Sakalidis v Australian Diamond Exploration NL
[2003] WASC 258
SAKALIDIS & ANOR -v- AUSTRALIAN DIAMOND EXPLORATION NL [2003] WASC 258
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 258 | |
| Case No: | CIV:1777/1996 | 19 NOVEMBER 2003 | |
| Coram: | MASTER NEWNES | 18/12/03 | |
| 17 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | GEORGE SAKALIDIS BARRINGTON DANCE AUSTRALIAN DIAMOND EXPLORATION NL |
Catchwords: | Practice and procedure Application to strike out for want of prosecution Inordinate and inexcusable delay Prejudice Turns on own facts |
Legislation: | Supreme Court Rules, O 1 r 4A, r 4B |
Case References: | Birkett v James [1978] AC 297 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Duke v Royal Star Pty Ltd [2001] WASCA 273 Duke v Royalstar Pty Ltd [2001] WASCA 273 Hughes v Gales (1995) 14 WAR 434 Leyburd Nominees Pty Ltd v Coates Brown, unreported; FCt SCt of Vic; 12 September 1995 Putnin as official liquidator of Lombardo Ltd (In Liq) v Kane, unreported; SCt of WA (Master Sanderson); Library No 980454; 11 August 1998 Sangora Holdings Pty Ltd & Anor v Hodder & Anor [2003] WASCA 108 Spitfire Nominees Pty Ltd v Thompson & Hall [1999] VSC 12 State of Queensland v JL Holdings (1997) 189 CLR 146 Ulowski v Miller [1968] SASR 277 West Coast Clothing Co Pty Ltd v Sail America Foundation for International Understanding, unreported; SCt of WA; Library No 940482; 7 September 1994 Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 Arcadia Holdings Pty Ltd v Brown [2002] WASC 44 Brinkworth v The Commonwealth of Australia, unreported; SCt of WA; Library No 980357; 26 June 1998 Bristow Helicopters Ltd v Global Marine Drilling Co [1981] WAR 108 Brixton Nominees Pty Ltd v Hardiman [2002] WASC 3 Carter v Standen, unreported; FCt SCt of WA; Library No 970271; 28 May 1997 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 Department of Transport v Chris Smaller (Transport) Ltd [1989] AC 1197 Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431 Dzienciol v Logie Brae Pty Ltd, unreported; FCt SCt of WA; Library No 980078; 25 February 1998 Gould v Vaggelas (1985) 157 CLR 215 Helmy v SBF Engineering Pty Ltd [2001] WASC 241 Jennings Construction Ltd v McNulty [2000] WASCA 348 La Trobe Country Credit Co-operative Ltd v Smith [1999] 1 VR 440 Newman v Victoria, unreported; SCt of Vic (McDonald J); 25 August 1995 Paxton v Blenkinsop Nominees Pty Ltd [2002] WASC 93 Pinson v Lloyds & National Provincial Foreign Bank Ltd [1941] 2 KB 72 R v Lawrence [1982] AC 510 Roebuck v Mungovin [1994] 2 AC 224 Stollznow v Calvert [1980] 2 NSWLR 749 Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- BARRINGTON DANCE
Plaintiffs
AND
AUSTRALIAN DIAMOND EXPLORATION NL
Defendant
Catchwords:
Practice and procedure - Application to strike out for want of prosecution - Inordinate and inexcusable delay - Prejudice - Turns on own facts
Legislation:
Supreme Court Rules, O 1 r 4A, r 4B
Result:
Application dismissed
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Category: B
Representation:
Counsel:
Plaintiffs : Mr D M Stone
Defendant : Mr C W Lockhart
Solicitors:
Plaintiffs : Williams & Hughes
Defendant : Pullinger Readhead Stewart
Case(s) referred to in judgment(s):
Birkett v James [1978] AC 297
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
Duke v Royal Star Pty Ltd [2001] WASCA 273
Duke v Royalstar Pty Ltd [2001] WASCA 273
Hughes v Gales (1995) 14 WAR 434
Leyburd Nominees Pty Ltd v Coates Brown, unreported; FCt SCt of Vic; 12 September 1995
Putnin as official liquidator of Lombardo Ltd (In Liq) v Kane, unreported; SCt of WA (Master Sanderson); Library No 980454; 11 August 1998
Sangora Holdings Pty Ltd & Anor v Hodder & Anor [2003] WASCA 108
Spitfire Nominees Pty Ltd v Thompson & Hall [1999] VSC 12
State of Queensland v JL Holdings (1997) 189 CLR 146
Ulowski v Miller [1968] SASR 277
West Coast Clothing Co Pty Ltd v Sail America Foundation for International Understanding, unreported; SCt of WA; Library No 940482; 7 September 1994
Case(s) also cited:
Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229
Arcadia Holdings Pty Ltd v Brown [2002] WASC 44
Brinkworth v The Commonwealth of Australia, unreported; SCt of WA; Library No 980357; 26 June 1998
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Bristow Helicopters Ltd v Global Marine Drilling Co [1981] WAR 108
Brixton Nominees Pty Ltd v Hardiman [2002] WASC 3
