Westonia Earthmoving Pty Ltd (in Liquidation) v Geier [No 2]
[2020] WASC 267
•17 JULY 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: WESTONIA EARTHMOVING PTY LTD (IN LIQUIDATION) -v- GEIER [No 2] [2020] WASC 267
CORAM: REGISTRAR WHITBREAD
HEARD: 16 JUNE 2020
DELIVERED : 17 JULY 2020
FILE NO/S: CIV 2052 of 2018
BETWEEN: WESTONIA EARTHMOVING PTY LTD (IN LIQUIDATION)
Plaintiff
AND
WALTER HERBERT GEIER
First Defendant
CHRISTINE ETHEL GEIER
Second Defendant
ASHLEY JAMES GEIER
Third Defendant
STACEY ANN GEIER
Fourth Defendant
TANIA MICHELLE GEIER
Fifth Defendant
Catchwords:
Practice and procedure - Interlocutory application to dismiss proceeding for want of prosecution - Consideration of what constitutes a procedural step for the purposes of O 4A r 24
Legislation:
Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA), O 4A r 24
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr T O Coyle |
| First Defendant | : | Mr J E Scovell |
| Second Defendant | : | Mr J E Scovell |
| Third Defendant | : | Mr J E Scovell |
| Fourth Defendant | : | Mr J E Scovell |
| Fifth Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Cooper Legal |
| First Defendant | : | Salerno Law |
| Second Defendant | : | Salerno Law |
| Third Defendant | : | Salerno Law |
| Fourth Defendant | : | Salerno Law |
| Fifth Defendant | : | No appearance |
Case(s) referred to in decision(s):
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Brisbane South Regional Health Authority v Taylor [1996] CLR 541
Brocx v Hughes [2010] WASCA 57
Crane v The State of Western Australia [2017] WASCA 31
Evans v Wainter Pty Ltd [2005] FCAFC 114
Grovit v Doctor [1997] 2 All ER 417
Hong Kong Bank of Australia v Murphy & Ors (1992) 10 ACLC 1573
Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273
Netglory Pty Ltd v Caratti [2013] WASC 364
Re Global Medical Imaging Management Limited (In liq) [2001] NSWSC 481
The Hancock Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
REGISTRAR WHITBREAD:
The application
On 22 April 2020 the First, Second, Third and Fourth Defendants (Defendants) filed an application that this proceeding be dismissed for want of prosecution (Application).
The Defendants rely upon their written submission filed on 21 May 2020 and 23 June 2020 together with the affidavit of Gemma Lonsdale Abbey sworn 21 April 2020 (Abbey Affidavit).
The Plaintiff relies upon its written submissions filed on the 4 June 2020 and 25 June 2020 together with the affidavits of Peter Reymond Quigley (Liquidator) sworn 14 May 2020 (Liquidator's Affidavit) and the affidavit of Peter Reymond Quigley sworn 14 June 2017 (Summary Judgment Affidavit). The Plaintiff sought to file a further affidavit of Peter Reymond Quigley on 25 June 2020 but no leave had been given to file further affidavits and the Plaintiff did not seek leave to file; hence this affidavit cannot be relied on the Application.
The history of the action
On 1 March 2017, this proceeding was commenced in the District Court. Thereby, the liquidator for the Plaintiff seeks to recover monies alleged to be owing by the Defendants to the Plaintiff. The Liquidator was appointed on 7 October 2014. The Fifth Defendant has never entered an appearance.
The Plaintiff claims the sum of $898,215 in its amended statement of claim filed 14 June 2017 (Amended Statement of Claim) in respect of alleged loan accounts that were owing by the Defendants to the Plaintiff. The Plaintiff's case is that the Plaintiff was a family controlled earthmoving business which provided funds to, and paid accounts on behalf of, a family partnership which, in turn, hired equipment to the Plaintiff. The debits and credits between the two enterprises resulted in the claimed debt owing by the Defendants to the Plaintiff.
On 25 August 2017, on the hearing of an application for summary judgment in the District Court, the Defendants consented to judgment as to part of the sum claimed by the Plaintiff (being $437,205). Following the hearing, summary judgment was given for the Plaintiff in the sum of $898,215, but that judgment was not entered.
On 7 September 2017, the District Court raised the issue of jurisdiction by way of letter advising that the judgment exceeded the jurisdiction of the Court.
