The Hancock Family Memorial Foundation Ltd v Fieldhouse
[2005] WASCA 93
•26 MAY 2005
THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD -v- FIELDHOUSE [2005] WASCA 93
| (2005) 30 WAR 398 | |||
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2005] WASCA 93 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | FUL:49/2004 | 10 FEBRUARY 2005 | |
| Coram: | STEYTLER P OWEN JA ROBERTS-SMITH JA | 26/05/05 | |
| 53 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed | ||
| A | |||
| PDF Version |
| Parties: | THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD CARNEGIE RICHMOND HALLETT FIELDHOUSE |
Catchwords: | Practice and procedure Dismissal for want of prosecution Birkett v James principles are guidelines not rules Some delay due to acquiescence by defendant Delay not inordinate Discretion favoured allowing action to proceed |
Legislation: | Bankruptcy Act 1966 (Cth), s 82(1), s 82(2), s 224, Pt XI Rules of the Supreme Court 1971 (WA), O1, O 1 r 4A, O 1 r 4B, O 29, O 33 r 2 Supreme Court Act 1935 (WA), s 60(1)(f) |
Case References: | Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621 Barnes v Addy [1874] LR 9 Ch App 244 Birkett v James [1978] AC 297 Cooper v Hopgood & Ganim [1999] 2 Qd R 113 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 Daly v The Sydney Stock Exchange Ltd (1986) 160 CLR 371 Dzienciol v Logie Brae Pty Ltd, unreported; FCt SCt of WA; Library No 980078; 25 February 1998 Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198 House v The King (1936) 55 CLR 499 Hughes v Gales (1995) 14 WAR 434 Inform Formwork Pty Ltd v McInnes Concrete Service Pty Ltd, unreported; FCt SCt of WA; Library No 950611; 15 November 1995 Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 Latrobe Country Credit Co-op Ltd v Smith [1999] 1 VR 440 Levi v Stirling Brass Founders Pty Ltd, unreported; FCt SCt of WA; Library No 970209; 9 May 1997 Lewandowski v Lovell (1994) 11 WAR 124 Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 Ngurli Ltd v McCann (1953) 90 CLR 425 Porteous v Donnelly [2002] FCA 862 Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146; 71 ALR 294 The Hancock Family Memorial Foundation Ltd v Porteous [1999] WASC 55 The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40 Tipperary Developments Pty Ltd v State of Western Australia [2004] WASC 15 Ulowski v Miller [1968] SASR 277 West Coast Clothing Company Pty Ltd v Sail America Foundation for International Understanding, unreported; SCt of WA; Library No 940482; 7 September 1994 Wilson v Metaxas [1989] WAR 285 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Geneva Finance Ltd (Receiver & Manager Appointed) v Howat [2003] WASC 119 Hall v Motor Vehicle Insurance Trust [1984] WAR 111 Hardware Services Pty Ltd v Primac Association Ltd [1988] 1 Qd R 393 Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 11,110 Jakovljevic v Doslov [2000] WASCA 131 Meerkin & Apel v Rossett Pty Ltd [1998] 4 VR 54 National Mutual Life Association of Australasia Ltd & Ors v Grosvenor Hill (Qld) (formerly Hillier, Parker (Qld) Pty Ltd) & Anor (2001) 183 ALR 700 Pegrum v Fatharly (1996) 14 WAR 92 Sakalidis v Australian Diamond Exploration NL [2003] WASC 258 Sangora Holdings Pty Ltd & Anor v Hodder & Anor [2003] WASCA 108 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD -v- FIELDHOUSE [2005] WASCA 93 CORAM : STEYTLER P
- OWEN JA
ROBERTS-SMITH JA
- Appellant (Plaintiff)
AND
CARNEGIE RICHMOND HALLETT FIELDHOUSE
Respondent (First Defendant)
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : MASTER SANDERSON
Citation : [2004] WASC 59
File No : CIV 1802 of 1995
(Page 2)
Catchwords:
Practice and procedure - Dismissal for want of prosecution - Birkett v James principles are guidelines not rules - Some delay due to acquiescence by defendant - Delay not inordinate - Discretion favoured allowing action to proceed
Legislation:
Bankruptcy Act 1966 (Cth), s 82(1), s 82(2), s 224, Pt XI
Rules of the Supreme Court 1971 (WA), O1, O 1 r 4A, O 1 r 4B, O 29, O 33 r 2
Supreme Court Act 1935 (WA), s 60(1)(f)
Result:
Appeal allowed
Category: A
Representation:
Counsel:
Appellant (Plaintiff) : Mr J Gilmour QC & Mr A P Hershowitz
Respondent (First Defendant) : Mr G R Donaldson SC & Ms F C E Davis
Solicitors:
Appellant (Plaintiff) : Cocks Macnish
Respondent (First Defendant) : Phillips Fox
Case(s) referred to in judgment(s):
Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229
Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621
Barnes v Addy (1874) LR 9 Ch App 244
Birkett v James [1978] AC 297
Cooper v Hopgood & Ganim [1999] 2 Qd R 113
CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345
Daly v The Sydney Stock Exchange Ltd (1986) 160 CLR 371
(Page 3)
Dzienciol v Logie Brae Pty Ltd, unreported; FCt SCt of WA; Library No 980078; 25 February 1998
Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198
House v The King (1936) 55 CLR 499
Hughes v Gales (1995) 14 WAR 434
Inform Formwork Pty Ltd v McInnes Concrete Service Pty Ltd, unreported; FCt SCt of WA; Library No 950611; 15 November 1995
Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564
Latrobe Country Credit Co-op Ltd v Smith [1999] 1 VR 440
Levi v Stirling Brass Founders Pty Ltd, unreported; FCt SCt of WA; Library No 970209; 9 May 1997
Lewandowski v Lovell (1994) 11 WAR 124
Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274
Ngurli Ltd v McCann (1953) 90 CLR 425
Porteous v Donnelly [2002] FCA 862
Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146; 71 ALR 294
The Hancock Family Memorial Foundation Ltd v Porteous [1999] WASC 55
The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40
Tipperary Developments Pty Ltd v State of Western Australia [2004] WASC 15
Ulowski v Miller [1968] SASR 277
West Coast Clothing Company Pty Ltd v Sail America Foundation for International Understanding, unreported; SCt of WA; Library No 940482; 7 September 1994
Wilson v Metaxas [1989] WAR 285
Case(s) also cited:
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
Geneva Finance Ltd (Receiver & Manager Appointed) v Howat [2003] WASC 119
Hall v Motor Vehicle Insurance Trust [1984] WAR 111
Hardware Services Pty Ltd v Primac Association Ltd [1988] 1 Qd R 393
Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 11,110
Jakovljevic v Doslov [2000] WASCA 131
Meerkin & Apel v Rossett Pty Ltd [1998] 4 VR 54
National Mutual Life Association of Australasia Ltd & Ors v Grosvenor Hill (Qld) (formerly Hillier, Parker (Qld) Pty Ltd) & Anor (2001) 183 ALR 700
Pegrum v Fatharly (1996) 14 WAR 92
Sakalidis v Australian Diamond Exploration NL [2003] WASC 258
(Page 4)
Sangora Holdings Pty Ltd & Anor v Hodder & Anor [2003] WASCA 108
(Page 5)
1 STEYTLER P & OWEN JA: This is an appeal against the decision of a Master dismissing an action for want of prosecution.
Background
2 In March 1992 Mr Lang Hancock died. Prior to his death Mr Hancock effectively controlled a group of companies including The Hancock Family Memorial Foundation Ltd (HFMF) (the present appellant) and Hancock Prospecting Pty Ltd (HPPL). In the years and months before he died certain transactions occurred, apparently on Mr Hancock's instructions, that materially altered the shareholding structure and asset value of companies within the group.
3On the death of Mr Hancock effective control of HFMF and other entities in the Hancock group of companies passed to Ms Gina Rinehart, his daughter. Ms Rinehart alleges that some of the impugned transactions (including those involving the shareholding structure and value of HFMF) were inapposite and inappropriately benefited Ms Rose Porteous, Mr Hancock's widow.
4 HPPL was incorporated in 1955 by Mr Hancock. Its principal revenue–producing asset was the right to receive royalties from the iron ore miner, Hamersley Iron Pty Ltd. At all material times, HPPL was highly profitable and had substantial reserves, amounting to tens of millions of dollars out of which it could properly pay dividends. From the inception of the company, and until not long before his death, Mr Hancock held a share called the Life Governor's share No 1. This share gave him extraordinary powers and entitlements, which effectively meant that Mr Hancock had total control of the company and its Board, and the power to distribute dividends to himself, as long as the power was exercised bona fide for the purpose of obtaining a dividend and not for some ulterior purpose: see Ngurli Ltd v McCann (1953) 90 CLR 425 at 437 - 440.
5 HFMF was established by Mr Hancock, apparently on the advice of his legal adviser, Mr Fieldhouse, primarily for income tax purposes. Essentially, HFMF was used as a vehicle to enable HPPL to distribute its income so as to avoid the imputation of double taxation prior to the introduction of the dividend imputation system in 1987. HFMF was incorporated in 1972 as a company limited by guarantee. As such it did not have a share capital.
(Page 6)
6 Until 18 March 1986 Mr Hancock was a director of HFMF. Thereafter he remained as de facto director and was also the dominant member and had effective power to control the Board.
7 Following Mr Hancock's death a series of complex legal actions was commenced by the companies, under the control of Ms Rinehart, to attack the impugned transactions and claw back the value said to have been lost by the companies. Essentially there were three sets of legal proceedings.
8 The legal actions had at their heart a view apparently taken by those in control of the Hancock group that the person responsible for, and the principal beneficiary of, the companies' losses was Ms Porteous. According to advice given to HFMF, Ms Porteous (and entities related to her) was the recipient of a large amount of company money that arose from certain asset sales instigated by Mr Hancock in 1989 and 1991. From May 1992 through to November 1994, HFMF and HPPL filed six actions in this Court against Ms Porteous and related entities. The plaintiffs in this case submitted that certain valuable property was held by the defendants on resulting or constructive trust for the plaintiffs. These actions were tried together in the Supreme Court of Western Australia in March 1999 and will be referred to as the "Constructive Trust Actions".
