Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No 2)
[2006] VSC 241
•5 July 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 4051 of 2000
| TENTH VANDY PTY LTD (ACN 005 335 820) | Plaintiff |
| v | |
| NATWEST MARKETS AUSTRALIA PTY LTD (ACN 002 987 957) | Defendant |
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JUDGE: | HARGRAVE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19 May 2006 | |
DATE OF JUDGMENT: | 5 July 2006 | |
CASE MAY BE CITED AS: | Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No 2) | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 241 | |
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Practice and Procedure – proceeding struck out with a right of reinstatement under case management rules – application to reinstate proceeding – applicable principles – want of prosecution – whether impecuniosity of plaintiff excuses inordinate delay – application for reinstatement dismissed because proceeding would, if reinstated, be dismissed for want of prosecution.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Selimi | Radebe & Associates |
| For the Defendant | Mr J Styring | Mallesons Stephen Jaques |
HIS HONOUR:
Introduction
On 22 August 2003, on the Court’s own motion, this proceeding was dismissed with a right of reinstatement. By summons filed 23 December 2005, the plaintiff applied for an order that the proceeding be reinstated and that the plaintiff have leave to amend its statement of claim in the form of a draft amended statement of claim exhibited to an affidavit filed with the summons. On 30 March 2006, the Senior Master dismissed the plaintiff’s applications. By notice of appeal dated 6 April 2006, the plaintiff appealed against the decision of the Senior Master.
The plaintiff’s appeal came on for hearing before me when I was sitting in the Practice Court. At the request of the parties, I heard and determined an application by the defendant to dismiss the plaintiff’s summons as an abuse of process. I determined this preliminary issue against the defendant.[1] I then made directions for the further hearing of the appeal. As I had become familiar with the matter, I directed that the appeal be heard by me.
[1]Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2006] VSC 170.
Some of the background facts are set out in my decision on the abuse of process argument (“the first decision”). However, it is in my view desirable that all of the facts which are relevant to the disposition of the appeal be set out in these reasons. This will necessarily involve duplication of the facts set out in the first decision.[2]
[2]Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2006] VSC 170 at [2]-[23].
Evidence
The plaintiff relied upon a number of affidavits and their exhibits. Some of the exhibits comprised affidavits sworn in the proceeding on behalf of the defendant, and the exhibits to those affidavits. The affidavits which were relied upon by the plaintiff included five affidavits sworn by Mr Thomas, a director and shareholder of the plaintiff. These affidavits were before the Senior Master.[3] The plaintiff also sought to rely on appeal upon a further affidavit of Mr Thomas sworn 12 May 2006 which was not before the Senior Master. Accordingly, the plaintiff required leave to rely upon this further affidavit.[4] No objection was raised on behalf of the defendant to the plaintiff relying upon this affidavit before me. Indeed, counsel for the defendant referred to the contents of this further affidavit in oral argument. Accordingly, it is appropriate to grant leave to the plaintiff to rely upon the further affidavit sworn by Mr Thomas on 12 May 2006.
[3]Affidavits sworn by Thomas on 17 August, 16 September, 13 October, 26 October and 22 December 2005.
[4]Rule 77.05(7)(b) of the Supreme Court (General Civil Procedure) Rules 2005.
The plaintiff also relied upon an affidavit sworn by its solicitor, Mr Radebe, sworn 23 December 2005.
On behalf of the defendant, reliance was placed upon the affidavit sworn by its solicitor, Ms Waters, on 7 March 2006.
Based upon my reading of the affidavit material filed on behalf of the plaintiff, and after hearing oral argument, it appeared to me that the proposed amended statement of claim did not contain the whole of the case which the plaintiff wishes to pursue. In these circumstances, to which I will make further reference below, I gave the plaintiff leave to file and serve a further proposed amended statement of claim within seven days and made directions as to the filing of further affidavits and written submissions limited to the question of whether, in the light of the further proposed amended statement of claim, there will be prejudice to the defendant if this proceeding is reinstated.
Facts
At all relevant times, Handevel Pty Ltd (in liquidation) (“the Lessor”) was the registered proprietor of certain land in Mulgrave (“the land”) on which it operated a shopping centre business known as the “Waverley Gardens Shopping Centre” (“the shopping centre”).
In about 1985, the plaintiff, in its capacity as trustee of the Thomas Family Trust, purchased a business conducted at shops 15.10 and 15.11 in the shopping centre (“the premises”) and took an assignment of the lease of the premises. Thereafter, the plaintiff commenced to operate a coffee lounge, restaurant and takeaway food business at the premises (“the business”).
By a second lease dated 14 June 1990, the plaintiff leased the premises for a further period of five years commencing on 28 July 1990 and ending on 28 July 1995 (“the lease”). There was no option to renew the lease for a further term.
The lessor was placed in receivership, and then liquidation, soon after the lease commenced. Thereafter, on or about 1 February 1991, the defendant entered into possession of the land and the shopping centre as mortgagee and became entitled to receive the rents and profits. The plaintiff alleges, as a result, that the defendant became “the landlord” of the premises within the meaning of s. 3(1) of the Retail Tenancies Act 1986 (Vic) (“the Act”) which was then in force. The defendant denies this allegation.
The lease was in evidence. Relevantly, it contains the following terms:
(1)The plaintiff agreed to pay rent monthly in advance “without prior demand therefor and without any abatement, deduction or set-off whatsoever.” (Clause 3.04.)
(2)Subject to the plaintiff paying the rent, the lessor would permit the plaintiff to have quiet enjoyment of the premises until the expiration of the term of the lease “without any interruption or disturbance from the lessor or any other person or persons lawfully claiming by, from or under the lessor.” (Clause 11.01.)
(3)If the rent or any part thereof should be in arrears and unpaid for a period of seven days, whether formally demanded or not, then the lessor could at any time re-enter the premises and the lease would thereby be determined. (Clause 12.01.)
(4)Upon re-entry, the lessor may remove the plaintiff’s chattels and store them in a public warehouse or elsewhere at the cost of the plaintiff without being liable in conversion or for any loss or damage caused thereby. (Clause 12.03.)
(5)Clause 12.05 of the lease provides:
“the lessor and the lessee hereby acknowledge and declare that the obligation of the lessee to pay the rent hereby reserved and the obligation to make other payments of money are fundamental and essential provisions of this lease and that upon the happening of any default by the lessee in respect of such obligations the default may be treated by the lessor upon notice to the lessee as being a fundamental breach of the lease by the lessee entitling the lessor to the rights conferred by cl. 12.01...” (Emphasis added.)
Further, the plaintiff relies upon the term implied into the lease by s. 17(1)(b) of the Act. Section 17(1)(b) is to the following effect:
“17. Compensation by landlord
(1)A retail premises lease is taken to provide that if the landlord –
(b)except with the consent of the tenant, takes any action... that would substantially alter or inhibit the flow of customers to the retail premises;
and the landlord does not rectify the matter within a reasonably practicable time after receiving from the tenant a written notice asking the landlord to do so, then the landlord is liable to pay the tenant for any loss or damage suffered by the tenant as a consequence reasonable compensation as agreed in writing between the parties or, in the absence of agreement, determined under Part 3.”
In October or November 1991, the defendant as mortgagee in possession commenced refurbishment and capital works at the shopping centre. It appears that these works continued until about October 1992. There was also considerable alteration to the signage at the shopping centre. In September 1992, a new food court was opened at the shopping centre.
As a result of the refurbishment works, alterations to signage and the opening of the new food court, the plaintiff alleges that the defendant took action which substantially altered or inhibited the flow of customers to the premises at which the business was conducted. As a result, the plaintiff alleges that it suffered a substantial decline in sales revenue generated by the business and that this caused it to fall into arrears in the payment of rental for the period November 1993 to January 1994.
