Reid International Pty Ltd v Ron Farris Real Estate Pty Ltd - [2016] WASC 6

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: REID INTERNATIONAL PTY LTD -v- RON FARRIS REAL ESTATE PTY LTD [2016] WASC 6

CORAM: ACTING MASTER GETHING

HEARD: 22 OCTOBER 2015

DELIVERED : 19 JANUARY 2016

FILE NO/S: CIV 1418 of 2015

BETWEEN: REID INTERNATIONAL PTY LTD
Plaintiff
AND
RON FARRIS REAL ESTATE PTY LTD
First Defendant
CHRISTOPHER FARRIS
Second Defendant

Catchwords:

Summary judgment - Application by defendant - Limitation of actions - Misleading conduct on sale of a strata title unit - Date on which cause of action accrued - Whether action should be dismissed as an abuse of process given delays in its commencement

Legislation:

Australian Consumer Law, s 18, s 236
Rules of the Supreme Court 1971 (WA), O 16

Result:

Application granted
Action dismissed

Category: A

Representation:

Counsel:

Plaintiff:     Mr B L Nugawela
First Defendant             :     Mr T M Clavey
Second Defendant         :     Mr T M Clavey

Solicitors:

Plaintiff:     Success Legal
First Defendant             :     Jarman McKenna
Second Defendant         :     Jarman McKenna

Case(s) referred to in judgment(s):

Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209
Alvaro v Metaxas & Hager [2012] WASC 341
Anderson v Effexseven (1998) 10 ANZ Ins Cas 61‑424
Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Ltd [2009] HCA 19; (2009) 239 CLR 305
Australian Growth Managers Ltd v Egerton‑Warburton [2007] WASC 10
Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Birkett v James [1978] AC 297
Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
Caffey v Leatt-Hayter [No 3] [2013] WASC 348
Commonwealth of Australia v Albany Port Authority [2006] WASCA 185
CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; (1997) 189 CLR 345
Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87
Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; (2013) 249 CLR 435
Hall Chadwick Corporation Finance (WA) Pty Ltd v Axiom Properties Ltd [2002] WASC 179
Howden v Truth & Sportsman Ltd [1937] HCA 74; (1937) 58 CLR 416
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640
Jakovljevic v L & B Doslov [2000] WASCA 131
Johnson v Hallam [2015] WASC 149
Lewandowski v Lovell (1994) 11 WAR 124
Lois Nominees Pty Ltd v QBE Insurance (Australia) Ltd [2011] WASC 208; (2011) 42 WAR 75
McKechnie v Campbell (1996) 17 WAR 62
Meridian Oil NL v Smyth [2007] WASC 179
Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273
Morellini v Adams [2011] WASCA 84
Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388
North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60; (2010) 269 ALR 262
Potts v Miller (1940) 64 CLR 282
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR
Rasheed v Rasheed (1999) 73 SASR 346
RHG Mortgage Corporation Ltd v Schafer [2014] WASC 297
SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138
Smith v Bank of Western Australia Ltd [2010] WASCA 15; (2010) 265 ALR 472
Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118
Stocks v Retirement Benefits Fund Board [2007] TASSC 8
The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398
Ulowksi v Miller [1968] SASR 277
Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514
Watson v Foxman (1995) 49 NSWLR 315
Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598
WMC Resources Ltd v Roche Mining Pty Ltd [2004] WASC 76
Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661

ACTING MASTER GETHING: Reid International Pty Ltd (Reid) is the registered proprietor of a business unit at 76 Mill Point Road, South Perth, being Lot 2 on Strata Plan 19544 (Lot 2). Reid purchased Lot 2 in June 2004. The real estate agent who handled the sale was Ron Farris Real Estate Pty Ltd (RFRE), the representative being Christopher Farris.
Reid alleges that Lot 2 was advertised for sale with six car bays. However, the registered proprietor of Lot 2 is only entitled as of right to the use of four car bays. Between its purchase of the property in June 2004 and 28 March 2012 Reid used two other car bays (Additional Two Bays). The Additional Two Bays are on the title to Lot 3 on Strata Plan 19544 (Lot 3). On 28 March 2012, Michael Collier, the registered proprietor of Lot 3, placed a discarded vehicle on each of the Additional Two Bays. As a consequence, Reid lost the use of the Additional Two Bays.
By writ filed 21 December 2012, Reid commenced Supreme Court proceedings against Mr Collier seeking a declaration that it has a proprietary interest in the Additional Two Bays (being CIV 3069 of 2012).
By writ of summons filed 24 March 2015, Reid commenced an action against RFRE and Mr Farris.[1] In it, Reid alleges that the representations made by the defendants as to the number of car bays attached to Lot 2 were misleading and deceptive in breach of the Australian Consumer Law (ACL),[2] and seeks damages.
[1] Whom I will refer to collectively as the 'defendants'.
[2] Competition and Consumer Act 2010 (Cth) (CCA), sch 2.
On 7 July 2015 the defendants filed an application seeking orders that Reid's statement of claim be struck out and that judgment be entered for the defendants or, alternatively, an order that the action be permanently stayed. The bases relied on by the defendants are Rules of the Supreme Court 1971 (WA) (RSC) O 16 (summary judgment), O 20 r 19(1) (strike out as an abuse of process), Supreme Court Act 1935 (WA) (SCA) s 16(1)(d)(i) (equitable jurisdiction) and the inherent jurisdiction of the court. In essence, the defendants assert that:
(a)the action should be summarily dismissed as the cause of action is statute barred, falling outside the applicable limitation period; and
(b)the delays between the events the subject of the action and commencement of the action are such that the continuation of the action would amount to an abuse of the processes of the court.
The defendants filed two affidavits in support of the application. The first was sworn by Mr C Farris on 7 July 2015.[3] The second was sworn by Ronald Sidney Prichard Farris, also on 7 July 2015.[4] Mr R Farris is a director of RFRE.
[3] Which I will refer to as the 'C Farris Affidavit'.
[4] Which I will refer to as the 'R Farris Affidavit'.
Reid filed four affidavits in opposition to the application. The first was sworn by Clinton Gary Reid on 23 September 2015.[5] The second was sworn by Veronica Arlene Reid on 23 September 2015.[6] Mr C Reid and Ms V Reid are directors of Reid. The third affidavit was sworn by Anton Reid.[7] Mr A Reid is the father of Mr C Reid and the husband of Ms V Reid. The final affidavit was sworn by Henry Yu‑Jin Chew on 14 October 2015.[8] Mr Chew is the principal of Reid's lawyers.
[5] Which I will refer to as the 'C Reid Affidavit'.
[6] Which I will refer to as the 'V Reid Affidavit'.
[7] Which I will refer to as the 'A Reid Affidavit'.
[8] Which I will refer to as the 'Chew Affidavit'.
On the evidence and submissions before me, there are two issues for determination:
•Should the action be summarily dismissed on the limitation point?
•Should the action be dismissed or permanently stayed as an abuse of the processes of the court?