On 28 March 2018, the matter was remitted to the Supreme Court. The Defendants did not oppose remittal to the Supreme Court.
In October 2018, the Defendants sought leave to re-open and to have the Plaintiff's application for summary judgment dismissed (Re‑open Application) on the basis that new evidence, contained in the affidavit of the First Defendant sworn on 29 October 2018 and the affidavit of Ross McDermott sworn on 29 October 2018 (New Evidence), evidenced that the summary judgment application proceeded upon a misapprehension as to the correctness of, and the proper accounting treatment of, the amounts claimed by the Plaintiff.
The Defendants' application was ultimately successful and appropriate orders were made by the Master on 20 December 2018.
A discovery application, filed by the First Defendant on 21 September 2018, was heard and dismissed, by the Master, on 9 October 2018 and a costs order was made in the Plaintiff's favour.
A further costs order was made by the Master, on 12 February 2019, in relation to the setting aside of the summary judgment application, in favour of the Plaintiff.
Bills of costs relating to the two costs orders were filed by the Plaintiff on 30 May 2018 and both of those bills were taxed. The two certificates of taxation, respectively in the sums of $25,830.40 and $13,776.90, were issued on 3 July 2019. The monies due under those certificates were paid to the Plaintiff on 26 July 2019.
The proceedings then remained dormant until the Application was filed. The Liquidator asserts that since that time he has been pursuing monies due from the ATO (in respect of a GST refund) in order to fund a public examination of one of the directors of the Plaintiff, Darren Geier, and the Plaintiff's former external accountant.
On 8 April 2020 the Plaintiff wrote to the Associate to the Principal Registrar and advised that public examination proceedings would be commenced by 14 May 2020. The Application was filed on 22 April 2020 but as at the date of hearing of the Application no public examination proceedings had been commenced.
On the hearing of the Application, on 16 June 2020, it became relevant to consider the question of the actual status of the proceeding given that, arguably, no procedural step had been taken in the proceeding for more than 12 months; the last procedural step, on the Defendants' case, having been the orders made by the Master on 12 February 2019. The Plaintiff contends that the Application is, of itself, a procedural step.
The Defendants contend that there is no evidence to suggest that there are any limitation periods which would expire which would otherwise prejudice the Liquidator.
The principles applying to an application for the dismissal of proceedings for want of prosecution
The Court, as part of its inherent jurisdiction, has power to dismiss a proceeding for want of prosecution. Whether the Court should do so in a particular case is a function of the broader consideration that the Court must ensure that justice is done in any cause brought before it.
The inherent power to dismiss proceedings for want of prosecution was considered by the Court of Appeal in The Hancock Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93 (Hancock Memorial Foundation) at [99] per Steytler P and Owen JA, who relevantly identified the applicable principles that a defendant must meet when seeking an order for dismissal of proceedings for want of prosecution. A defendant must show:
(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.
Their Honours then went on, at [103], to find that the following five matters are guidelines and are usually relevant to the court's discretion in determining an application to strike out for want of prosecution:
(a)the length of the delay;
(b)the explanation for the delay;
(c)the hardship to the plaintiff if the action is dismissed and the cause of action left statute barred;
(d)the prejudice to the defendant if the action is allowed to proceed notwithstanding the delay; and
(e)the conduct of the defendant in the litigation.
In Aon Risk Services Australia Ltd v Australian National University(2009) 239 CLR 175(Aon). French CJ, at [5], observed that there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings and that the time of the Court is a publicly funded resource.
Heydon J in Aon, at [137], importantly made the following observations about the need for the efficient and timely disposition of commercial litigation:
While in general it is now seen as desirable that most types of litigation be dealt with expeditiously, it is commonly seen as especially desirable for commercial litigation. Its claims to expedition may be less than those of proceedings involving, for example, extraordinary prejudice to children; or the abduction of children; or a risk that a party will lose livelihood, business or home, or otherwise suffer irreparable loss or extraordinary hardship, unless there is a speedy trial. But commercial litigation does have significant claims to expedition. Those claims rest on the idea that a failure to resolve commercial disputes speedily is injurious to commerce, and hence injurious to the public interest. As Rogers J stated in Collins v Mead:
'For example, if banks are unable to collect overdue loans from borrowers speedily, if small traders cannot recover moneys owed to them speedily the commercial life of the [c]ommunity is detrimentally [a]ffected. The consequences of delay in the hearing of a commercial dispute … will impact not just on the two or three persons or companies who are the immediate parties, but may have an effect on the creditors of the business, on employees, and perhaps on other traders unrelated to the immediate dispute.'
Commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible, whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case that is because it is important that both the claimants and those resisting claims are able to order their affairs. How they order their affairs affects how their creditors, their debtors, their suppliers, their customers, their employees, and, in the case of companies, their actual and potential shareholders, order their affairs. The courts are thus an important aspect of the institutional framework of commerce. The efficiency or inefficiency of the courts has a bearing on the health or sickness of commerce.
In Brocx v Hughes [2010] WASCA 57, Newnes JA made relevant observations, in an appeal from an order dismissing proceedings as an abuse of process in an action that was in all material respects identical to a claim in a former action which had been dismissed for noncompliance with a springing order. In particular, after referring to the principles in Aon, Newnes JA stated, at [93]:
Whilst parties have the right to invoke the jurisdiction and the powers of the court in order to seek a resolution of their dispute, where a party has had a sufficient opportunity to plead his or her case, it may be necessary for the court to make a decision which may produce a sense of injustice in that party, for the sake of doing justice to the opponent and to other litigants.
In Brisbane South Regional Health Authority v Taylor [1996] 186 CLR 541 (Brisbane South Regional Health Authority) at page 552, McHugh J set out the impact of delay as follows:
… as time goes by, relevant evidence is likely to be lost. It is oppressive, even cruel, to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed. People should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. The public interest requires that disputes be settled as quickly as possible.
There may also be cases where the Court will dismiss the action as an abuse of process because the circumstances of the plaintiff's inactivity lead to the conclusion that the plaintiff has commenced and continued litigation which they have no intention of bringing to a conclusion: Grovit v Doctor [1997] 2 All ER 417 at 418, 424 and 425.
The onus is on the Defendants to show that those general principles apply to the present circumstances such that this proceeding should be dismissed for want of prosecution. It is the cumulative effect of delay that needs to be considered. Dismissal for want of prosecution involves the exercise of a discretion which ought not be fettered by any absolute or inflexible rules (see Hancock at [102] ‑ [103]). A Court should consider the delay from the time of the inception of the proceedings and should not compartmentalise the assessment of prejudice by reference to discrete periods: see Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273 (Monaveen) at [25], [42], [61].
The grounds upon which the Defendants seeks an order that the Plaintiff's action be dismissed for want of prosecution
The Defendants contend that the Liquidator has not sufficiently dealt with the reasons for the delay in prosecuting the proceedings and that any attempt now to undertake the proposed public examinations should be regarded as seeking to obtain a forensic advantage or to engage in a dress rehearsal for trial, both of which involve an abuse of process.
The Defendants contend that the history of the liquidation and these proceedings is rather lengthy. It appears from the Liquidator's Affidavit that two reasons are stated for the inordinate delay – a lack of funding and the desire to commence public examinations.
The Defendants assert that the reasons given for the delay are tenuous at best and do not properly address the reasons for delay. The explanations offered by the Liquidator as to the delay are wholly insufficient. The Defendants say that this is proven by the following contentions:
(i)The lack of funding cannot be a valid excuse in the circumstances. The liquidation of the Plaintiff has been going on for some six years – with the proceedings being on foot for almost three of those. The Liquidator's capacity to fund the proceeding to its conclusion should have been readily apparent to him.
(ii)There is no evidence to suggest that there are any limitation periods which would expire which would otherwise prejudice the Liquidator.
(iii)Consistent with the court's comments in Brisbane South Regional Health Authority, the Defendants should be afforded the ability to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. This is particularly so where the Liquidator has not reached a conclusion as to whether the prospects of success of the action warrant it being continued (see par 10(1) of the Liquidator's Affidavit).
(iv)The costs payable by the Defendants to the Plaintiff in the proceeding were paid in July 2019, some 10 months ago. The delay after receipt of these costs is inexcusable.
The Defendants contend, as to the impending receipt of the GST refund, that this amount is only approximately $13,000. It will not be sufficient to see this proceeding through to trial. Accordingly, to dismiss the Application would likely only serve to delay the inevitable and subject the Defendants to the existence of litigation that is doomed not to progress.