In the period November 1992 to September 1993, the plaintiff made numerous complaints to the defendant about the effect of the refurbishment works and alteration to signage upon the business. The plaintiff requested replacement of its signs, which had been removed by the defendant, and a reduction in rental and other charges payable under the lease in respect of the premises.
Following an invitation from the defendant to the plaintiff to provide an estimate of the quantum of the plaintiff’s alleged losses, the plaintiff put a proposal to the defendant in December 1993. The plaintiff stated an intention to refer the matter to arbitration under the Act if a resolution could not be reached.
By letter dated 22 December 1993 from the defendant’s agent for management of the shopping centre, Retail Realty Pty Ltd, the plaintiff was given particulars of the amount of rental and other charges which were due and unpaid under the lease, in the sum of $9,452.93. The letter concluded:
“We request that you deliver your cheque for $9,452.93 payable to Retail Realty Pty Ltd to Centre Management by 12 noon Friday 24th December, 1993 to finalise this matter.”
The plaintiff did not pay the arrears of rental and other charges.
By notice of dispute dated 13 January 1994 (“the notice of dispute”), the plaintiff gave notice of dispute to the defendant under s. 21 of the Act. The notice of dispute refers to the “landlord” in the following manner:
“Handevel Pty Ltd of 520 Collins Street, Melbourne (Natwest Australia Bank Ltd of 18 Jamieson Street, Sydney Receiver of Rents and Profits).”
The notice of dispute is in the following terms:
“The nature of the dispute between the parties is as follows:
During the term of the tenancy the Landlord has acted in a manner which has been vexatious, discriminatory, unconscionable, prejudicial to the tenancy and the tenant’s quiet possession and enjoyment of the premises and in breach of Section 17.1(b) of the Retail Tenancies Act 1986 including
(a) removal of signage from the premises
(b) failure to replace signage from the premises
(c)constructing signs which unfairly direct customers to other tenancies
(d)the creation of a food court
(e)charging management fees
(f)removal of furniture adjacent to the premises.
The Relief or Award which the arbitrator will be asked to grant or make is as follows:
(a) a reduction of rental and/or
(b) an abandonment of arrears of rental and/or
(c) damages and/or compensation for loss of profits.”
Pursuant to the notice of dispute, an arbitrator was appointed on 18 January 1994.
The response of the defendant to the notice of dispute and the appointment of the arbitrator was swift. On 24 January 1994, the defendant re-entered the premises, changed the locks and removed all of the plaintiff’s chattels at the premises, including stock, plant, equipment and books of account and other records.
The defendant then embarked upon a course of conduct designed to prevent the plaintiff from proceeding with the arbitration. It did so by contending, in correspondence and before the arbitrator, that the arbitrator had no jurisdiction by reason of the termination of the lease by re-entry.
By interim award dated 7 March 1994, the arbitrator declared that he had jurisdiction to consider the matters alleged in the notice of dispute insofar as the same related to matters occurring up to the time of determination of the lease by re-entry. This would have included issues such as the entitlement of the plaintiff to an abandonment of arrears of rental, damages or compensation for loss of profits, as claimed in the notice of dispute.
The defendant did not accept the arbitrator’s ruling on jurisdiction. On 25 March 1994, the defendant commenced proceeding number 5220 of 1994 in this Court. It alleged that:
(1)It was not a “landlord” within the meaning of the Act and, accordingly, was not a proper party to any arbitration in respect of the lease under s. 21 of the Act.
(2)By reason of the termination of the lease by re-entry, the arbitrator had no jurisdiction to determine any dispute between the plaintiff and the defendant, or between the plaintiff and the lessor, including the plaintiff’s claim for compensation. The defendant sought declarations and an injunction, interlocutory and permanent, restraining the arbitrator from proceeding with the arbitration.
The defendant was unsuccessful in obtaining an interlocutory injunction restraining the continuance of the arbitration.
The arbitration resumed with a new arbitrator. The new arbitrator heard further argument from the parties on the question of jurisdiction. By interim award made on 15 December 1994, the new arbitrator declared that the defendant was the “landlord” within the meaning of the Act for the purposes of the arbitration and that he had jurisdiction over the dispute referred to in the notice of dispute.
However, the plaintiff did not proceed with the arbitration. In his affidavit sworn 22 December 2005, Mr Thomas swore:
“30.By reason of my dissatisfaction with the progress and costs of the arbitration process, I decided not to continue with the arbitration. I did not have the benefit of any legal representation during the arbitration process nor did I have sufficient funds to pay the Arbitrator’s fees.
31.I also became very depressed when I realised the lengths to which the Defendant would go to deprive the Arbitrator of his jurisdiction to deal with the whole dispute. I believe that the Defendant deliberately adopted the tactic of purporting to determine the Lease in order to oust the jurisdiction of the Arbitrator and thereby force the plaintiff into Supreme Court litigation in the knowledge that it did not have the funds to conduct such litigation in the usual fashion.”
It appears that this explanation by Mr Thomas of the reasons why he caused the plaintiff to withdraw from the arbitration is incomplete. Mr Thomas prepared an outline of argument for submission to the Legal Profession Tribunal in respect of a complaint by him, on behalf of the plaintiff, against one of his lawyers about the conduct of his case. He exhibited that outline of argument to his affidavit sworn 13 October 2005 in this proceeding. That outline of argument includes the following statements by Mr Thomas on behalf of the plaintiff:
“15.Mr Phipps QC replaced Mr Permewan as arbitrator on 14 July 1994.
16.Mr Phipps made an Interim Award declaring Natwest to be the Landlord for the purposes of the dispute and that he had jurisdiction over the dispute on 15 December 1994.
17.Tenth Vandy Pty Ltd sought to extend the ambit of proceedings to include the alleged unlawful lockout but Mr Phipps declared that he did not have jurisdiction to address that issue.
18.On 11 May 1995 Tenth Vandy Pty Ltd advised Mr Phipps that it wished to cancel the hearing set down for 15 May 1995.
19.Reasons for cancelling the hearing included;
(a)The Notice of Dispute only referred to the conduct of the Landlord prior to the lockout.
(b)Arbitration could not deal with matters in their entirety.
20.Tenth Vandy Pty Ltd and its Directors were impecunious having had their means of support and livelihood taken away and destroyed by Natwest.”[5]
[5]Exhibit TAM-7 to the affidavit of Mr Thomas sworn 13 October 2005.
The plaintiff commenced this proceeding on 14 January 2000. Its statement of claim included allegations concerning conduct occurring more than six years prior to the commencement of the proceeding and claimed damages or restitution in respect of that conduct (“the statute barred claims”).
Further, the plaintiff made claims:
(1)that the defendant repudiated the lease by wrongfully re-entering the premises on 24 January 1994. It was alleged that the plaintiff accepted that repudiation and has suffered loss and damage as a result;
(2)that the defendant wrongfully took possession of its chattels on 24 January 1994, as a result of which it converted those chattels to its own use; and
(3)for exemplary damages.
These claims have appeared in each version of the statement of claim.
The defendant filed a defence on 14 March 2000. In that defence, the defendant denied the plaintiff’s allegations and pleaded that any cause of action which accrued prior to 14 January 1994 was barred by reason of the Limitation of Actions Act 1958 (Vic). Significantly, the defendant did not plead any positive defences. In particular, the defendant did not plead that it had any legal entitlement to re-enter the premises or to take possession of the plaintiff’s chattels. It simply denied the plaintiff’s allegations in that regard.
In April 2000, the defendant sought further and better particulars of the statement of claim, and these particulars were provided in June 2000.
In July and August 2000, the parties made discovery of documents.
The defendant’s discovered documents were inspected by the plaintiff on 4 October 2000.
