Toula Holdings Pty Ltd v Lee Turnbull & Co
[2023] QSC 11
•13 February 2023
SUPREME COURT OF QUEENSLAND
CITATION: Toula Holdings Pty Ltd & Anor v Lee Turnbull & Co [2023]
QSC 11PARTIES: TOULA HOLDINGS PTY LTD (ACN 059 859 684) (first plaintiff) DANTE (NQ) PTY LTD (ACN 100 998 169) (second plaintiff) v
LEE TURNBULL & CO (A FIRM)(defendant) FILE NO/S:
BS No 10651 of 2019 BS No 12883 of 2022
DIVISION: Trial Division PROCEEDING: Applications ORIGINATING Supreme Court at Brisbane COURT: DELIVERED ON: 13 February 2023 DELIVERED AT: Brisbane HEARING DATE: 16 December 2022 JUDGE: Davis J ORDER:
1. Application BS12883 of 2022 is dismissed. 2. The plaintiffs’ application for leave to proceed in BS10651 of 2019 is dismissed.
3. The plaintiffs’ claim in BS10651 of 2019 is dismissed for
want of prosecution.
4. By 4.00 pm on 20 February 2023 the plaintiffs shall file and serve any written submissions as to why they
should not pay the defendant’s costs of proceedings in
BS10651 of 2019 including their application for leave to
proceed and the defendant’s application to dismiss the
claim, and the costs of BS12883 of 2022.
5. By 4.00 pm on 27 February 2023 the defendant shall file and serve any written submissions on costs.
6. By 4.00 pm on 7 March 2023 each party has leave to file and serve an application for leave to make oral submissions on the question of costs.
7. In the event that no party files an application for leave to make oral submissions on costs by 4.00 pm on 7
March 2023, the question of costs will be determined on
any written submissions filed and without further oral
hearing.
CATCHWORDS:
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - UNDERTAKING AS TO DAMAGES - GENERALLY - where a lessee of premises claimed the lease was void - where the owner of the premises had contracted to sell the premises - where the owner had covenanted to transfer the benefit of the lease to the purchaser - where the lessee sought interlocutory relief enjoining the sale - where solicitors for the owner of the premises advised the
owner to accept “the usual undertaking as to damages” from the lessee - where the trial judge found that the lease was void - where the purchaser of the premises rescinded the contract because the owner could then not transfer the benefit of the lease - where the owner appealed - where the owner was successful on appeal - where the premises was sold below the original contract price - whether the loss flowed from the interlocutory orders - whether the lessee was liable under the
undertaking as to damages - whether the owner’s solicitors were negligent in advising the owner to accept the usual
undertaking as to damagesPROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COURT SUPERVISION - WANT OF PROSECUTION OR LACK OF PROGRESS - where there had been delay of over two years in taking a step in the
proceedings - where the plaintiff sought leave to proceed – where the delay had been at least partially explained - where the claim had no merits - whether leave to proceed should be granted
Corporations Act 2001 (Cth), s 601AB, s 601AD, 601AH Uniform Civil Procedure Rules 1999, r 389, r 255, r 260A, r 261, r 264, r 280, r 389, r 681, r 900
Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1979-1981) 146 CLR 249, followed
Anton Piller KG v Manufacturing Processes Ltd [1976] Ch
55, cited
Arawak Holdings Pty Ltd v Jackson [2021] QCA 062, citedAustralian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, cited Mareva Compania Naviera SA v International Bulkcarriers SA; The Mareva [1980] 1 All ER 213, cited Morgo’s Leisure Pty Ltd & Ors v Toula Holdings Pty Ltd and Ors [2013] QSC 325, related
The Bell Group Limited v ASIC [2018] FCA 884, cited
Thorne Developments Pty Ltd v Laird [2022] QSC 085, citedToula Holdings Pty Ltd & Ors v Morgo’s Leisure Pty Ltd & Ors [2014] QCA 201, related Toula Holdings Pty Ltd & Ors v Morgo’s Leisure Pty Ltd & Ors [2014] QCA 320, related Toula Holdings Pty Ltd & Ors v Morgo’s Leisure Pty Ltd & Tyler v Custom Credit Corporation Ltd & Ors [2000] QCA
178, followedOrs [2019] QSC 196, related cited
COUNSEL: M Eastwood for the plaintiffs
SD McCarthy for the defendantSOLICITORS: Simmons & McCartney Lawyers for the plaintiffs
Hopgood Ganim Lawyers for the defendant
The plaintiffs, Toula Holdings Pty Ltd (Toula) and Dante (NQ) Pty Ltd (Dante), bring
two applications:
1. for orders under the Corporations Act 2001 (Cth) validating actions taken while each of them were deregistered;[1] and
2. for leave to proceed given that no step in the proceedings against Lee Turnbull
& Co, the defendant, has been taken for over two years.[2]
[1] BS 12883 of 2022; Corporations Act 2001, s 601AH(1A) and s 601AH(3).
