Yu v Lu
[2019] VSC 576
•28 August 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2018 02307
| XINQIANG YU | Plaintiff |
| v | |
| OU LU | First Defendant |
| LUOU PTY LTD (ACN 124 393 353) | Second Defendant |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 22 August 2019 |
DATE OF JUDGMENT: | 28 August 2019 |
CASE MAY BE CITED AS: | Yu v Lu |
MEDIUM NEUTRAL CITATION: | [2019] VSC 576 |
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PRACTICE AND PROCEDURE – Want of prosecution – Failure to comply with orders of the Court – Inordinate and inexcusable delay in the prosecution of the matter by the plaintiff – Dismissal of proceeding for want of prosecution – Whether dismissal of proceeding consistent with the interests of justice and with the overarching purpose contained in the Civil Procedure Act 2010 (Vic) – Civil Procedure Act 2010 (Vic) s 7, Part 2.4 – Department of Transport v Chris Smaller (Transport) Ltd [1989] AC 1197, 1203; Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863; Aon Risk Services Ltd v Australian National University (2009) 239 CLR 175; Knorr v CSIRO (Commonwealth Scientific and Industrial Research Organisation) [2014] VSCA 84.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr B Harding | Herald Legal |
| For the Defendant | Mr TP Mitchell | Tao Jiang Lawyers |
TABLE OF CONTENTS
Introduction......................................................................................................................................... 1
The facts............................................................................................................................................... 2
12 February 2019........................................................................................................................... 2
28 March 2019................................................................................................................................ 3
14 May 2019.................................................................................................................................... 4
19 June 2019.................................................................................................................................... 5
25 July 2019.................................................................................................................................... 6
22 August 2019.............................................................................................................................. 8
Submissions and consideration...................................................................................................... 9
Conclusion......................................................................................................................................... 21
HIS HONOUR:
Introduction
The defendants apply to dismiss the plaintiff’s proceeding for non-compliance with orders of the Court, want of prosecution and pursuant to the Civil Procedure Act 2010 (Vic) (CPA). The defendants rely upon rr 24.02 and 22.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) and upon s 29 of the CPA.[1]
[1]The application was originally made by summons filed on 10 January 2009 by the then defendant (now the first defendant) seeking, amongst other things, the summary dismissal of the plaintiff’s proceeding pursuant to ss 62 and 63 of the CPA. Subsequently, application was made pursuant to the summons to dismiss for non-compliance with orders of the Court and want of prosecution as long ago as 19 June 2019. The application has proceeded on that footing on 25 July and 22 August 2019 without objection by the plaintiff.
The first defendant (Ms Lu) is the registered proprietor of two properties, being 31 Gertz Avenue, Reservoir, (Gertz Avenue Property)[2] and Unit 712, 233 Collins Street, Melbourne, Victoria (Collins St Property).[3] The second defendant (Luou), as trustee of the Luou Family Trust, is registered as proprietor of a third property, 98 Doncaster Road, Balwyn North, Victoria (Balwyn Property).[4]
[2]The land more particularly described in certificate of title volume 09002 folio 508.
[3]The land more particularly described in certificate of title volume 10523 folio 675.
[4]The land more particularly described in certificate of title volume 06156 folio 085.
The plaintiff (Mr Yu) has lodged caveats on the titles to those properties claiming a freehold interest as beneficiary pursuant to an implied, resulting or constructive trust (the caveats). Mr Yu is and was in occupation the Gertz Avenue Property, against Ms Lu’s will and without her permission.
Ms Lu lodged lapsing notices with the Registrar of Titles (Registrar) pursuant to s 89A of the Transfer of Land Act 1958 (Vic) (TLA). This proceeding was commenced in order to maintain the caveats. Initially it was commenced against Ms Lu alone. Luou was added later as I shall explain.