There was then a delay in the proceeding whilst commercial negotiations occurred. A formal mediation took place on 20 February 2001.
Next, by summons dated 23 May 2001, the defendant sought summary judgment in respect of the statute barred claims and further and better particulars in respect of other allegations in the statement of claim.
On 18 June 2001, Master Kings gave judgment for the defendant against the plaintiff in respect of the statute barred claims. The plaintiff was given leave to file and serve an amended statement of claim giving full particulars. The plaintiff was ordered to pay the defendant’s costs of the summons.
On 29 June 2001, the plaintiff filed an amended statement of claim. This version of the statement of claim was prepared by Mr Thomas personally. It was a most unsatisfactory document. It included allegations of fraud and conspiracy to pervert the course of justice and was otherwise in a wholly embarrassing and inappropriate form. Once again, claims were made in respect of causes of action which, on any view, were statute barred (“the further statute barred claims”).
By summons dated 4 July 2001, the defendant sought summary judgment in respect of the further statute barred claims and sought to strike out the whole of the statement of claim.
By summons dated 5 July 2001, the solicitors then acting for the plaintiff sought leave to cease acting. In support of this application, the plaintiff’s previous solicitor swore:
“The position has arisen wherein I am now unable to further accept the instructions of Mr Thomas in this matter due to irreconcilable differences as to certain fundamental legal matters in relation to his claim and the manner it can properly be put before the Court.
Further, pursuant to the Order of Master Kings on 18 June 2001 the Plaintiff was given leave to file and serve an Amended Statement of Claim. Mr Stirling, of Counsel, was instructed and drew an Amended Statement of Claim in compliance with the Order on instructions from myself. Mr Thomas was dissatisfied with the amended statement as drawn by Counsel and instructed my office that he was filing and serving an Amended Statement of Claim. The Amended Statement of Claim as filed by Mr Thomas is not a document prepared by this firm or by any person instructed by this firm.”[6]
[6]Affidavit of William Gulliver Griffiths sworn 5 July 2001 in the proceeding.
On 18 July 2001, Master Kings made a number of further orders. These included:
(1)An order that there be judgment for the defendant against the plaintiff in respect of the further statute barred claims.
(2)The amended statement of claim be otherwise struck out pursuant to Rule 23.02.
(3)Pursuant to Rule 1.17, the plaintiff not take any step in the proceeding save by a solicitor.
(4)The plaintiff have leave to file and serve an amended statement of claim by 23 August 2001.
(5)The trial date of the proceeding be vacated and a new trial date was fixed, with consequent directions.
(6)The plaintiff pay the defendant’s costs of the application.
The plaintiff appealed to a judge against the orders of Master Kings. Mr Thomas sought to appear for the plaintiff. On 9 August 2001, Beach J ordered that the plaintiff’s appeal be adjourned to enable it to obtain legal representation.
On 20 September 2001, Eames J dismissed the plaintiff’s appeal against the orders of Master Kings and refused Mr Thomas leave to represent the plaintiff in the proceeding. The plaintiff was ordered to pay the defendant’s costs.
On 12 October 2001, Master Kings vacated the trial date which was fixed for 13 November 2001 and ordered that:
“Unless within 28 days of service of this order upon the Plaintiff, the Plaintiff, by a solicitor, files and serves an amended statement of claim complying with the Supreme Court (General Civil Procedure) Rules 1996, the proceeding is dismissed with costs including reserved costs.”
By this time, the plaintiff had persuaded its previous solicitors and counsel to re‑commence acting for it. On 9 November 2001, its solicitors filed and served an amended statement of claim, mistakenly dated 29 June 2001. This form of the amended statement of claim included allegations that the defendant acted fraudulently.
Correspondence from Mr Thomas to his solicitors at this time establishes that Mr Thomas was driving the allegations of fraud which were made in the amended statement of claim.[7]
[7]Facsimile dated 13 December 2001 from Mr Thomas to his solicitors, Exhibit LTJ-14 to the affidavit sworn by Mr Thomas on 17 August 2005.
By summons dated 7 December 2001, the defendant sought the following relief:
(1)Pursuant to Rule 63.03(3)(a), that the proceeding be stayed until such time as the plaintiff pays all costs ordered to be paid by it to the defendant.
(2)Pursuant to Rule 23.02, that certain paragraphs and particulars of the amended statement of claim served 9 November 2001 be struck out.
The defendant’s application to stay the proceeding until payment of the costs orders made in its favour, and to strike out certain aspects of the amended statement of claim, was heard by Master Kings. On 27 February 2002, Master Kings delivered a written judgment in favour of the defendant on both issues.
The formal orders made by Master Kings on 27 February 2002 were as follows:
“(1)Pursuant to Rule 63.03(3)(a) ... the proceeding is stayed until such time as the Plaintiff pay the sum of $25,723.40 to the Defendant.
(2)Pursuant to Rule 23.02 ...:
(a)the particulars under paragraphs 12 and 15;
(b)paragraphs 22 and 30;
of the Plaintiff’s amended statement of claim ... (prepared by Taylor Splatt & Partners) be struck out.
(3)Paragraph 23A of the plaintiff’s amended statement of claim... is struck out.
(4)Leave to the Plaintiff to replead paragraphs 22 and 30.
(5)Leave to the Plaintiff to provide particulars to paragraphs 12 and 15.
(6)The Plaintiff to file and serve an amended statement of claim in accordance with this order within 14 days of payment of the sum referred to in paragraph 1.
(7)The Plaintiff pay the Defendant’s costs...”
Thereafter, the plaintiff took no steps in this proceeding for a period of three and a half years. However, there were material events in the meantime.
On 15 April 2002, Mr Thomas lodged a complaint with the Legal Ombudsman, on behalf of the plaintiff, against the plaintiff’s lawyers. The resulting dispute occupied some 18 months. On 12 March 2003, the Legal Profession Tribunal ordered that the compliant be dismissed “having found that the subject-matter of the dispute would be more appropriately dealt with by a court”. An appeal to the Full Tribunal of the Legal Profession Tribunal was dismissed on 22 September 2003.
According to Mr Thomas:
“The purpose of referring the matter to the Legal Ombudsman was to seek orders pursuant to s. 133(a)(c)(d) and (f) [of the Legal Practice Act 1996 (Vic)] that both of the legal practitioners properly finish that which they had agreed to do in the first place and fairly and properly contribute towards those costs which prevented the Supreme Court matter from proceeding.”[8]
[8]Thomas affidavit, 13 October 2005, paragraph 17.
During the pendency of the appeal to the Full Tribunal, this Court took steps of its own motion in relation to the proceeding. By letter dated 3 April 2003 from the Prothonotary to the plaintiff’s solicitors, the plaintiff’s solicitors were informed that, as there had been no action taken in the proceeding for some time, the proceeding would be referred to the judge sitting in the Practice Court on 23 April 2003 with a request to make orders that the proceeding be dismissed with a right of reinstatement unless a notice of discontinuance was filed or orders were made in the proceeding by consent.
The solicitors then acting for the plaintiff forwarded this correspondence from the Prothonotary to Mr Thomas, together with a notice that they no longer acted for the plaintiff.
On 9 April 2003, Mr Thomas wrote to the Prothonotary and stated that an appeal had been lodged with the Full Tribunal with regard to a dispute between the plaintiff and its legal practitioners. Mr Thomas concluded:
“I am without a solicitor and pursuant to r. 59.06(1) and r. 59.06(8)(a) respectfully object to the proposed order to be made on 23 April 2003.”
