Royalstar Pty Ltd v Duke - [2001] WASC 89

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: ROYALSTAR PTY LTD -v- DUKE [2001] WASC 89

CORAM: MASTER SANDERSON

HEARD: 28 MARCH 2001

DELIVERED : 5 APRIL 2001

FILE NO/S: CIV 1927 of 1994

BETWEEN: ROYALSTAR PTY LTD
Plaintiff
AND
BARBARA DUKE
Defendant

Catchwords:

Practice and procedure - Application to strike out for want of prosecution - Turns on own facts

Legislation:

Nil

Result:

Application refused

Representation:

Counsel:

Plaintiff: Mr P E Harris
Defendant: Mr G J O'Hara

Solicitors:

Plaintiff: Camillo D'Angelo & Co
Defendant: Kott Gunning

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

Allen v Sir Alfred McAlpine & Sons Ltd (1968) 2 QB 229
Ballas v Theophilos (No 2) (1957) 98 CLR 193
Birkett v James (1978) AC 297
Boomalli Ltd v Hake (1985) WAR 7
Brisbane South Regional Health Authority v Taylor (1996) 139 ALR 1
Bruce Pie & Sons Pty Ltd v Mainwaring (1987) 1 Qd R 304
FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Grovit v Doctor (1997) 2 All ER 417
Lewandowski v Lovell (1994) 11 WAR 124
Ulowski v Miller (1968) SASR 277
White v Northern Territory (1989) 97 FLR 122
Williams v Spautz (1992) 174 CLR 509

Case(s) also cited:

Hughes v Gales (1995) 14 WAR 434

MASTER SANDERSON: This is the defendant's application to strike out the action for want of prosecution. The action was commenced on 20 September 1994. It has now reached the stage where it could be, but has not yet been, entered for trial. It is appropriate to begin with a short summary of the nature of the dispute between the parties and a history of how the matter has proceeded since the writ was issued.
The dispute between the parties is of no great complexity. It can be summarised in the following way. The defendant is and was at all material times the registered proprietor of land at 226 Royal Street, Yokine ("the land"). In May of 1994 the plaintiff agreed to buy the land from the defendant for the sum of $235,000. In May of 1994 the parties agreed to cancel that contract and to enter into a further contract whereby the defendant granted to the plaintiff an option to purchase the land. As to these facts there is no dispute between the parties.
The plaintiff says that on or about 28 May 1994 it entered into an option agreement with the defendant and paid to the defendant's agent $1,000 as an option fee. It is then pleaded that the option was exercised by the plaintiff paying to the defendant's agent the sum of $4,800 as required by the option agreement. The plaintiff says that the defendant has refused to settle on the sale of the land and is in breach of the contract that arose upon exercise of the option. The plaintiff seeks specific performance of the agreement for the sale of the land and damages for breach of contract.
The defendant in her defence denies that the parties ever entered into an option agreement. It is said that the person named in a statement of claim as the "defendant's agent" was in fact the plaintiff's agent and therefore payment of the option fee was not made to the defendant. It is further pleaded that there are deficiencies in the way in which the option was signed which render it ineffective. I need not go through the defendant's claims in detail. It is sufficient if I say that the defendant denies that there was any valid option entered into between the parties with the result that the purported exercise of the option by the plaintiff was ineffective. The defendant says that no valid and enforceable contract for the sale of land ever came into existence and the plaintiff is not entitled to the relief of specific performance or any relief.
It is apparent from what I have said above that the dispute between the parties is of narrow compass. Such evidence as will be required will be limited to the circumstances surrounding the signing of the option agreement. Questions arise as to whether the agent who received the $1,000 option fee payment was the agent of the plaintiff or of the defendant. There are also questions about timing and the circumstances of the parties signing the alleged option agreement. But it must be said that, by any standard, this is a straightforward action which would occupy no more than two days trial time.
The statement of claim was endorsed on the writ and the writ itself was served shortly after it was issued. The defendant filed her defence on 2 November 1994. Thereafter, only two steps in the proceedings have been initiated by the plaintiff. First, the plaintiff filed a request for discovery on 9 November 1994. Second, the plaintiff filed an affidavit of discovery on 7 July 1995. In November of 1996 the defendant sought summary judgment under O 16. That produced what was, for this action, a flurry of activity. Eventually the application for summary judgment was withdrawn in June of 1997. A reading of the affidavits filed in relation to this application makes it plain that there were disputes of fact which could not be resolved in a summary judgment application. Thereafter, the plaintiff took no steps in the proceedings for over three years. On 3 November 2000 the plaintiff filed a notice of intention to proceed. That step provoked this application which was filed on 24 January 2001. It is common ground between the parties that no further interlocutory steps are necessary and there is no impediment to the action being listed for trial forthwith.
The principles upon which an application to strike out for want of prosecution are determined were considered by the Full Court in the decision of Lewandowski v Lovell (1994) 11 WAR 124. Murray J at 130 ‑ 135 considers in detail the relevant cases and sets out the principles to be applied in applications of this kind. In particular, his Honour referred to the decisions of Allen v Sir Alfred McAlpine & Sons Ltd (1968) 2 QB 229; Birkett v James (1978) AC 297; Ulowski v Miller (1968) SASR 277; White v Northern Territory (1989) 97 FLR 122 and Bruce Pie & Sons Pty Ltd v Mainwaring (1987) 1 Qd R 304. With respect, his Honour's analysis of the law on this area is thorough and detailed and nothing would be served by my repeating what his Honour had to say. In particular, his Honour adopted what was said by Bray CJ in Ulowski v Miller as a succinct and useful statement of principle (at 280):
"In these cases, as perhaps might be expected, a variety of opinions has been expressed in language differing in emphasis and sometimes in substance. I do not think it necessary or desirable to attempt to canvas them case by case. It must be remembered that we are dealing here with a discretion and in my view it ought not to be fettered by any absolute or inflexible rules. It clearly appears from these cases that five paramount matters to be considered are the length of the delay, the explanation for the delay, the hardship to the plaintiff if the action is dismissed and the cause of 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."
During the course of his submissions counsel for the plaintiff referred to the House of Lords' decision in Grovit v Doctor (1997) 2 All ER 417. The House of Lords was dealing with an appeal against an order striking out a libel action for want of prosecution. Both the Judge at first instance and the Court of Appeal had dealt with the matter on the basis that the failure of the appellant to pursue the action amounted to an abuse of process. Lord Woolf dealing with the question of whether or not delay amounted to an abuse of process said (at 424):
"The courts exist to enable parties to have their disputes resolved. To commence and to continue litigation which you have no intention to bring to conclusion can amount to an abuse of process. Where this is the situation the party against whom the proceedings is brought is entitled to apply to have the action struck out and if justice so requires (which will frequently be the case) the courts will dismiss the action. The evidence which was relied upon to establish the abuse of process may be the plaintiff's inactivity. The same evidence will then no doubt be capable of supporting an application to dismiss for want of prosecution. However, if there is an abuse of process, it is not strictly necessary to establish want of prosecution under either of the limbs identified by Lord Diplock in Birkett v James. In this case, once the conclusion was reached that the reason for the delay was one which involved abusing the process of the court in maintaining proceedings when there was no intention of carrying the case to trial the court was entitled to dismiss the proceedings."
It seems generally to be the case in this jurisdiction that applications are made to strike out for want or prosecution rather than on the basis that delay in and of itself constitutes an abuse of process. If the latter approach were to be adopted then the principles set out by Lord Woolf in Grovit v Doctor would have to be read in the light of the decision of the High Court in Williams v Spautz (1992) 174 CLR 509. Thus, it may well be necessary to show that not only were the proceedings not pursued but that it was not the intention of the party to prosecute the proceedings to a conclusion but rather to use them as a means of obtaining some advantage for which they were not designed or some collateral advantage beyond what the law offers. Insofar as the defendant based her application on an abuse of process argument I am not satisfied that the evidence establishes that the proceedings were designed to achieve some collateral benefit or in some other way were initiated for an improper purpose. This summons fails to be determined on the principles applicable to striking out for want of prosecution.
Turning then to the guidelines set out by Bray CJ in Ulowski there is no doubt that there has been a lengthy delay in this matter. The writ was issued in September of 1994, it is now 2001 and the matter has not yet been entered for trial. There has been little progress in six and a half years. In my view, this is a factor which weighs very much in the defendant's favour.
The explanation for the delay is to be found in an affidavit of Ross Anthony Torre sworn 26 March 2001 and filed in opposition to this application. Mr Torre sets out the history of the dealings between the plaintiff and the defendant. He says that the plaintiff owned property adjoining the land. It was the plaintiff's intention upon acquiring the land to subdivide both pieces of land and construct 10 residential units on the amalgamated site. Costs associated with extending the sewerage services made subdivision of the properties separately uneconomic. Mr Torre says as a consequence of the defendant's refusal to settle on the land the plaintiff's adjoining site was reduced in value and this consequently placed financial stress on the plaintiff. As I understand Mr Torre's evidence, this financial hardship was the main reason why the action has not been pursued. Mr Torre does set out certain steps taken by his solicitors from time to time and refers to the fact that a barrister originally briefed in relation to the matter retired in 1997. However, these matters would not appear to have materially affected the capacity of the plaintiff to pursue the action. Mr Torre also outlines a number of steps taken in an attempt to effect a settlement. This evidence has about it a hollow ring.