This is one of three proceedings between the parties:
(a) This proceeding commenced by writ on 19 November 2018 (Trust Proceeding);
(b) Proceeding S ECI 2019 01525 between Ms Lu as plaintiff and Mr Yu as defendant commenced by originating motion on 8 April 2019 for the removal of the caveats (Caveat Proceeding);
(c) Proceeding S ECI 2019 01744 between Ms Lu as plaintiff and Mr Yu as defendant commenced by originating motion on 21 April 2019 seeking to recover possession of the Gertz Avenue Property pursuant to ord 53 of the Rules (Possession Proceeding).
The facts
The proceeding was commenced by generally endorsed writ on 19 November 2018. The general endorsement was follows:
The Plaintiff claims against the Defendant damages for breach of contract and/or constructive and/or resulting trust arising out of joint business ventures between the parties.
Ms Lu filed an appearance on 4 December 2018. On 10 January 2019 Ms Lu filed a summons seeking the summary dismissal of the proceeding pursuant to ss 62 and 63 of the CPA, orders for the removal of three caveats pursuant to s 90(3) of the TLA, and an order for the recovery of possession of the Gertz Avenue Property (the Summons). Because the writ was generally indorsed, that is it was not indorsed with a statement of claim, the time specified by the Rules for Mr Yu to file and serve a statement of claim expired on 21 January 2019.[5] No statement of claim was filed or served within that period.
[5]Rule 14.02, read with r 3.04.
12 February 2019
Ms Lu’s application came on for hearing on 12 February 2019. At that time, orders were made for the plaintiff to file and serve by 4 pm on 5 March 2019 a proposed statement of claim, a proposed amended general endorsement and any affidavits in opposition to the Summons. Consequential orders were made for the defendant to file and serve any affidavits in response and for the parties to file and exchange outlines of submissions. The Summons was adjourned to 28 March 2019.
The plaintiff failed to file a proposed statement of claim and a proposed amended general endorsement, and any affidavit in opposition to the defendant’s summons by 5 March 2019, the time ordered on 12 February 2019. However, on 12 March 2019, the plaintiff filed a proposed statement of claim. That proposed statement of claim did not comply with the rules of pleading, seemed not to disclose a cause of action and was confusing, unclear and embarrassing.
28 March 2019
At the commencement of the hearing on 28 March 2019, Counsel for the plaintiff (Mr G Herbert) handed up a further proposed statement of claim. That proposed statement of claim was also not in accordance with the rules of pleading, was confusing, unclear and embarrassing. It would not have been possible for the defendant to plead to it.
Mr Yu applied for an adjournment in order to put before the Court another further proposed statement of claim and to submit affidavits in opposition to the application made by Ms Lu for the removal of the caveats and to recover possession of the land at Gertz Avenue.
Orders were made giving the plaintiff another opportunity to file and serve by 18 April 2019 a further proposed statement of claim, an affidavit verifying the claims made in the further proposed statement of claim, and affidavits in opposition to Ms Lu’s applications, including the applications for the removal of the caveats and affidavits in response to an anticipated claim by originating motion for Ms Lu to recover possession of the Gertz Avenue Property. Directions were made for Ms Lu to file answering affidavits and for the parties to exchange and file outlines of submission, and the Summons was adjourned to 14 May 2019.
As a result of some concerns regarding the application made by the Summons for removal of the three caveats in this proceeding,[6] leave was granted by the order of 28 March 2019 for Ms Lu to commence a separate proceeding for the removal of the caveats. This was done by originating motion filed on 8 April 2019. In addition to the caveat removal proceeding, Ms Lu commenced the Possession Proceeding to recover possession of the Gertz Avenue Property.
[6]See Shaw v Yarranova [2005] VSC 94; Walters v Perton (No 2) [2019] VSC 542.
The plaintiff attempted to file a further proposed statement of claim in accordance with the order made on 28 March 2019, but it was rejected because of differences in the spelling of the plaintiff’s name, and related issues.
14 May 2019
At the commencement of the hearing on 14 May 2019, new Counsel for the plaintiff handed up a further proposed statement of claim dated 18 April 2019. That proposed statement of claim had been served on Ms Lu’s lawyers and they had filed submissions on 13 May 2019 setting out at some length the deficiencies in the proposed pleading. That submission maintained that the proposed statement of claim was defective and should be rejected for filing. There were many criticisms of the pleading and of the substance of the claims sought to be raised. One of these was that the pleading was against Ms Lu and against a company she controlled, Luou Pty Ltd (as trustee for the Luou Family Trust).