9 The second principal party who allegedly benefited from the sale of the Hancock group assets was Mr Hancock's estate. In December 1997 HPPL lodged a petition to bankrupt the estate of Mr Hancock. HPPL's petition for bankruptcy enabled HFMF to lodge a proof of debt against the Hancock Estate to recover HFMF's losses. These actions are referred to as the "Bankruptcy Proceedings" and were taken in parallel to the Constructive Trust Actions.
10 The third in the series of actions is the one the subject of the present appeal. It is against Mr Fieldhouse, a solicitor who had been employed by and worked for the late Mr Hancock and his group of companies from around 1972. According to HFMF, Mr Fieldhouse breached his fiduciary and common law obligations owed to it when he caused HFMF to purchase from Mr Hancock his Life Governor's share in HPPL for significantly more than its true worth. The loss HFMF seeks to recover in this action is encompassed within the losses that were the subject of the other two sets of proceedings. Consequently, HFMF argued that the proceedings in this case were instituted in August 1995 primarily to preserve a cause of action on behalf of HFMF "in the event that it may become necessary or desirable to pursue the same".
(Page 7)
11 HFMF considered this action to be "subsidiary" to the other recovery proceedings. HFMF argued that it would have been inappropriate to prosecute this action pending the final decision of the above mentioned cases, as "it could have potentially resulted in wasteful and unnecessary duplication of litigation, unnecessary incurring of legal costs and unnecessary tying up of the Court's resources": see the affidavit of Mr David Neill sworn 11 October 2002.
12 What follows is an outline of each of the three sets of proceedings. We have included the outline because the appellant relies on the content of, and interrelationship between, the several actions to explain the delay that precipitated the respondent's application to strike out the proceedings the subject of this appeal.
The Constructive Trust Actions
13 The plaintiffs in these actions were HPPL and HFMF, two companies in the Hancock group of private family companies. HPPL was a plaintiff by itself in three of the actions. HFMF was a plaintiff by itself in two of the actions. HPPL and HFMF were co-plaintiffs in one action. On 20 May 1992, 19 May 1993, 19 October 1993, 11 April 1994, and 18 November 1994 respectively, HPPL and HFMF commenced various of the six Constructive Trust Actions against Ms Porteous and entities related to her. In the actions the plaintiffs sought a declaration of resulting trust or constructive trust in respect of certain assets acquired by Ms Porteous or companies controlled by her, which were said to have been financed by utilising moneys derived from the Hancock group of companies. In the six actions the plaintiffs claimed a proprietary interest in a motor vehicle and five parcels of land which were acquired between 1984 and 1993.
14 By and large HPPL and HFMF based these Constructive Trust Actions upon allegations that Mr Hancock (who at all material times was a director of HPPL and a de facto director of HFMF) breached his fiduciary and other duties owed to the plaintiff companies, by causing payments to be made to his then wife, Ms Porteous, out of the plaintiff companies' funds. HPPL and HFMF argued that immediately upon the breach of duties by Mr Hancock (and other officers of the plaintiff companies), the moneys paid out to the defendants were impressed with a constructive trust. It was also argued that the defendants received these trust moneys as knowing recipients or volunteers and were liable as accessories to the breach of trust by Mr Hancock and other officers of the plaintiffs, under the second limb of the rule in Barnes v Addy(1874) LR 9
(Page 8)
- Ch App 244. It was alleged that these moneys were used to acquire property, the subject of the Constructive Trust Actions.
15 At the trial HPPL and HFMF submitted (and it was generally accepted) that it was customary for Mr Hancock to draw funds for his personal expenses and those of Ms Porteous by way of loans from within his group of companies. In this way, HPPL acted as the "family treasury", paying the personal expenses of family members which would be recorded and posted to loan accounts maintained in the company ledgers.
16 By 1988, Mr Hancock had accumulated substantial debts to a number of his companies including HFMF. In order to discharge this indebtedness in a tax effective way, Mr Hancock entered into contracts with the plaintiff companies. There were three particular contracts:
• on 24 February 1989 Mr Hancock sold his one third shareholding in HPPL (not including his Life Governor's share) to HFMF for the sum of $23.2 million;
• on 7 August 1991 Mr Hancock sold his Life Governor's share in HPPL to HFMF for $20 million;
• the purchase price for the transactions mentioned in (a) and (b) above was credited to Mr Hancock's loan account with HFMF, thereby discharging his indebtedness to that company and other associated entities.
17 In the pleadings HPPL and HFMF maintained that the loans made by HFMF were not genuine loans at all, and that the loan account entries were fraudulent entries calculated to mask a fraudulent taking of the companies' assets.
18 On 10 June 1999 Anderson J dismissed the Constructive Trust Actions: see The Hancock Family Memorial Foundation Ltd v Porteous [1999] WASC 55. His Honour found that HFMF and HPPL had lent moneys to Mr Hancock, who in turn had given them by way of "gift" to Ms Porteous. He found that HFMF, whilst it was originally set up to be a charitable "not for profit" company, did have the power to enter into commercial lending arrangements, at least with HPPL, and given the accounting evidence, HFMF did enter into many such lending transactions.
19 As regards the bona fides of the"loan account system" within the Hancock Group and the alleged breach of fiduciary duty, Anderson J said at [58]:
(Page 9)
- "A simple method for a treasury company to record its activities on behalf of other entities in the group is by a system of loan accounts ... the mere fact that one company within the group habitually makes payments on behalf of other entities in the group and keeps track of its expenditure through loan accounts does not necessarily point to impropriety. It does not necessarily mean that the loan accounts are not genuine."
- Furthermore at [60] his Honour said:
"All the surrounding circumstances are to be taken into account. An important circumstance here was that this group of companies was pregnant with profits and, as holder of the Life Governor's share, Mr Hancock was entitled to and had the power to claim them as dividends. That he did not deplete its reserves by doing so, but instead directed that loans of lesser amounts be made to him, represents a sufficient benefit to the company to displace what might otherwise have been an adverse implication arising from the loans."
" … remedy at law as creditors entitled to recover the moneys from the person who, on the whole of the evidence, was the real borrower. No constructive or resulting trust would arise in respect of the borrowed funds and there would be no question of tracing."
21 In July 1999, HPPL and HFMF appealed against the decision of Anderson J. The appeal was heard by the Full Court in December 1999. The Court handed down its decision dismissing the appeal on 17 February 2000: Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198.
(Page 10)
22 In March 2000 HPPL and HFMF sought special leave to appeal to the High Court. The High Court dismissed the applications on 8 September 2000.
The Bankruptcy Proceedings
23 In parallel with the Constructive Trust Actions, in December 1997 HPPL lodged a creditors' petition to have the estate of Mr Hancock declared bankrupt under s 224 of the Bankruptcy Act1966 (Cth) ("Act"). The debt, the subject of the Bankruptcy Proceedings, was for unpaid calls on certain "D" Class partly paid shares held by the late Mr Hancock in HPPL. The Bankruptcy Petition was heard before Tamberlin J in the Federal Court on 16 and 17 December 1998 and the Estate was declared bankrupt on 8 April 1999. Mr Max Donnelly was appointed Trustee in Bankruptcy.
24 About four months later (on 4 August 1999) HFMF lodged a proof of debt in the bankruptcy administration for about $16.5 million. The debt was said to arise from the transaction in 1991 in which Mr Hancock sold his Life Governor's share in HPPL to HFMF for $20 million. The debt was admitted in full by the appointed Trustee on 3 November 1999 based on Mr Hancock's alleged breach of fiduciary duties as a de facto director of HFMF.
25 On 30 November 1999 Ms Porteous commenced proceedings in the Sydney Registry of the Federal Court to expunge the proof of debt by arguing that the Trustee was in error in admitting it. HFMF was an interested party in those proceedings. We will refer to them as "the Proof of Debt Proceedings".
26 The Proof of Debt Proceedings were heard between 26 and 29 June 2001. The respondents argued that at the time of the sale, the Life Governor's share was worth at most only $16,733.33, and that as de facto director of HFMF, Mr Hancock breached his fiduciary duties owed to the company by causing it to purchase the said share at a very substantial overvalue. Relying on s 82(1) and s 82(2) of the Act, the respondents claimed that the consequential liability of Mr Hancock to compensate HFMF was a provable debt.
27 In the proceedings the respondents contended that the value placed on the Life Governor's share in the transaction could not be justified on a proper construction of the Memorandum and Articles of Association of HPPL. Very briefly, these documents provided that Mr Hancock, as founding member of HPPL, was also the holder of the Life Governor's
(Page 11)
- share No 1. So long as Mr Hancock held that share there attached to it certain rights and privileges which effectively conferred total control of the company to him including the right to declare and issue dividends against the interests of HFMF (a one third shareholder of HPPL). Further clauses provided that, upon transfer by Mr Hancock of his Life Governor's share No 1, the share would thereafter be classified as an "A" Class share. It would no longer have attached to it the same rights and entitlements as the Life Governor's share. But immediately after the transfer of the Life Governor's share No 1, a new share, called a Life Governor's share No 2, would issue to Mr Hancock. The new share would have the same rights and privileges as the original. Consequently, the respondents argued, the sale of the Life Governor's share No 1 to HFMF was of no benefit to HFMF, was not in HFMF's interests, and Mr Hancock had breached his fiduciary duties to the company by causing it to purchase the share for far more than its actual worth.
28 On the other hand the applicant argued that $20 million was a fair and reasonable price for the share to be transferred to HFMF. The value, the applicant submitted, was in accordance with the advice of Mr Hancock's legal and accounting advisers, (including Mr Fieldhouse) and was commercially reasonable. It was asserted by the applicant that since HFMF was a major shareholder in HPPL, the sale of the Life Governor's share and the consequent extinguishment of the rights of control over HPPL was of valuable benefit to HFMF. The applicant also submitted that the sale of the Life Governor's share was an alternative to Mr Hancock making distributions directly in his favour as he could have lawfully done, and on that basis HFMF did not suffer any material loss or damage as a result of the transaction.
29 Alternatively, the applicant submitted that even if Mr Hancock breached his duty to HFMF, the company assented to the purchase of the said share and this was ratified by the directors of HFMF.