In support of her application the defendant relied upon her affidavit sworn 19 January 2001. She acknowledges that some overtures of settlement were made from time to time but none were pursued. In fact on 17 March 1997 the defendant's solicitors wrote to the plaintiff's solicitors outlining the terms upon which the defendant was prepared to settle the matter. No response was received from the plaintiff's solicitors and follow up letters were sent on 15 April 1997 and 2 May 1997. Still no response was provoked and the matter was left to rest: see affidavit of Gerard James O'Hara sworn 28 March 2001. In March 2000 the defendant was approached by one George Metaxas, a real estate agent, who raised the prospect of finding a buyer for the land. Through Metaxas the defendant invited the plaintiff to make an offer but nothing more happened. In the circumstances of this case alleged settlement negotiations could provide no basis for the plaintiff's delay.
In my view, the explanation for the delay by the plaintiff is inadequate. The affidavit of Mr Torre provides no real detail as to how it is said that the failure of the defendant to settle on the land gave rise to hardship. Such detail as there is is to be found in par 6.3 of Mr Torre's affidavit. No doubt, financing of the proposed development had about it some complexity and the failure of the plaintiff to secure the land caused difficulty. But what is put on behalf of the plaintiff by Mr Torre is really nothing more than assertions. To make out the claim that the delay in prosecuting this action was occasioned by financial hardship caused by the defendant's action a good deal more detail was required. In my view, the explanation for the delay is inadequate and unconvincing and this is a matter which weighs in favour of the defendant.
There is a dispute between the parties as to whether, if this action is dismissed, the plaintiff's cause of action will be statute‑barred. By its statement of claim the plaintiff pleads that the option was duly exercised and consequently there was an agreement for the sale of land. If that is so the plaintiff says, it has an equitable interest in the land: see Ballas v Theophilos (No 2) (1957) 98 CLR 193 per Williams J at 208. Pursuant to s 4 of the Limitation Act 1935 the limitation period in relation to actions involving land is 12 years. By virtue of s 24 the same limitation period applies to equitable actions in relation to land. The effect of dismissing this action then for want of prosecution would be that the plaintiff could commence a fresh action and not have to meet a limitation defence. The defendant, in response, says that s 4 of the Limitation Act does not apply to actions such as this and there is, at law, no limitation period. If, under the guidelines framed by Bray CJ, the plaintiff is correct this would be a factor in favour of the defendant - striking out the action will not cause hardship to the plaintiff because a fresh action could be commenced. On the other hand if the defendant is correct, it would mitigate against striking out the action.
Whether it is appropriate to strike out an action for want of prosecution when in all likelihood a fresh action will be commenced is open to question. In FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 Gaudron J dealt with this question in a context of an application for an extension of time to comply with a springing order. Her Honour said (at 288):
"Where an order for dismissal does no more than effect a situation in which fresh proceedings may be brought (involving additional expense and duplication of court time if, as here, there has been a hearing as to the issues in dispute or some of them) then it seems to me that the administration of law and justice may be well served by a power to reinstate proceedings."
The power of what her Honour has to say is not to be doubted. If this action were to be dismissed for want of prosecution and any limitation period had not expired then the plaintiff would be required to pay the defendant's costs of the action and, in all probability, could not proceed with a fresh action until those costs were paid. That might of some small advantage to the defendant. But there is presently a caveat over the land lodged by the plaintiff and at some stage the defendant will be required to take steps to remove that caveat. Inevitably, that will result in the issues raised in these proceedings being ventilated. There is much to be said for dealing with the issues between the parties in these proceedings rather than delaying the inevitable dispute to some later date in some other proceedings.
Without seeking to resolve the limitation issue it is enough if I say I am of the view the position is evenly balanced on the question of hardship to the plaintiff if the action is dismissed.
Save in one respect which I will deal with below, this is not a case where the defendant is able to point to any particular prejudice that she will suffer if the action is allowed to proceed. It is not suggested by the defendant that a witness has died or that documents have been lost or destroyed. Rather it is a case of general prejudice occasioned by the passage of time. The defendant says in her affidavit that since these proceedings were issued she has moved to Queensland and that based on the plaintiff's inactivity she had ordered her affairs on the assumption that the action had been abandoned. In light of the fact that the caveat lodged by the plaintiff remains on the land it is difficult to see how she could have made that assumption. Be that as it may, what is put by the defendant is that she has suffered general prejudice rather than particular prejudice.
The extent to which such general prejudice can be said to be a factor in the defendant's favour when the limitation period has not expired is, I think, open to question. In Brisbane South Regional Health Authority v Taylor (1996) 139 ALR 1 McHugh J when dealing with an application to extend time under a statute of limitation had this to say (at 11):
"Legislatures enact limitation periods because they make a judgment, inter alia, that the chance of an unfair trial occurring after the limitation period has expired is sufficiently great to require the termination of the plaintiff's right of action at the end of that period. When a defendant is able to prove that he or she will not now be able to fairly defend him or herself or that there is a significant chance that this is so, the case is no longer one of presumptive prejudice. The defendant has then proved what the legislature merely presumed would be the case. Even on the hypothesis of presumptive prejudice, the legislature perceives that society is best served by barring the plaintiff's action. When actual prejudice of a significant kind is shown, it is hard to conclude that the legislature intended that the extension provision should trump the limitation period. The general rule that actions must be commenced within the limitation period should therefore prevail once the defendant has proved the fact or the real possibility of significant prejudice. In such a situation, actual injustice to one party must occur. It seems more in accord with the legislative policy underlying limitation periods that the plaintiff's lost right should not be revived than that the defendant should have a spent liability reimposed upon it. This is so irrespective of whether the limitation period extinguishes or merely bars the cause of action."
There is, as I have said, one aspect of this case where it might be said that the defendant will suffer real prejudice. On the evidence there is no dispute that as at May 1994 $240,000 was a fair value for the land. Subsequently, perhaps due to a rezoning and perhaps to prevailing market conditions the value of the land declined. Mr Torre says in his affidavit (par 6.3) that as of 1996 the land was worth $165,000. Both parties agree that now it is worth in the region of $375,000. If the plaintiff is successful then it will acquire the land for perhaps two-thirds of its present value. This the defendant says is a particular prejudice she will suffer. If the action had been pursued she would not now be in this position. Counsel for the defendant submitted that there was real doubt that, in the circumstances, the remedy of specific performance was available. Reference was made to the decision of the Full Court in Boomalli Ltd v Hake (1985) WAR 7 and in particular the reference by the Court to the work Spry: Equitable Remedies. The reference in Boomalli Ltd v Hake is to the second edition of that work. The fourth edition dealing with actions for specific performance puts the position as follows (at 230):
"Further circumstances where delay may render the grant of relief unjust arise where the defendant has indicated, whether by expressly repudiating the contract or otherwise, an intention not to perform his obligations and then, through the delay of the plaintiff, has been exposed to undue doubt and certainty. Here the very fact that the defendant has been held unfairly in suspense may lead the court in its discretion to refuse the plaintiff relief. This consideration is of additional weight where the material agreement concerns property of a fluctuating value, for in such cases the plaintiff 'should show himself in good time willing to participate in possible loss as well as profit, not play a game in which he alone risks nothing. It has, indeed, been said more generally, 'Equity will not allow the possibility of its making such a decree to be held unfairly long over the head of the party who denies the existence of the contract and asserts a right to deal with the property as his own'. This consideration has particular weight also where the material agreement comprises an option to purchase, or is otherwise one that, if performed, will substantially affect the enjoyment by the defendant of his property or the value of consideration received by him. In these circumstances especially unreasonable delay may render it unjust that the defendant should be kept unduly in suspense."