On 10 July 2003, the Prothonotary again wrote to the plaintiff’s solicitors. They were informed that the notice ceasing to act was invalid, as leave of the Court was required. A copy of the Prothonotary’s letter was forwarded to the plaintiff at the address given by Mr Thomas in his letter of 9 April 2003 to the Prothonotary. I note that this remains the present address of Mr Thomas. The Prothonotary’s letter stated that, in the absence of a notice of discontinuance or consent orders being filed by 20 August 2003, the proceeding would be referred to Bongiorno J on 22 August 2003 with a request to make the following order:
“The proceeding is dismissed with a right of reinstatement and no order as to costs.”
Although Mr Thomas acknowledges that he received a copy of the Prothonotary’s letter of 10 July 2003, he did not take any action as he believed that he had no entitlement to act on behalf of the plaintiff without legal representation.
On 22 August 2003, Bongiorno J ordered:
“(1) The proceeding is dismissed with a right of reinstatement.
(2) There is no order as to costs.”
After the dismissal of his complaint against his lawyers by the Full Tribunal, Mr Thomas started looking for another legal practitioner to assist him in prosecuting the plaintiff’s case. It was not until April 2004 that Mr Thomas met his present lawyer. Even then, there was considerable further delay before any step was taken in the proceeding. As I have said, the next step in the proceeding was not taken until August 2005. Mr Thomas has sworn, and I accept, that this was because of the impecuniosity of himself and the plaintiff.
Impecuniosity was a barrier to the taking of further steps in the proceedings for two reasons. First, there was no point in seeking to take any step in the proceeding until the stay ordered by Master Kings ceased to have effect. This required the payment to the defendant’s solicitors of the amount ordered by Master Kings (“the stay amount”). Second, the plaintiff (through Mr Thomas) needed to obtain sufficient funds to pay for the continued prosecution of the proceeding, or else persuade lawyers to act on a “no win – no fee” basis or other similar arrangement.
As to the first matter, Mr Thomas prevailed upon is daughter to borrow the stay amount in her name. Mr Thomas makes the monthly payments. A bank cheque for the stay amount, payable to the defendant’s solicitors, was drawn on 14 May 2004. However, this bank cheque became stale before any further step was taken in this proceeding. There was no point in the plaintiff proffering this cheque to the defendant’s solicitors if the plaintiff had no funds, or other arrangements, to enable the continued prosecution of the proceeding.
Persuading the plaintiff’s present lawyers to proceed took some time. In the words of Mr Thomas:
“Fortunately in April 2004 I was lucky enough to meet Mdu Radebe, my new lawyer. Because of the enormous amount of paper work generated through the 20 month arbitration proceedings, the 25 month’s Supreme Court proceeding to that time, the 19 months before the Legal Profession Tribunal, together with the fact that I was only earning a modest wage, it took a considerable, but I verily believe, reasonable amount of time for him to get to know me, and the case, to a degree where he was comfortable enough to introduce me to a barrister friend. There was a further familiarisation period required to establish both trust and knowledge of the case the barrister.”[9]
[9]Thomas affidavit, 13 October 2005, paragraph 23.
By summons dated 22 August 2005, the plaintiff made its first application to have the proceeding reinstated (“the first reinstatement application”). The first reinstatement application was heard and determined by Master Efthim on 3 October 2005.
Before Master Efthim, the plaintiff relied upon two affidavits sworn by Thomas. These affidavits deal with the underlying events about which the plaintiff complains in the proceeding, and with the procedural history of the proceeding. Further, Thomas deposes to his own limited financial means and the fact that he required the assistance of his daughter to borrow money enabling him to procure the bank cheque for the stay amount in May 2004.
Master Efthim also considered a detailed written outline of argument on behalf of the defendant dated 30 September 2005. This written outline discloses that the first reinstatement application was opposed on a variety of grounds, including submissions that:
(1)It would be futile to reinstate the proceeding because the plaintiff appeared to be insolvent. Reliance was placed upon the fact that further costs orders had been made against the plaintiff in the proceeding, in respect of which a draft bill of costs had been prepared in the sum of $18,141.95, and to the fact that the plaintiff had provided no explanation for “holding back” delivery of the bank cheque for the stay amount.
(2)Because the plaintiff had not paid the stay amount, the present form of the plaintiff’s pleading was unknown.
(3)Given the delay in the proceeding, and the fact that all relevant limitation periods had expired, it was futile to reinstate the proceeding because an application to dismiss it for want of prosecution would almost certainly succeed. In this regard, the defendant submitted that there had been inordinate delay in the prosecution of the proceeding and that the Court could safely infer that the delay would prejudice the fair trial of the proceeding.
After considering the two affidavits sworn by Thomas and the arguments on behalf of the defendant, Master Efthim determined to dismiss the first reinstatement application. It is apparent that he did so after a full hearing on the merits of the application. In particular, it is apparent that Master Efthim did not dismiss the application on the sole ground that the plaintiff had not paid the stay amount or delivered an amended statement of claim consequent upon doing so. Although the Master did not give written reasons for his decision, he incorporated into the “OTHER MATTERS” section of his order the following statements:
“1. Application is dismissed.
2.Material filed on behalf of the Plaintiff is deficient:
-No amended Statement of Claim before the Court
-No explanation for delay - inferences at best can be made in Affidavit
-No explanation given by the Plaintiff why cheque drawn in May 2004 was not delivered to the payee and no explanation why application not brought prior to September 2005
- No explanation how other costs outstanding to be paid
-Likely to be some prejudice to [Defendant][10]
-Facts go back to 1990 (likely to have [been] change of personnel)
- Order 34.05 – used as a guide only.”[11]
[10]The authenticated order refers, in error, to prejudice to “Plaintiff”. This is an obvious error, as the relevant question before the Master, which was the subject of submissions by the defendant, concerned prejudice to the defendant.
[11]The reference to Order 34.05 is a reference to a submission put on behalf of the defendant that the judgment which the plaintiff was seeking to set aside was obtained in circumstances which were comparable to a judgment obtained in accordance with the previous Rule 34.05. The terms of rule 34.05 are set out below.
It was submitted on behalf of the plaintiff that I should find that Master Efthim dismissed the first reinstatement application on the sole ground that the plaintiff had not paid the stay amount, thus lifting the stay ordered by Master Kings and permitting the filing of an amended statement of claim. I reject this submission. Master Efthim clearly considered the arguments put on behalf of the defendant and, in his brief “reasons” referred to a number of factors other than the plaintiff having failed to pay the stay amount and file an amended statement of claim. I find that Master Efthim heard and determined the first reinstatement application on its merits. However, he did so in the context of an amended statement of claim which alleged fraud. The Master’s brief reference to prejudice to the defendant must be seen in that light.[12]
[12]Compare Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863 at [40].
By notice of appeal dated 7 October 2005, the plaintiff appealed against the order of Master Efthim dismissing the first reinstatement application.
The appeal was first considered on 28 October 2005. On that day, Williams J ordered that the further hearing of the appeal be adjourned to 11 November 2005 on condition that the plaintiff pay the stay amount to the Senior Master or the Prothonotary, such amount to be paid to the defendant on the determination of the appeal. The plaintiff did not pay the stay amount. Instead, it abandoned the appeal from the order of Master Efthim and that appeal was dismissed with costs.
By summons filed 23 December 2005, the plaintiff made a second application to a master for an order that the proceeding be reinstated (“the second reinstatement application”). In addition, the summons sought leave to amend the statement of claim in the form of a draft amended statement of claim exhibited to an affidavit filed with the summons.
The proposed further amended statement of claim put forward on behalf of the plaintiff, and in respect of which leave was sought, was a simple document. It pleaded two causes of action:
(1)That the defendant repudiated the lease by wrongfully re-entering the premises on 24 January 1994; and
(2)The defendant has wrongfully detained and/or converted the plaintiff’s chattels which were seized upon re-entry.