Carter v Standen, unreported; FCt SCt of WA; Library No 970271; 28 May 1997
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Department of Transport v Chris Smaller (Transport) Ltd [1989] AC 1197
Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431
Dzienciol v Logie Brae Pty Ltd, unreported; FCt SCt of WA; Library No 980078; 25 February 1998
Gould v Vaggelas (1985) 157 CLR 215
Helmy v SBF Engineering Pty Ltd [2001] WASC 241
Jennings Construction Ltd v McNulty [2000] WASCA 348
La Trobe Country Credit Co-operative Ltd v Smith [1999] 1 VR 440
Newman v Victoria, unreported; SCt of Vic (McDonald J); 25 August 1995
Paxton v Blenkinsop Nominees Pty Ltd [2002] WASC 93
Pinson v Lloyds & National Provincial Foreign Bank Ltd [1941] 2 KB 72
R v Lawrence [1982] AC 510
Roebuck v Mungovin [1994] 2 AC 224
Stollznow v Calvert [1980] 2 NSWLR 749
Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323
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1 MASTER NEWNES: This is an application by the defendant for an order that the plaintiffs' claim be struck out for want of prosecution.
2 The action was commenced on 29 July 1996. A statement of claim was filed on 2 September 1996. In it, the plaintiffs allege that, by an agreement dated 1 July 1989 (the "agreement"), the plaintiffs and the defendant agreed to a joint venture with a view to the location of aeromagnetic signatures, due to kimberlitic rocks, from aeromagnetic data owned by the plaintiffs. Under the agreement, the defendant was to be given access to the plaintiffs' aeromagnetic data and the defendant would, when it located aeromagnetic signatures, draw circles around those signatures on the relevant maps, and the areas so marked would be designated as subjoint venture ("SJV") areas. The defendant would be entitled to take the plaintiffs' aeromagnetic data relating to such areas, and their topographic maps showing the areas concerned, with a view to copying them and using them for exploration for minerals.
3 The plaintiffs plead that it was an express term of the agreement that, if a decision was made to mine a kimberlite pipe or other commodity located as a result of the defendant's examination of the electromagnetic data, the defendant would pay the plaintiffs the sum of $200,000.
4 It is alleged that one of the areas designated as an SJV included an area that is within what is now mining lease 27/200 and is commonly known as the Silver Swan Nickel Discovery. The plaintiffs say that the Silver Swan Nickel Discovery was located as a result of the work carried out by the defendant under the agreement. They say that, on or about 24 June 1996, a decision was made to mine nickel, located as a result of work done under the agreement, from mining lease 27/200, and the defendant is entitled to a royalty from those engaged in the mining work on the nickel recovered from the mine. The plaintiffs claim the sum of $200,000 from the defendant under the agreement.
5 The defence was filed on 23 September 1996. In its defence, the defendant admits that the parties entered into a written agreement dated 1 July 1989, but says that, although in terms it purported to be a joint venture agreement, in fact it was a contract for services to be provided by the plaintiffs to the defendant for certain consideration. The defendant otherwise substantially admits the terms of the agreement pleaded by the plaintiffs, save that the defendant says that, on the proper construction of the agreement, a payment of $200,000 was payable only if, during the currency of the agreement, a decision was made by the defendant to mine a kimberlite pipe or other commodity. The defendant pleads that the
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- agreement terminated when the defendant completed testing of all the SJVs, which it did prior to November 1993, or alternatively, upon the defendant giving notice to the plaintiff that it did not intend testing any more of the aeromagnetic signatures within the SJVs, which notice was given in November 1993.
6 The defendant denies that it ever made a decision to mine nickel on mining lease 27/200 and also denies that the Silver Swan Nickel Discovery was located as a result of work done under the agreement. It admits that it is entitled to a royalty as a result of the nickel discovery on mining lease 27/200, but denies any liability to the plaintiffs.