[2] The principal proceedings are BS 10651 of 2019, Uniform Civil Procedure Rules 1999, r 389(2).
Lee Turnbull & Co is a firm of solicitors. It has brought an application seeking an
order that the claim against it be dismissed for want of prosecution.[3]
[3] Uniform Civil Procedure Rules 1999, s 280.
It is the outcome of the plaintiffs’ application for leave to proceed which is
determinative. Lee Turnbull & Co accepts that if leave to proceed is given, then
validation ought to be ordered and the application to dismiss for want of prosecution
ought to be dismissed. Toula and Dante accept that if they fail to obtain leave to
proceed, then the validation application will fail as being of no utility and Lee
Turnbull & Co’s application to dismiss the plaintiffs’ claim should succeed.
Relevant events
Toula and Dante owned the Newmarket Hotel in Townsville (the hotel). The hotel
was leased (the lease) to Morgo’s Leisure Pty Ltd (Morgo’s). Morgo’s obligations
under the lease were guaranteed to Toula and Dante by Grant Morgan (Morgan) and
Ashlee Hassett (Hassett).
By a contract dated 20 September 2013 (the contract), Toula and Dante contracted to
sell the hotel to Davark Pty Ltd (Davark). By the terms of the contract:
1. Davark agreed to pay a purchase price of $1.45 million; 2. Toula and Dante covenanted to assign the benefit of the lease to Davark upon settlement of the contract;
3. settlement was due on 11 October 2013.
On 8 October 2013, Morgo’s, Morgan and Hassett commenced proceedings against
Toula and Dante (Morgo’s proceedings) alleging that the lease was entered into by
Morgo’s, and the guarantees were given by Morgan and Hassett, based on deceptive
and misleading representations made on behalf of Toula and Dante. Morgo’s sought
declarations that the lease was void ab initio. It also sought to restrain the sale to
Davark, who was also named as a defendant.
Lee Turnbull & Co was retained by Toula and Dante to act as their solicitors in
Morgo’s proceedings.
Morgo’s proceedings threatened the ability of Toula and Dante to settle the contract.
The contract could hardly settle while those proceedings cast doubt on the ability of
Toula and Dante to assign to Davark the benefit of the lease. In the event that Morgo’s
obtained declaratory relief, Toula and Dante could not then perform their covenant to
transfer the benefit of the lease to Davark.
The first plaintiff in the Morgo’s proceedings was Morgo’s. The second plaintiffs
were Morgan and Hassett. The first defendants were Toula and Dante and the third
defendant was Davark. The second defendant (who did not give any undertaking)
was Toula Cassimatis, the director of Toula and Dante. She was alleged to have made
the representations alleged to be deceptive and misleading.