Should the action be summarily dismissed on the limitation point?

RFRE requires leave to apply for summary judgment, the application being filed more than 21 days after the date on which its appearance was entered.[9] Mr C Farris does not require leave, having entered an appearance on 19 June 2015. Given the stage at which the application was filed, and the fact that Mr C Farris does not require leave, it is appropriate that RFRE be given this leave.[10]
[9] RSC O 16 r 1(1).
[10] See generally: Johnson v Hallam[2015] WASC 149 [9] (Gething AM).
The following facts do not appear to be contested:
(a)Reid is the registered proprietor of Lot 2 on Strata Plan 19544, being Certificate of Title Volume 1875 Folio 402;
(b)Reid acquired Lot 2 by a Contract for Sale of Land or Strata Title by Offer and Acceptance dated 5 May 2004;
(c)the vendors of Lot 2 were Collier Knyn & Associates Pty Ltd and Collier Super Pty Ltd (Vendors);
(d)RFRE acted for the Vendors on the sale of Lot 2;
(e)Mr C Farris was RFRE's sales representative on the sale of Lot 2;
(f)there are only three car bays allocated to Lot 2 on the title to Lot 2, with a fourth being made available by a written exclusive licence for the term of the strata plan;
(g)the advertising brochure for the sale of Lot 2, prepared by RFRE, stated that it had six car parking bays;
(h)a marketing billboard at the front of the building prepared by RFRE also referred to Lot 2 as having six car parking bays;
(i)the Additional Two Bays are on the title to Lot 3;
(j)on 28 March 2012, Mr Collier placed a disused vehicle into each of the Additional Two Bays; and
(k)since 28 March 2012 Reid has not been able to use the Additional Two Bays.
The evidence filed on behalf of the defendants identifies one occasion on which it is said that Reid, through Mr C Reid, became aware that the Additional Two Bays were not on the title to Lot 2. This was at the Annual General Meeting of the owners of Strata Plan 19544 held on 28 November 2005. This information was obtained from an affidavit filed by Mr Collier in CIV 3069 of 2012, which is annexed to the affidavits of both Mr C Farris and Mr R Farris.[11] The minutes of the meeting are annexed to both affidavits. Mr C Reid disputes the accuracy of the minutes, and does not recollect discussions surrounding the car bays for Lot 2 with Mr Collier on this occasion.[12] For the purposes of a summary judgment application, I am to proceed on the basis that Mr C Reid's evidence will be accepted at trial.[13] Accordingly, for present purposes, I proceed on the basis that the issue of the number of car bays to which the registered proprietor of Lot 2 is entitled was not discussed at the meeting on 28 November 2005. I also proceed on the basis that until 28 April 2012 no issues relating to the Additional Two Bays had been brought to the attention of officers of Reid.[14]
[11] C Farris Affidavit, pars 35 ‑ 36, annexure CF2, pages 32, 75; R Farris Affidavit, pars 19 ‑ 21, annexure RF2, pages 17, 60.
[12] C Reid Affidavit, pars 18 ‑ 19.
[13] Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598, 608 (Mason CJ, Deane & Dawson JJ); RHG Mortgage Corporation Ltd v Schafer [2014] WASC 297 [28] (Chaney J).
[14] V Reid Affidavit, par 11.
Reid seeks damages pursuant to ACL s 236(1) on the basis of misleading conduct pursuant to ACL s 18, s 29 or s 30(1). Pursuant to ACL s 236(2), the six year limitation period begins to run when the cause of action that relates to the conduct accrued. 'As loss or damage is the gist of the statutory cause of action …, the cause of action does not accrue until actual loss or damage is sustained'.[15] In determining when a plaintiff first suffers economic loss or damage under ACL s 236(1) based on misleading conduct constituting a contravention of ACL s 18, it is necessary to have regard to the applicable measure of damages.[16]
[15] Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514, 526 (Mason CJ, Dawson, Gaudron & McHugh JJ).
[16] Wardley (526).
The defendants' position is that the case is properly characterised as being one in which 'because of'[17] the misleading conduct of the defendants Reid acquired an asset, namely Lot 2. The principles governing the assessment of damages in a case of this kind are conveniently summarised in the decision of Beech J in Caffey v Leatt‑Hayter [No 3]:[18]
Where the misleading conduct is found to have been a material cause of the acquisition of an asset by the plaintiff, a conventional measure of damage, perhaps the general rule, will be the difference between the price paid and its true value at the time of acquisition. ...
It is important, and fundamental, to recognise that this measure of damages does not depend on the difference between price and market value, but the difference between price and the real or true value.
An assessment of market value invites attention to information available to a hypothetical purchaser at the time value is to be assessed. The position is different when an assessment is to be made of the real or true value of an asset. Although under the ordinary rule value is assessed as at the date of acquisition, subsequent events may be considered insofar as they illuminate the value of the thing as at that date. For example, the takings of a business after its acquisition are generally admissible to prove the true value of the business acquired.
In taking into account evidence of matters subsequent to the time of assessment, the court must consider whether the subsequent event truly indicates or reflects the measure of the loss earlier suffered.
In considering subsequent events, a distinction is drawn between those that affect value, arising from the nature or use of the thing itself, and subsequent events affecting value if they are 'independent', 'extrinsic', 'supervening' or 'accidental'.
In Kizbeau [Kizbeau Pty Ltd v WG & B Pty Ltd [1995] HCA 4; (1995) 184 CLR 281, 291] the court applied the well-known dictum of Lord Macnaghten in Bwllfa [Bwllfa & Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Company [1903] AC 426, 431] to an award of damages under s 82. That dictum requires the decision maker in a valuation case to 'avail himself of all information at hand at the time of making [the decision]', and not to 'shut his eyes and grope in the dark'. In HTW Valuers the court stated that the significance of Kizbeau was that it endorsed Lord Macnaghten's approach in relation to s 82 when the court is assessing damages by comparing the price and the real value of the asset at the date of the acquisition. [HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640]
[17] To use the language of ACL s 236(1).
[18] Caffey v Leatt-Hayter [No 3] [2013] WASC 348 [363] ‑ [368] (footnotes omitted, save for the cases referred to in the text).