7 On 24 September 1996, the plaintiffs sought particulars of the facts relied upon for the (implicit) allegation in the defence that the Silver Swan Nickel Discovery was located as a result of work other than that done under the agreement. The defendant provided those particulars on 11 October 1996. The defendant says that the nickel discovery was located entirely as a result of work carried out by one or more of Outokupu Exploration Ventures Pty Ltd ("OEV"), Mining Project Investors Pty Ltd ("MPI") and Fodina Minerals Pty Ltd ("Fodina"). It says that those parties were not prepared to provide full particulars of their exploration programme. The defendant said that the results of the work carried out by the defendant under the agreement were not communicated to any of those parties.
8 Discovery was given by the plaintiffs on 17 October 1996 and by the defendant on 11 November 1996. An application by the plaintiffs for discovery of particular documents was dismissed on 20 February 1997.
9 No steps were taken in the action from February 1997 until a notice of intention to proceed was filed on behalf of the plaintiffs on 14 May 1998. On 16 December 1998, the plaintiffs filed an application for a separate trial of the issue of the true construction of the agreement. On 19 March 1999, that application was dismissed.
10 The matter fell dormant again. A notice of intention to proceed was filed on behalf of the plaintiffs on 21 March 2000, but no steps were taken following that notice. Another notice of intention to proceed was filed on behalf of the plaintiffs on 26 March 2003.
11 On 4 August 2003, more than four years after the last substantive step was taken in the action, the plaintiffs applied for leave to amend the writ and statement of claim and to adduce expert evidence. On 25 August
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- 2003, the defendant applied to strike out the plaintiffs' claim for want of prosecution.
12 The proposed amendments to the writ and statement of claim are significant in the context of this application and it is therefore necessary to describe them. By the proposed amendments, the plaintiffs seek to introduce two additional claims relating to nickel discoveries on mining lease 27/200, being described in the statement of claim as the Cygnet Nickel Discovery and the Gosling Nickel Discovery respectively. It is alleged that, in or about 1999 or 2000, a decision was made to mine nickel from the Cygnet Nickel Discovery and a royalty was to be paid to the defendant. It is further alleged that, on or about 22 February 2002, a decision was made to mine nickel from the Gosling Nickel Discovery, for which the defendant was again to receive a royalty. The plaintiffs say that, in each case, the nickel was located as the result of work done under the agreement. The plaintiffs claim the sum of $200,000 in respect of each of the Cygnet and Gosling Nickel Discoveries.
13 It was not in issue that it is open to the plaintiffs to institute proceedings against the defendant in respect of the new claims, in the sense that, on their face, the claims are not statute-barred. But the defendant says, in effect, that if the plaintiffs wish to make those claims, they should be made in fresh proceedings and that the current proceedings should be struck out. The plaintiffs, on the other hand, contends that there is a substantial overlap, if not a commonality of issues, between the new claims and the existing claim, which is a compelling reason, of itself, not to strike out the existing claim and which make it convenient to hear all the claims together.
14 The principles to be applied on this application were not in dispute. In Birkett v James [1978] AC 297 the House of Lords held that the power of a court to dismiss an action for want of prosecution should be exercised only where the plaintiff's default has been intentional and contumelious, or where there has been inordinate and inexcusable delay on the part of the plaintiff giving rise to a substantial risk that a fair trial would not be possible or would cause serious prejudice to the defendant.
15 It is well-established that the primary considerations in applying those principles are the length of the delay, the explanation for the delay, the hardship to the plaintiff and the prejudice to the defendant: Ulowski v Miller [1968] SASR 277 per Bray CJ, at 280, Lewandowski & Ors v Lovell (1994) 11 WAR 124 at 133, Duke v Royalstar Pty Ltd [2001] WASCA 273, at [10]; Sangora Holdings Pty Ltd & Anor v Hodder &
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- Anor [2003] WASCA 108. In the end, as the Full Court emphasised in Sangora, what is required is a balancing of the relevant interests.
16 It was submitted on behalf of the defendant that, in the light of the case flow management principles enshrined in O 1 r 4A and r 4B of the Supreme Court Rules, in an appropriate case delay alone is sufficient to justify dismissal of an action. Counsel referred to West Coast Clothing Co Pty Ltd v Sail America Foundation for International Understanding, unreported; SCt of WA; Library No 940482; 7 September 1994, affirmed in Hughes v Gales (1995) 14 WAR 434 at 449 - 50. The defendant contended that the delay in this case was sufficient, of itself, to justify the action being struck out. In that respect, it was submitted, it is also relevant that, if the matter did proceed, there would be further delay before the action was finally resolved because the trial would not take place within the next 12 months, given the state of the matter and of the Court lists.