This simplistic form of statement of claim ignores the real issues in the case. It fails to address the fact that the defendant’s covenant to give the plaintiff quiet enjoyment is conditional upon the payment of rent, and the undoubted fact that the plaintiff was in arrears of rent at the time of re-entry by the defendant.
In a further affidavit sworn by Thomas, he stated:
“On behalf of the Plaintiff, I hereby irrevocably undertake that in the event that this Court exercises its discretion to reinstate the proceeding in accordance with the Plaintiff’s current Summons, the Plaintiff shall pay the sum of $25,723.40 as a condition of any such re-instatement within 7 days of the making of an order for conditional re-instatement. I had previously procured a Bank cheque in this sum with the support of my daughter as evidence of my ability to raise the necessary funds to discharge the cost orders in the even[t] that the proceeding was reinstated. These funds remain available to discharge the taxed costs ordered in favor of the Defendant.”[13]
[13]Thomas affidavit, 22 December 2005, paragraph 9.
The second reinstatement application was heard by the Senior Master on 8 and 30 March 2006.
On 8 March 2006, the Senior Master adjourned the second reinstatement application to enable two things to happen. First, the Senior Master ordered that unless the plaintiff tendered to the defendant a bank cheque for the stay sum by 4.00 pm on that day, the application would stand dismissed.[14] Secondly, the Senior Master directed the parties to exchange written outlines of argument on the following question:
“... concerning whether on a second application, in effect to set aside a judgment, the applicant is confined to new evidence (taken in conjunction with the old) which was not available to the applicant at the time of the hearing of the first application.”
[14]In fact, the stay amount was paid after 4.00 pm on 8 March 2006. However, on 30 March 2006, the Senior Master extended the time for payment of the stay sum nunc pro tunc.
Following the payment of the stay sum and the exchange of the written outlines of argument ordered by the Senior Master, the Senior Master heard and determined the second reinstatement application on 30 March 2006. The Senior Master dismissed the second reinstatement application, in the following circumstances.
On the hearing of the second reinstatement application, counsel for the defendant made an oral application to dismiss the second reinstatement application as an abuse of process. The Senior Master heard and determined this oral application and determined to accept it. The Senior Master’s brief reasons appear in the “OTHER MATTERS” section of his authenticated order.
As I have said, by notice of appeal dated 6 April 2006, the plaintiff appealed to a judge against the decision of the Senior Master made on 30 March 2006 to dismiss the second reinstatement application. On 4 May 2006, I gave my reasons for refusing to dismiss the second reinstatement application as an abuse of process, based only on the limited questions argued before me on the preliminary issue agitated by consent of the parties.[15]
[15]Tenth Vandy v Natwest Markets Australia Pty Ltd [2006] VSC 170.
Further, as I have said, at the conclusion of oral argument on the adjourned hearing of the appeal, I gave leave to the plaintiff to file and serve a further proposed amended statement of claim. The purpose of granting this leave was to enable the plaintiff to put forward a pleading which contained the whole of the case which the plaintiff wished to make at trial in the event that the proceeding is reinstated. Obviously enough, this will be a relevant matter for me to take into account in the exercise of my discretion.
On 26 May 2006, the plaintiff filed and served a proposed further amended statement of claim (“the proposed statement of claim”). The proposed statement of claim recognises the fact that the plaintiff was in arrears in payment of its rental obligations at the time of re-entry of the premises on 24 January 1994. In summary, the proposed statement of claim seeks to meet this fact by the following allegations:
(1)Consistent with all of the earlier versions of the statement of claim, it is alleged that, by entering into possession of the shopping centre and the premises as mortgagee, the defendant became the “landlord” of the premises within the meaning of the Act and became bound by the terms and conditions of the lease.
(2)In addition to the express terms of the lease contained in cll. 3.4, 11.01, 12.01 and 12.05, it is alleged that the lease contained implied terms reflecting the provisions of s. 17(1)(b) of the Act.
(3)It is alleged that, at the time of re-entry of the premises by the defendant, the plaintiff was in arrears of rental by reason of the conduct of the defendant in the period between late 1991 and early 1993. The conduct relied upon relates to the refurbishment works, capital works, installation of new signage in the shopping centre, removal of the plaintiff’s signage relating to the premises and refusal to reinstate that signage and the removal of the plaintiff’s external tables and chairs immediately adjacent to the premises and the opening of the food hall. It is alleged that this conduct by the defendant caused a substantial alteration and inhibition in the flow of customers to the premises, with consequent substantial decline in the sales revenue of the plaintiff’s business and inability of the plaintiff to pay the rental for the period November 1993 to January 1994.
(4)It is alleged that the plaintiff made various complaints about the conduct of the defendant and requested payment of compensation and that, in the absence of any resolution, the plaintiff referred the dispute to arbitration in accordance with s. 21 of the Act.
(5)It is alleged that, in the knowledge of the appointment of the arbitrator and the powers of the arbitrator, the defendant embarked upon a course of conduct designed to ensure that the plaintiff’s claims in the notice of dispute were not heard and determined by the arbitrator. The course of conduct relied upon is that of the defendant in:
(a)re-entering the premises without notice on 24 January 1994 and changing the locks;
(b)asserting to the plaintiff and the arbitrator that, by reason of the determination of the lease by re-entry, the arbitrator lacked any jurisdiction to determine the issues raised by the notice of dispute;
(c)seeking to challenge by proceedings in this Court the decision of the arbitrator that he had jurisdiction to determine some of the claims raised by the plaintiff in the notice of dispute.
It is alleged that this conduct by the defendant, in combination with its conduct concerning redevelopment works, capital works and signage (collectively “the defendant’s conduct”), “was an unconscientious, unconscionable and highhanded exercise of a purported legal right”, that the defendant “acted unfairly, capriciously, unconscientiously, unconscionably and unjustly towards the plaintiff” and that, as a result, “the defendant was estopped and precluded from re-entering the premises as it was unconscionable and unconscientious of the defendant to purport to exercise its legal right of re-entry whilst the arbitration was extant and without taking into account the plaintiff’s statutory right to compensation pursuant to s. 17(1)(b) of the [the Act].”
(6)Alternatively, it is alleged that the right of the plaintiff to seek statutory compensation against the defendant pursuant to s. 17(1)(b) of the Act constituted a right of equitable set-off sufficient to negate any liability for unpaid rental at the time of re-entry, with the result that the defendant was “thereby precluded from purporting to exercise its right of re-entry pursuant to cl. 12.01 of the lease.” In this regard, it is alleged that the provisions of cl. 3.04 of the lease are inapplicable because they do not expressly exclude the right to withhold payment of rent by reason of “equitable set-off” or, if such right was excluded, the defendant ought be estopped from relying upon cl. 3.04 by reason of the defendant’s conduct. Alternatively, it is alleged that cl. 3.04 of the lease is void by reason of the operation of s. 24(2) of the Act as it is contrary to, or inconsistent with, the right of the plaintiff to seek compensation pursuant to s. 17(1)(b) of the Act.
(7)On the basis of the above allegations, it is alleged that the re-entry by the defendant on 24 January 1994 constituted a repudiation of the lease, which repudiation has been accepted by the plaintiff which has suffered loss and damage as a result. The particulars of loss and damage include a claim for “complete destruction of the plaintiff’s business and all the goodwill attaching to the business”. In this respect, the particulars state that the plaintiff suffered loss of profits in the approximate sum of $80,000 per annum for the remainder of the term of the lease. As the lease had 18 months to run, this claim totals approximately $120,000. Further, it is alleged that the plaintiff lost the commercial opportunity to enter into a new lease and to continue its business at the premises beyond the expiry of the lease on 28 July 1995.
(8)Claims in detinue and conversion of the plaintiff’s chattels which were seized at the time of re-entry are, in accordance with all previous versions of the statement of claim, repeated. The plaintiff alleges that it has been unable to give particulars of the amount of loss and damage claimed in this regard because the defendant has not made full and proper discovery.