Further and in any event, the Defendants contend that the desire to conduct examinations should not be a legitimate basis to excuse the current delay or exacerbate it. This is particularly so where the proposed examinations are, on the Defendants' case, arguably, at least in part, an abuse of process. The Defendants assert that the Plaintiff gives no explanation as to why the examinations were not commenced in or about July 2019 when the funds relating to the costs were received by the Plaintiff. Paragraph 10(1) of the Liquidator's Affidavit states that a purpose of the proposed public examinations is 'determining the prospects of the legal proceedings being successful or whether the litigation should be discontinued.' The Liquidator has been appointed since 7 October 2014. The liquidation appears to have been undertaken at a glacial speed and no explanation is proffered as to why. Further, there is no explanation given as to why the proposed examinations were not undertaken prior to the commencement of the proceeding.
The Defendants argue that there is no direct answer to the delay of almost a year since the last application was determined and the costs in respect of that application were paid to the Plaintiff. The Defendants contend that any attempt to now undertake the proposed examinations after the filing of a substantial volume of evidence in the proceedings, including expert evidence, would simply be for the Liquidator to obtain a forensic advantage or to engage in a dress rehearsal for trial – both being impermissible as an abuse of process. On the basis that any questions at the proposed examinations regarding these proceedings and the evidence therein would be impermissible as an abuse of process, the Defendants contend that it appears highly unlikely that there is any prospect that the stated aim of determining the prospects of the litigation can be achieved.
The Defendants further contend that if the Application is dismissed to allow public examinations to occur, there will be a substantial risk that it is not possible to have a fair trial of the issues in the action. At the very least such a course would cause serious prejudice to the Defendants, as the Liquidator will have obtained an impermissible forensic advantage or conducted a dress rehearsal for trial. Further, those examinations would cause prejudice to the Defendants as any examinees would require legal representation to ensure that the Plaintiff's counsel did not traverse any issues that would constitute an abuse of process; costs that the Defendants should not have to incur.
Further, the Defendants state that there has been no attempt to informally approach the Defendants as to their capacity to meet any judgment; this could have been requested on oath and potentially avoided the need for an examination. The remaining stated aims of the proposed examinations, being potential breaches of the Corporations Act 2001 (Cth) by the Plaintiff's directors or the First Defendant, are not deposed to having any link whatsoever to the subject matter of the proceedings. As a result, these purported aims should be disregarded as irrelevant for the purposes of this Application.
The Defendants assert that if this matter had been the subject of usual case management, the action would have fallen into the inactive cases list and have been dismissed in the length of time that has passed since the Master's determination on 12 February 2019.
The Defendants conclude that the proceeding should be dismissed, with costs, for want of prosecution
The Plaintiff's submission on the Application and the explanation of the delay
The Plaintiff relies on the chronology set out in the affidavit of Damian Cooper dated 10 August 2018 in support of the Plaintiff's motion for judgment brought in the Supreme Court after remittal.
The Liquidator's Affidavit discloses his explanation for the delay which I will come to, in more detail, later in these reasons for decision.
The Plaintiff contends that the delays have not been inordinate and the explanations for the delays are entirely reasonable.
The Plaintiff contends that the proceedings were properly commenced on the basis of the liabilities disclosed in the financial statements of the Plaintiff and the second partnership (as defined in par 18 the Amended Statement of Claim) (Second Partnership), and it was only in October 2018, after the remittal to the Supreme Court, that the Defendants raised the New Evidence by way of seeking to displace the indebtedness as revealed by the financial statements, as part of the Re‑open Application.
The Plaintiff asserts that the Defendants' contention that lack of funding does not provide a valid excuse has no merit. The Plaintiff points out that the funding requirements changed dramatically when the Supreme Court re-opened the summary judgment application and the summary judgment application was dismissed.
The Plaintiff contends that it is unclear whether the Plaintiff's claims would be statute barred if the proceedings were dismissed at this stage.
The Plaintiff argues that the Defendants' contention, as to alleged abuse of process in proceeding with public examinations, involves pre‑judging the outcome of any application to set aside summonses for such an examination. The suggestion of the Defendants' submissions, that public examinations should have been conducted before the proceedings were commenced, is misplaced, given that: (1) the proceedings were based on the clear position disclosed in the Plaintiff's and Defendants' financial statements; (2) the Defendants did not respond to demands made to them prior to commencing proceedings; and (3) the Defendants did not raise any of the new matters, as supported by the New Evidence, until after the proceedings were remitted to the Supreme Court.