17 In Westcoast Clothing, while Master Adams did refer to the possibility that case flow management principles "may … justify dismissal on the grounds of delay alone without the need for any other ingredient to be established", the question of whether, and if so in what circumstances, delay itself would be sufficient was expressly left open. It was unnecessary to decide it in that case and, in my view, it is unnecessary to decide it in this case. I might say, however, that, unless the delay leads to an inference of prejudice, the circumstances in which delay alone might justify dismissal of an action are not easy to conceive, particularly having regard to the decision of the High Court in State of Queensland v JL Holdings (1997) 189 CLR 146. In any event, I do not consider that the delay in the present case would, of itself, justify dismissal.
18 Having said that, I am satisfied that the delay is inordinate. The action was commenced in July 1996. The pleadings were closed and discovery given by November 1996. Apart from the application for the trial of a preliminary issue, filed in May 1998 and disposed of in March 1999, no further steps were taken in the action until August 2003, when the application to amend the writ and statement of claim and to adduce expert evidence was filed. The delay, by any standards, has been manifestly excessive. It is therefore necessary to turn to the question of whether the delay is inexcusable.
19 The reason proffered for the delay is that, having failed to secure an order for a trial of a preliminary issue on the construction point, the
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- plaintiffs effectively ran out of money to fund the action. It is said that their financial circumstances took a turn for the better in April 2003, as a result of which they gave notice of intention to proceed.
20 In support of that explanation, the defendant filed an affidavit of the first-named plaintiff, Mr Sakalidis, sworn 17 September 2003. In that affidavit, Mr Sakalidis says simply that he and Mr Dance lacked the financial resources to pursue the action on all issues until April 2003, when a takeover of Magnetic Minerals Ltd, a company in which the plaintiffs were each major shareholders, was completed and their financial position changed. Mr Sakalidis also says that the defendant did not give any notice of its concern about the delay. If it had, other means of raising the necessary funds, for example, by mortgage over the plaintiffs' respective houses, would have been investigated. Mr Sakalidis goes on to say that he and Mr Dance knew there was still a lot of activity going on in the area in which the Silver Swan Nickel Discovery was made and they believed that they might be able to bring other claims in relation to further discoveries within the SJV areas.
21 The financial position of the plaintiffs is contested by the defendant. In an affidavit sworn on 22 September 2003, the defendant's solicitor, Mr Stewart, refers to a copy of a search of the records of the Australian Investments and Securities Commission ("ASIC") from which it appears that on the first date of the quotation of Magnetic Minerals Ltd on the Australian Stock Exchange ("ASX") on 17 October 2000, Mr Sakalidis held 1,537,547 shares and Mr Dance held 766,486 shares. Mrs Dance held 759,486 shares. As at 17 September 2003, those shareholdings remained the same. A history of the trading price of the shares of Magnetic Minerals Ltd between 21 October 2000 and 15 March 2003, obtained from the records of ASIC, shows the lowest closing price for the shares of Magnetic Minerals Ltd was 18 cents and the highest was 63 cents. On the assumption that each person's shareholding remained constant, the value of Mr Sakalidis' shares over that period ranged from $276,758.46 to $968,654.61, Mr Dance's shares from $137,967.48 to $482,886.18 and Mrs Dance's from $136,707.48 to $478,476.18.
22 Mr Stewart also refers to the prospectus issued by Magnetic Minerals Ltd, a copy of which is annexed to his affidavit, from which it appears that, as managing director of the company, Mr Sakalidis was to be paid an annual salary of $175,000 from the date the company listed.
23 It also appears from title searches conducted on behalf of the defendant that since 20 March 1975, Mr Dance has owned, with his wife,
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- a property in Waikiki, which has been remortgaged on three occasions, and another property in Waikiki, also jointly with his wife, which was purchased in November 1995.