Morgo’s sought interlocutory orders against Toula and Dante restraining the
settlement of the contract. That application resulted in consent orders being made on
10 October 2013 which were directions designed to have the matter ready for trial on
16 October 2013.
The consent orders were supported by mutual undertakings in these terms:
“UPON:
A. THE USUAL UNDERTAKINGS AS TO DAMAGES OF THE FIRST PLAINTIFF AND THE SECOND PLAINTIFFS. B. THE UNDERTAKING OF THE FIRST DEFENDANTS AND THE THIRD DEFENDANTS TO AGREE TO AN EXTENSION OF THE DATE OF COMPLETION OF THE CONTRACT THE SUBJECT OF THE PROCEEDING TO FRIDAY 25 OCTOBER 2013, AND NOT TO COMPLETE SAME PRIOR TO THAT DATE; C. THE UNDERTAKING OF THE THIRD DEFENDANT TO ABIDE BY THE ORDER OF THE COURT; THE ORDER OF THE COURT IS THAT:
1. [directions leading to trial]”
Therefore, the “usual undertaking as to damages” was given by Morgo’s, Morgan and
Hassett:
1. To secure the undertakings given by Toula, Dante and Davark not to settle the contract before 25 October 2013; and
2. to secure the directions orders.
A trial of Morgo’s proceedings commenced on 16 October 2013 before North J but
was aborted. On 18 October 2013, more directions orders were made and the trial
was set for hearing on 12 November 2013. Again, undertakings were given.
“A. The continuance of the undertakings A and C recorded in the
order of 10 October 2013; andB. Upon the undertaking of the Third Defendant to agree to the First Defendant’s request to an extension of the date for completion of the contract the subject of the proceedings to Friday 22 November 2013 and the undertaking of both the First and Third Defendants not to complete the said contract prior to that date.”
Undertaking “A” recorded in the order of 10 October 2013 is the “usual undertaking
as to damages”. The continuance of that undertaking secured the further extension of
the time for settlement of the contract and the undertaking not to settle before 22
November 2013 (which is undertaking B given by Toula Dante and Davark) on 18
October 2013. Undertaking C given on 10 October 2013 was Davark’s undertaking
to abide by any order. That undertaking was continued on 18 October 2013.
North J tried Morgo’s claim on 12 and 13 November 2013 and gave judgment on
21 November 2013declaring the lease and guarantees void ab initio.[4]
[4] Morgo’s Leisure Pty Ltd & Ors v Toula Holdings Pty Ltd and Ors [2013] QSC 325.
On 21 November 2013, Toula and Dante retook possession of the hotel.
On 3 December 2013, Toula, Dante and Davark extended the contract again.
Just before Christmas 2013, Lee Turnbull & Co ceased acting for Toula and Dante.
On 30 January 2014, Davark terminated the contract on the basis that Toula and Dante
could not assign to it the benefit of the lease as they covenanted to do.
Toula and Dante appealed against the declaration made by North J. The Court of
Appeal allowed the appeal on 22 August 2014 finding errors in the assessment of the
credit of a crucial witness, Morgan.[5] Final orders were made by the Court of Appeal
on 2 December 2014 dismissing Morgo’s claim.[6]
[5] Toula Holdings Pty Ltd & Ors v Morgo’s Leisure Pty Ltd & Ors [2014] QCA 201 at [107] and [113].
[6] Toula Holdings Pty Ltd & Ors v Morgo’s Leisure Pty Ltd & Ors [2014] QCA 320.
The hotel was sold by Toula and Dante at a price far less than the $1.45 million which
Davark had covenanted to pay. Settlement of that sale occurred on 27 September
2017.
Toula and Dante sought to recover that loss by enforcing the undertakings given by
Morgo’s, Morgan and Hassett. That application was dismissed by Holmes CJ on 20
June 2019.[7] Her Honour’s reasons are of significance to the present applications and
I consider them later.
[7] Toula Holdings Pty Ltd & Ors v Morgo’s Leisure Pty Ltd & Ors [2019] QSC 196.