In consequence of these matters, and by consent, the name of the plaintiff as expressed in the proceeding was amended so as to state the plaintiff’s proper name, Luou Pty Ltd was added as the second defendant in the proceeding, orders were made for the filing of an amended writ and the plaintiff was ordered to file and serve a second further proposed amended statement of claim by 28 May 2019. Other orders were made for the filing of affidavits and outlines of submissions. The Summons was then adjourned to 19 June 2019.
The Possession proceeding was also heard on 14 May 2019 and the decision was then reserved.
19 June 2019
This proceeding came back before the Court on 19 June 2019 (in accordance with the orders made on 14 May 2019). No second further proposed statement of claim had been filed in accordance with the order made on 14 May 2019. Nor had there been any compliance with the other orders made on that day. Mr Yu made application for a further adjournment.
In support of the adjournment, on 17 June 2019 the solicitor for Mr Yu, Mr I G Hone, filed an affidavit which attempted to explain the non‑compliance with the orders made on 14 May 2019. Essentially, the explanation was that:
(a) Mr Yu had been called to travel to China to see his sick and elderly mother shortly before 30 May 2019 and Mr Hone had been unable to contact him;
(b) Counsel previously briefed had returned the brief because of an absence of instructions and a failure to put him in funds, as had been agreed; and
(c) Mr Hone had engaged new Counsel and he had been unable, in the time allowed, to produce a second proposed amended statement of claim.
On the same date, 17 June 2019, Mr Yu made an affidavit confirming the evidence given by Mr Hone.
Before the adjourned hearing on 19 June 2019, notice was given by Ms Lu’s solicitors for Mr Yu to attend to be cross-examined on his affidavit made on 17 June 2019. In addition, a notice to produce had been given for the production of various documents referred to in the affidavit of Mr Hone.
The application for an adjournment also involved an extension of the time for Mr Yu to file a further proposed statement of claim, based on the evidence given by Mr Hone in his affidavit. There was, however, no explanation why no proposed statement of claim had been produced before Mr Yu had to travel to China shortly before 30 May 2019. Neither Mr Hone nor Mr Yu attended the hearing on 19 June 2019. No documents were produced pursuant to the notice to produce and there was no cross-examination of Mr Yu.
Counsel for Ms Lu submitted that the application for an adjournment should be refused and, as there was no pleading, it followed that this was a case where the proceeding should be dismissed. Ms Lu had been prejudiced by:
(a) the delay and the series of adjournments and failed attempts by Mr Yu to state his case;
(b) the caveats, which act as a fetter on her ability to deal with the properties; and
(c) the non-payment of costs that had been ordered against Mr Yu in favour of Ms Lu.
After considerable argument, an order was made that unless the plaintiff filed and served a second further proposed statement of claim by 12 July 2019, the proceeding would be dismissed. The Summons was adjourned for hearing on 25 July 2019.
25 July 2019
On 25 July 2019, I handed down my reasons for decision in the Possession Proceeding (proceeding S ECI 2019 01744). I concluded, for the reasons then given, that upon proof of service in accordance with r 53.05 of the Rules, I would make an order for the recovery of possession of the Gertz Avenue Property in favour of the plaintiff.[7] The point of there being a further service of the application was that there was no evidence that the application had been served in accordance with r 53.05(3)(a) and (b) of the Rules.
[7]Lu v Yu [2019] VSC 499.
On 25 July 2019, I ordered in the Possession Proceeding that the relevant documents (the originating motion, affidavit in support and exhibits, the reasons for decision published as Lu v Yu [2019] VSC 499 and a copy of the order) be served at the Gertz Avenue Property in accordance with rule 53.05(3)(a) of the Rules (by affixing those documents to some conspicuous part of the land). I also ordered that any person in occupation of the property, other than Mr Yu, may appear on the adjourned date of 22 August 2019 if they seek maintain a right to occupy the property as against the Ms Yu as registered proprietor.