(9)Finally, the plaintiff claims exemplary damages against the defendant.
Applicable Law
(1) Discretion to reinstate
In the period 1 November 1996 to 1 January 2006 Rule 34.05 provided:
“(1)Any proceeding commenced or filed before 1 November 1996 shall stand dismissed on 1 July 1997 unless before 1 July 1997:
(a)it has been admitted to one of the following lists...[16]
(b)it has been set down for trial... or an order has been made that it be fixed for hearing; or
(c)the Court, constituted by a judge, has ordered this Rule not apply to the proceeding.
(2)The Court, constituted by a judge, may reinstate any proceeding that stands dismissed by the operation of paragraph (1).”[17]
[16]The specialist lists of the Court which involve continuous case management, are referred to.
[17]Supreme Court (General Civil Procedure) Rules 1996 (Vic).
A number of proceedings were dismissed pursuant to Rule 34.05 as it then operated. As a result, there were a number of applications to reinstate proceedings which were dismissed in this way. A number of such applications were opposed on the ground that, if such an application for reinstatement was granted, the defendant would immediately make an application to have the proceeding dismissed for want of prosecution and that such application was bound to succeed. Beach J, who was at the time sitting frequently in the Practice Court, refused a number of applications for reinstatement on the basis that it would be futile to reinstate the proceeding because it would, if reinstated, be the subject of a successful application to strike it out for want of prosecution.[18]
[18]For example, Graham v Visy Board Pty Ltd (unreported, 11 February 1998), Envol Pty Ltd v Perceptive Systems Pty Ltd [1998] VSC 53, Scholz v Shire of Healesville [1998] VSC 62, Streamlux Pty Ltd v Land [1999] VSC 16, Waugh v Waugh [1999] VSC 51.
In Caruso v Jafer[19] Mandie J considered such an application. Whilst acknowledging that a proceeding would not be reinstated if, upon reinstatement, it would be struck out for want of prosecution, Mandie J stated that this was not the sole matter to be considered in the exercise of the discretion as to whether to reinstate a proceeding which was dismissed under Rule 34.05. Mandie J stated:
“It seems to me that it is incumbent upon a plaintiff who seeks to reinstate a proceeding under this rule to satisfy the court that justice requires that the court exercise its discretion to reinstate the proceeding. Clearly if the proceeding is in such a state that had an application been made by a defendant to have it dismissed for want of prosecution, that application would have succeeded, then the court would not reinstate the proceeding.
If any authority be needed for that proposition, I would refer to Graham v Visy Board Pty Ltd, an unreported decision of Beach J made on 11 February 1998.
Counsel for the plaintiff submitted that that was the governing consideration, that if a proceeding would be dismissed for want of prosecution, then it could not be reinstated, but if it would not have been dismissed for want of prosecution, then it should be reinstated.
However, in my view, the second part of that proposition does not follow from the first and is not justified upon a proper construction of the rule. The court constituted by a judge is empowered in its discretion to reinstate the proceeding and it does not seem to me to treat the rule with any due regard to conclude that the question of reinstatement stands or falls on the test relating to the principles applied under an application to dismiss a proceeding for want of prosecution.
The proceeding has been dismissed and the question is whether the Court should exercise its discretion to reinstate. In my opinion, it is a question of what justice requires and all the relevant circumstances ought to be taken into account. No doubt many of the same circumstances as might be considered on an application to dismiss for want of prosecution are relevant, but the plaintiff comes seeking an indulgence and it is for the plaintiff to satisfy the Court that the proceeding should be reinstated, and there may be cases which had they not been dismissed under this rule would not have been dismissed for want of prosecution and yet the plaintiff might fail to have them reinstated once they are dismissed under this rule.
It is necessary to consider the particular circumstances of the proceeding...”
[19]Unreported, Mandie J, 18 June 1998.
I adopt this statement by Mandie J as being applicable to this application for reinstatement. It seems to me that there are other matters, apart from whether a proceeding ought be dismissed for want of prosecution, which are relevant to the exercise of the discretion as to whether or not to reinstate a proceeding. For example, a proceeding ought not be reinstated if it would be futile to do so because it raises a hopeless case which is bound to fail.
(2) Want of prosecution
One of the principal grounds of opposition to the second reinstatement application is that the proceeding, if reinstated, would be the subject of a successful application to strike it out for want of prosecution. It is accordingly necessary to refer to the relevant principles governing the exercise of the discretion to strike out a proceeding for want of prosecution.
In Masel v Transport Industries Insurance Co Ltd[20], the Appeal Division of this Court reviewed the authorities on the principles to be applied in the exercise of the discretion to dismiss a proceeding for want of prosecution. The principles may be summarised as follows:
(1)The guiding principle is that an order for dismissal for want of prosecution ought only be made if the justice of the occasion demands it.
(2)The guidelines for the exercise of the discretion, which may be expected to arrive at a just result in the generality of cases, are those stated by Lord Griffiths in Department of Transport v Chris Smaller Transport Ltd:
“The power should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious, e.g. disobedience to a peremptory order of the court or conduct amounting to an abuse of process of the court; or (2)(a) that there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (b) that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants, either as between themselves and the plaintiffs, or between each other, or between them and a third party.” [21]
(3)These guidelines are not rules of universal application and may and should be departed from if justice requires.
[20][1995] 2 VR 328.
[21][1989] 1 AC 1197 at 1203.
An issue arises as to whether or not the delay is excusable. On behalf of the plaintiff, it was submitted that the delay is excusable because it is directly attributable to the impecuniosity of the plaintiff and Mr Thomas, which impecuniosity was caused by the conduct of the defendant which is the subject-matter of the allegations in the proceeding.
In support of the submission that impecuniosity could afford an excuse for inordinate delay, the plaintiff placed reliance upon the decision of Hedigan J in Imaging Applications Pty Ltd v Sun Alliance Australia Ltd. [22]
[22][1999] VSC 230.
In that case, Hedigan J considered whether impecuniosity could constitute an excuse for inordinate delay. Hedigan J concluded that:
“As a general principle, I would regard it as being a rare case in which impecuniosity, standing alone, could amount to a reasonable excuse for the failure to prosecute a proceeding. In a legal-aid denuded legal world, one in which the cost to plaintiffs of maintaining litigation has become prohibitive, serious delays could thus always be explained away. I take the view that impecuniosity is a matter appropriate to be considered, in conjunction with other matters, here raised, in determining whether the delay in the progression of this litigation is excusable.” [23] (Emphasis added.)
[23][1999] VSC 230 at [44].
There was also mention in argument on behalf of the plaintiff of the delay being caused by the plaintiff’s former lawyers. However, it is well settled that delay on the part of a plaintiff’s lawyers does not excuse delay. The plaintiff is responsible for his own delay and that of his lawyers.[24]
[24]Masel v Transport Industries Insurance Co Ltd [1995] 2 VR 328 at 332; Department of Transport Industries v Chris Smaller (Transport) Ltd [1989] 1 AC 1197 at 1203.
I next turn to consider the question of prejudice.
In Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells[25] Tadgell and Ormiston JJA (with whom Brooking JA agreed) considered the approach which a court adopt in considering whether there has been, or is likely to be, prejudice to the defendant by reason of inordinate delay by the plaintiff in prosecuting a proceeding. In my view, the following principles may be distilled from the passage in the joint judgment in Bishopsgate to which I have referred:
(1)Although the onus is upon the defendant to establish prejudice, the defendant is not obliged to allege prejudice upon affidavit. The defendant may ask the court to infer prejudice from all of the circumstances of the case. In this regard, the defendant is entitled to ask the Court to draw inferences from established facts.[26]
(2)The Court is not concerned only with past and present prejudice. The critical time to assess prejudice to a defendant is the time at which the trial of the proceeding is likely to occur. In a case where the proceeding is not, if allowed to proceed, ready to be set down for trial, the Court must consider when the trial is likely to take place and any potential additional prejudice which may fairly be expected to be suffered by the defendant as a result of the further delay until trial.[27]
[25][1999] 3 VR 863 at [33]-[35].