Toula and Dante then sued Lee Turnbull & Co in the current proceedings. They
alleged negligence, essentially that the undertakings extracted from Morgo’s, Morgan
and Hassett in 2013, did not properly protect their interests.
An amended statement of claim and particulars was served upon Lee Turnbull & Co
on 23 January 2020. That was the last step taken in the proceedings. In fact, it is no
step at all unless validated because Toula and Dante were deregistered at that point.
No step in the action has been taken for over two years and therefore leave is required, as is the validation of the commencement of the proceedings and the filing and
delivery of the amended statement of claim and particulars.[8]
Statutory provisions and legal principles
[8] Uniform Civil Procedure Rules 1999, r 389(2).
Corporations Act 2001 (Cth)
The Australian Securities and Investments Commission (ASIC) may deregister a
company under s 601AB of the Corporations Act for failing to file company returns.
Upon deregistration, the company ceases to exist.[9] ASIC may, and routinely does,
reinstate a deregistered company pursuant to s 601AH(1A). While assets owned by
the company prior to deregistration vest back in the company upon reinstatement,[10]
things done by the company during the period of deregistration are invalid and of no
affect unless validated pursuant to s 601AH(3)(c). The discretion to validate is a
broad one exercised upon consideration of all the circumstances.[11]
[9] Section 601AD.
[10] Section 601AH(5).
[11] The Bell Group Limited v ASIC [2018] FCA 884, Thorne Developments Pty Ltd v Laird [2022] QSC
In the event Toula and Dante obtain leave to proceed, it would be appropriate to
validate steps already taken in the proceedings. The concession by Lee Turnbull &
Co to that effect is appropriate.
Leave to proceed under r 389(2), and the power to dismiss under r 280
Rule 389 of the Uniform Civil Procedure Rules 1999 provides restrictions upon the
right to take steps in a proceeding where there has been delay. It provides:
“389 Continuation of proceeding after delay
(1)
If no step has been taken in a proceeding for 1 year from the time the last step was taken, a party who wants to proceed must, before taking any step in the proceeding,
give a month’s notice to every other party of the party’s intention to proceed. (2)
If no step has been taken in a proceeding for 2 years from the time the last step was taken, a new step may not be taken without the order of the court, which may be made either with or without notice.
(3) For this rule, an application in which no order has been made is not taken to be a step.”
Rule 280 empowers the court to dismiss a proceeding for want of prosecution. It
provides:
“280 Default by plaintiff or applicant
(1) If—
(a) the plaintiff or applicant is required to take a step required by these rules or comply with an order of the court within a stated time; and (b) the plaintiff or applicant does not do what is required within the time stated for doing the act; a defendant or respondent in the proceeding may apply to the court for an order dismissing the proceeding for want of prosecution. (2) The court may dismiss the proceeding or make another
order it considers appropriate.(3) An order dismissing the proceeding for want of prosecution may be set aside only on appeal or if the parties agree to it being set aside.
(4) Despite subrule (3), the court may vary or set aside an order dismissing the proceeding for want of prosecution made in the absence of the plaintiff or applicant, on terms the court considers appropriate, and without the need for an appeal.”
Rules 280 and 389 are intertwined in that an order dismissing proceedings under r 280
is often the consequence of a plaintiff’s failure to obtain leave to proceed under
r 389(2).
Rules 280 and 389 were considered in Tyler v Custom Credit Corporation Ltd &
Ors.[12] There, Atkinson J summarised the principles as:
[12] [2000] QCA 178, followed consistently including recently in Arawak Holdings Pty Ltd v Jackson [2021] QCA 062 at [19].
