Queensland Trustees Ltd v White and Gardiner Pty Ltd

[1990] FCA 76

C A T C H W O R D S

PRACTICE AND PROCEDURE - application to strike out proceedings - inherent jurisdiction - applicant's inordinate delay - fresh proceedings would not be time-barred - delay producing prejudice to respondents - consideration of "urholly exceptional circumstances" - whether part of claim may be struck out for dilatoriness.

Queensland Trustees Limited

v. White and Gardiner Pty Ltd and Anor

Qld G2 of 1987

PINCUS J .

BRISBANE

g MARCH 1990

I

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY	QLD G2 of 1987
GENERAL DIVISION	1

BETWEEN: QUEENSLAND TRUSTEES LIMITED

Applicant

AND: WHITE AND GARDINER PTY LTD

First Respondent

AND: GLEN J. WHITE

Second Respondent

MINUTES OF ORDER

CJUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	BRISBANE
WHERE MADE:	9 MARCH 1990
THE COURT ORDERS THAT:

1.    the respondents' motion to strike out the proceedings be dismissed;

2.    the applicant have leave to deliver an amended

statement of claim substantially in accordance with

Exhibit "A ' to the affidavit of Simon Carter filed in the proceedings provided that:

(i)  paragraph 22 be amended so as to delete the allegation of fraud implied thereby;

(ii) paragraph 40 be amended to set out in full the claims for relief and so that the claim in fraud is abandoned and that the claims in respect of Emu Plains Cellars and the Nerang Heights Estates are not founded upon the provisions of the Trade Practices Act 1974.

NOTE :  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

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IN THE FEDERAL COURT OF AUSTRALIA	)
QUEENSLAND DISTRICT REGISTRY	) QLD G2 of 1987
GENERAL DIVISION	1

BETWEEN: QUEENSLAND TRUSTEES LIMITED

Applicant

AND:  WHITE AND GARDINER PTY LTD

First Respondent

AND: GLEN J. WHITE

Second Respondent

PINCUS J.

REASONS FOR JUDGMENT

There are before me two notices of motion, one by the respondents asking for an order that the proceedings be struck out for want of prosecution or as an abuse of process, and one by the applicant for directions.	L.'
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I.

It is convenient to deal with them in the order in which

they were argued.

The respondents argue that the proceedings should be struck out on the ground of inordinate delay on the part of the applicant. The proceedings were begun on 12 January 1987, and after an initial burst of activity, a period not much short of three years elapsed during which nothing was done.

The application is brought by the trustee of the "Bartlett ~rbperty Trust", units in which were issued to the public in 1984. The prospectus, which is in evidence, includes a copy of a letter from the second respondent confirming that he had valued five properties to be acquired by the trust and commenting upon their proposed acquisition, for a total consideration of $16 million. The applicant says that it became the trustee and acquired properties valued by the second respondent at a total price of $16 million. It says that the second respondent's valuations were material inducements relied on by it in purchasing the properties. It sues for damages for negligence and also on the basis of s.52 of the Trade Practices Act.

~lthough it was not quite common ground, it seems clear

that the claim in negligence is not statute barred. The subscription list was said in the prospectus to be open from 16 April 1984, and the prospectus contemplated that the properties would be purchased by the trustee; that apparently occurred in May

1984.

It was accepted by counsel for the second respondent, correctly in my opinion, that if the claim had been brought in negligence only, it could hardly be struck out, because to do so would be futile; fresh proceedings could be brought: Birkett v. James [l9781 AC 297; Madden v. Kirkegaard Ellwood and Partners L19831 1 Qd.R. 649; Department of Transport v. Chris Smaller (Transport) Ltd [l9891 2 WLk 578 at 581, 582. The peculiarity of the case is that, insofar as the applicant relies upon the Trade Practices Act, the three year limit has run out.

hat gives rise to the possibility, which was canvassed during the cohrse of argument, of striking out part of the claim. Logically the first question is whether, to adopt the test in the case last mentioned, "wholly exceptional circumstances" have been shown, such as to justify striking out the negligence claim within the limitation period.

The principal circumstance relied on was that the delay had prejudiced the second respondent. The second respondent says in an affidavit that, in the course of preparing the valuation in question, he looked at quite a volume of documents, had conversations with various people about the properties, and made notes and calculations which have been destroyed. He also refers to the difficulty of remembering the circumstances after so long a period of time.

The disadvantages just referred to no doubt exist but, as was pointed out by Mr Bowden for the applicant, in considering their weight one must have regard to the nature of the valuations. They are also in evidence. One valuation capitalises the net

profit of the property (a tavern) on the basis of a yield of 14%.