In relation to the proposition that the conventional measure of damage is the difference between the price paid and its true value at the time of acquisition, Beech J cited the decisions in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd,[19] Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2],[20] Morellini v Adams[21] and North East Equity Pty Ltd v Proud Nominees Pty Ltd.[22] This proposition is sometimes referred to as the 'rule in Potts v Miller'.[23]
[19] HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640 [35] ‑ [36] (Gleeson CJ, McHugh, Kirby, Gummow & Heydon JJ).
[20] Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179 [101] (Martin CJ, Buss & Newnes JJA agreeing).
[21] Morellini v Adams [2011] WASCA 84 [41] (McLure P, Pullin & Newnes JJA agreeing).
[22] North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60; (2010) 269 ALR 262 [136] (Judgment of the Court).
[23] Potts v Miller (1940) 64 CLR 282, 297 (Dixon J). See for example: Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388 [31] (Judgment of the Court).
If the rule in Potts v Miller is applicable, the loss or damage was incurred when Reid acquired Lot 2. As this is more than six years prior to the date on which the action was commenced, the claim would be statute barred.
Reid's position is that the case is properly characterised as being one in which the contract to purchase Lot 2 gave rise to a contingent loss. Reid had the use of the Additional Two Bays until such time as the true owner asserted a right of possession against it. This did not occur until March 2012 when Mr Collier placed a disused car in each of the two car bays. By this characterisation, counsel for Reid sought to bring the case within the principle set out in Wardley that where a contract gives rise to a contingent loss, no loss is suffered until the contingency is fulfilled and the loss becomes actual.[24]
[24] Wardley (532).
Counsel for the plaintiff characterised the case as being similar in principle to that considered by the High Court in Murphy v Overton Investments Pty Ltd. In that case, the appellants had been induced to enter into a lease in a retirement village by statements in relation to the level of outgoings to be charged which were misleading or likely to mislead. The issue on appeal was what loss the appellants could claim. The trial judge found that the appellants had not proven that they had suffered any loss or damage. The appropriate measure was held to be the rule in Potts v Miller (discussed above [14]), and there was no evidence of any difference between the price paid under the agreement and the value of the property as at the date of the agreement. The Full Court agreed with the approach taken by the trial judge.
The High Court, in a joint judgment by all members of the court, allowed the appeal and remitted the action back to the trial judge to assess damages in accordance with their reasons.
The High Court cautioned against concluding that the difference between price and value is the only kind of damage that may be suffered:[25]
[T]he difference between price and value will often be an important element in assessing the damage suffered by a person who, by a misrepresentation, has been induced to buy an item of property. … there may also be questions of consequential damage. It would be wrong, however, to assume that in every case of misrepresentation (leave aside other forms of misleading or deceptive conduct) the only kind of damage which may be suffered, and compensated or redressed by orders under Pt VI of the Act, is any difference between price and value or any consequential losses. In particular, care must be exercised before seeking to apply what is described as the 'rule in Potts v Miller' to claims made for relief under Pt VI of the Act. This is especially so when it is recalled that while the only monetary remedy for the tort of deceit is damages, a far wider range of remedies is available where contravention of the Act has caused or is likely to cause loss or damage to a party to the proceeding.
[25] Murphy [31] (footnote omitted). See also: HTW Valuers [64] ‑ [65].
Rather, their Honours made it clear that loss and damage may take several forms and may be incurred at different times:[26]
It would be wrong … to assume that, where a person is induced by misleading or deceptive conduct to undertake a continuing future obligation, the remedy to be awarded for a contravention of Pt V of the Act must be, or even ordinarily will be, a lump sum award of damages. There will be cases in which that will be the appropriate remedy. But that is a conclusion to be reached only after identifying the loss or damage which has been or will likely be suffered. That loss or damage may take several forms. It may be incurred at different times. Whether damages are to be awarded in compensation may depend upon what other forms of relief are to be awarded. In particular it will be much affected by what orders to prevent or reduce the loss or damage are made under s 87.
[26] Murphy [52].
Their Honours held that on entering the lease, the appellants undertook an obligation to pay outgoings 'which may, but need not, have proved to be larger or more costly than they had been led to believe'.[27] Their Honours continued:[28]
What the appellants did not know was that the estimate of outgoings they were given did not provide for all the outgoings that were then being incurred. Here, therefore, the appellants suffered no loss as a result of undertaking the obligations they did unless and until the contingency which the misrepresentation hid (that items other than those used to form the estimate were then being incurred and could be charged as outgoings) was first realised. That was a contingency in the sense that the adverse risk might never have eventuated. When the lease was entered in 1992, the respondent was charging levies in relation only to limited categories of the overall outgoings. The respondent might have chosen to continue to charge the appellants only for those limited categories. On the other hand, it was possible that after 1992 it might decide to charge for wider categories. It was only from the time when it in fact decided to depart from the 1992 position and charge for the wider categories that the adverse risk eventuated. When it did, but only then, the appellants suffered loss and damage. And this Court's decision in Wardley requires the conclusion, on the evidence in this case, that it was only when the contingency came to pass that the appellants sustained loss or damage. It follows that no limitation defence was available.
[27] Murphy [54].
[28] Murphy [55] (footnote omitted).