Mr Yu had attempted to file his second further proposed statement of claim on 12 July 2019, in accordance with the order made by me on 19 June 2019, but it was not accepted for filing because of an error made by the Court. On 25 July 2019, the adjourned date of the Summons, that second further proposed statement of claim was analysed and revealed to be no better as a pleading than its predecessor. It was entirely unsatisfactory, in that it failed to plead material facts, pleaded conclusions without there being any underpinning, was confusing, unclear and embarrassing. I did not permit it to be filed. Counsel for Mr Yu accepted that it needed to be re-done ‘root and branch’.
On that day, Ms Lu made application to dismiss the proceeding for want of prosecution pursuant to the inherent jurisdiction of the Court, preserved by r 24.05 of the Rules, for non-compliance with orders of the Court, and pursuant to the CPA. Submissions were made based, amongst other things, on the decision of the Court of Appeal in Knorr v CSIRO (Commonwealth Scientific and Industrial Research Organisation)[8].
[8][2014] VSCA 84 (Knorr).
I refused that application at that time, essentially because I had determined to adjourn the Possession Proceeding to 22 August 2019 to enable any person in occupation of that property who had not received notice of the application to attend the Court. Given that I had determined to adjourn that proceeding, I gave Mr Yu a further opportunity to get the statement of claim proposed to be filed in proper order. Mr Yu was required to file and serve a third further proposed statement of claim by 4 pm on 15 August 2019 and the Summons was adjourned to 22 August 2019. Mr Yu was ordered to the pay the defendant’s costs thrown away by reason of the adjournment, which were fixed (as had been ordered on 28 March 2019).
22 August 2019
No proposed statement of claim was filed on 15 August 2019, or at all. On 14 August 2019, a notice of change of solicitor was filed on behalf of Mr Yu. Mr Hone ceased to act and Herald Legal (a Sydney firm) commenced to act.
On 21 August 2019, one Mr Yahya Sukari, a solicitor employed by Herald Legal, made an affidavit on behalf of Mr Yu in support of an application for a further adjournment of the Summons and a further extension of time to file a third further proposed statement of claim. Mr Sukari deposed that:
(a) his firm received instructions to act for Mr Yu in this proceeding, and in the related proceedings (Possession Proceeding and Caveat Proceeding) on 14 August 2019, in the afternoon;
(b) a colleague took instructions from Mr Yu in Mandarin and they were translated to Mr Sukari in English;
(c) on that day, Mr Sukari received a voluminous number of documents from Mr Yu. Some of them concerned this proceeding and the related proceedings, but others did not appear to have anything to do with any proceeding. He set about trying to piece together the proceedings and determine what the relevant documents were;
(d) he then became aware of the orders made on 25 July 2019 and the fact that a proposed statement of claim was required to be filed by 15 August 2019 and, in the Caveat Proceeding, affidavits were due to be filed on 8 August 2019;
(e) he immediately emailed the solicitors acting for the defendants seeking further time both to file the evidence in the caveat proceeding and to file the proposed statement of claim in this proceeding;
(f) Ms Lu’s solicitors responded, on 15 August 2019, that they would allow an adjournment of the caveat proceeding but it would object to any adjournment of this proceeding;
(g) because of the complex nature of the proceedings, he then instructed new Counsel to act;
(h) after a further review of the documents provided by Mr Yu to him, he concluded that further time would be required to prepare a proposed statement of claim and the evidence on behalf of the plaintiff as it was not possible properly to articulate the plaintiff’s claim without time to obtain proper instructions and obtain the evidence to support those claims;
(i) he is instructed by Mr Yu that he (Mr Yu) is making the necessary arrangements to obtain and provide all documents and evidence, which Mr Sukari has requested, that will enable him properly to prepare a third proposed statement of claim and an affidavit for the plaintiff.