“[2]
When the Court is considering whether or not to dismiss an action for want of prosecution or whether to give leave to
proceed under Uniform Civil Procedure Rules (‘UCPR’) r389, there are a number of factors that the Court will take into account in determining whether the interests of justice require a case to be dismissed. These include:
(1)
how long ago the events alleged in the statement of claim occurred and what delay there was before the litigation was commenced;
(2) how long ago the litigation was commenced or causes of
action were added;(3) what prospects the plaintiff has of success in the action; (4) whether or not there has been disobedience of Court
orders or directions;(5) whether or not the litigation has been characterised by
periods of delay;(6) whether the delay is attributable to the plaintiff, the
defendant or both the plaintiff and the defendant;(7)
whether or not the impecuniosity of the plaintiff has been responsible for the pace of the litigation and whether the
defendant is responsible for the plaintiff’s impecuniosity;
(8) whether the litigation between the parties would be concluded by the striking out of the plaintiff’s claim; (9) how far the litigation has progressed; (10) whether or not the delay has been caused by the plaintiff’s lawyers being dilatory. Such dilatoriness will not necessarily be sheeted home to the client but it may be. Delay for which an applicant for leave to proceed is responsible is regarded as more difficult to explain than delay by his or her legal advisers;
(11) whether there is a satisfactory explanation for the delay;
and(12) whether or not the delay has resulted in prejudice to the
defendant leading to an inability to ensure a fair trial.The court’s discretion is, however, not fettered by rigid rules but
should take into account all of the relevant circumstances of the particular case including the consideration that ordinary members of the community are entitled to get on with their lives and plan their affairs without having the continuing threat of
litigation and its consequences hanging over them.”[13]
[13] Citations omitted.
Consideration
Toula and Dante’s claim against Lee Turnbull & Co has no prospect of success. It
proceeds upon a misunderstanding of the effect of the undertaking given by Morgo’s,
Morgan and Hassett, the purpose of a court requiring an undertaking as to damages
as the price for an interlocutory order or undertaking, and of a misunderstanding of
the judgment of Holmes CJ in Toula Holdings Pty Ltd & Ors v Morgo’s Leisure Pty
Ltd & Ors [14]
[14] [2019] QSC 196, and see paragraph [20] and [22] of these reasons.
As already observed, the undertaking given by Morgo’s, Morgan and Hassett on 10
October 2013 was in terms of “the usual undertaking as to damages”. That
undertaking was given upon an interlocutory application seeking to maintain the
status quo pending trial of the claim against Toula and Dante. On that application,
Morgo’s, Morgan and Hassett secured undertakings from Toula, Dante and Davark
to extend the settlement of the contract and thus preserve their interests. They also
obtained directions to have the trial heard quickly. The undertaking given by
Morgo’s, Morgan and Hassett was the price paid for the undertaking by Toula, Dante
and Davark. The orders and undertakings of 18 October 2013 were of similar effect.
This is the way interlocutory orders (or undertakings as the case may be) are secured.
The party obtaining the order or undertaking on an interlocutory basis, before having
proved anything more than just a serious question to be tried,[15] must undertake to pay
damages which flow as a result of the undertaking or order in the event they are not
successful in the action.[16]
[15] Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [19].
[16] Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1979) 146 CLR 249
Toula and Dante plead:
“13. The terms of the Morgan and Hassett Undertaking were to the effect that Morgan and Hassett would pay to any person affected by the making of a Part 2 order, within the meaning of that term contained in rule 255A UCPR, an amount the Court decides should be paid for damages that person may sustain because of the Part 2 order.”
The reference in paragraph 13 of the amended statement of claim to “Part 2” is a
reference to Part 2 of Chapter 8 of the UCPR.[17] Toula and Dante go on to plead that
the undertaking was ineffective because the orders made on 10 and 18 October 2013
were not Chapter 8, Part 2 orders.
[17] Uniform Civil Procedure Rules 1999, r 255A.
Chapter 8, Part 2 of the UCPR concerns “freezing orders” and “search orders”.