In Stocks v Retirement Benefits Fund Board Inc Underwood J adopted a similar approach on a claim for negligent misrepresentation by a real estate agent which induced the plaintiffs to enter into a lease of premises in a shopping centre.[29]
[29] Stocks v Retirement Benefits Fund Board [2007] TASSC 8 [120] ‑ [132] (Underwood J).
In the present case, as pleaded, Reid appears to say that it suffered two forms of loss. The first, to use the analogy adopted by the High Court in Murphy,[30] is a capital loss: the difference between the price paid for Lot 2 in 2004 and its value at that time.[31] In its submissions, Reid advised that it was not going to press this claim due to the difficulties in measuring this loss.[32] The second, continuing the analogy, is a loss on the revenue account: the loss of use of the Additional Two Bays.[33] It is arguable that this loss did not arise until March 2012 when Reid was deprived of the use of the Additional Two Bays. The action was commenced within six years of this date.
[30] Murphy [50] ‑ [51].
[31] Statement of claim [14].
[32] Plaintiff's submissions, 13 October 2015 [1].
[33] Statement of claim [24].
The High Court in Wardley thought it generally undesirable to resolve limitation issues in interlocutory proceedings:[34]
We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.
[34] Wardley (533).
In my view, the present case is not the 'clearest of cases'. There are (at least) two distinct approaches open on the authorities. The determination of which of the two lines of authority the present case falls within should properly await trial. In particular, the evidence going to loss and damages will be critical, as will be the evidence as to the knowledge of the directors of Reid of the existence of a dispute as to the number of car bays attached to Lot 2. It will only be once findings have been made as to the loss and damage (if any) suffered by Reid that it will be possible to determine when the cause of action arose. It is of course open to the defendants to plead the limitation point in their defence.
The power to order summary judgment on an application by a defendant may be exercised where the court is satisfied 'that the action is frivolous or vexatious [or] that the defendant has a good defence on the merits'.[35] The onus is on the defendants to so satisfy the court.[36] The power to order summary judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.[37] It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted.[38] For the reasons which I have set out above, this is not such a case. The defendants have not persuaded me that Reid's claim is frivolous or vexatious, or that they have a good defence on the merits, as required by RSC O 16 r 1(1).
[35] RSC O 16 r 1(1).
[36] Johnson [6] (Gething AM); Lois Nominees Pty Ltd v QBE Insurance (Australia) Ltd [2011] WASC 208; (2011) 42 WAR 75 [34] (Beech J); WMC Resources Ltd v Roche Mining Pty Ltd [2004] WASC 76 [35] (Newnes M); Anderson v Effexseven (1998) 10 ANZ Ins Cas 61‑424, 74,757 (Parker J, Owen J agreeing).
[37] Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99 (Mason, Murphy, Wilson, Deane & Dawson JJ); SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138 [20] (Judgment of the Court).
[38] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57] (Gaudron, McHugh, Gummow & Hayne JJ); Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46] (Gleeson CJ, Gummow, Hayne & Crennan JJ); Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 [24] (French CJ & Gummow J), [54] ‑ [57] (Hayne, Crennan, Kiefel & Bell JJ); SMEC [20]; Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209 [113] (Le Miere J).
I decline to award summary judgment pursuant to RSC O 16 r 1(1).