30 On 8 July 2002, Stone J in the Federal Court ruled in favour of the respondents and dismissed the application to expunge the proof of debt: see Porteous v Donnelly [2002] FCA 862. In her reasons for decision Stone J said at [66]:
"The loans made to Mr Hancock were valuable assets of HFMF. The effect of the sale was to deprive HFMF of these assets in favour of a share that, in the hands of HFMF, was merely an ordinary A class share of very little value. In this sale Mr Hancock put his own interests ahead of those of HFMF and
(Page 12)
- in doing so breached his fiduciary duty to HFMF; Permanent Building Society v Wheeler (1994) 14 ACSR 109, Abeles v PA Holdings Pty Ltd (2000) NSWSC 1008, (2000) 18 ACLC 867."
31 Further, regarding the applicant's submissions, her Honour said at [74]:
"[T]he argument suffers from the flaw that seems to have permeated the whole transaction, namely the complete disregard for the fact that HFMF was a separate legal entity with its own rights and interests. Mr Hancock established HFMF for the purpose of reducing his tax obligations. He enjoyed the advantages (from a taxation perspective) that flowed from the separate legal identity of HFMF and he was subject to the disadvantages that interests of the separate legal identity were not always identical to his own. In particular the assets of HFMF could not be treated as if they were the same as the assets that Mr Hancock held in his own name."
32 As regards the company consent and ratification of the transaction her Honour said at [69]:
"I am not satisfied on the evidence that all the directors did consent to the transaction or that all the members would have consented. The fact that members and directors were accustomed to act in accordance with Mr Hancock's wishes does not inexorably lead to the conclusion that they would have sanctioned this transaction."
33 Consequently, the proof of debt remained against the estate of Mr Hancock as admitted and there have been no further proceedings to challenge that decision. The administration of the bankrupt estate has not proceeded to a stage where it can be said what, if any, dividend creditors of the bankrupt estate will receive.
The Actions Against Mr Fieldhouse
34 Over time the companies in the Hancock group have commenced three actions in this Court against Mr Fieldhouse. The first was an action taken at the instance of HPPL (CIV 2576 of 1992) in which it claimed damages for unjust enrichment from Mr Fieldhouse in his capacity as solicitor to Mr Hancock and HPPL. This action, referred to as "the Retainer Action", was dismissed by consent on 18 January 1999. The second action (CIV 1803 of 1995), referred to as "the HPPL Action",
(Page 13)
- concerned the sale by Mr Hancock of his one third shareholding in HPPL to HFMF on 24 February 1989. The parties consented to a dismissal of the HPPL Action on 20 December 2002. The third action (CIV 1802 of 1995, which is the action the subject of the present appeal) concerns the sale of Mr Hancock's Life Governor's share in HPPL to HFMF on 7 August 1991. We will refer to CIV 1802 of 1995 as "the Present Action".
The Plaintiff's Argument - The Present Action
36 At all material times, both HFMF and HPPL were part of the Hancock group of companies under the ultimate control of Mr Hancock. As at August 1991, and since 15 March 1989 (following the sale of Mr Hancock's one third shareholding in HPPL to HFMF) HFMF held a combination of "A" Class and ordinary shares amounting to one third of the shareholding in HPPL. Also by August 1991, Mr Hancock owed substantial amounts to HFMF.
37 In order to re-pay this debt, Mr Hancock sold to HFMF his Life Governor's share in HPPL for $20 million. HFMF alleges that the price paid by it for the share was far in excess of its actual worth. HFMF also alleges that Mr Fieldhouse stood in a position of conflict whilst acting as solicitor for both Mr Hancock and HFMF when negotiating and procuring the sale of the Life Governor's share to HFMF. Accordingly, HFMF asserts that Mr Fieldhouse breached his fiduciary and common law duties owed to it, acted negligently in advising it, and consequently claims damages for the loss suffered.
38 In support of its argument HFMF contends that Mr Fieldhouse, in his capacity as solicitor for Mr Hancock, advised Mr Hancock that the most tax effective manner of clearing his debt with HFMF would be to sell his Life Governor's share in HPPL to HFMF for a value of $20 million. According to Mr Fieldhouse, this transaction would also release further funds for Mr Hancock's personal expenses. Mr Fieldhouse was retained as solicitor for Mr Hancock in respect of the transaction to advise him generally and to settle all necessary documents required to give effect to the sale. And this is in effect what he did.
(Page 14)
39 With regard to breaches of fiduciary duty, HFMF submits that Mr Fieldhouse, in his regular and usual capacity as legal adviser to Mr Hancock and HFMF, and as the only solicitor acting for HFMF with regard to the sale of the Life Governor's share, was also (impliedly) retained as the solicitor for HFMF in respect of the said transaction. As such, Mr Fieldhouse was required to advise HFMF generally including the reasonableness of the consideration and the propriety of the transaction as a whole, and to draw up the necessary documents. It is the plaintiff's case that Mr Fieldhouse did in fact advise the directors of HFMF in all aspects of the sale. He told the Board of HFMF that $20 million was reasonable in his view and in the view of Mr David Bloom QC, a specialist taxation senior counsel from whom Mr Fieldhouse had sought advice concerning the August 1991 Life Governor's share transaction.
40 The plaintiff also alleges that Mr Fieldhouse told the directors of HFMF that the sale was in HFMF's interests because the effect of the transfer would be to deny Mr Hancock the capacity to cause HPPL to declare discriminatory dividends contrary to the interests of HFMF. This would ensure that HFMF would receive dividends on a pari passu basis with ordinary shareholders. Mr Fieldhouse drew up the Sale Agreement and Transfer of Shares documentation, on behalf of HFMF, and presented them to the HFMF Board for approval. Mr Fieldhouse did not inform the Board that he was not acting for HFMF. HFMF contends that in advising HFMF to enter into the Life Governor's Share Agreement, Mr Fieldhouse negligently and in breach of his duty of care towards HFMF, failed to advise that he stood in a position of conflict of interest and that accordingly HFMF should have obtained independent legal and valuation advice.
41 HFMF also contends that Mr Fieldhouse failed to exercise reasonable care, skill and diligence by failing to advise HFMF that the Life Governor's share, upon transfer, was worth little or no value to HFMF. The plaintiff says that Mr Fieldhouse, as legal adviser to Mr Hancock and his group of companies, would have known that the purchase of the Life Governor's share from Mr Hancock would not achieve the purpose intended by HFMF, that is, of preventing Mr Hancock from causing HPPL to declare discriminatory dividends contrary to the interests of HFMF.
42 Furthermore, the plaintiff contends that Mr Fieldhouse breached his common law duties to HFMF. HFMF argues that, given the fact that Mr Fieldhouse was so closely connected with the Hancock group, he knew HFMF would act on the instructions of Mr Hancock, and therefore
(Page 15)
- in advising Mr Hancock he knew he was also advising HFMF. HFMF contends that as the solicitor for Mr Hancock, Mr Fieldhouse also owed a duty to a third party not to give negligent advice to Mr Hancock.
43 The plaintiff also relies on matters raised in the Proof of Debt Proceedings, at which Mr Fieldhouse gave evidence. When considering the methodology and the process Mr Fieldhouse used in arriving at a value for the Life Governor's share, Stone J said at [58]:
"Clearly the value of the Life Governor's Share as at the date of sale to HFMF is critical. I do not, however, accept the basis on which Mr Fieldhouse arrived at a sale price of $20 million as an appropriate method of determining the value of the Life Governor's Share. It is in stark contrast with the approach adopted on the sale of Mr Hancock's one-third shareholding in HPPL in 1989. At that time the price was struck after a formal valuation process by Coopers & Lybrand. In the case of the Life Governor's Share Mr Fieldhouse, who was quite definite that he was advising only Mr Hancock and not HFMF, sought assistance, not from a qualified valuer but from Mr Bloom, QC who specialised in taxation. Mr Bloom was told (in the brief of 7 May 1991 – see [42] above) that the purpose of the brief was to consider 'the most effective manner' for Mr Hancock to raise a 'substantial sum of money' by selling the Life Governor's Share."
- And at [65] her Honour added:
"As Mr Fieldhouse himself admitted, the spectre, raised with Mr Bloom, of Mr Hancock using the Life Governor's Share to declare discriminatory dividends or to strip assets from HPPL was a pretext. The inescapable conclusion from the evidence is that the prime motivation for the sale was to release more funds for Mr Hancock's personal use in a tax effective way and to protect the tax exempt status of the previous loans."
(Page 16)
- The History of the Proceedings CIV 1802 of 1995
45 It will be apparent from what we have already said that the Present Action does not exist in a vacuum and must be seen in the context of the commercial and family context in which it arose. It is necessary to gain some understanding of what had previously happened, and what was happening between the parties both in and out of the courts in the period following the death of Mr Hancock in March 1992. What follows is a chronological account of some of the material events. Some of it is repetitious but we think it is useful to see the various incidents in context.
46 Mr Hancock died on 27 March 1992. In September 1992 Ms Porteous commenced proceedings in this Court (CIV 2121 of 1992), which we will call "the Deed Action". The gravamen of these proceedings was an attack on a Share Purchase Supplementary Deed entered into on 13 March 1992 by members of the Hancock group of companies (including HFMF and HPPL) and BHP. The document provided, amongst other things, for royalties to be paid to HPPL rather than to Mr Hancock. Mr Hancock had acknowledged HPPL's entitlement to the royalties and disclaimed any entitlement to them.
47 Later in 1992 the Hancock group, including HFMF, instigated the first of the Constructive Trust Actions. Also in 1992 HPPL commenced the Retainer Action against Mr Fieldhouse.
48 In July 1993 HPPL lodged a counterclaim in the Deed Action seeking to recover from Ms Porteous something in excess of $30 million. A substantial portion of these moneys were also the subject of the Constructive Trust Actions, and therefore encompassed the losses sought to be recovered from Mr Fieldhouse.
49 On 21 August 1995 the HPPL Action and the Present Action were commenced in this Court. The writ of summons in the Present Action was served on Mr Fieldhouse on 25 August 1995. He filed a memorandum of appearance on 17 October 1995.