Freezing orders[18] are a statutory adaptation and variation of the Mareva injunction.[19]
Search orders[20] are a statutory adaptation and variation of an Anton Piller order.[21]
[18] Rule 260A.
[19] Mareva Compania Naviera SA v International Bulkcarriers SA; The Mareva [1980] 1 All ER 213.
[20] Rule 261A.
[21] Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55.
Rule 264 provides:
“264 Damages and undertaking as to damages
(1)
Unless there is a good reason, the court must not grant a part 2 order until the trial or hearing or until a stated day without the usual undertaking as to damages having been given.
(2) The usual undertaking as to damages for a part 2 order
applies during an extension of the period of the order.(3)
If the usual undertaking as to damages is contravened, the person in whose favour the undertaking is given may apply to the court for an order conditional on the assessment of damages.
Note— See rule 507 (Conditional order).
(4) If the court finds damages are sustained because of a part 2 order, the court may assess damages or give the directions it considers necessary for the assessment of damages. (5) In this rule or an order— usual undertaking as to damages, for a part 2 order, means an undertaking to pay to a person (whether or not a party to the proceeding) who is affected by the order an amount the court decides should be paid for damages the person may sustain because of the order.”
For r 264, “the usual undertaking as to damages” is defined by sub-rule 264(5) and
must (unless there is good reason) be offered as the price of obtaining a freezing order
or a search order.[22]
[22] Rules 264(1) and see r 255A.
The fact that r 264 defines the “usual undertaking as to damages” for the purpose of
Chapter 8, Part 2 of the UCPR, does not mean that the giving of an undertaking in those terms in other circumstances is inappropriate to meet loss suffered as the
consequence of other interlocutory orders and undertakings.
In Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd,[23] Aickin J
observed an undertaking as to damages in a general form:
“The undertaking given by Ansett was in the customary form which
[23] (1979) 146 CLR 249, upheld on appeal, Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249.
has been in use since about the middle of the nineteenth century in
cases where an injunction is granted either ex parte or on notice or motion to operate until the determination of the action or further order ... In Graham v Campbell (1878) 7 Ch D 490 the Court of Appeal ...
said ‘The undertaking as to damages which ought to be given on
every interlocutory injunction is one to which (unless under special circumstances) effect ought to be given. If any damage has been
occasioned by an interlocutory injunction, which on the hearing is found to have been wrongly asked for, justice requires that such damage should fall on the voluntary litigant who fails, not on the
litigant who has been without just cause made so’.” (emphasis
added)[24]
[24] Page 260.
As a matter of routine, courts accept “the usual undertaking as to damages” from
applicants seeking interlocutory orders and undertakings. It is the “customary form”
and has the effect explained in Air Express Ltd v Ansett Transport Industries
(Operations) Pty Ltd.[25]
[25] (1979-1981) 146 CLR 249.
As already observed, Toula and Dante made application for compensation to enforce
the undertaking as to damages. What came before Holmes CJ was an application for
leave to proceed on an application expressed to be brought under r 264(3) and
r 900(3). Rule 900(3) empowers the court to award compensation where there is a
breach of an undertaking.
What the Chief Justice found was that:
1. r 900(3) did not apply because there was no suggestion of a breach of any undertaking;
2. r 264 does not apply because that is a provision in Chapter 8, Part 2 which only
applies to freezing orders and search orders.
There is nothing in the Chief Justice’s judgment to suggest that an undertaking as to
damages in the usual form is not enforceable in relation to interlocutory orders other
than freezing orders or search orders. It is just that it was not enforceable in these
circumstances under r 264 (the rule claimed to justify the orders) because that only
concerns freezing orders and search orders and no orders of that kind were made on
either 10 or 18 October 2013.
Significantly though, is this comment by her Honour:
“Those undertakings permitted completion on 22 November 2013, but
it did not take place, not because of the orders in connection with which the undertakings had been given, but because of the
declaration that the lease was void.”[26]
[26] [2019] QSC 196 at [8].