Should the action be dismissed or permanently stayed as an abuse of the processes of the court?

General principles

The defendants rely on a number of bases in relation to this issue. The first is RSC O 20 r 19(1)(d). This rule empowers the court to strike out a pleading that is an abuse of the process of the court, and to order the action to be stayed or dismissed. The defendants also rely on the inherent jurisdiction of the court to prevent its processes from being abused. On the heading to the chamber summons, the defendants further rely on SCA s 16(1)(d)(i), which refers to the court's equitable jurisdiction. As no submissions were made on this point, I do not propose to consider whether there is an equitable doctrine which would give rise to a different conclusion than under the first two bases. Further, for ease of reference, I have analysed the issues on the basis that the defendants seek the dismissal of the action; I will consider the alternative of a stay should I consider that the discretion should be exercised.
The court has inherent power to prevent its processes from being abused and the corresponding power to protect their integrity once they are set in motion.[39] This is function of the 'broader consideration that the Court must ensure that justice is done in any case brought before it'.[40] Justice in this context includes a consideration of the private interests of the parties themselves and the public interest in the way in which disputes as to private interests are resolved.[41]
[39] CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; (1997) 189 CLR 345, 391 (Dawson, Toohey, Gaudron, McHugh, Gummow & Kirby JJ); The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398 [93] (Steytler P & Owen JA).
[40] Hancock [90].
[41] Hancock [91].
In Commonwealth of Australia v Albany Port Authority Steytler J summarised the general principles in the following terms:[42]
In Walton v Gardiner (1993) 177 CLR 378 at 393, Mason CJ, Deane and Dawson JJ, speaking in the context of the power to stay proceedings as an abuse of process, said that the jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536 as 'the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people'. (See also Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334 at 344; Trade Practices Commission v Kimberley Homes Pty Ltd (1989) 217 ALR 110 at 114 and Batistatos v Roads & Traffic Authority of New South Wales (2006) 80 ALJR 1100 at [6] per Gleeson CJ, Gummow, Hayne and Crennan JJ, at [142] per Kirby J.) Order 1 r 3A of the Rules provides that the inherent power of the Court to control the conduct of a proceeding is not affected by the Rules. Of course, none of this means that a court can, in reliance upon inherent powers (or implied powers: see Batistatos at [121] - [136] per Kirby J), ignore any conditions on the exercise of a particular power imposed by the Rules or by legislation: Doyle v The Commonwealth of Australia (1985) 156 CLR 510 at 518 and Landsal Pty Ltd (in liq) v REI Building Society (1993) 41 FCR 421 at 427 …
In R v Carroll (2002) 213 CLR 635 at 657 [73], Gaudron and Gummow JJ said that 'the circumstances in which proceedings will constitute an abuse of process cannot be exhaustively defined and, in some cases, minds may differ as to whether they do constitute an abuse'. (See also Batistatos at [7] and [9]). What is clear, however, is that the concept extends to proceedings that are 'seriously and unfairly burdensome, prejudicial or damaging' (Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 247); 'productive of serious and unjustified trouble and harassment' (Oceanic Sun Line, ibid; Hamilton v Oades (1989) 166 CLR 486 at 502 and Ridgeway v The Queen (1995) 184 CLR 19 at 74 - 75); invoked for an illegitimate purpose (Rogers v The Queen (1994) 181 CLR 251 at 286 per McHugh J); or such as to 'bring the administration of justice into disrepute' (Rogers, ibid): see, generally, Batistatos at [14] - [15]. It is also clear that, while many cases of abuse arise from the institution of proceedings, any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court's process: Rogers, ibid, and Batistatos at [15].
[42] Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 [20] ‑ [21] (Steytler P); see also [63] (Pullin JA).
The observations of Steytler P make it clear that the court has the power to dismiss or stay an action notwithstanding that it was regularly commenced and the plaintiff has complied with all applicable rules and orders of the court. The use of the inherent power to dismiss an action for want of prosecution is a classic example. Indeed, perhaps even axiomatically, the inherent power to prevent the court's processes from being abused will ordinarily only be used where the action is regularly commenced and the plaintiff has complied with the rules and orders of the court. An action which is not regular can be dismissed on that basis alone; likewise an action may be dismissed for non-compliance with the rules or orders of the court on that basis alone, the use of springing orders being a paradigm example.
In written submissions, counsel for the defendants states that the prejudice suffered by the defendants is of the kind described by McHugh J in Brisbane South Regional Health Authority v Taylor.[43] In that decision, his Honour makes detailed observations as to the impact of delay, and the role played by statutes imposing limitation periods, on the quality of justice. Those comments are apposite for the present application, and it is instructive to quote them in full:[44]
For nearly 400 years, the policy of the law has been to fix definite time limits (usually six but often three years) for prosecuting civil claims. 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 in 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 without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo, 'what 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 because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings, but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. 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.
Even before the passing of the Limitation Act 1623 (Imp), many civil actions were the subject of time limitations. Moreover, the right of the citizen to a speedy hearing of an action that had been commenced was acknowledged by Magna Carta itself. Thus for many centuries the law has recognised the need to commence actions promptly and to prosecute them promptly once commenced. As a result, courts exercising supervisory jurisdiction over other courts and tribunals in their jurisdictions have power to stay proceedings as abuses of process if they are satisfied that, by reason of delay or other matter, the commencement or continuation of the proceedings would involve injustice or unfairness to one of the parties.
[43] Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 (footnotes omitted).
[44] Brisbane South (551 ‑ 552) (McHugh J).
McHugh J goes on to identify four other rationales, additional to the effect of delay on the quality of justice, motivating legislatures to enact limitation periods for commencing actions:[45]
•As time goes by, relevant evidence is likely to be lost.
•It is oppressive, even cruel, to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed.
•People should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them.
•The public interest requires that disputes be settled as quickly as possible.
[45] Brisbane South (552 ‑ 553) (McHugh J).
Each of these considerations is relevant to the present application as an aspect of the interests of justice.
The use of the inherent power of the court to prevent its processes from being abused where there has been want of prosecution of an action is a useful analogy as to the factors relevant to the exercise of the inherent jurisdiction of the court in the present case; in the present case, it is the delays in the commencement of the action, rather than the prosecution of the action, which is said to abuse the processes of the court. Where a party seeks to have an action struck out for want of prosecution, there are five matters which the court will usually consider in the exercise of the discretion:[46]
•the length of the delay;
•the explanation for the delay;
•the hardship to the plaintiff if the action is dismissed and the cause of the action left statute‑barred;
•the prejudice to the defendant if the action is allowed to proceed notwithstanding the delay; and
•the conduct of the defendant in the litigation.
[46] Ulowksi v Miller [1968] SASR 277, 280 (Bray CJ); Lewandowski v Lovell (1994) 11 WAR 124, 130 ‑ 135 (Murray J, Kennedy & White JJ agreeing); Hancock [100]; Smith v Bank of Western Australia Ltd [2010] WASCA 15; (2010) 265 ALR 472 [4], [14] (Pullin JA), [78] (Newnes JA).
Three other matters which the court should have regard to in exercising the discretion are:[47]
(a)whether any default has been intentional and contumelious, for example, disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or
(b)whether there has been inordinate and inexcusable delay on the part of the plaintiff or his or her lawyers, and, if so
(c)whether such delay:
(i)will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action; or
(ii)is such as is likely to cause or to have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party.
[47] Birkett v James [1978] AC 297, 318 (Lord Diplock); Lewandowski (130 ‑ 135); Hancock [98]; Smith [13], [78].
As the Court of Appeal made clear in Hancock, it is inappropriate to take these considerations and 'use them as a check list to be ticked off one after the other'.[48] Rather:[49]
They are all things to which the court should have regard and they will usually be persuasive. But the absence of one or more of them from the credit or debit side of the check list process will not necessarily determine the result. It will always be necessary for the court to stand back and ask: what does justice, in all the notions or senses of it that are relevant, require in the circumstances of this case?
[48] Hancock [103].
[49] Hancock [103].
The onus is on the defendants as the parties seeking to move the court to exercise its discretion to dismiss or stay the action.[50]
[50] Hancock [98].
On the evidence and submissions before me, it is convenient to consider the exercise of the discretion under five broad headings:
•The length of the delay.
•The explanation for the delay.
•The prejudice to Reid if the action is dismissed.
•The prejudice to the defendants if the action is allowed to proceed.
•The interests of justice.