50 In early December 1995, HFMF requested Mr Fieldhouse to consent to a deferral of the filing of the statement of claim pending resolution of related matters, referred to by HFMF's solicitors as the "Conflict Action". There is no evidence of any response by Mr Fieldhouse to the request. The appellant contends that the appropriate inference to be drawn is that he acquiesced in the deferral.
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51 The Conflict Action involved an alleged situation of conflict involving a solicitor who was a co-executor of the estate of Mr Hancock, and who at the same time acted as solicitor for Ms Porteous in another action in this Court. The other co-executors of Mr Hancock's estate, including Ms Rinehart, sought to have the solicitor removed as executor. A hearing date for the Conflict Action was set for July 1996 but it was resolved before trial.
52 On 2 April 1996 the solicitors for the plaintiff wrote to Mr Fieldhouse's solicitors referring to "a recent development" in the Conflict Action and saying that they would hold actions against Mr Fieldhouse "in abeyance". The letter concluded by saying "we assume that your client will … not oppose our proposed course of action". On 4 June 1996 solicitors for HFMF informed Mr Fieldhouse that the Conflict Action had been resolved and that therefore they would proceed with the actions. They also said a statement of claim would be served upon him "shortly". There is no evidence that Mr Fieldhouse responded to either of those letters.
53 On 9 July 1996, another action was instituted in this Court by Ms Porteous against the Hancock group. In it Ms Porteous alleged a conspiracy relating to the procuration and execution by Mr Hancock of the March 1992 share purchase agreement with BHP.
54 In August 1996 HFMF engaged senior counsel to draft a statement of claim in the Present Action. It appears that a draft pleading was available by January 1997.
55 In the meantime, from at least September 1996, Ms Rinehart (on behalf of HFMF and HPPL) and Mr Fieldhouse communicated with each other in respect of a number of transactions and matters of concern to the Hancock group, including the sale of the Life Governor's share. The communications between Ms Rinehart and Mr Fieldhouse culminated in Mr Fieldhouse agreeing to co-operate with the Hancock group in respect of, amongst other things, the Hancock group's recovery proceedings against the parties said to be the principal beneficiaries of the dissipated funds, including but not limited to, Ms Porteous.
56 On 26 March 1997 in accordance with the arrangement, Mr Fieldhouse provided for the Hancock group of companies a long and detailed signed statement relating to his dealings with Mr Hancock and his companies over many years. Matters canvassed in the statement included his involvement in, and the circumstances surrounding the sale of, the Life
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- Governor's share to HFMF in 1991. HFMF contends that this statement, along with transcripts of evidence given in the Proof of Debt Proceedings effectively preserves Mr Fieldhouse's evidence necessary for the Present Action.
57 Following this, on 16 April 1997 HPPL wrote to Mr Fieldhouse, advising him that they were awaiting legal advice as to:
" … how we can proceed the matters between us in a method that ensures we preserve our primary aim in our main actions against Porteous. I am hopeful of having this by the end of this week and have instructed all solicitors representing us in regard to the actions against yourself to 'go slow' so that I have time to finalise these matters. It is then proposed that I could draft a detailed letter to yourself setting out parameters for resolution some time next week."
58 There is no evidence that Mr Fieldhouse voiced any dissent from the proposals in the letter. It should be noted that the letter was not annexed as an exhibit to Mr Neill's affidavit as it comprised part of certain without prejudice negotiations between the Hancock group and Mr Fieldhouse. Senior counsel for Mr Fieldhouse submitted that the letter related only to the Retainer Action and not to the Present Action. We will return to this issue a little later.
59 In June 1997 HFMF instructed its solicitors to brief a Sydney law firm, Corrs Chambers Westgarth (which was also acting for HFMF in other Hancock group litigation) to review the draft statement of claim of January 1997, and to instruct counsel in Sydney to consider the pleadings. The briefs were forwarded to the solicitors in or about November 1997.
60 On 5 December 1997, following further investigations into the affairs of Mr Hancock and the Hancock group of companies, HPPL lodged the creditors' petition seeking to have Mr Hancock's estate declared bankrupt. Ms Porteous filed a Notice of Intention to Oppose on 3 March 1998.
61 Further discussions took place between Mr Fieldhouse and the Hancock group and on 22 September 1998 HPPL, HFMF and Mr Fieldhouse entered into a Deed of Partial Release ("the Release Deed") pursuant to which the Retainer Proceedings would later be settled on confidential terms. There was an express term in the Release Deed to the effect that the Present Action and the HPPL Action would be preserved (other than the abandonment of an allegation of fraud against
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- Mr Fieldhouse in the latter). In particular, cl 2.5 of the Release Deed relevantly provided that:
"HPPL, HFMF and Fieldhouse acknowledge and agree that this Deed in no way operates to release and indemnify Fieldhouse against the Claims arising out of CIV 1802 of 1995 and CIV 1803 of 1995 and any claims which HPPL has, or which but for this Deed could, would or might at any time hereafter have or have had against Fieldhouse in respect of or arising out of, either directly or indirectly, the matters the subject of CIV 1802 of 1995 and CIV 1803 of 1995 which claims are unaffected by this Deed."
63 The Deed also provided in cl 2.7:
"HFMF further agrees that, in the event of obtaining judgment in CIV 1802 of 1995 or CIV 1803 of 1995, it shall not seek to enforce either judgment and any costs order that may be made against Fieldhouse to recover monies beyond that paid or payable by Fieldhouse's professional indemnity insurers (including LawCover) in respect of either judgment. Fieldhouse agrees that he shall not knowingly do or take any step that might have the effect of amounting to a breach by him of any obligation to Fieldhouse's professional indemnity insurers (including LawCover) in respect of any policy of insurance Fieldhouse has in relation to his practice as a solicitor."
64 There is no evidence as to the extent (if any) of the insurance cover available to indemnify Mr Fieldhouse against any judgment that might be entered in the Present Action.
65 On 18 January 1999 the Retainer Action against Mr Fieldhouse was dismissed by consent pursuant to the terms of the Release Deed.
66 In March 1999 the Constructive Trust Actions were heard in this Court and in June 1999 judgment was handed down against the interests of the present appellant.
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67 On 8 April 1999 Mr Hancock's estate was declared bankrupt and an order was made that the estate be administered under Pt XI of the Bankruptcy Act 1966 (Cth).
68 On 8 July 1999 HFMF and HPPL lodged a notice of appeal challenging the trial Judge's decision in the Constructive Trust Actions.
69 On 4 August 1999 HFMF lodged a proof of debt against the bankrupt estate of Mr Hancock. In September 1999 Mr Fieldhouse gave evidence in a Trustee's examination into matters, including the 1991 sale of the Life Governor's share. On 3 November 1999 the Trustee admitted the debt in full, based on Mr Hancock's breach of fiduciary duties as de facto director of HFMF.
70 On 30 November 1999 Ms Porteous instituted the Proof of Debt Proceedings seeking to expunge the proof of debt. This action was not heard until June 2001.
71 In December 1999 the Full Court of this Court heard the appeal against Anderson J's decision in the Constructive Trust Actions. The Full Court handed down its decision dismissing the appeal on 17 February 2000. On 9 March 2000 HPPL and HFMF lodged an application in the High Court for special leave to appeal.
72 In April 2000 Corrs ceased acting for the HFMF and other Hancock companies. There was, at that time, still no final statement of claim in the Present Action.
73 On 8 September 2000 the High Court dismissed the applications for special leave to appeal in the Constructive Trust Actions.
74 In February 2001 the Trustee of Mr Hancock's bankrupt estate conducted further examinations. Mr Fieldhouse gave evidence concerning, amongst other things, events surrounding the sale of the Life Governor's share.
75 In June 2001 the Proof of Debt Proceedings were heard in the Federal Court. Again Mr Fieldhouse gave evidence relating to, among other things, the sale of Life Governor's share and the role that he and other persons played in relation to the transaction. It seems that Mr Fieldhouse appeared as a witness voluntarily.
76 There is no evidence that from July 2001 until 31 May 2002 anything of significance happened "either on or off the file" between the parties
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- with respect to the Present Action or, indeed, in relation to other matters affecting the interests of the Hancock group. The appellant contends that it was after giving evidence in the Proof of Debt Proceedings that Mr Fieldhouse re-assessed his position.
77 On 31 May 2002 solicitors for Mr Fieldhouse notified HFMF of their intention to apply to strike out the Present Action for want of prosecution. On the same day the solicitors of HFMF replied by telephone suggesting a deferral of the strike out application, pending the handing down of a decision in the Proof of Debt Proceedings. At that stage the solicitors for HFMF apparently thought that the delivery of a decision was "imminent". But on the same day (31 May 2002) HFMF also instructed its solicitors to prepare an application to file and serve a statement of claim out of time in the Present Action.
78 On 7 June 2002 the solicitors for HFMF wrote to the solicitors for Mr Fieldhouse formally requesting a deferral of the strike out application. Mr Fieldhouse's solicitors responded on 28 June 2002. They refused the request to defer and indicated that they would proceed with the filing and serving of the application "shortly".
79 On 1 July 2002 solicitors for HFMF issued a summons for leave to file a statement of claim.
80 On 8 July 2002 Stone J delivered her decision in the Proof of Debt Proceedings, dismissing Ms Porteous's application to expunge the said debt.
81 On 10 July 2002 the application to strike out the Present Action for want of prosecution was served on the solicitors for HFMF.
82 Over the next three months discussions occurred between the parties regarding mediation and possible settlement. An agreement to mediate was reached on 29 October 2002, resulting in the parties executing a minute of consent order adjourning sine die both the application to strike out and the application to file a statement of claim.
83 On 30 October 2002 the solicitors for HFMF wrote to those of Mr Fieldhouse informing them that whilst an adjournment had been agreed, they were still in a position to proceed with the application for leave to file a statement of claim and that their client was eager to preserve its cause of action against Mr Fieldhouse. The letter said:
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- "The basis of our consent to the adjournment is, however, that our client's position be fully preserved and that your client will not in any way take issue with the postponement of our client's Application for Leave to File the Statement of Claim or any delay consequent upon the consent adjournment of that Application. … Could you kindly confirm that the above meets with your approval."