The principles set out above deal with the question of whether or not the remedy of specific performance ought be available in circumstances where the plaintiff has delayed taking action and a defendant has consequently been prejudiced. But these are matters which are properly to be raised in the context of the application itself. They are considerations to be taken into account in determining whether in the Court's discretion specific performance ought be ordered. In my view, they are not matters which should properly be considered in the context of an application to strike out for want of prosecution.
Finally, there is the question of the conduct of the defendant in the litigation. In no way could it be said that the defendant has frustrated or delayed this action. True it is that she has taken no steps to enter the matter for trial and she could, of course, have done so. But the primary responsibility for the conduct of these proceedings rests with the plaintiff and in my view no criticism can be directed at the defendant for the way in which she has responded to this action.
In the end, taking all matters into consideration I am not satisfied that this is a case where the action ought be struck out for want of prosecution. I am not satisfied that in the circumstances of this case the delay is such as to hopelessly prejudice the capacity of the Court to fairly try the issues in the litigation. Furthermore, there is a real prospect if this action is struck out a new action will be commenced by the plaintiff and further delay will be occasioned to the parties. In my view, that is in no ones interest. While the actions of the plaintiff fall well short of what is required of a party seeking to bring a matter before this Court they are not such as in all the circumstances warrant the action being struck out.
I would therefore dismiss the defendant's chamber summons. I will hear the parties as to the precise form of order and as to costs.