The length of the delay

The relevant chronology may be shortly stated. The misleading conduct is alleged to have occurred in 2004, shortly prior to Reid acquiring Lot 2 in June 2004.
On the evidence before me, Reid only became aware of the fact that it was not entitled as of right to the use of six car bays with Lot 2 on 28 March 2012 when a discarded vehicle was placed on each of the Additional Two Bays. As with the summary judgment application, it is appropriate that I determine the abuse of process application on the basis that conflicts of evidence are resolved in favour of Reid.
The action against Mr Collier was commenced on 21 December 2012. In this action, Reid seeks a declaration that it has a proprietary interest in the Additional Two Bays.
The present action was commenced on 24 March 2015.

The explanation for the delay

Reid did not put on any specific evidence as to the explanation for the delays.
There are two relevant periods of delay. The first is between June 2004 (when Lot 2 was settled) and 21 December 2012 (when the action was commenced against Mr Collier). The explanation for the greater part of this delay appears to be that Reid did not know that it was only entitled as of right to the use of four car bays. The fact that it had been using the Additional Two Bays for an eight year period, apparently without challenge, gives some credence to this position.
The second period of delay is between when the action against Mr Collier was commenced and when the present action was commenced, a period of some 27 months. No explanation is provided for this delay. Nor is one immediately obvious. Nor is it apparent to me why the action against Mr Collier has not yet proceeded to trial; the point in issue is discrete, and 27 months is more than ample time for it to have been heard and determined in this court.

The prejudice to Reid if the action is dismissed

The prejudice to Reid if the action is dismissed is that it will not be able to pursue its claim for damages against RFRE and Mr C Farris. However, this will not leave Reid without a remedy. It is still able to pursue its cause of action against Mr Collier.