84 There is no evidence that the solicitors for Mr Fieldhouse responded to that communication.
85 On 20 December 2002 the parties consented to a dismissal of the HPPL Action.
86 On 30 July 2003 the parties engaged in mediation. Unfortunately the mediation did not achieve a settlement. The parties then applied to the Court to have their respective applications heard. A draft statement of claim was filed and served on Mr Fieldhouse on 16 September 2003.
87 The two applications were heard together by the Master on 3 December 2003. At that time there was pending in the Full Court an appeal in an unrelated matter which was expected to cover some matters relating to strike out applications that might have been relevant to the instant proceedings. The Master indicated that he would await delivery of reasons in that matter before handing down a judgment. This occurred in February 2004. The Master delivered his judgment on 6 April 2004, ordering that the Present Action be struck out for want of prosecution. As a consequence of that decision, there was no need to consider the appellant's application for leave to file the statement of claim.
88 On 21 April 2004 solicitors for HFMF gave notice of this appeal.
89 In summary, then, these are the significant facts:
• In August 1991 Mr Hancock sold his Life Governor's share in HPPL to HFMF.
• In August 1995 the Present Action was commenced by which HFMF sought to recover from Mr Fieldhouse the losses said to have arisen from the sale of the share.
• By September 2000 the Constructive Trust Actions, in which HFMF had sought to recover from persons other than Mr Fieldhouse amounts related to those losses, had
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- been finalised against the interests of HFMF. Had HFMF succeeded in the Constructive Trust Actions it is unlikely they would have proceeded against Mr Fieldhouse.
- • In May 2002 Mr Fieldhouse gave notice of intention to apply to strike out the Present Action for want of prosecution.
• In July 2002 the Proof of Debt Proceedings, which gave HFMF another source of possible recovery (apart from the claim against Mr Fieldhouse) of amounts related to the losses said to have been occasioned by the sale of Life Governor's share, were decided in favour of the interests of HFMF. But there was then no indication of the amount, if any, that would flow to HFMF from that source.
• As at May 2002 and July 2002 no final statement of claim in the Present Action had been filed and served on Mr Fieldhouse.
Striking Out for Want of Prosecution – The Legal Principles
Introduction
90 There is no dispute that the Court has, as part of its inherent jurisdiction, power to dismiss proceedings for want of prosecution. This is a function of the broader consideration that the Court must ensure that justice is done in any cause brought before it. But justice is not a fixed or immutable concept. It is, in fact, used in a number of different senses. One idea of justice is that like cases should be treated alike. In this sense it is uniform and constant. But in determining whether cases are alike there will be a need for flexibility and the application of varying or shifting criteria. In this latter aspect it is flexible, adaptable and amenable to change. It exists to be applied in the particular circumstances in which its dictates are called in aid.
91 "Justice" is also used to describe the system by which disputes between individuals are resolved per medium of the mechanisms of the State. The parties bring their problems forward and are allocated a share of a public resource. And it is a scarce, and ever shrinking, resource at that. So "justice" has, relevantly, two further aspects to it. One is the private interests of the litigants themselves. The other is the public interest in the way in which disputes as to private interests are resolved.
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92 All of these notions or senses of justice play a part at various stages of the litigious process. And all of them (the public and the private) have a role to play in shaping the relevant principles to be applied when one party wishes, summarily and without a full trial, to bring an action to an end.
The Case Management Era
93 The court has inherent power to prevent its processes from being abused and the corresponding power to protect their integrity once they are set in motion: CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 391. The court also has inherent power to dismiss actions for gross disregard of case management orders. The rules have always prescribed time frames within which particular steps are to be taken in proceedings. Their effect is that the legal advisers for the parties are responsible for bringing cases to a reasonably expeditious conclusion. Until recently, as a general rule delay in bringing proceedings to a conclusion was only considered by the court on an application to strike out for want of prosecution. Today the position is different. The inherent jurisdiction to dismiss an action for want of prosecution is to be exercised having regard to the case flow management principles set out in the O 1 r 4A and r 4B and O 29 Rules of the Supreme Court 1971 (WA); Hughes v Gales (1995) 14 WAR 434 at 450 (FC).
94 The effect of O 1 r 4A is that the court takes its own positive steps to require parties to conduct litigation with proper expedition. Order 1 r 4B introduces management and supervision of litigation by the court to the extent that its resources permit in accordance with a system of positive case flow management. If a party fails to comply with case flow management orders, that party runs grave risks: Inform Formwork Pty Ltd v McInnes Concrete Service Pty Ltd, unreported;FCt SCt of WA; Library No 950611; 15 November 1995 per Ipp J at 9 - 11 (in the context of a summary judgment application).
95 On the other hand, the courts have acknowledged that case management is not an end in itself and that the ultimate aim of the court is the attainment of justice which no principle of case management can be allowed to supplant: Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146; Levi v Stirling Brass Founders Pty Ltd, unreported; FCt SCt of WA; Library No 970209; 9 May 1997.
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96 In addition to the court's inherent power to dismiss a proceeding for want of prosecution O 33 r 2 provides for dismissal in defined circumstances.
97 These principles of case management reflect the public aspect of the notion of justice as much as they do the private interests of the litigants. The longer a case is in the system the greater the chance that it will use more than its fair share of the scarce public resource.
The Identification of General Principles
98 The Full Court has applied the general principles applicable to dismissal of an action for want of prosecution enunciated by Lord Diplock in Birkett v James [1978] AC 297 at 318; [1977] 2 All ER 801 at 805, and it is for the defendant to show that these general principles apply: see Lewandowski v Lovell (1994) 11 WAR 124 at 128, 133, 134, 135, 158.
99 The general principles identified in those cases include consideration of these points:
(a) whether any default has been intentional and contumelious, for example, disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or
(b) whether there has been inordinate and inexcusable delay on the part of the plaintiff or his or her lawyers, and, if so
(c) whether such delay:
(i) will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action; or
(ii) is such as is likely to cause or to have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party.
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- not elevated to the level of a "test" or a "rule". They are more appropriately to be seen as guidelines indicating some of the matters to which the court should have regard in exercising the discretion. The court's discretion to dismiss an action for want of prosecution is not fettered by any absolute or inflexible rules. There are however five matters to be considered which will usually be relevant to the court's decision to exercise the discretion:
• the length of the delay;
• the explanation for the delay;
• the hardship to the plaintiff if the action is dismissed and the cause of the action left statute-barred;
• the prejudice to the defendant if the action is allowed to proceed notwithstanding the delay; and
• the conduct of the defendant in the litigation.
Ulowski v Miller [1968] SASR 277 at 280 (FC); Dzienciol v Logie Brae Pty Ltd, unreported; FCt SCt of WA;Library No 980078; 25 February 1998.
101 Significantly however, the Court of Appeal in New South Wales has held that the principles enunciated in Birkett are not to be strictly applied as part of the law of that State: Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [51]. This reflects a desire to emphasise the unfettered nature of the discretion. The position is similar in Queensland: see Cooper v Hopgood & Ganim [1999] 2 Qd R 113 at 119 - 120.
102 And it must always be remembered that in Ulowski, Bray CJ recognised (at 280) that dismissal for want of prosecution involved the exercise of a discretion and that the discretion ought not be fettered by any absolute or inflexible rules. His Honour went on to say, at 281:
"I think the discretion should be exercised as seems best in the interests of justice after considering in relation to the particular case the five matters mentioned above."
103 In our view it is inappropriate to take the considerations identified in Birkett or the five matters mentioned in Ulowski and use them as a check list to be ticked off one after the other. They are all things to which the court should have regard and they will usually be persuasive. But the absence of one or more of them from the credit or debit side of the check list process will not necessarily determine the result. It will always be necessary for the court to stand back and ask: what does justice, in all the
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- notions or senses of it that are relevant, require in the circumstances of this case?
104 Some commentators have expressly or implicitly criticised this approach. In an article entitled Dismissal for Want of Prosecution, (1996) 70 LIJ No 10, p 57 Matthew Harvey identified the criteria of "delay" and "prejudice" and the principles that guide the courts as to what justice demands. In The End of an Era: Goodbye Birkett v James, (2001) 21(4) QldLawyer 107 Grant Riethmuller decried what he described as the move from the restrictive test formulated in Birkett v James to the more general focus on the "justice of the case". But in our view the correct approach does not mean an abandonment of the reasoning in Birkett. What it does is to avoid the tendency to treat the Birkett principles as if they were, in essence, Rules of Court and to cast attention on a discretionary power that ought not to be manacled by set rules.
The Master's Reasons
105 The Master set out the relevant legal principles in a way that is not, as we understand it, seriously challenged. He referred to the authorities, particularly and Tipperary Developments Pty Ltd v State of Western Australia[2004] WASC 15 and Ulowski, and outlined the "five paramount matters to be considered" from the latter. In his discussion of Tipperary the Master said there was a the need to give some consideration to whether "the delay is contumelious or inexcusable". He then said, at [7]:
"As I understand the decision in Tipperary, it does not set out to lay down a new and different approach, or vary any of the established principles. Perhaps what can be said is that each case must be considered on its merits and the facts of each case weighed in the balance against the particular circumstances of the case."
106 It will be apparent from what we have already said that the second sentence in that quote reflects an approach with which we agree.
107 The Master then examined the facts of the dispute the subject of the action and the reasons advanced for the delay. The latter were, in essence, that the action had been commenced to preserve the limitation period but to pursue the other potential sources of recovery and to pursue the claim against Mr Fieldhouse only if and to the extent necessary after exhausting the other possibilities. It was put to the Master in language that was, in essence, repeated by senior counsel during the appeal:
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- "… we are in a place where we are damned if we do and damned if we didn't [sic]. … it was a quite reasonable, indeed responsible, allocation of resources not only in the private interest of the plaintiff but there is a public interest issue here involving, not the least, this court in pursuing remedies as against the Porteous interests, alternatively against Mr Hancock, if you like, the primary sources.
Our submission is that Mr Fieldhouse is equally liable because but for his negligence we would not be here but it is recognised that he did not get the money. … success in whole or in part in relation to either of those actions or sets of actions would have meant Mr Fieldhouse would have been off the hook because we would have extinguished the claim for damages ...".