[26][1999] 3 VR 863 at [33].
[27][1999] 3 VR 863 at [34], [35].
Application of Legal Principles
In this case, there is no doubt, indeed it is conceded, that there has been inordinate delay by the plaintiff. Having regard to the fact that the plaintiff commenced this proceeding only a matter of days before the expiration of the relevant period of limitation,[28] the plaintiff was under an obligation to move with greater speed than if it had commenced proceedings promptly after the events in issue.[29] Clearly, the plaintiff did not do so. In the first place, there are the delays in formulating a statement of claim in an acceptable form. These delays occupied much of the time which elapsed between the commencement of the proceeding and the making of the stay orders by Master Kings. Secondly, the period of three and a half years from the making of the stay orders until the making of the first reinstatement application was, on any view, inordinate.
[28]As appears above, the plaintiff sought to raise issues in the earlier pleadings which were in fact statute barred under the Limitation of Actions Act 1958 (Vic). These claims have already been the subject of summary judgment against the plaintiff.
[29]Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863 at [32].
In my view, the delay is not excusable. The principal ground which was relied upon is the impecuniosity of the plaintiff and Mr Thomas. I accept the law is as stated by Hedigan J in Imaging Applications[30] to which I have referred. Although impecuniosity may be a relevant factor to be taken into account, there needs to be something else excusing the delay.
[30][1999] VSC 230 at [44].
I do not regard the prosecution by Mr Thomas, on behalf of the plaintiff, of complaints against the plaintiff’s previous lawyers as constituting an excuse for the delay in prosecution of the proceeding. This conduct was directly related to the impecuniosity relied upon. As appears above, Mr Thomas swore that the purpose of prosecuting complaints against the plaintiff’s previous lawyers was to have them “fairly and properly contribute towards” the costs required to be paid in order to lift the stay ordered by Master Kings.
It was also submitted on behalf of the plaintiff that its delay was excusable because it was caused by the delay of its lawyers in the conduct of the proceeding, especially with regard to the failure to formulate an acceptable statement of claim. It was submitted that this gave rise to the stay ordered by Master Kings, because the costs orders were the result of negligence in the formulation of the statement of claim.
As I have said above, the plaintiff must be responsible for any delay on the part of its lawyers. However, in any event, I am not satisfied that material delays have been caused by the conduct of the plaintiff’s former solicitors. First, the evidence establishes that Mr Thomas was responsible for a substantial part of the costs orders made against the plaintiff. Mr Thomas was dissatisfied with the amended statement of claim drawn by counsel instructed by his former solicitors, and filed and served an amended statement of claim prepared by him. That statement of claim was struck out with costs. That costs order formed part of the stay amount. Secondly, the inordinate delay on the part of the plaintiff after the proceeding was stayed was not attributable to any negligence on the part of its lawyers. It was caused by impecuniosity.
I turn to consider whether the inordinate and inexcusable delay by the plaintiff is such that it will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the proceeding, or is likely to cause or to have caused serious prejudice to the defendant.
The starting point is to consider the case which the plaintiff now seeks to put forward in the proposed statement of claim. I have summarised this case above. The plaintiff wishes to pursue at trial a case that the conduct of the defendant and its agents in the period between late 1991 and early 1993 caused a substantial alteration and inhibition to the flow of customers to the premises, with consequent substantial decline of sales revenue of the plaintiff’s business and inability of the plaintiff to pay the rental for the premises in the period November 1993 to January 1994. These issues will involve evidence as to events occurring between 13 and 15 years ago, even if a trial of the proceeding could take place in the latter part of this year.
However, a trial later this year seems highly unlikely. The proposed statement of claim is the subject of considerable criticism by the defendant, including submissions that it contains allegations which are time barred and/or the subject of issue estoppel. The form of the statement of claim cannot be regarded as settled. Even if it was, a defence would still be necessary and, having regard to the extensive amendments which are proposed, it is likely that some further discovery will be required. Even if all this could be attended to promptly, this is not a case which is likely to be given any priority over other cases. Accordingly, it would be unlikely to be tried until the latter half of next year, involving a further delay of one year.
It was acknowledged by Mr Selimi, who appeared for the plaintiff, that the case which the plaintiff seeks to raise will involve the calling of oral evidence at trial as to the events in question, and that the question of credibility of witnesses will arise. However, Mr Selimi submitted that this does not mean that there is a substantial risk that a fair trial will not be possible, or that the Court should infer prejudice to the defendant, merely because of the lapse of time between the relevant events and the likely trial date. Mr Selimi submitted that:
(1)a significant proportion of the material facts alleged are objectively established and uncontroversial;
(2)there is likely to be a documentary record of a significant portion of the relevant facts. He pointed to the fact that the defendant is a subsidiary of a large bank and is likely to have kept records of its actions and that it is likely that records were kept of the numbers of customers visiting the shopping centre at material times;
(3)notwithstanding numerous opportunities and invitations to do so, the defendant has not filed any evidence as to actual prejudice. It relies only upon the lapse of time between the relevant events and the likely trial date, and the fact that it is conceded that the trial will involve the calling of oral evidence as to relevant events between 1991 and 1994;
(4)unlike earlier versions of the statement of claim, the proposed statement of claim makes no allegation of fraud. This is not a case where prejudice can be inferred because there have been serious allegations outstanding for a long period of time which are yet to be resolved. Those allegations have been abandoned altogether.
On behalf of the plaintiff, heavy reliance was placed upon the decision of Hedigan J in Imaging Applications Pty Ltd v Sun Alliance Australia Pty Ltd.[31] In that case, Hedigan J considered an application by the defendants to strike out a proceeding for want of prosecution. The defendants were an insurance company, an insurance broker and the Law Institute of Victoria. Hedigan J described them as “well-resourced professional litigants.”[32] As a subsidiary of a large bank, this description is also applicable to the defendant.
[31][1999] VSC 230.
[32][1999] VSC 230 at [52].
Imaging Applications involved events occurring in 1986, proceedings issued in 1990 and an application to strike the proceeding out in 1999. A substantial part of the plaintiff’s case involved a claim that a partly written and partly oral contract had been entered into in May 1986, with an oral variation to that contract in August 1986. The damages which were claimed included damages for consequential loss resulting from interruption with certain businesses operated by the plaintiff. Claims in misrepresentation were made against the broker and the Law Institute.
Hedigan J found that the plaintiff’s delay was inordinate but, in the circumstances of the case, excusable.[33] Although Hedigan J found the delay excusable, he took the view that, as the ultimate test is whether the justice of the occasion demands that a proceeding be dismissed, the question of prejudice was nevertheless an important matter to be considered.
[33][1999] VSC 230 at [49].
The defendants in Imaging Applications filed affidavit evidence concerning prejudice. Four grounds were relied upon:
(1) the insurance underwriting file had been lost or misplaced;
(2)sheer lapse of time between the conversations relied upon by the plaintiff and the likely trial date, such that prejudice could be inferred;
(3)failure of the plaintiff to give appropriate particulars, as a result of which prejudice could be inferred; and
(4)material witnesses had only been partially “proofed” or had not been proofed at all.[34]
[34][1999] VSC 230 at [51].