The Plaintiff contends that the delay asserted by the Defendants has been adequately answered in the Liquidator's Affidavit.
The explanation for the delay
The Liquidator's Affidavit discloses the following in explaining the delay:
(i)Delay initially arose because of the need to remit the proceeding to the Supreme Court in view of the amount for which summary judgment was sought.
(ii)Further delay arose upon the Defendants bringing the Re‑open Application and their reliance on the New Evidence.
(iii)The Master's decision on the Re‑open Application was delivered on 12 February 2019.
(iv) Thereafter, the Liquidator decided that it would be prudent to conduct public examinations for the purposes set out in par 10 of the Liquidator's Affidavit; in summary (a) to better ascertain the prospects of the litigation; (b) to ascertain the financial capacity of the Defendants to meet a judgment; (c) to better identify the Plaintiff's assets; (d) to ascertain any potential liability of the First Defendant, as a director of the Plaintiff, under the Corporations Act 2001; and (e) to ascertain whether any of the directors had, prima facie, committed any offences under the Corporations Act 2001.
(v)The Liquidator sought funds through to recovery of costs awarded against the Defendants, and by seeking a GST refund from the ATO. The Plaintiff had to lodge a bill of costs for assessment, and the amount assessed was not paid until 26 July 2019.
(vi)The Liquidator has had communications with the ATO in relation to the GST refund since August 2019. The ATO experienced internal processing problems. On 17 April 2020 the Liquidator was told that the balance of the refund would be paid within 28 days.
(vii)On 13 May 2020 the Liquidator instructed the Plaintiff's solicitors to apply for examination summonses. On 8 April 2020, the Court was advised that such proceedings would be commenced within 35 days.
Essentially, the Liquidator wanted to be in funds before pursuing the public examinations. The Liquidator contends that those examinations will be crucial to determine whether the current action should proceed.
In relation to the delay I would observe that the Plaintiff could have progressed the present matter by requiring the Defendants to file a defence and pursuing discovery. The Plaintiff has chosen not to do so, preferring the course of public examinations; whilst that was the Liquidator's choice it has inevitably caused this proceeding to stagnate. On the other hand, the Defendants have not incurred the costs of filing a defence and providing discovery.
The liquidation of the Plaintiff has now been going on for some six years and seeking to finance the Liquidator's chosen course, namely the public examinations, by a mix of costs orders against the Defendants and ATO tax refunds, appears 'band-aid' in nature. Litigation funding, another course referred to by the Liquidator on the Application, might have been sought a long time ago. The Defendants contend that the public examination process could have been commenced in July 2019 when the Liquidator received the funds payable under the costs orders. The Liquidator contends such funds were insufficient and that it was reasonable, in all of the circumstances, to choose to await the receipt of the refund from the ATO.
Accordingly, whilst the future course of this litigation appears perilous, apparently depending on the outcome of proposed public examinations and litigation funding consequent thereon, the question before me is whether the delay is so inordinate and the explanation so unreasonable that the proceeding should be struck out for want of prosecution with due diligence. Whilst the Defendants contend for a course of action they say a reasonable Liquidator should have taken, I find that the course the Liquidator has taken cannot be said to be unreasonable or imprudent in the prevailing financial and factual circumstances. I find that the stated purposes of the Liquidator in seeking public examinations are not unreasonable, or unrelated, to this proceeding. I also find that the proceeding is not unreasonably bought and that the Liquidator intends to bring it to a conclusion.
New proceeding would not be time barred
The Defendants contend that there is no evidence to suggest that there are any limitation periods which would expire which would otherwise prejudice the Liquidator. To determine that question on the Application would, on the relevant authorities, be premature: Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514.
The amount claimed in the amended statement of claim dated 14 June 2017, namely $898,214, is calculated from the amounts recorded in the financial records of the Plaintiff and the Second Partnership as of 31 January 2013 and 30 June 2013 respectively. The financial statements for the year ending 30 June 2013 were signed on 16 April 2014 and the six year period commencing from 16 April 2014 has expired. The subsequent financial statements of the Second Partnership would arguably be insufficient to comprise acknowledgments of the liability for the purposes of s 47 of the Limitation Act 2005.