108 The Master then said that it had been over eight years since the proceedings were issued and that the plaintiff had not even finalised a statement of claim. He characterised that delay as "lengthy" and as a factor weighing against the plaintiffs. He also found that the delay had been occasioned by a "calculated tactical decision" taken by the plaintiff and its legal advisers. The Master found support in Hughes v Gales for the proposition that a strategic decision to delay an action for reasons related to other actions was not a justifiable excuse for the undue prolongation of the proceedings.
109 The Master recognised that to dismiss the action would occasion hardship to the plaintiff. The claim would be statute barred and the plaintiff would be left without a remedy against Mr Fieldhouse. Having said that, the Master referred to the Release Deed and the reference in it to the limitation of any recovery to the amount of Mr Fieldhouse's insurance cover. This caused the Master to conclude that while the plaintiff categorised the claim as substantial "it is not quite as substantial as would seem from counsel's submissions". This was because it was not certain what amount the plaintiff would recover even if it were successful in establishing liability.
110 The Master then turned to the prejudice that might be suffered by Mr Fieldhouse. He noted the following submissions:
• The defendant's contention that Mr Fieldhouse was in his mid-70's and although still practising as a solicitor and in good health would necessarily have a limited recollection of events and the effluxion of
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- time would undoubtedly have prejudiced the ability to mount a proper defence.
- • The plaintiff's contention that Mr Fieldhouse had already given detailed evidence about the transaction in the Proof of Debt Proceedings and this evidence could stand as his evidence in the Present Action or would greatly assist him in recalling the relevant events.
111 This led the Master to make these findings:
• There was significant overlap between the issues in the Proof of Debt Proceedings and the subject matter of the Present Action but there was no certainty that Mr Fieldhouse's evidence in the Federal Court would precisely coincide with the evidence he might have to adduce in the Present Action.
• There was some prejudice to Mr Fieldhouse if the Present Action were permitted to proceed, but notwithstanding the delay it was not determinative one way or the other.
• The prejudice to the plaintiff and the prejudice to the defendant were evenly balanced.
• There was nothing in the conduct of Mr Fieldhouse that would explain the delay and that consideration could be put to one side.
• The case was nowhere near ready for trial – there was not even a settled statement of claim.
• The submission of counsel for the plaintiff that the action was "relatively straightforward" and it could be ready for trial "towards the end of this calendar year" (that is, within about eight or nine months) ought not to be accepted. The action was "at present, nowhere near ready for trial and will not be for some time".
• The two factors that were determinative were the length of the delay and the explanation for the delay.
• Eight years had passed with nothing happening on the file. This was a significant factor weighing against the plaintiff.
• The delay was brought about by a tactical decision. This could not provide a satisfactory explanation based on Hughes v Gales.
112 The Master expressed his ultimate conclusion in this way:
"In referring to [the length of the delay and the explanation for the delay] as the reason for reaching the conclusion I have, I
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- have not been unmindful of the hardship occasioned to the plaintiff if the action is dismissed. I have weighed that hardship in the balance. However, in the end I have concluded that the proper course is to strike this action out for want of prosecution."
Grounds of Appeal
Ground 1 – Incorrect Test Applied
113 In the first ground of appeal the appellant complains that the Master applied an incorrect test. The contention is that it was not open at law to dismiss the action unless it were found that the delay was intentional and contumelious or inordinate and inexcusable and that the delay gave rise to a substantial risk that a fair trial was not possible or was likely to result in serious prejudice to the respondent.
114 It will be apparent from what we have already said that we do not accept this argument. It is inappropriate to regard the matters set out in the first ground of appeal as a "test". It is inappropriate to say that unless all of those matters were found to exist that it was not "open at law" to dismiss the action.
Ground 2 – Inordinate Delay
115 Ground 2 is in the alternative to the first ground. In it the appellant contends that the Master erroneously found there had been an eight year delay (which, by implication, he found to be inordinate) when the delay was actually four years. Notwithstanding our rejection of the appellant's attempt to elevate the various criteria to which it has referred to the level of a legal rule, we think it is appropriate to see what the delay actually was and to see whether it can properly be characterised as "inordinate".
116 A defendant is not confined to proof of inordinate and inexcusable delay by reference to long periods of total inactivity on the part of the plaintiff. It is also relevant that there may be a want of prosecution during a period in which the plaintiff is involved in continuing unsuccessful efforts to establish a proper pleading: Latrobe Country Credit Co-op Ltd v Smith [1999] 1 VR 440 at 448, 452.
117 It seems that on the Master's reckoning the delay ran from 2 August 1995, the date on which the writ in these proceedings was filed, until 5 August 2003, the date the appellant requested a re-listing of its application for leave to file a statement of claim out of time. Hence the
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- period of eight years. The appellant submitted that the following periods should not be included in the period of relevant delay:
(a) the period during which the parties acquiesced in a stay of proceedings from 2 April 1996 to 4 June 1996;
(b) the period from the date when the parties first agreed to mediate on 29 October 2002 to the conclusion of the mediation process on or about 30 July 2003;
(c) the period from institution of the proceedings on 21 August 1995 to 22 September 1998 when the Release Deed was signed.
119 In relation to (b) there is no evidence that the arrangement between the parties to mediate was other than genuine or that it was protracted due to the fault of one party (in this case the appellant). In the letter of 30 October 2002 the appellant set out the basis on which it had agreed to the adjournment of the strike out application and the application in relation to the statement of claim. It was open to the respondent to object to the course of action proposed. There is no evidence that he did so. In those circumstances it seems difficult to hold the appellant accountable for the periods during which the mediation was current. But (a) and (b) only account for roughly a year. So the delay, leaving to one side the period of which (c) speaks, remains at seven years.
120 The appellant's submissions regarding deducting the period between 21 August 1995 and 22 September 1998 from the period of relevant delay are premised upon the respondent acquiescing during this period to the delay and to "the ambit and extent of the cause of action".The appellant submits that the respondent knew of the appellant's decision to pursue the Constructive Trust Actions and the Proof of Debt Proceedings and did not, until June 2002, take any action.
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121 The respondent denies that there was any arrangement or any agreement between himself and the Hancock group of companies that the litigation need not be prosecuted diligently. The respondent points to the series of letters that appear in the Additional Appeal Papers at 15 to 23. The final letter in this series is a facsimile dated 4 June 1996 from the appellant's solicitors in which it is said that "[o]ur client therefore proposes proceeding with this action" and "the Statement of Claim will be served upon you shortly".
122 There are, I think, two issues here. One is the progress (or lack of it) in relation to the preparation of a statement of claim. The second is whether the respondent acquiesced in the delay at least until the time of the Release Deed. I will deal with each in turn.
The Statement of Claim
123 It seems that the decision to proceed at this time was taken following the resolution of the Conflict Action. But there was a two month delay between this advice to the respondent and the instructions given in August 1996 to engage senior counsel to draft the statements of claim in the Present Action and the HPPL Action. A draft statement of claim may have been available from January 1997 but it was not completed or delivered to the respondent. It was then not until June 1997 that the appellant instructed its solicitors to brief Corrs in Sydney to instruct an "eastern states silk" to review the draft statement of claim. There is also evidence that the briefs were forwarded to Corrs in Sydney in or about November 1997. There is no evidence to explain why it took from August 1996 to November 1997 to proceed from the initial instructions for the preparation of a draft statement of claim to the delivery of the brief to Corrs in November 1997. And even then it still had not proceeded beyond instructions to have counsel advise on a draft statement of claim.
124 There is evidence that the draft statement of claim was sent to senior counsel for review but the evidence is that by the time Corrs ceased to act for the appellant, and other Hancock group companies, in or about April 2000, counsel had still not completed a review of the pleading. Certainly no such pleading was ever filed or (at least until 2002) served on the respondent.
125 More could have, and should have, been done by the appellant to have the pleading finalised. At least the respondent would have known the precise ambit of the allegations against him. This counts against the appellant. But it is not the only issue.
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- The Release Deed and Acquiescence
126 We should make it clear that when we use the term "acquiescence" in this context we are not referring to the technical legal doctrine but rather to the more colloquial understanding of acquiescence as a knowing but tacit acceptance of a state of affairs or a course of conduct.
127 The appellant has submitted that the respondent went along with the appellant's course to pursue the recovery action in a particular order leading up to the execution of the Release Deed. The appellant refers to communications between Ms Rinehart and the respondent that occurred between September 1996 and 16 April 1997. The communications are said to have resulted in Mr Fieldhouse offering to cooperate in the various recovery proceedings. The final communication in this period is said to be a without prejudice letter written by Ms Rinehart to the respondent on 16 April 1997. An extract from that letter appears earlier in these reasons. In it there is a reference to instructions being given to the solicitors to "go slow" in relation to the actions against the respondent. It also refers to the provision of a "detailed letter to yourself setting out parameters for resolution some time next week".
128 In his affidavit of 31 October 2003 the respondent does not deny that conversations took place with Ms Rinehart but he does deny one specific aspect of the alleged conversations, namely that the words "at a gross overvaluation" (in relation to the sale of the Life Governor's share) were used. He acknowledges that he did offer to assist the Hancock group in recovery proceedings notwithstanding the claims made against him. He goes on to deny that there was any arrangement or agreement with the Hancock group of companies that the litigation against him would not be prosecuted diligently. We think there are two points to the respondent's contentions in respect of this aspect. First, that put at its highest there was no formal agreement or arrangement to defer progress on the actions against him. The appellant's contention is that the acquiescence, by going along with the course of conduct that the appellant had determined, is pitched lower than an agreement or an arrangement. But the fact is there were statements in the 16 September 1997 letter of an intention on the part of the appellant to preserve its claims but that it had instructed its solicitors to "go slow". At first glance this letter would appear to have called for a response if the respondent's state of mind was that the actions against him were to be "prosecuted diligently". There is no evidence of any such response.
