is evidence of loss of memory and loss of documentation more than would have occurred had the matter proceeded without the inordinate and inexcusable delay of the plaintiffs.
Most significant is the impact of delay, supported by evidence and which may also be inferred, on the availability of the relevant witnesses and on their recollection of the relevant events. The memories of those involved are limited at best and will likely only degrade further. As employees have changed employment, matters relating to the defendant and the subject-matter of the proceeding will likely have been put out of mind. The defendant’s witnesses will have to depend on contemporaneous documents, to the extent the defendant holds any.
Having regard to the remarks of Lord Diplock in Birkett v James, I am satisfied these post-Writ delays have caused prejudice to the defendant which is far ‘more than minimal’ prejudice. It is prejudice of a kind that calls for the dismissal of this action because there is a substantial risk that a fair trial cannot be had so long after the events that gave rise to them. Justice demands that the proceeding be dismissed.
H Issue 4 - Does the defendant’s delay in discovery adversely impact the defendant’s application to dismiss for want of prosecution?
The plaintiffs submit that the defendant’s delay in discovery in relation to the Lloyds documents and the third tranche of discovery, whatever the reason, constitutes a ‘serious default’ and is a factor relevant to whether the defendant should succeed in getting an order for dismissal for want of prosecution.[239]
[239]Day 1 Transcript, 122-125; Day 2 Transcript, 1, 50.
The plaintiffs relied on the following authorities in support of that submission:[240]
(a)Hunter v Stingley [1997] 3 All ER 568.
(b)Austin SecuritiesLtd v Northgate and English Stores (1969) 2 All ER 753.
(c)Worcester v Allard [1990] QSC 430.
(d)Wilcox v Chapel (No 2) [2021] NSWSC 1607.
[240]Day 2 Transcript, 25-29.
Each case concerned an application to dismiss a proceeding for want of prosecution. In each case:
(a)the applicant was found to have contributed substantially to the period of delay;
(b)a fair trial was considered possible; and
(c)the application was rejected on the basis that the defendant had materially contributed to the delay.
The facts of this case are quite different and readily distinguishable from those cases. As I have found, if there has been any delay caused by the defendant’s discovery, it is confined to a period of only two months between 19 August 2022 and 7 October 2022. Even so, the defendant has provided an explanation for that delay and, as I stated in sub-paragraph 138(h), the late discovery appears to have been caused or contributed to by the plaintiffs’ late commencement of this proceeding.
There is no evidence to support the proposition that this delay contributed in any material way to the overall delay in this proceeding. Accordingly, the defendant’s delay in providing discovery does not affect my decision to dismiss this proceeding.
Orders
I propose to order that the proceeding be dismissed for want of prosecution.
I will hear from the parties as to the form of order and costs.
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