In Netglory Pty Ltd v Caratti [2013] WASC 364, Edelman J at [275] said that absent express terms to the contrary, the amount owing on a loan would be repayable upon demand and time would run from the date of the demand. This position is potentially altered by s 59 of the Limitation Act 2005 which provides that a cause of action for the repayment of a debt repayable on demand accrues when there is a failure to comply with a demand for repayment. However, as things stand and in the absence of further evidence, it is not clear whether the amount in question was in fact repayable upon demand, or within a reasonable time, or by a particular date or upon some other contingency.
Accordingly, I am satisfied that the Plaintiff's position in relation to the right to commence fresh proceedings could be adversely affected if the proceeding was to be struck out.
Public examinations an abuse of process
The Defendants contend that the public examinations will be an abuse of process.
The parties referred me to the law applicable to ascertaining whether a public examination is an abuse of process but the relevant principles for my consideration on the Application can be summarised as follows.
In Evans v Wainter Pty Ltd [2005] FCAFC 114 at [252] Lander J stated:
The procedure may not be used as a dress rehearsal for the cross‑examination of a person in a pending or subsequent action. However, it is not improper to seek an order of the court to summon a person for examination whilst litigation is pending against that person or entities connected with that person.
In Hong Kong Bank of Australia v Murphy & Ors (1992) 10 ACLC 1573 the NSW Court of Appeal said (at 1577) that:
[W]hile the court will not permit a liquidator to abuse its process by using examination solely for the purpose of obtaining a forensic advantage not available from ordinary pre-trial procedures, such as discovery or inspection, on the other hand, the possibility that a forensic advantage will be gained does not mean that the making of an order will not advance a purpose intended to be secured by the legislation. This was endorsed by the Master in Ferrinda & Anor v Bendigo Bank Ltd [2002] WASC 169 at [14].
The onus of proving an abuse of process in on the party alleging it, and it is a heavy onus because the party must show that the pursuit of forensic advantage was the dominant purpose of the liquidator: Re Global Medical Imaging Management Limited (In liq) [2001] NSWSC 481 at [13].
On the Application, the Plaintiff has asserted that the purpose of conducting public examinations at this stage would not be merely to obtain a forensic advantage or to engage in a dress rehearsal for trial. The New Evidence which was relied on in the Re‑open Application, does not provide any reliable basis for the Liquidator to properly assess the prospects of success of defences based on the new matters raised. No defence has been filed. The Plaintiff contends that not enough is known of the Defendants' defences for the public examinations to be conducted as a dress rehearsal (to the extent that this can sometimes be impermissible) for trial.
In Monaveen at [68], Pullin JA said that a summary determination that a plaintiff's case is untenable is not to be made in cases where there is not a high degree of certainty about the ultimate outcome. The Defendants are asking the Court to make a summary determination as to their contention that the public examination would be an abuse of process. The Plaintiff contended that this is contrary to the approach set out in Monaveen. It would be inappropriate for me to conclude on the Application that questioning at the examination would be an impermissible abuse. The Defendants' point in effect asks the Court to make a summary determination about applications by the examinees to set aside the proposed examination summonses. This is contrary to the approach set out in Monaveen.
I accept the Plaintiff's submissions that the shift in position arising from the introduction of the New Evidence (which, whilst it established an arguable defence, is based on limited evidence and has unexplained aspects) means that there are a range of factual matters sought to be investigated at public examinations. All of the Defendants' submissions in relation to the public examinations may well be correct (and I make no finding either way), but they will have to be argued in that proceeding. However, the Plaintiff's position as to the basis for the public examinations cannot, on this Application, be said to be so unreasonable as to warrant a finding on this Application that the proposed public examinations would be an abuse of process before they have even been commenced.
Detriment and hardship
The Defendants contend for the right to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them given the delay.
There is no doubt that the future conduct of this litigation remains perilous and the Defendants will no doubt be in a strong position to bring an application for security for costs on the basis of the evidence filed on the Application. An application for security of costs may well be bought prior to the Defendants going to the expense of filing a defence in the present action but that application would fall to be determined on the facts and submissions made therein.
However, when all of this is put into the balance with the fact that new proceedings may be time-barred and the public examinations may not be an abuse of process, and in the context that I find that the claim is not unreasonably bought on the facts and the Plaintiff intends to bring the proceeding to a conclusion, in my view the down side of the balance of detriment and hardship falls onto the Plaintiff if the Application is granted.
Is the matter inactive?