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129 Counsel for the respondent submitted that what the appellant contends to be acquiescence is at its highest "assumption" and that a unilateral assertion of assumption is not acquiescence. That is undoubtedly so, but we do not think it fully answers the contention. As we have already said we are not here concerned with a technical legal doctrine. We are examining the conduct of the parties to ascertain (to the extent it is possible to do so) what actually happened and how a situation developed in which no progress was made over an extended period in legal proceedings that had been commenced in this Court.
130 The second aspect of the respondent's retort to the appellant's reliance on the letter is that it was written by HPPL and not by the appellant company. But the plain wording of the letter seems to be to the contrary. The author refers to the "matters between us" (plural not singular) and to instructions given to "all solicitors representing us" (again in the plural). The only action in which HPPL was solely involved was the Retainer Action. In our view the appropriate inference to draw is that the author was not intending the letter to be confined to the Retainer Action but rather that it would cover all matters in which the Hancock group had claims for recovery against the respondent.
131 There is no evidence before the court that the "detailed letter" referred to in the 16 April 1997 letter was ever sent to the respondent.
132 There is limited evidence regarding the events that occurred after the 16 April 1997 letter. There is evidence that the appellant instructed its solicitors to brief Corrs in Sydney and senior counsel in June 1997. In December 1997 HPPL filed a creditors' petition to have Mr Hancock's estate declared bankrupt. This application was opposed by Ms Porteous.
133 On 22 September 1998 the parties entered into the Release Deed. The document covers a number of matters. Clause 2.1 provides that Mr Fieldhouse will "make himself available" to HPPL, HFMF and other companies in the Hancock group at such times as they may reasonably require "to provide evidence … in sworn form if thought appropriate" on matters relating to the affairs of Mr Hancock (among other things). Clause 2.2 provides that during the process "the respondent may refuse to answer any questions which may prejudice his position as an insured in [the Present Action and the HPPL Action] provided that such refusal is reasonable". Clause 2.5 expressly preserves the appellant's rights in the Present Action. In cl 2.6 the appellant says that it will not make any claim of fraud against the respondent. Clause 2.7 limits the recovery that the appellant might make under any judgment it obtains to the amount of the
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- respondent's professional indemnity insurance. Clause 3 provides for the release of the respondent from claims made in the Retainer Action.
134 We think the comprehensive nature of this document detracts from the force of the respondent's complaint that the "detailed letter" referred to in the 16 April 1997 letter did not eventuate. We also note that there is no evidence that the respondent sought to have included in the Release Deed any stipulations as to the conduct of the Present Action.
Was There an Acquiescence?
135 We acknowledge that it is difficult in interlocutory proceedings where there are disputed facts and where there has been no cross-examination to make determinations. But in our view the proper conclusion to draw by way of inference from the available material is that the respondent did acquiesce in the appellant's declared course of conduct.
136 We repeat that here we are using the term "acquiesce" in a colloquial rather than a strict legal sense. But there was an arrangement by which the respondent was to assist the appellant in other proceedings. Had those other proceedings been successful the claim against the respondent would have disappeared. In that sense he stood to obtain a benefit from the arrangement. He also obtained a benefit to the extent that he avoided the possibility of allegations of fraud being made against him. He also had the monetary claim confined to the limit of his professional indemnity insurance.
137 This last matter cannot be taken too far. In pars 17 and 18 of his reasons the Master said the respondent "has no interest one way or the other in the outcome of these proceedings" and would not suffer prejudice but the proper way of viewing the matter was to look at the prejudice the insurer might suffer if the action were to proceed. We are not sure we agree with the first part of that comment. We will return to it a little later. But we should say here that we agree with the Master that it is necessary to look to the position of the insurer. That is the reality of how litigation of this nature is conducted.
138 We think that it is the question of acquiescence that sets this case apart. It is true that a defendant is not under a positive obligation to insist that a plaintiff complies religiously with each and every time limit placed on it by the rules of court. But there is a difference between the absence of a positive obligation of that nature on the one hand and, on the other hand, a tacit agreement not to insist on reasonable compliance where the
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- party concerned has done so with knowledge and in a situation where that party might benefit.
139 The Master appears to have looked at the time period between the commencement of the Present Action and the request to re-list the applications and to have concluded that this period (eight years) was the "length" of the delay. In our view the circumstances called for a different approach. The Master ought to have looked at the component parts of the delay to see what periods were to be taken into account and what were not. This is because the mischief against which orders of this nature speak is not just delay. It is aimed at delay that is inordinate. And the term "inordinate" has within it both quantitative and qualitative aspects. This is why it is important to look at the explanation for the delay as well as the number of months or years over which the delay extended.
140 It seems to us that the Master looked at the overall time lapse of eight years and then inquired whether there was an adequate explanation for this delay. It is common ground (leaving to one side the periods in (a) and (b) referred to above) that the only real explanation proffered by the appellant was the concentration on the other sources of recovery. The Master concluded that this was a tactical forensic decision that, on the basis of Hughes v Gales, could not provide an explanation.
176 Mr Hancock died in March 1992. Thus it was, as a result of lengthy and complex investigations, determined secondly to petition for the bankruptcy of Mr Hancock's estate and thereafter to lodge a proof of debt on behalf of the applicant, claiming from the estate.
177 In the midst of those two courses of action, the writ in the instant proceedings was filed against Mr Fieldhouse, so that the claim against him would not become statute barred.
178 Each of the other two claims were for, or included, the same damages as claimed against Mr Fieldhouse.
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179 The applicant then decided that rather than pursue Mr Fieldhouse, the proceedings against him would be held in abeyance while the other two claims were being pursued. That was said to be because Mr Fieldhouse had not benefited personally from the transaction, and because if either of the other claims were successful, the need to pursue him to trial and judgment would have been much less significant (in terms of the damages sought) or would not have been necessary at all, because the damages would have been recovered from one or other of the estate or Mrs Porteous.
180 It should be noted that the respondent contended on this application that the reasons deposed to by Mr Neill lacked credibility and were not genuine explanations for the delay. However, there was no application before the Master to cross-examine him and nor was his evidence challenged. The Master accepted it as genuinely expressing the applicant's reasons and under the circumstances he was right to do so. It is too late now for the respondent to seek to impugn his evidence.
181 The Master held there were two factors which were determinative. The first was the length of the delay; the second was the explanation for it. As his Honour saw it, it was not just that eight years had passed, although that in itself was significant, it was the fact that eight years had passed with nothing happening on the file. That made the length of the delay a significant factor weighing against the applicant. Furthermore, the applicant had delayed for tactical reasons and that was a decision for which it must bear responsibility. The Master said that based upon the decision of the Full Court in Hughes v Gales the tactical decision "can provide no satisfactory explanation for the delay" and was satisfied that was a reason for striking the action out for want of prosecution.
182 I take the reference to Hughes v Gales to be to the passage at 444 (supra) in which Malcolm CJ said that in all the circumstances the plaintiff's spasmodic attempts to get the defendant to sign a proof of evidence could not be regarded as a reasonable excuse for delaying the action. His Honour continued:
"The delay was deliberate and apparently due to a strategic decision to delay the action for reasons related to the other action. Any plaintiff who brings actions against potential witnesses is likely to face the same difficulty of their lack of cooperation prior to trial. The decision must then be made as to what ought to be done, but in my view any difficulty thereby produced is the plaintiff's own doing and cannot be used as a
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- justifiable excuse for the undue prolongation of unrelated proceedings."
183 Although that was clearly an important consideration for his Honour in the circumstances of that case, it was not expressed to be a statement of general principle. Nonetheless, it is, with respect, a commonsense observation which in that sense did properly bear upon the circumstances of this case. That said, the cases are plainly distinguishable. In Hughes v Gales the plaintiff had delayed his action against the defendant because in separate and quite unrelated proceedings he wished to call the defendant as a witness. The defendant was not surprisingly recalcitrant. That was the context in which the Chief Justice made the observation referred to. In the present case, the several proceedings were related, all concerned (or included) the same claim for damages, and the outcome of the others had potentially or may potentially have had a significant effect on the claim against Mr Fieldhouse.
184 To describe a decision to delay proceedings as "tactical" does not say very much about the reasons for or the quality or merit of the decision. The tactical decision in Hughes lacked merit because it was made for the purpose of achieving a benefit in unrelated proceedings; the tactical reasons for the decision to delay here, related to and bore directly upon, the potential outcome of the instant proceedings.
185 There never was any prospect of the applicant recovering any significant part of the claimed $20 million from the Hancock estate. That should have been apparent from the outset. It was signalled in the report from the trustee in June 1995. In the end there was an estimated distribution of only 34 cents in the dollar. At least from the dismissal of the applicant's claims against Mrs Porteous on 10 June 1999, further delay of the proceedings against Mr Fieldhouse because of the prospect of recovery against the estate was unjustified.
186 The Master was right to conclude (as he did at [15]) that the decision not to proceed was that of the applicant. His Honour's statement (at [22]), that the tactical decision could provide no satisfactory reason for the delay, must be read against his earlier remarks. Doing so reveals he was not saying simply that a tactical decision cannot provide satisfactory reason for delay, but was referring to the particular tactical decision made in the circumstances of this case.
187 The eight-year delay referred to by the Master appears to have been calculated from the date of issue of the writ to 5 August 2003, the date
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- upon which the applicant requested a re-listing of its application to file a statement of claim out of time.
188 The writ in these proceedings was issued on 21 August 1995. I accept the view, expressed by Diplock LJ in Birkett v James (supra, at 322) that to justify striking out an action for want of prosecution, the delay relied upon must be that after the issue of the writ, but that:
"A late start makes it the more incumbent upon the plaintiff to proceed with all due speed and a pace which might have been excusable if the action had been started sooner maybe inexcusable in the light of the time that has already passed before the writ was issued."
189 I agree with Murray J (Lewandowski, supra at 134) that that is a very sensible way to view the matter.
190 It is submitted for the applicant that correspondence between the parties between December 1995 and June 1996 culminated in deferral of this action. It surely did so as a matter of fact, but the question is whether the implication that such deferral was the result of agreement or acquiescence can be sustained.