24 In response, Mr Sakalidis has filed an affidavit in which he says that, under the ASX listing rules, the shares he and Mr Dance held were required to be held in escrow for a period of 24 months from 13 October 2000, and could not be sold or provided by way of security in that period. The escrow period ended on 12 October 2002. Mr Sakalidis says, however, that, even after that date, the shares were not available to him or to Mr Dance because, on 26 July 2002, Magnetic Minerals Ltd and Ticor Ltd announced to the ASX that they had entered into an Exclusive Due Diligence Programme and Option Agreement. On 16 December 2002, Magnetic Minerals Ltd announced to the ASX that Ticor had made a takeover bid. The takeover was not completed until the beginning of March 2003. Mr Sakalidis says that, as directors of Magnetic Minerals Ltd, he and Mr Dance became aware of price sensitive information, so that they would have been in breach of s 1043A of the Corporations Act2001 (Cth) if they had sold any of the shares between 26 July 2002 and the beginning of March 2003.
25 Mr Sakalidis says that, in March 2003, his shares and those of Mr Dance were acquired by Ticor as part of the takeover. It appears from the documents annexed to his affidavit that Mr Sakalidis' shares were acquired for the sum of $845,650.85 or 55 cents per share. Presumably, Mr Dance's shares were acquired at the same price. Mr Sakalidis says he does not know why the shares still appear in his name, and Mr Dance's name, in the company's share register.
26 No affidavit has been sworn by Mr Dance, but, according to Mr Sakalidis, from 1983 to 1997 Mr Dance was a partner in a small business known as Advanced Reprographic Services. Mr Sakalidis says that the business was funded through business loans and an overdraft secured against the personal assets of Mr Dance and his partner. From 1997, Mr Dance has funded other small business ventures in a similar way. According to Mr Sakalidis, the Waikiki property purchased in 1995 was purchased for Mr Dance's son and the loan is serviced by the son through the Dance Family Trust.
27 As I have said, the delay in this case has been inordinate. It calls for a proper explanation by the plaintiffs. I do not regard the explanation advanced as satisfactory. To support such an explanation, a much fuller and franker description of the respective financial circumstances of each
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- of the plaintiffs over the relevant period should have been provided. Instead, the plaintiffs, by Mr Sakalidis, have limited themselves simply to responding to the information about their financial affairs which the defendant has been able to glean from public records. Otherwise, the plaintiffs have proffered nothing beyond a bare assertion of financial incapacity.
28 It appears, moreover, from the information located by the defendant that the full picture of the plaintiffs' financial circumstances has not appeared in the evidence. I have mentioned that, according to the prospectus, Mr Sakalidis was to receive a salary of $175,000 per annum from the listing of Magnetic Minerals Ltd. Under his agreement with the company, he was required to devote 75 per cent of his time to the company's affairs. The prospectus states that Mr Sakalidis had, at that time, over 19 years' experience as an exploration geophysicist and, with others, had compiled the second-largest aeromagnetic database in Australia, which was then held by Magnetic Resources NL. The prospectus says that, using the database, Mr Sakalidis had been involved in a number of discoveries, including two gold discoveries. It also says that Mr Sakalidis was previously a director of Northern Star Resources NL.
29 In the light of his background and qualifications, it is reasonable to infer that Mr Sakalidis has been able to devote the 25 per cent of his time not required for the affairs of Magnetic Minerals Ltd, to remunerative work. There is, however, in his affidavit no mention of his income or his assets over the period of this litigation. In relation to his assets, it is notable that the prospectus refers to Mr Sakalidis holding 19.2 per cent of the issued shares in Magnetic Resources NL. There is no reference anywhere in the affidavit material to the value of Mr Sakalidis' interest in Magnetic Resources NL. It appears, however, that at the date of the prospectus, Magnetic Resources NL held 2,000,000 shares or 12% of the issued capital of Magnetic Minerals Ltd. According to the prospectus, Magnetic Resources NL had sold its Dongara project to Magnetic Minerals Ltd for $300,000, of which $200,000 had been paid and $100,000 was payable on the listing of Magnetic Minerals Ltd.
30 It is also notable that it appears from the prospectus that Mr Sakalidis underwrote the issue of shares in Magnetic Minerals Ltd, at an offer price of 30 cents, to the extent of 350,000 shares.
31 All of that suggests that at the time Mr Sakalidis was not without financial resources.
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32 I should mention that there is no reason to doubt the accuracy of the information in the prospectus concerning Mr Sakalidis. The directors' authorisation of the prospectus was signed by Mr Sakalidis as managing director of Magnetic Minerals Ltd.