The undertaking as to damages covers loss caused by the interlocutory orders (or
undertakings) made, not from the general consequences of the litigation. That was
made clear in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd.[27]
[27] (1981) 146 CLR 249.
The amended statement of claim then goes on to plead:
“21. By virtue of the Plaintiffs’ First Undertaking and Plaintiffs’
Second Undertaking, the Plaintiffs could not lawfully complete the Davark Contract between 10 October 2013 and 21 November 2013 (the Inability to Complete).
22. At all times between 10 October 2013 and 21 November 2013, Davark and the Plaintiffs were ready willing; and able to complete the Davark Contract.
23. As a consequence of the Inability to Complete =, the Plaintiffs
did not receive the Davark Sale Price.”
These paragraphs show the insurmountable problems faced by Toula and Dante and
proves the point made by the Chief Justice that the loss was not referrable to the orders
or the undertakings but was caused by the judgment given on 21 November 2013.
In paragraph 21 of the amended statement of claim, it is pleaded, not doubt correctly,
that Toula and Dante could not complete the Davark contract between 10 October
2013 and 21 November 2013 because of the existence of the undertakings; but
21 November 2013 is the date North J gave judgment in favour of Morgo’s, Morgan
and Hassett. The contract remained on foot for over a further two months, eventually being terminated on 30 January 2014. At that point, Toula and Dante were not subject
to any undertaking not to settle the contract with Davark. Had they persuaded Davark
to settle notwithstanding a failure to assign the lease, then they were free to complete
the sale. They were not enjoined against settling.
The loss suffered by Toula and Dante was not suffered because they gave
undertakings on 10 and 18 October 2013; nor was it suffered because North J made
directions orders. The loss was suffered because on 30 January 2014, Toula and
Dante could not assign the benefit of the lease to Davark. That circumstance was as
a result of the fact that North J had declared the lease void.
Other discretionary considerations
Lee Turnbull & Co point to delay and prejudice as discretionary factors suggesting
against the granting of leave to proceed in the claim.
Any cause of action probably arose on 30 January 2014 when Davark rescinded the
contract. It is at that point that loss was suffered.[28]
[28] Wardley Australia v Western Australia (1992) 175 CLR 514.
The proceedings were not commenced until 1 October 2019. That is understandable
because although the loss was suffered in 2014, it may not have been apparent to
Toula and Dante until the judgment of Holmes CJ[29] that the undertakings did not
cover the loss.
[29] 20 June 2019.
The proceedings have not progressed past the filing of an amended statement of claim.
In the three years and four months since the filing of the claim, all that seems to
otherwise have been achieved is the reregistration of Toula and Dante and the
securing of litigation funding.
Lee Turnbull & Co point to general prejudice caused by the passage of time and the
general inability to properly defend a claim arising from events now almost a decade
ago. However, it is unlikely that the facts of the case will be in dispute. There is no
doubt that Lee Turnbull & Co were retained. The facts leading up to the giving of
the undertakings could hardly be in contest. The real issues are whether it was
negligent to advise Toula and Dante to give the undertaking not to settle and to
consent to the directions orders based on the undertakings offered by Morgo’s,
Morgan and Hassett.
Ms Cassimatis, in her affidavit,[30] expresses her complaint in terms of a failure to
[30] Court file index no 12
advise. In relation to the giving of the undertaking on 10 October 2013,
Ms Cassimatis says:
“2. At no time during the course of the Plaintiffs retaining the
Defendant was I advised by that firm
(i)
that the Morgan and Hassett undertaking (referred to in paragraph 12(iv) of the Statement of Claim) (the Morgan and Hassett Undertaking) was ineffective to allow the Plaintiffs to recover any loss from Morgan and Hassett suffered as a consequence of the giving of the Plaintiffs' undertaking referred to in paragraph (b) of the Statement
of Claim (the Plaintiffs’ First Undertaking)
(ii) that the Morgan and Hassett undertaking was meaningless in light of the Court making no order pursuant to Chapter 8, Part 2 Uniform Civil Procedure Rules
(iii) that the Plaintiffs’ First Undertaking was to be and was
provided to the Court in return for no benefit to the
Plaintiffs;(iv) of the terms of an enforceable undertaking which might have been given by Morgan and Hassett during the First
Hearing, in return for the Plaintiffs’ First Undertaking.”[31]
[31] She makes almost identical complaint about the orders and undertakings on 18 October 2013.