There was no material whatsoever in the affidavit to explain what, if anything, was done in order to prepare the third further proposed statement of claim before Mr Sukari was engaged to act.
On 22 August 2019, the matter came on for hearing together with the related proceedings. Orders were made in the Possession Proceeding for Ms Lu to recover possession of the Gertz Avenue Property and the Caveat Proceeding was adjourned with an extension of time for the filing of affidavits and submissions. Fresh Counsel appeared for Mr Yu and applied for an adjournment and an extension of time (of about 11 days) within which to file a third further proposed statement of claim.
Submissions and consideration
The application was opposed by Ms Lu. It was submitted that there was nothing in the affidavit of Mr Sukari to explain why there had been a change of solicitor and why there had been no third further proposed statement of claim filed by 15 August 2019 as ordered on 25 July 2019.
It was clear from Mr Sukari’s affidavit that even after the time when he was instructed to act there was insufficient instructions and material to enable him, or Counsel, to settle a third further proposed statement of claim. There had been a deliberate disobedience of the orders of the Court and, having regard to the history of the proceeding, inordinate delay.
Submissions were made by Counsel for Ms Lu that not only should the adjournment be refused but the proceeding should be dismissed for the failure of Mr Yu to comply with the orders of the Court, for want of prosecution and pursuant to s 29 of the CPA.
Counsel for Mr Yu submitted that he was confident that an acceptable proposed statement of claim could be drafted within a short period of about 11 days. The claim would involve a claim for a constructive trust over the capital and profits from the various businesses run, allegedly, by the parties commencing in 1997, the tracing of the proceeds of those businesses and a claim to a common intention constructive trust over the three properties of the kind described in Muschinski v Dodds[9] and Baumgartner v Baumgartner[10] so as to restore to Mr Yu contributions which he has made to a joint venture which failed when the contributions were made by him in circumstances in which it was not intended that Ms Lu should enjoy them.
[9](1985) 160 CLR 583.
[10](1987) 164 CLR 137.
I have up to this point refrained from attempting to describe the claims sought to be raised by Mr Yu in this proceeding, other than in a very general way. It is now appropriate to give some indication of the way the claim has been attempted to be pleaded. The extract below is taken from the most recent proposed statement of claim dated 12 July 2019, and shows the conclusory nature of the allegations, exposes one of the inconsistencies in the pleading and identifies one of the fundamental difficulties arising from an attempt to trace funds through the use of companies and trusts (emphasized in the quotation):
9In June 1998 the Plaintiff moved in with the First Defendant at 3/128 Inkerman Street, St Kilda, and the Plaintiff and the First Defendant began to pool their respective incomes for the payment of living and rental expenses, and also in order to save money to start their own business. This was the beginning of a partner relationship (both from a social and a business perspective) (“the relationship”) which lasted sixteen (16) years until October 2104 [sic].
...
10From on or about June 1998, the Plaintiff and the First Defendant agreed (a), to accumulate their savings and for the First Defendant to keep the savings (b), to use the savings for the purposes of the acquisition of property of businesses (“the assets”) (c), if the relationship between the parties ended, the parties would distribute the money and assets acquired during the relationship in accordance with the contributions that had been made by them respectively to the acquisition of the assets during the period. This would also include the profits and proceeds of the asset sales which had rolled into asset acquisitions over the sixteen (16) year period which could be traced through to the initial savings of $80,000 accumulated by mid to late 1999 as outlined below. [emphasis added]
11Pursuant to the agreement on or about June 1998, the Plaintiff regularly gave all his income from work as a coach driver, tour guide and tour operator to the First Defendant, who was responsible for paying all bills, including rent, and then saving the remainder as cash in the Inkerman Street apartment for the purposes of investment and/or assets acquisitions to be held in equal share between the Plaintiff and the First Defendant. [emphasis added]
12As a result, the cash saved was held on trust by the First Defendant (by way of constructive or resulting trust) for the Plaintiff and the First Defendant in equal share to be used to acquire assets such as property and businesses to be held jointly as business partners or through any other corporate structures such as companies, family trusts or partnerships for the purposes of minimising the tax obligations of the Plaintiff and the Defendant and ensuring that the assets were protected from creditors in the event that any of the businesses or property acquired failed from a business perspective or defaulted in the case of mortgage repayments. Hence the financial advice and the recommendations of the First Defendant was to ensure that the properties were registered in her personal name and/or through a family structure via the use of either her father’s name in the as evidenced in the case of the HSBC bank account or in the case of the Second Defendant as outlined below. [emphasis added]
The proposed statement of claim went on in this fashion and then proceeded to make allegations concerning the:
(a) acquisition of a milk bar business in St Kilda;
(b) the acquisition of a restaurant business, initially with other partners but ultimately only involving the parties, conducted through a proprietary limited company;
(c) the operation of a tour bus business through a partnership and then successively by three propriety limited companies; and
(d) the investment of the proceeds of these various businesses in various real properties, which ultimately ended up (somehow, but unexplained) comprising the three properties the subject of the caveats.