33 The position in relation to Mr Dance is even more unsatisfactory. Mr Dance has not filed any affidavit in relation to this application. The only information as to his financial circumstances is that contained in Mr Sakalidis' affidavit. Once again, there is no mention of Mr Dance's income or assets over the period of this litigation. There is, however, a reference in Mr Sakalidis' affidavit to the Dance Family Trust, but there is no mention of whether Mr Dance has any interest in that.
34 The fact that the plaintiffs have made no real attempt to set out their financial circumstances over the relevant period suggests that a frank disclosure of their full financial position would not have assisted their case. That view is reinforced by the information in the prospectus which, as I have said, alludes to there being more to their financial affairs than has been disclosed by the evidence.
35 It was submitted by the defendant that the real explanation for the delay is probably to be found in the statement in Mr Sakalidis' affidavit of 17 September 2003 that he and Mr Dance knew there was a lot of activity in the area and that they might, at some stage, be able to bring other claims. In any event, no proper explanation has been provided for the delay.
36 I accept that there has been no proper explanation. The explanation of financial hardship which has been proffered has not been made out. Accordingly, in my view, the delay is not only inordinate, but inexcusable.
37 It was submitted on behalf of the defendant that it would suffer serious prejudice if the matter were allowed to proceed to trial. Although there was affidavit evidence on both sides as to the question of the availability of specific witnesses, I understood that, in the end, the defendant put its case on the ground of general prejudice, due to the effluxion of time, and specific prejudice due to the death of a person who was said to be an important witness.
38 On the question of general prejudice, counsel for the defendant referred to the oft cited statement of McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, at 551:
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- " … prejudice may exist without the parties or anyone else realising that it exists. … 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. … The longer the delay in commencing proceedings, the more likely it is the case will be decided on less evidence than was available to the parties at the time of the cause of action."
- It was submitted that general prejudice may be suffered due to the effluxion of time, as witnesses' recollections fade, and it is not necessary that there should always be evidence of when, and in what respects, witnesses' memories have faded. The defendant submitted that it was entitled to rely on an inference that generally the recollection of witnesses, including expert witnesses, would have faded, with the result that there was real prejudice to the defendant: Shtun v Zalejska [1996] 3 All ER 411, Duke v Royal Star Pty Ltd [2001] WASCA 273, at [35].
39 It was further submitted that there was specific prejudice in this case in that the managing director of MPI at the time the decision was made to mine Silver Swan Nickel Discovery, Mr Ken Fletcher, died in a car accident in Victoria in September 2002. In that regard, two affidavits have been filed on behalf of the defendant. One is an affidavit of Ian Neuss, sworn 18 November 2003. Mr Neuss is, and has been since 1992, an executive director of OEV. Mr Neuss says that in or about June 1992, OEV and Fodina (a subsidiary of MPI Ltd) formed the Base Metals Joint Venture to explore for minerals in Western Australia. In about 1995, it reached an agreement with the then holders of, among others, mining lease 27/200, to acquire a 100 per cent interest in the tenement.
40 In about May 1995, nickel sulphide mineralisation was discovered on mining lease 27/200. Mr Neuss says that OMA and Fodina formed a new management company, Black Swan Nickel Pty Ltd, to exploit what subsequently became the Silver Swan Shoot. Fodina was appointed the manager of Black Swan Nickel Pty Ltd. The "directions and parameters for" Black Swan Nickel Pty Ltd were determined by the Base Metals Joint Venture. The joint venture representatives included Mr Fletcher and Mr Evans on behalf of Fodina. The joint venture meetings were held approximately every six months and were co-ordinated and chaired by Mr Fletcher.
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41 An affidavit has also been filed by a former director of MPI, Mr David Burt. Mr Burt was a director of MPI between May 1992 and April 2001. During that period, Mr Fletcher was the managing director of MPI. In his affidavit, Mr Burt says that after the discovery of nickel on ML 27/200 a joint venture was formed between Fodina and OEV and a committee was formed to manage it. The committee consisted of Messrs Burt, Fletcher and Evans for Fodina and three representatives of OEV. According to Mr Burt, Mr Fletcher effectively managed the joint venture. Mr Fletcher would confer with the other directors of MPI and the OEV joint venture committee members concerning significant matters arising out of the joint venture operation. He would also canvass opinions within MPI from its geologists, technical committee and others. According to Mr Burt, Mr Fletcher had a significant role in the joint venture's decision in about November 1995 to mine the Silver Swan Nickel Discovery. As managing director of MPI, Mr Fletcher was responsible for making recommendations to the MPI board in relation to the development.