191 In a facsimile from Phillips Fox to the applicant's solicitors dated 5 December 1995 the respondent's solicitors expressed surprise that the applicant was talking about deferring the statement of claim, given the urgency with which the writ was served. They asserted that from the respondent's point of view it was most unsatisfactory to have the action left in abeyance without any resolution. They requested details of the related matter said to be the reason for the deferral and when it was anticipated the applicant would proceed with "the present actions". Some details were provided in a telephone conversation between the solicitors the following day. They had to do with a "conflict situation" of Mr Martin Bennett in proceedings concerning a wider dispute between Mrs Porteous, Mrs Gina Rinehart and the Hancock estate. That had nothing to do with the respondent, but nonetheless had an impact on the action against him. The conflict issue needed to be resolved before the actions against Mrs Porteous could progress. Phillips Fox said the Judge case-managing the Porteous actions had accepted that. It was said that as Mr Bennett was also an executor and co-defendant in the present two actions concerning the respondent, the conflict situation needed to be resolved before they could progress. The position was confirmed in a brief note from the applicant's solicitors dated 11 December 1995 and
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- again later in a letter dated 2 April 1996. In the latter, the solicitors advised there had been a recent development in the conflict actions which they were not at liberty to disclose, that the matters had been listed for trial in July 1996 and that once they were completed the actions against the respondent would be pursued, but in the interim they would be in abeyance. They concluded:
"We assume that your client will, in light of the above and the tragic loss of his spouse, not oppose our proposed course of action."
193 I accept the applicant's submission that the course of correspondence shows, if not agreement to defer the action against the respondent from December 1995 to 4 June 1996, at least acquiescence, such that the delay over that period could not be counted as inordinate or inexcusable.
194 It is next submitted that the period from 21 August 1995 to 22 September 1998, when the deed of release and indemnity was executed, ought not to be included as relevant delay because the respondent acquiesced to any delay. This was said to be because the respondent knew of the applicant's decision to prosecute the Porteous and Hancock estate claims first, nonetheless cooperated with the applicant in that course, and did not, until June 2002, either correspond with the applicant requesting the action be prosecuted expeditiously or seek peremptory orders from the court.
195 I accept the respondent's submission that there is no obligation upon a defendant to press a plaintiff to prosecute an action against the defendant. Accordingly, mere failure to do so cannot militate against a defendant who seeks to strike out the plaintiff's action for want of prosecution. The defendant who does no more than stand by while the plaintiff delays, is not by that alone, acquiescing in the delay; there must be something more which indicates a willing acceptance or allowance of the delay, for whatever reason. The submission is that there was more here.
196 The respondent's acquiescence from December 1995 was exhausted on 4 June 1996. Indeed, from that date the applicant had undertaken to
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- progress the action. There was no occasion for acquiescence to further delay at that stage.
197 Following the unsuccessful mediation, on 5 August 2003, the applicant requested re-listing of its application for leave to file a statement of claim out of time.
198 The summons to strike out was heard on 3 December 2003 and judgment was given on 6 April 2004.
199 In further support of its argument for acquiescence the applicant relies upon communications between the respondent and Mrs Rinehart culminating in the former agreeing to cooperate with the Hancock group of companies ("the Hancock group") in respect of a number of matters including the group's recovery proceedings against the principal beneficiaries of the funds which they claimed had been dissipated. That included Mrs Porteous. As a consequence of these communications, Mr Fieldhouse provided a statement dated 26 March 1997, the content of which included the circumstances, and his involvement in, the sale by Mr Hancock of his life governor's share in HPPL. The applicant further relies upon a letter dated 16 April 1997 from Mrs Rinehart to Mr Fieldhouse in which she relevantly wrote:
"… how we can proceed the matters between us in a method that ensures we preserve our primary aim in our main actions against Porteous. I am hopeful of having this by the end of this week and have instructed all solicitors representing us in regard to the actions against yourself to 'go slow' so that I have time to finalise these matters. It is then proposed that I could draft a detailed letter to yourself setting out parameters for resolution sometime next week."
200 The continuing negotiations between the Hancock group and the respondent resulted in execution of the Deed of Release and Indemnity dated 22 September 1998, pursuant to which one of the then extant actions against the respondent (described as "the retainer action") was dismissed on 18 January 1999. The applicant also relies on the respondent's continuing cooperation with the Hancock group in relation to matters which included the Hancock bankruptcy estate proceedings, in which he testified.
201 The respondent deposes that he did offer to assist the Hancock group in recovery proceedings notwithstanding the claims against him, but
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- expressly denies there was any arrangement or agreement they would not be prosecution diligently.
202 Senior counsel for the applicant accepts it could not be said there was agreement by the respondent that the action against him not proceed pending resolution of the others, but does maintain there had been acquiescence - the respondent "went along with the course of conduct which the applicant determined".
203 True it is there was a significant degree of self-interest on the respondent's part, in his cooperation with Mrs Rinehart and HPPL, he being a practising solicitor in New South Wales and no doubt hopeful developments in the other proceedings or any of them would be to his ultimate advantage. But there was obvious disadvantage or prejudice to him too, in delay of the action against him. Be that as it may, for reasons which will become apparent, it is not necessary for me to canvass them.
204 It is fair to say that the submissions on behalf of the applicant were put on the basis that whether or not the respondent has suffered serious prejudice as a result of the delay was really the central question before the Master and is on this appeal. As it was put, the explanation for the delay may inform the question of prejudice. There may be significant delay which is inordinate and inexcusable but which does not result in any significant prejudice to a defendant; on the other hand, there may be a shorter period of inexcusable delay which does occasion substantial prejudice to a defendant in a particular case. I accept that submission. It is consistent with Ulowski. The proposition that the prejudice must be shown to have been caused by the delay must also be accepted. But in this case all of this is subject to the question whether or not there was acquiescence.
205 Mr Donaldson SC conceded that if there was an agreement the action would not be prosecuted and there was no persuasive argument as to prejudice, then the action ought not to be struck out. He conceded further that if there was acquiescence in delay and no prejudice, "it would be difficult" for a defendant to move to strike out an action for want of prosecution. His contention is, however, that if there is acquiescence, it is still necessary to balance the interests of the plaintiff against those of the defendant and the outcome would depend upon the nature of the disadvantage or prejudice to the defendant. Notwithstanding the phraseology of the submission, I take Mr Donaldson to be referring here to something less than acquiescence in the sense I have described it above. He was really referring, I think, to a defendant merely "standing by"
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- whilst the plaintiff delays. The position must be, that a defendant who truly acquiesces, that is who gives tacit agreement, who so fails to do anything in opposition to the delay as to imply consent to it, cannot then take the benefit of the delay.
206 Although the letter from Mrs Rinehart which referred to "the actions" against the respondent, was written on HPPL letterhead, it must sensibly be taken as referring to the actions by the Hancock group and the applicant. There was at least one action by HPPL against the respondent, that being the retainer action.
207 The letter of 16 April 1997 is significant. So is the respondent's failure to express opposition to what it proposed, until 31 May 2002. Given that, and the respondent's knowledge of what was happening with the other claims, his position was one of tacit consent. He did acquiesce in the delay, at least from 16 April 1997 until 31 May 2002. That period of delay was therefore not inexcusable.
208 It is then submitted for the applicant that the Master should not have included in the period of relevant delay, that from 29 October 2002 when the parties first agreed to mediate, to the conclusion of that process about 30 July 2003, that being a matter which occurred "on file". The applicant's submissions assert that on 20 October 2002 the parties agreed to adjourn the strike-out application pending mediation. That much appears to be correct. The question was, on what basis.
209 There is no particular significance to the mediation process which detracts from the Master's statement that over the eight years nothing was happening on the file. I would take that as meaning no more than that there were no pleadings or other formal steps taken to progress the action as such - which was correct. In particular, no statement of claim was filed.
210 The respondent's solicitors wrote to the applicant's solicitors on 31 May 2002 notifying them of his instructions to strike out the action for want of prosecution. On 7 June 2002 the applicant's solicitors wrote suggesting the action be deferred pending finalisation of the bankruptcy proceedings. By letter dated 28 June 2002 the respondent's solicitors refused to consent to deferral and threatened to apply to strike out for want of prosecution. That application was in fact filed on 10 July 2002.
211 The respondent disputes there was a concession that delay due to the mediation would not be taken into account. That is disputed on the basis the respondent did not respond to a facsimile dated 30 October 2002 from
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- the applicant's solicitors asking for confirmation that the respondent would not take issue with postponement of the application for leave to file a statement of claim pending mediation. It is as well to set out the text of that short facsimile. It was as follows:
"You will of course appreciate that our client is, in light of your client's Applications to Strike Out for want of prosecution, eager to preserve its cause of action against your client and its position generally with a view to ultimately recovering against your client whether in the current Supreme Court proceedings or in any subsequently agreed mediation or arbitration.
As explained to you our client was ready, willing and able to pursue its Application for Leave to Amend the Statement of Claim on 1 November 2002 and indeed Senior Counsel had been briefed in that regard. Our client agreed to an adjournment of that Application and of your client's Applications to Strike Out for want of prosecution as set out in recent correspondence. The basis of our consent to the adjournment is, however that our client's position be fully preserved and that your client will not in any way take issue with the postponement of our client's Application for Leave to File the Statement of Claim or any delay consequent upon the consent adjournment of that Application.
Could you kindly confirm that the above meets with your approval.
We reserve our right to show this letter to the Court or a mediator or arbitrator if the need arises."
213 What appears from the above is that the large part of the eight year delay identified by the Master as one of the two determinative factors, ought not to have been included because the defendant acquiesced in the delay. This period comprised the periods from December 1995 to 4 June
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1996, 16 April 1997 to 31 May 2002 and 29 October 2002 to 30 July 2003. The exercise of the discretion by the Master thereby miscarried and so it becomes necessary for this Court to exercise the discretion afresh.
214 In effect, acquiescence by the defendant in 2002 and 2003 necessarily implied acquiescence to any earlier delay. That consideration must ultimately give the short answer to the application. There has effectively been no relevant delay and so the need to weigh up the prejudice likely to flow to the parties from striking out the action, or not doing so, respectively, does not arise.
215 I would refuse the application to strike out.
216 The orders I would make therefore are that leave to appeal be granted, the appeal be allowed, the decision of the Master be set aside and in lieu thereof the defendant's application for an order striking out the plaintiff's action be dismissed.
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