On the question of inferred prejudice arising from sheer lapse of time, Hedigan J stated:
“As one who has appeared in and heard as judge many cases of this kind, one is immediately struck by the absence from the defendants' material of the detail one would ordinarily encounter in these cases, such as (1) as the names, occupations, function and relevance of the witnesses who might have been called but are no longer able to be called or who no longer have any recollection; (2) what critical evidence might have been called and can no longer be called because of the death, absence, unknown whereabouts, illness or infirmity of a particular witness or witnesses, or other similar matters. There is no identification of any important witness who has died or is unavailable... The proceeding was commenced in the Commercial List from the outset in 1990. It was in the List for four months. A number of the affidavits filed detailed the steps taken by the parties and appearances before the Judge-in-charge of the List. The reasons for this were to endeavour to show from the outset the failure of the plaintiffs to press their case forward with competence and despatch. This was, I would judge, largely due to the inexperience of [the plaintiff], coupled with his psychological incapacities. However, it also makes it almost impossible to believe that the three defendants, an insurance company, an insurance broker and the Law Institute of Victoria, did not get around to interviewing witnesses to meet the plaintiffs' claim during the first four or five months after the commencement of the action. That would be a level of incompetence falling far below the standards that one’s experience instructs is likely found in such well-resourced professional litigants. Taking into account the failure to identify the witnesses, I am unconvinced that the defendants have been denuded by time of the opportunity to call relevant witnesses with memory of these events. Furthermore, it seems to me to be significant that not only have the first and second defendants failed to identify who the four additional witnesses are, nor the subject matter of their evidence; there is no evidence that any one of them has forgotten, or has diminished recollection, of whatever it is the witness would be expected to address. One should not overlook that, although the period here is very substantial, courts every day hear witnesses giving evidence about events which have occurred many years before.”[35]
[35][1999] VSC 230 at [52].
Hedigan J concluded that, although the case was “near the outer edge of the feasible periods of delay”,[36] he was not persuaded that, on the facts of that case, the defendants had suffered prejudice of the necessary kind.
[36][1999] VSC 230 at [54].
The decision of Hedigan J in Imaging Applications involved an exercise of discretion relating to the particular facts of the case. Of course, each case must be determined on its own facts to ascertain whether the justice of the occasion demands that the proceeding be dismissed.
In my view, this case is one where the delay has reached the stage where the likely trial date is outside of the feasible period of delay for the conduct of a fair trial. In this respect, it must be remembered that the trial will involve an investigation of the causes of the failure of the plaintiff’s business in the period between late 1991 and December 1993.
In reaching this conclusion, I have taken into account the fact that the defendant has filed no evidence as to actual prejudice. Furthermore, I accept that a significant proportion of the relevant facts are likely to be the subject of contemporaneous documents.
However, the fact remains that it is conceded on behalf of the plaintiff that the trial will involve the calling of contested oral evidence as to the causes of the failure of the plaintiff’s business as long ago as December 1993. In this respect, the conduct relied upon goes back to 1991.
Issues such as the nature and extent of the refurbishment and other works at the shopping centre, and in relation to signage, will require oral evidence by the plaintiff and others as to their recollections. The same can be said of issues concerning any causal link between the conduct of the defendant and the decrease in the profitability of the plaintiff’s business. There will no doubt be issues concerning other possible causes of the decline in the plaintiff’s business, such as the recession in the late 1980s and early 1990s. For example, in a letter dated 16 May 1993 from Mr Thomas to the defendant, Mr Thomas stated that:
“... sales commenced declining with the beginning of the recession approximately three years ago. It was on this basis that I requested a reduction in rent in a letter of 15/5/91. This was the beginning of dialogue between Retail Realty and myself and the commencement of her vendetta against me.”
Although the balance of this letter contains strong statements by Mr Thomas to the effect that the refurbishment works at the shopping centre caused a decrease in the flow of customer traffic, the effects of external issues such as the recession will no doubt be relied upon by the defendant at trial.
These issues do not concern a single event, such as an accident, where memories are less likely to fade.[37] They involve a course of events spanning more than a year which occurred between 13 and 15 years ago. Some loss of memory by material witnesses can safely be inferred.
[37]Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863 at [57].
As to the failure of the defendant to file evidence as to prejudice of the kind referred to by Hedigan J in Imaging Applications, each case must be considered on its own facts. There is no universal rule as to the need to file evidence of actual prejudice. My own experience of appearing in cases of this kind is that defendants often prefer to file no evidence of actual prejudice, and to rely upon inferred actual prejudice arising from mere delay, because they fear that evidence of actual prejudice will prejudice them at trial if the application to strike out is unsuccessful. That is a forensic decision which is made by those advising the defendant in each case. As I have said, I am of the view that, notwithstanding the lack of direct evidence of prejudice, the stage has been reached in this case where the likely trial date is such that a fair trial will not be possible, or at least there is a substantial risk that this is so, with the effect that prejudice has, or is likely to have been, caused to the defendant.
Mr Selimi also submitted that the plaintiff had a strong case in one respect, which did not depend upon oral evidence at all. He submitted that the provisions of cl. 12.05 of the lease provided a complete answer to the defendant’s submission that it was entitled to re-enter for non-payment of rent by reason of cl. 12.01 of the lease. It was submitted that cl. 12.05 required the giving of a notice by the lessor, or the defendant, treating the plaintiff’s non-payment of rent as a fundamental breach of the lease entitling the lessor, or defendant, to re-enter under cl. 12.01 and that such notice must be given prior to re-entry. It was submitted that there was no evidence of any notice being given by the defendant or the lessor under cl. 12.05 prior to re-entry and that, accordingly, the plaintiff had an arguable case that the defendant repudiated the lease by re-entry.
I accept that it is arguable that the lease provides that a notice under 12.05 must be served before the lessor or the defendant could re-enter the premises under cl. 12.01 for non-payment of rent.[38] However, even accepting this to be the case, the plaintiff would still need to establish at trial that it suffered loss as a result of the defendant wrongfully re-entering the premises. At best, the plaintiff’s claim is that it lost the opportunity to stay in possession of the premises and conduct a loss-making business in circumstances where, on its own case, it could not pay the rent due under the lease. In paragraph 25 of the proposed statement of claim, it is alleged that the plaintiff was unable to pay rental for the period November 1993 to January 1994. In the particulars of this allegation, it is alleged that the plaintiff’s sales revenue had, by 1993, fallen to such an extent that the plaintiff (and Mr Thomas) were required to liquidate assets in order to meet the operating expenses of the business.
[38]No submission was put on behalf of the defendant that, in any event, the defendant was entitled to re-enter because the conduct of the plaintiff in falling into arrears of rental constituted a repudiation of its obligations under the lease, as in Apriaden Pty Ltd v Seacrest Pty Ltd [2005] VSCA 139.
In my view, the damages component of the claim which the plaintiff seeks to make based upon cl. 12.05 of the lease will require substantial evidence, including oral evidence, concerning the viability of the plaintiff’s business as at the time of re-entry. In respect of this issue also, I infer that the defendant will be prejudiced in the conduct of the trial by reason of the inordinate delay in the prosecution of the proceeding.
There remains for consideration the separate claim by the plaintiff for damages in respect of wrongful conversion or detinue of its stock in trade, tenant’s fixtures and other goods located at the premises at the time of re-entry. As I have said, this claim has been made in each version of the statement of claim.
In my view, the delay in prosecution of the proceeding is such that there is also a substantial risk that a fair trial will not be possible in respect of these claims. This is because evidence will be necessary as to the precise identity of any chattels seized, their condition and value in 1994. There are no relevant admissions in this regard by the defendant. In any event the claim is subsidiary to the principal claim and is in many respects bound up with it.
Conclusion
As I have concluded that the proceeding would, if reinstated, be the subject of a successful application to dismiss it for want of prosecution, there is no need to consider the other discretionary factors to which I have referred.
The second reinstatement application will be dismissed. I will hear the parties as to costs.
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