42 It was submitted by the defendant that, although it was impossible to say how significant Mr Fletcher's evidence would have been, it is clear that he was a key participant in the decision to mine Silver Swan. On the defendant's case, the plaintiffs need to show that the decision to mine was made on the basis of work done under the agreement. There is, therefore, a serious risk that the plaintiffs' claim cannot now be tried fairly: Leyburd Nominees Pty Ltd v Coates Brown, unreported; FCt SCt of Vic; 12 September 1995; Spitfire Nominees Pty Ltd v Thompson & Hall [1999] VSC 12, at [42]; Putnin as official liquidator of Lombardo Ltd (In Liq) v Kane, unreported; SCt of WA (Master Sanderson); Library No 980454; 11 August 1998.
43 Accordingly, the defendant says that if, after the long delay, the matter is allowed to proceed it will be severely prejudiced both generally because the recollection of witnesses will inevitably have faded and, specifically, because an important witness, Mr Fletcher, is no longer available. As Mr Fletcher died in 2002, there is little doubt that had the action been pursued with appropriate expedition he would have been available to give evidence at the trial.
44 The plaintiffs submitted first, that, on the proper construction of the agreement, namely, that the plaintiffs are entitled to a payment of $200,000 if the use of the aeromagnetic data was the first step leading to a decision to mine minerals, the case will not turn on oral evidence, but simply on the legal interpretation of known facts. Secondly, it was argued that the defendant has not led any persuasive evidence that the memories
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- of any relevant witnesses are hazy or unreliable, nor has the defendant specified what those witnesses will give evidence about.
45 The plaintiffs submitted that they had done substantial work in respect of the claim and it was close to the point at which it could be entered for trial. All that work would be lost and the claim itself would be statute-barred if it were struck out.
46 It is clear that a decision to dismiss a claim after the limitation period has expired will not be made lightly. The hardship to the plaintiffs in this case is obvious. Their claim will be statute-barred and the expenditure they have incurred to date in the action will have been wasted.
47 Counsel for the plaintiffs submitted that, upon analysis, the defendant's claims of prejudice have not been made out, even accepting the defendant's contention that questions as to the circumstances in which the minerals were discovered and who made the decision to mine, and on what basis, are relevant. It was reasonable to assume that full statements must have been taken in 1996 from the witnesses employed by the defendant to enable the defence to be drawn. Counsel argued that there is, moreover, no persuasive evidence that any witness proposed to be called by the defendant would be unable to recall relevant facts. The period of time since the mining work referred to in the statement of claim commenced is not so lengthy that it can reasonably be inferred that memories of the relevant events will have so faded that a fair trial of the issues is no longer possible.
48 In his affidavit sworn 25 August 2003 and filed on behalf of the defendant, Mr Stewart refers to recent conversations he has had with three witnesses, each of whom has left the defendant's employment. Mr Stewart says that in each case the witness said that he has only a limited and general recollection of the arrangements between the plaintiffs and the defendant between 1989 and 1992 and no longer holds notes or diaries from that period.
49 One of those witnesses, however, has been contacted by the plaintiffs' solicitors and in a letter of 14 September 2003 to the plaintiffs' solicitors that witness said he believes that his recollection of events is quite clear. He confirms that he has no notes but says that any documents were the defendant's property and remained with it. He also indicates support for the plaintiffs' case.
50 I should say that it was not suggested that there was anything untoward about the statements made by Mr Stewart in his affidavit, but I
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- accept, as submitted by the plaintiffs' counsel, that the different responses by the witness to the inquiries made of him indicates the caution with which statements of the generality made by the witnesses to Mr Stewart must be treated. I should also mention that it is not apparent from the evidence whether any of the witnesses referred to by Mr Stewart gave proofs of evidence in the early stages of the action. Nor is it apparent that their evidence of the events of 1989 – 1992 will be relevant to the issues that arise in the case.
51 It appears from the affidavit of the defendant's corporate counsel, Mr Mark Sokolich, sworn 29 August 2003, that most of the witnesses previously employed by the defendant are no longer in its employ. Mr Sokolich says they are now scattered around the country and have commitments to other employers, which will make them more difficult to locate and increase the problems associated with gaining their co-operation and attendance at a trial. It is not asserted, however, that those problems are insuperable. What also does not appear from the evidence is when those employees left the defendant's employment, and, in particular, whether they were still employed by the defendant at the time that the trial would have taken place in the ordinary course.