The former figure was arrived at, having regard to trading results over a period of years; those results are still available. A similar approach was used in three of the other valuations, all of which related to premises licensed to sell liquor. The fifth valuation was of a caravan park and the method there used was to apply comparable sales of caravan parks at a certain figure per site. It seems likely that, insofar as the passage of time has increased the second respondent's difficulty in resisting the claim, that factor is of less importance than it would be likely to be in many other suits based upon allegations of negligent misstatement hnd misleading conduct. The soundness of four of the valuations appears to depend principally upon the question whether the figure taken for net profit is a reasonable one and whether the interest rate was properly chosen. Neither of these factors is likely to depend, in any large measure, upon unaided recollection of the circumstances in 1984.

That having been said, the delay was, so far as the evidence shows, not necessary and seems to have been due principally to dilatoriness on the part of solicitors (not the present solicitors acting for the applicant). But it is impossible to hold that this is one of those unusual cases in which, so far as the negligence claim is concerned, the discretion should be exercised in favour of the respondents. It seems evident that, if the applicant were not permitted to pursue these negligence proceedings, it could and would simply sue again; the damages claimed are very large.

The question then which remains is whether the claim Practices Act. No order to that effect was sought in the notice	should be struck out insofar as it is based upon the Trade
of motion, and it is by no means clear that the Court has jurisdiction to strike out part of a claim only on the ground of dilatoriness. Assuming in favour of the second respondent that such an order may be made, it does not appear to me that this is an appropriate case in which to do so. Some further circumstances should be mentioned.
One peculiarity of the case is that, due to an unfortunate dourse of proceedings, the directions hearing which the rules require was adjourned to a date to be fixed before the proceedings were served. That was done, it appears, in the expectation that service would be attended to and the matter brought back on again. But the matter was left in limbo from 31 March 1987 until it was revived by the applicant's present solicitor on 2 February 1990. Mr Thompson argued for the respondents that the failure to effect service made it necessary that the applicant obtain an extension of time for service. He argued that the applicant should be in a position analagous to that of a plaintiff suing in the Supreme Court, who has let his writ become stale by not having served it within 12 months. I do not find the analogy compelling, but in any event it seems too late to take any point about service; an appearance was entered on
2 March, which appears to me to be a waiver of the late service.
Further, I deduce from the second respondent's affidavit that he was well aware of the proceedings having been instituted. No doubt he hoped that they would not be pressed, and he had no obligation to take steps to ensure that the applicant pursued
them; nevertheless, the case for the second respondent is not as strong as it would have been if he had had no knowledge of the
institution of the proceedings.
The respondents also rely upon the fact that the first respondent (a company) let a policy of insurance which, I am asked
to assume, would have protected the second respondent, lapse some
years ago. The policy would not have covered a claim of this
size, nor, since it covered only claims made, was there any sound
reason for allowing it to lapse. I have come to the conclusion
that, although the applicant's conduct has been very dilatory, the I

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application should not be struck out either wholly or in part.

The remaining question raised before me was the form of the proposed amended statement of claim. Mr Thompson raised no	:
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objection in principle to the amendment, but pointed out that if leave is given to amend as proposed, the pleading will not accord with the pleader's intention in two respects. Firstly, it was said by Mr Bowden on behalf of the applicant (and I have taken into account in considering the application to amend) that the two additional complaints it raises in paras.23 to 30 and 31 to 38 are intended to be in negligence only. Had they been brought in reliance of the Trade Practices Act, the amendment must have been refused because of the time bar. Further, Mr Bowden informed me that, although the application mentions fraud, the applicant does
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not propose to pursue that allegation but proposes to rely only
upon the case of negligence and that under the Trade Practices	, ,
Act. Mr Thompson says that the amendment should reflect these
limitations, and I agree.	!

There remains to be considered the question of costs. Although the applicant has been successful on both notices of	i n
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motion, the necessity for them was no fault of the respondents.	I .
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Taking into account the applicant's conduct of the matter, it
appears to me that the costs of the notices of motion should be	r :
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costs in the proceedings.

I certify that this and the five

preceding pages are a true copy of the	,	I
reasons for judgment herein of His Honour
Mr. Justice Pincus.	1 -!

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b

Dated qHmh 1990	AssoFe	, .
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Counsel f o r the,applicant: Mr L.D. Bowden

S o l i c i t o r s for	the	applicant:	Bowdens McCafferty Waters and Ward
Counsel for the respondents:	Mr	G . A .	Thompson

S o l i c i t o r s f o r the respondents: Feez Ruthning

Date o f Hearing:  7 March 1990