Although no defence has been filed, it would be very surprising if Lee Turnbull & Co
asserted that advice was given in the terms that Toula and Dante allege it should have
been. This is because, consistently with my earlier analysis, and following the
subparagraph numbers in paragraph 2 of Ms Cassimatis’s affidavit:
(i) The undertaking was effective to allow Toula and Dante to recover loss suffered as a consequence of the giving of the undertaking to extend the time
for settlement of the contract. The loss though was not suffered as a
consequence of the giving of the undertaking to extend the time for settlement
of the contract. It was suffered as a result of actions taken upon the judgment
of North J.[32]
[32] See paragraphs [40]-[41] and [47] of these reasons.
(ii) The undertaking was effective as a matter of law, notwithstanding that the
court did not make an order under Chapter 2, Part 2 of the UCPR.[33]
(iii) The undertaking given by Toula and Dante was given in return for the usual
undertaking as to damages which was of a benefit to Toula and Dante to secure
any loss flowing from the undertaking given to extend the contract.[34]
(iv) Lee Turnbull & Co did give advice to Toula and Dante as to the terms of an
enforceable undertaking to be given by Morgan and Hassett in return for the
undertaking to extend the contract. Those terms were “the usual undertakings
as to damages”. That was sound advice to protect Toula and Dante against
any loss caused by the delay in settlement which was caused by the
undertakings not to settle pending trial.
[33] See paragraphs [37]-[46] of these reasons.
[34] See paragraph [32] of these reasons.
The prejudice which is being suffered by Lee Turnbull & Co is not prejudice caused
by delay but rather by being vexed by proceedings which have no prospect of success.
Conclusions
Toula and Dante’s case has, for the reasons I have explained, no prospect of success.
Whatever other discretionary features may or may not be present, there can be no
justification for granting leave to proceed in a claim which must fail.
The application for leave to proceed is dismissed. For the reasons explained earlier,[35]
it follows that the application for validation should be dismissed and the claim should
be dismissed for want of prosecution.
[35] Paragraph [3] of these reasons.
At the hearing of the application, the parties agreed that I should make orders with a
view to determining costs without a further hearing. That is appropriate.
Costs follow the event unless some other order is appropriate.[36] Therefore, it is
appropriate that Toula and Dante produce the first submission on costs.
[36] Uniform Civil Procedure Rules 1999, r 681.
Orders
I make the following orders:
1. Application BS12883 of 2022 is dismissed. 2. The plaintiffs’ application for leave to proceed in BS10651 of 2019 is dismissed.
3. The plaintiffs’ claim in BS10651 of 2019 is dismissed for want of prosecution.
4. By 4.00 pm on 20 February 2023 the plaintiffs shall file and serve any written
submissions as to why they should not pay the defendant’s costs of proceedings
in BS10651 of 2019 including their application for leave to proceed and the
defendant’s application to dismiss the claim, and the costs of BS12883 of 2022.
5. By 4.00 pm on 27 February 2023 the defendant shall file and serve any written
submissions on costs.
6. By 4.00 pm on 7 March 2023 each party has leave to file and serve an
application for leave to make oral submissions on the question of costs.
7. In the event that no party files an application for leave to make oral submissions
on costs by 4.00 pm on 7 March 2023, the question of costs will be determined
on any written submissions filed and without further oral hearing.
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