During the course of the Application the question of the current status of the matter, as to whether it is inactive or not, came into question.
Whilst this matter might have gone onto the Inactive Cases List earlier this year, the Defendants did not so request and the Principal Registrar did not so order. The reasons for that are irrelevant. The fact is that the Defendants chose to bring the present application. The Plaintiff contends that by doing so a procedural step has been taken in the proceeding such that the matter is not inactive.
Order 4A r 24 of the Supreme Court Rules 1971 (WA) (the Rules) states that:
24.Cases inactive for 12 months deemed inactive
1.If no procedural step is taken in a case for 12 months by any party to the case, the case is taken to be inactive unless the case manager for the case orders otherwise.
In Crane v The State of Western Australia [2017] WASCA 31[22] ‑ [27], the Court considered what constitutes the last proceeding in an action (or cognate expressions) within the meaning of comparable rules in other jurisdictions. The Court said:
22What constitutes the 'last proceeding in an action' (or cognate expressions) within the meaning of comparable rules in other jurisdictions has been the subject of a large number of decisions. Some of the old English decisions were helpfully collected by Stable J in Kaats v Caelers [1966] Qd R 482 and also by McPherson SPJ in Citicorp Australia Limited v Metropolitan Public Abattoir Board [1992] 1 Qd R 592. In Kaats, Stable J referred (at 489), with evident approval, to Webster v Myer, where a 'proceeding' was described as 'some step taken toward judgment or relief sought in the action'; and to Mundy, to the observation by Maugham J that, not as a definition but a kind of approximation, 'last proceeding' in the rule 'suggests something in the nature of a formal step, at least a step taken by the litigant in the prosecution of the case, being a step required by the rules'. In Artahs, Peter Lyons J (with whom Margaret McMurdo P and Fraser JA agreed) considered (at [42]) that the suggestion by Maugham J in Mundy that 'proceeding' involved 'a step required by the rules' was too narrow, and that, for example, the filing and service of a reply may not be required by the rules but it would amount to a 'proceeding' under the rule [48].
23In Citicorp, McPherson SPJ (with whom Ryan and Dowsett JJ agreed), in considering an equivalent Queensland rule, said (at 594) that it 'must have the characteristic of carrying the cause or action forward'; that it must be 'something in the nature of a formal step in the prosecution of an action'. His Honour distinguished such an act or activity from 'acts done in the recesses of a solicitor's office', such as inspecting documents, preparing an affidavit of discovery or preparing proofs of witnesses, which, although necessary to bring the action to trial, 'cannot be fairly described as a 'proceeding' in the cause' within the meaning of the rule.
24In Argo Pty Ltd v Attorney - General (Tas) (No 3) [2004] TASSC 51; (2004) 13 Tas R 69, Underwood J, having canvassed a number of authorities, concluded that 'proceeding' in the Tasmanian equivalent to O 3 r 7, means some step in the action required by the rules of procedure, but not necessarily carried out in accordance with those rules, to carry the action forward to a final judgment [27].
25In Burns v Korff [1982] 8 QL 201, 208, it was said in respect of the then Queensland equivalent to O 3 r 7, that the common feature of a 'proceeding' is that 'in a general way, the activity is recognised by the Rules as an activity which positively advances the cause and its conduct towards ultimate judgment, whether in favour of a plaintiff or a defendant.'
26In general terms then, a 'proceeding' in O 3 r 7 is something in the nature of a formal step which a party is required or permitted by the rules of court, or an order of the court, to take for the purpose of advancing the case towards final judgment.