52 It was also submitted on behalf of the defendant that most of the relevant witnesses are people who were never employees of the defendant and the passage of time will inevitably have aggravated the problems associated with locating them and, once again, in gaining their co-operation and attendance at a trial.
53 Apart from Mr Fletcher, there is, however, no substantial evidence that any of the material witnesses cannot be located or would not be available to give evidence at the trial if the matter proceeds. On the basis of affidavits filed on behalf of the plaintiffs, it seems that their solicitors have been able to locate many of the people concerned quite quickly. It appears that one of the witnesses has moved to Canada to take up a position as president of a Canadian mining company but there is no evidence that he would not be prepared to return to Australia to give evidence.
54 Moreover, the nature and extent of the oral evidence that would be given at the trial is by no means clear from the material before me. In the ordinary course, it is to be expected that there would be extensive documentation relating to the arrangements between the plaintiffs and the defendants, and in connection with the exploration which the defendant says led to the discovery of the nickel and with the decision to mine.
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- There is no suggestion by the defendant that relevant records are no longer, or are unlikely to be, available.
55 It is the case that Mr Fletcher is no longer available to give evidence, but it is not apparent how significant his evidence would have been. Mr Fletcher was only one of three representatives of Fodina, and only one of six members, on the joint venture management committee. So far as the activities and deliberations of that body may be relevant to the issues in the action, there remain the other Fodina representative and the OEV representatives, apart from any documentary evidence. It is not clear that, in terms of relevant evidence, anything turns on the fact, referred to in Mr Burt's affidavit, that Mr Fletcher chaired and co-ordinated the meetings or that he was managing-director of MPI. It is also not clear on the materials before me whether Mr Fletcher would have been able to give evidence on the issue of how the minerals came to be located.
56 There can be no doubt that the quality of justice deteriorates as time passes between the relevant events and the trial of the action. That is particularly so in cases where a long passage of time passes before proceedings are commenced, so that the need to gather the relevant documents and obtain proofs of evidence is not apparent until documents have been misplaced or destroyed and the witnesses' memories of apparently uncontroversial events have naturally faded, and also in cases where the primary source of the material facts lies in the recollections of witnesses rather than in extant business or official records.
57 In the present case, the proceedings were commenced within a matter of weeks of the alleged cause of action arising. Pleadings were exchanged and discovery of documents given promptly. Presumably, proofs of evidence of at least the most significant witnesses were taken to enable the defence to be drawn. With the exception of Mr Fletcher, to whom I have referred, it does not appear that any material witnesses who would have been available to give evidence if the matter had been pursued with proper expedition are no longer available. Nor does it appear that significant documents are no longer available. In a matter of this nature, it is reasonably to be assumed that business and other records will have a significant, if not critical, part to play.
58 It was also submitted on behalf of the plaintiffs that an important consideration on this application is the fact that the plaintiffs intend to pursue two additional claims arising out of the same facts. Those claims are not statute-barred and can be brought by fresh proceedings if necessary. It was argued that, as the same issues would have to be
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- canvassed in those claims as in the current claim, little point would be served by striking out the latter.
59 The defendant acknowledged that there was an overlap between the new claims and the existing claims, but did not accept that identical issues will arise out of the claims. It was submitted that on the defendant's case, in respect of each claim there will be separate questions of fact as to whether the nickel concerned in that particular claim was located as a result of work done under the agreement and on what basis the decision to mine was made.
60 The precise extent of the overlap between the existing claim and the new claims is impossible to determine on the material before me, but it is evident, and it was accepted by the defendant, that inevitably there would be some common elements. I cannot tell with any confidence whether they are as great as the plaintiffs contend or as limited as the defendant contends. It appears that the Cygnet and Gosling discoveries are immediately adjacent to the Silver Swan Nickel Discovery and that the exploration and mining work on the former deposits has been carried out by the same companies as the defendant says located the minerals and are carrying out the mining work on the latter deposit. There is no evidence as to whether or not the same individuals in those companies were involved in the location of the minerals and the decision to mine respectively in relation to each nickel deposit.
61 Whilst there has been inordinate and inexcusable delay in this action by the plaintiffs, on balance I am not satisfied that the delay is such as to give rise to a substantial risk that a fair trial would no longer be possible or would otherwise cause such prejudice to the defendant that the interest of justice require the plaintiffs' claim to be struck out.
62 I would, therefore, refuse the application.
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