The prejudice to the defendants if the action is allowed to proceed

The prejudice identified by the defendants is that the length of time between when Lot 2 was sold and the commencement of the action meant that their records have been destroyed and the memory of Mr C Farris and Mr R Farris has faded. It is instructive to quote in some detail from Mr C Farris' affidavit:[51]
[51] C Farris Affidavit, pars 6 ‑ 17, 23 ‑ 27.
6I believe that all relevant sale information relating to Lot 2 has been destroyed. I base my belief on my 20 years of experience as a sales representative for the First Defendant where it is the normal practice is [sic] to destroy sales files 7 years after the sale has been finalised.
7I cannot recall the exact date when Mr Collier first instructed me to act as his sales representative for the sale of Lot 2 as more than 12 years has passed since the property was sold.
8I cannot remember the exact instructions that Mr Collier gave me regarding the sale of Lot 2, but I have a vague memory that he said words to the effect of which were that Lot 2 included 4 car bays but that he had 2 other spare car bays that he didn't use so his 2 could be used as additional car bays for Lot 2.
9I cannot remember his exact instructions but I would not have put anything in the advertising material or the contract that was different than what I was instructed.
10My normal practice as a sales representative is to take notes of any instructions that I receive. I file all written notes and instructions in the property's sale file.
11I do not have any notes regarding the instructions that Mr Collier gave me regarding the sale of Lot 2.
12I cannot remember making a note of Mr Collier's instructions given the passage of time. If I did make a record of his instructions I believe that all of my notes have been destroyed because they would have been put in the sales file for Lot 2 and I believe that the file has been destroyed.
13I do not have electronic copies of files or instructions because I did not email my clients in 2004.
14It is my normal practice to record my appointments in my diary/calendar.
15I do not remember making any specific appointments with Mr Collier or with Mrs Vicky Reid who I believe was the managing director of the Plaintiff and was acting as the agent for the Plaintiff for the purchase of Lot 2 but it is my normal practice to write such appointments in my calendar.
16I do not have my diaries and/or calendar from 2004 as it is my normal practice to destroy my calendars after 2 years.
17Given the passage of time I do not have any documents to refresh my memory, other than documents that my solicitors have obtained from the Plaintiff's solicitors. Those documents do not include my personal notes and records that I customarily keep on a sale file relating to a transaction such as the sale of Lot 2.
...
23As far as I can remember I always dealt with Mrs Reid during the sale of Lot 2. I do not recall any of Mrs Reid's children ever being involved with the sale of Lot 2 or being at any meeting that I had with Mrs Reid.
24I do not remember the date when I met with Mrs Reid to discuss Lot 2 but I remember I had a conversation with her about the sale prior to the Offer and Acceptance being executed.
25I do not remember the exact words used in the conversation and my memory of it is vague.
26I do not remember drafting the Offer and Acceptance but it is my normal practice to draft contracts by hand and have someone at the office of the Frist [sic] Defendant finalise them for me.
27I cannot recall who would have assisted me in preparing the Offer and Acceptance for Lot 2.

The evidence of Mr R Farris is to the same effect.[52]
[52] R Farris Affidavit, pars 4 ‑ 6, 8 ‑ 9.
Counsel for Reid called into question the inability of Mr C Farris and Mr R Farris to recall the events. He referred to a letter dated 29 March 2012 from RFRE (Mr R Farris) to Mr C Reid in which RFRE stated its position in clear terms:[53]
The seller of Level 2, 76 Mill Point Road did include 6 car parking spaces in his sales campaign for the floor to make it a more attractive proposition for buyers. Six car parking spaces were included in the sale and should have been transferred to the buyer at settlement.
The fact that you have used the two bays in question for, as advised to me, 8 years without challenge to your usage is confirmation of the agreement. Obviously Mr Collier has seen the for lease sign, checked the strata plan and decided to retake possession of the two spaces that are still part of Lot 3 title.
You most definitely have our support in this matter.
[53] Chew Affidavit, annexure HC1, page 3.
In the statement of claim annexed to the writ of summons, Reid pleads that the vendors of Lot 2 were a companies of which Mr Collier was a director and the controlling mind. Reid further pleads that Mr Collier instructed RFRE and/or Mr Farris to advertise Lot 2 on the basis that it would include the Additional Two Bays. Reid further pleads that RFRE and/or Mr Farris advertised the sale of Lot 2 with six car parking bays acting in accordance with, and in reliance on, the instructions given to them by Mr Collier. Presumably, there is some credible material available to Reid to support these allegations.[54]
[54] Hall Chadwick Corporation Finance (WA) Pty Ltd v Axiom Properties Ltd [2002] WASC 179 [22], [27] (Pullin J).
In submissions, counsel for the defendants identified that, on Reid's pleaded case, the defendants may have a defence on the ground that they passed on information for what it was worth to the seller, in circumstances where the information was provided by the seller.[55] In other words, the defendants were a 'mere conduit' for the information. On this point, in Yorke v Lucas, Mason ACJ, Wilson, Deane and Dawson JJ observed:[56]
It is, of course, established that contravention of that section does not require an intent to mislead or deceive and even though a corporation acts honestly and reasonably, it may nonetheless engage in conduct that is misleading or deceptive or is likely to mislead or deceive … That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.
[55] Defendant's submissions, 9 October 2015 [12].
[56] Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661, 666 (Mason ACJ, Wilson, Deane & Dawson JJ). See also Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; (2013) 249 CLR 435 [9] (French CJ, Crennan & Kiefel JJ); Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 [38] (Gleeson CJ, Hayne & Heydon JJ); Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Ltd [2009] HCA 19; (2009) 239 CLR 305 [43] (French CJ & Kiefel J), [57] (Gummow J).
Counsel for the defendants also referred to the observations of McLelland CJ in Eq in Watson v Foxman, where his Honour stated:[57]
Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
However, as it seems clear the offending representations in the present case were made in writing,[58] these observations are of less significance than if the representations had been made orally. The observations are, however, valid in relation to any qualifying statements which Mr C Farris may have made to the representatives of Reid and to the conversations between Mr C Farris and Mr Collier.
[57] Watson v Foxman (1995) 49 NSWLR 315, 319.
[58] Statement of claim [11]; C Reid Affidavit, annexure GR1, page 6.
There would no doubt be a contest at trial as to whether the defendants expressly or impliedly disclaimed any belief in the truth or falsity of the representations about the car bays allocated to Lot 2. The defendants' point is that, given the passage of time, the second defendant cannot give evidence of the instructions given to him by the vendors regarding the sale of Lot 2. Moreover, as McHugh J observed in Brisbane South, what is forgotten can rarely be shown.