Many of the allegations were conclusory and lacked material facts.
Mr Yu has filed affidavits setting out some of the history of his personal relationship and business dealings with Ms Lu in the trust proceeding.[11] Ms Lu has made affidavits in this proceeding,[12] and in the Possession Proceeding.[13] It is a part of Mr Yu’s case that he and Ms Lu were in a de facto marriage/relationship for many years and also ran several businesses together.
[11]Affidavit of Xian Qing Yu made 14 March and 2 May 2019.
[12]Affidavit of Ou Lu made 9 January 2019.
[13]Affidavit of Ou Lu made 9 January 2019.
The allegation of a de facto relationship was rejected after a trial in the Family Court of Australia. The Family Court judge found that Mr Yu had not discharged the onus of proof on the balance of probabilities that the parties were in a de facto relationship as defined in s 4AA of Family Law Act 1975 (Cth).[14] The trial was conducted over 10 hearing days and involved many witnesses and voluminous evidence. Judgment was given on 1 October 2018.
[14]Xin Yu v Ou Lu (Family Court of Australia, Thornton J, 1 October 2018, DCG 2474 of 2015); Exhibit OL-7 to the affidavit of Ou Lu made 9 January 2019.
Counsel for Mr Yu also submitted that the Caveat Proceeding was inextricably linked to this proceeding because if the constructive trust claim cannot be maintained, the caveats cannot be maintained. He submitted that given that the parties had agreed to adjourn the caveat proceeding, it followed that this proceeding should also continue. He further submitted that issues of the kind that arose in Bishopsgate Insurance Australia Ltd (In Liq) v Deloitte Haskins & Sells[15], upon which Ms Lu relied, arising out of the expiry of the limitation period did not arise in this case. This is a case, he submitted, of an institutional constructive trust for which there is no limitation period.[16]
[15][1999] 3 VR 863 (Bishopsgate Insurance).
[16]McNab v Graham [2017] VSCA 352.
Counsel for Ms Lu relied on the inherent power of the Court to dismiss the proceeding for want of prosecution. As the Court of Appeal noted in Knorr:
The power of the Court to dismiss a proceeding for want of prosecution is (as in the case of dismissal for other forms of abuse of process) incidental to the jurisdiction of the Court to hear and determine the proceeding.[17] Rule 24.05 preserves the Court’s inherent power to dismiss a proceeding for want of prosecution. [18]
The power of the Court to dismiss for want of prosecution derives from r 24.01 and from the inherent jurisdiction of the Court. Rule 24.05 recognises the existence of this aspect of the inherent jurisdiction of the Court.
[17]Duncan v Lowenthal [1969] VR 180, 182; Exell v Exell [1984] VR 1, 7–8; Muto v Faul [1980] VR 26; Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863.
[18][2014] VSCA 84, [53].