27It is apparent that much that parties do in the course of litigation will not constitute a 'proceeding' for the purpose of O 3 r 7. Thus, for example, it has been held that a letter requesting delivery of a statement of claim was not a step in the proceedings: Ives & Barker v Willans[1894] 2 Ch 478, 483 ‑ 484; an agreement to extend the time for delivering a defence was not a step in the action, although an application to the court for an extension of time to do so would have been a step: Brighton Marine Palace and Pier Ltd v Woodhouse [1893] 2 Ch 486, 488 ‑ 489; making an application to set aside judgment was not a step in the action: ANZ Banking Group Ltd; the filing of affidavits in opposition to an application for the appointment of a receiver, in an action for the dissolution of a partnership, was not a step in the proceedings: Zalinoff v Hammond [1898] 2 Ch 92; a letter calling for compliance with an order for delivery of an affidavit of documents was not a proceeding in the action: Mundy; the inspection of copies of discovered documents in the solicitor's office was not itself a step in the action: Citicorp (albeit, it was accepted that the provision of copies of discovered documents was a step in the action: Wright v Ansett Transport Industries Limited [1990] 1 Qd R 297); delivery of a draft list of documents and unexecuted affidavit, accompanied by a letter confirming the provisional or interim basis of those documents, is not a step in a proceeding: Raabe v Brisbane North Regional Health Authority [2000] QSC 257; interviewing a potential witness is not a step in the action: Smiley v Watson [2001] QCA 269; [2002] 1 Qd R 560; an order for the transfer of an action from one court to another was not a step in the action: IH Dempster Nominees Pty Ltd v Chemgoods Pty Ltd[1993] 2 Qd R 377, 378; notice of a change of solicitors was not a step in the action and nor was an notice of intention to proceed: Kaats v Caelers; and, the taking out by a plaintiff of money paid into court, and payment into court for a cross-claim are not steps in a proceeding: Spincer v Watts (1889) LR 23 QBD 350.
The preponderance of authority leads me to conclude that the words 'procedural step' in the Rules of the Supreme Court 1971 O 4A r 24 means some step in the action, required by the rules of procedure, but not necessarily carried out in accordance with those Rules, to carry the action forward to a final judgment. Consistent with that conclusion, an application to dismiss a proceeding for want of prosecution is not a procedural step within the meaning of that rule, as it is a means of getting rid of an action, not a step forward to its conclusion. It would be incorrect, as a matter of principle, that an application by a defendant to strike out a proceeding for want of prosecution can be relied on by a dilatory plaintiff to successfully assert that a party has taken a procedural step in the proceeding so as to preclude the matter from being deemed inactive and thereby liable to be placed on the Inactive Cases List. The language of O 4A r 24 can only, logically and fairly, be interpreted so as to refer to a procedural step which advances the prosecution of the matter. An application to strike out a proceeding for want of prosecution could never be interpreted as a procedural step to advance the prosecution of a proceeding.
Accordingly, this matter is, in my view, inactive and the Plaintiff would in these circumstances be directed, pursuant to O 4A r 22, to attend a hearing to show cause why the matter should not be placed on the Inactive Cases List.
Conclusion
The power of the Court to strike out an action for want of prosecution will only be exercised with reluctance because of the serious consequences of such an order. However, litigation cannot just drift on in the hope that the Plaintiff will be able to find evidence to advance its case and obtain monies to fund the litigation.
The proceedings were properly commenced on the basis of information in the possession of the Liquidator. Whilst there has been delay, it cannot be said to be inordinate; given the explanation of the need to obtain funds to conduct the public examinations. The Liquidator's contention that the monies from the costs orders were insufficient to fund those examinations; and that monies from ATO's refunds were also required, cannot be said to be so unreasonable as to amount to a contemptable cause of delay.
Ultimately, I conclude that the Defendants have not made out their case, for the above reasons, to have the proceeding struck out for want of prosecution. I have, however, also concluded that the proceeding is inactive, no procedural step having been taken for 12 months. There would, in the normal course, then be a show cause hearing listed, in relation to my finding that the proceeding is currently inactive, as to why the matter should not be placed on the Inactive Cases List. That would have been appropriate in this matter.
Further, absent the factual scenario which now appends, and this will be ultimately relevant to costs, I would have made a springing order for the Plaintiff to commence the public examination proceeding within 14 days. I cannot ignore, given that the relevant filing is a matter of the Court's record, the fact that pending the filing of the further submissions on the Application (in relation to whether the proceeding was inactive, and, if so, the consequences of that), the Plaintiff commenced a public examination proceeding. This was significantly later than the Plaintiff had stated it would commence that proceeding in the 8 April 2020 correspondence. Accordingly, and unusually, even though I dismiss the Application I conclude that it was not an unreasonable step for the Defendants to bring the Application. The Plaintiff did not commence the public examination proceedings until after the Application was heard, which was well after the expiry of the timeline indicated to the Court in the 8 April 2020 letter. No explanation has been given for that delay.
I will hear the parties as to the costs of the Application and as to whether the Plaintiff should be ordered to attend a hearing to show cause as to why the matter should not be placed on the Inactive Cases List.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RM
Associate to Registrar Whitbread17 JULY 2020
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