The interests of justice

The eight year delay between when the misleading conduct was alleged to have occurred and when it was discovered does not, on the evidence before me, involve any fault on the part of Reid. This delay alone would not justify characterising the continuation of the action as an abuse of the processes of the court, especially given that I am satisfied that the limitation point should not be determined summarily.
There are, however, six factors which, in the context of the delay, lead me to the conclusion that to allow the action to continue would be to countenance an abuse of the processes of the court.
The first is that Reid does not provide any explanation for the 27 month delay between when it commenced the action against Mr Collier, and when it commenced the action against the defendants. Given the long delay in becoming aware of the issues regarding the Additional Two Bays, it was incumbent upon Reid to proceed against the defendants with some expedition.
The second is that dismissal of the present action does not leave Reid without a substantial remedy. It still has its action for proprietary relief against Mr Collier.
The third is that the determination of the issues in the present action needs to await the determination of the issues in the action involving Mr Collier. If it is the case that Reid has a proprietary right to the Additional Two Bays, then it has suffered no loss and damage as a result of any misleading conduct by the defendants. In practical terms, this means that the present action is likely to be held in abeyance for a further period of 12 or so months while the action against Mr Collier is heard and determined. The present case is not close to being ready for trial.[59]
[59] If a case is close to being ready for trial, this is a factor indicating that it would not be appropriate to strike it out for want of prosecution: Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273 [56] ‑ [58] (Martin CJ, Wheeler & Pullin JJA agreeing); Meridian Oil NL v Smyth [2007] WASC 179 [25] (Sanderson M); Alvaro v Metaxas & Hager [2012] WASC 341 [23] (Sanderson M).
The fourth is that, on Reid's pleaded case (described above [51]), it appears that the true perpetrator of the misleading conduct was Mr Collier and not his representatives, the defendants, who (Reid pleads) merely acted in accordance with Mr Collier's instructions. In my view, this lessens the adverse impact to the interests of justice that would result if the action were to be dismissed, as Reid can still proceed against the true perpetrator.
The fifth is that, on the evidence before me, the effluxion of time between the alleged misleading conduct in 2004 and the commencement of this action in 2015 has led to the defendants suffering a real prejudice. Mr C Farris and Mr R Farris have both sworn affidavits to the effect they have no real recollection of events and that all relevant paperwork has been destroyed. The concerns expressed by McHugh J in Brisbane Southas to the impact of delay on the quality of justice are evident in the present case.[60] As his Honour observed, 'perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties'.[61]
[60] See also comments to similar effect expressed in: Jakovljevic v L & B Doslov [2000] WASCA 131 [41] ‑ [42] (Steytler J, Kennedy & Anderson JJ agreeing); Australian Growth Managers Ltd v Egerton‑Warburton [2007] WASC 10 [96] (Newnes M).
[61] Brisbane South (551).
The sixth is that the delays in the present case, in particular between the commencement of the proceedings against Mr Collier and the commencement of the present proceedings, offend the public interest that disputes be settled as quickly as possible. On the evidence of Mr C Farris and Mr R Farris, relevant evidence has been lost. The defendants should be able to arrange their affairs and utilise their resources, including the regular destruction of documents, on the basis that, after 12 years, no claim would be made against them arising out of the sale of Lot 2. It would be oppressive to the defendants to allow the present action to be pursued.[62]
[62] See above [33].
I acknowledge that summary dismissal on the grounds of an abuse of process is exceptional and care must be taken before granting such an application.[63] However, having regard to all of the circumstances which I have set out above, I am satisfied that to allow the action to continue would amount to an abuse of the processes of the court. I consider that allowing Reid's case to proceed would inflict unnecessary injustice on the defendants.[64]
[63] Howden v Truth & Sportsman Ltd [1937] HCA 74; (1937) 58 CLR 416, 418 (Starke J); McKechnie v Campbell (1996) 17 WAR 62, 75 (Owen J); Rasheed v Rasheed (1999) 73 SASR 346 [63] (Duggan J).
[64] Smith [18] (Pullin JA).

What final orders are appropriate?

For the reasons set out above, I would not be prepared to award summary judgment to the defendants on the basis of the limitation point, but am of the view that the continuation of the present action would be an abuse of the processes of the court. This gives rise to the issue of whether the appropriate order is to dismiss the action or permanently stay it. I consider that the former is appropriate, so as to bring finality to the action and to remove the prejudice to the defendants of having an action which is technically 'live', but stayed, against their credit record.
The action should be dismissed. Both RSC O 20 and r 19(1)(d) and the inherent jurisdiction of the court provide the power to make this order.
I will hear from counsel as to costs.