It is well to set out the terms of r 24.05 because it extends to an aspect of this case that is different from many of the reported cases relied on by Ms Lu, in particular Bishopsgate Insurance and Knorr, because in this case there has been repeated non-compliance with orders of the Court by Mr Yu:
Nothing in this Order affects the inherent power of the Court—
(a) to dismiss any proceeding for want of prosecution; or
(b)to order that upon the failure of a party to do any act or take any step which under these Rules the party is required to do or take or to comply with an order that the party do any such act or take any such step the proceeding shall be dismissed or the defence struck out and that judgment may be entered or that there be judgment accordingly.
In Bishopsgate Insurance[19], the Court of Appeal, after careful consideration of the authorities relating to the dismissal of proceedings for want of prosecution, adopted the statement of principles given by Lord Griffiths in Department of Transport v Chris Smaller (Transport) Ltd[20] as follows:
The power should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious, e.g. disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or (2)(a) that there has been an inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (b) that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants, either as between themselves and the plaintiffs, or between each other, or between them and a third party.
[19][1999] 3 VR 863.
[20][1989] AC 1197, 1203 (Chris Smaller (Transport)).
The Court in Bishopsgate Insurance also considered three aspects of those principles that were raised in the course of the argument in that Court:
(a) the extent to which the Court should take into account on an application to dismiss a proceeding the effects on the Court’s lists and resources likely to have been caused by the plaintiffs’ delay;
(b) whether the Court should only have regard to the time which has expired since the plaintiff chose to issue its writ because it was entitled to wait until almost the expiry of the limitation period before issuing it; and
(c) the absence of evidence as to prejudice making it impossible for the Court to infer prejudice either as to the risk of not having a fair trial whenever that may occur or as to the burden which the defendant must be under by being kept at risk in relation to a claim of the kind advanced.[21]
[21]Bishopsgate Insurance [1999] 3 VR 863, 873 [29].
In relation to the first matter, the Court considered that in an application for dismissal for want of prosecution, as distinct from applications made relating to the fixing, adjourning or hearing of a trial or an appeal, and the effect thereon of the granting or refusing of orders to amend, to adjourn or to call additional evidence, the orderly management of the Court’s business is not ordinarily relevant to any decision whether a proceeding should be dismissed for want of prosecution upon the basis of delay.[22]
[22]Bishopsgate Insurance [1999] 3 VR 863, 874 [30].
In relation to the second matter, after a review of the authorities, the Court adopted Lord Griffiths’ remarks in Chris Smaller (Transport)[23]
…that long delay before the issue of the writ will have the effect of any post-writ delay being looked at critically by the court and more readily being regarded as inordinate and inexcusable than would be the case if the action had been commenced soon after the accrual of the cause of the action. And that if the defendant has suffered prejudice as a result of such delay before the issue of the writ, he will only have to show something more than minimal additional prejudice as a result of the post writ delay to justify striking out the action.
[23][1989] AC 1197, 1207-8; Bishopsgate Insurance [1999] 3 VR 863, 875 [32].
The third matter raised was the manner in which and the extent to which prejudice must be directly proved. The Court in Bishopsgate Insurance concluded that although there are many cases in which the necessity to establish prejudice has been stated as a condition precedent to the exercise of the power to dismiss for want of prosecution on the basis of delay, it is not correct to say that the defendant is obliged to allege that prejudice upon affidavit as opposed to asking the court to infer from all the circumstances of the case that prejudice has been or will be likely to be suffered. This is not to deny that prejudice, actual and potential, must be established: it is merely a reminder that proof of any issue can be established by circumstantial evidence and of the necessary process of inference from such evidence. The defendant is entitled to point to undisputed facts and ask the court to draw necessary logical inferences from them for this purpose.[24]
[24]Bishopsgate Insurance [1999] 3 VR 863, 875 [33].
The Court in Bishopsgate Insurance added that the analysis of prejudice involved the prejudice that has been and will be likely to be suffered by the defendant because of the delay and any prejudice it might have suffered in the event. So far as likely prejudice of the conduct of a fair trial is concerned, the critical time is the time at which the action is likely to be heard.[25]
[25]Bishopsgate Insurance [1999] 3 VR 863, 875 [34].
It is now authoritatively accepted that the question of whether a Court should take the exceptional step of dismissing a proceeding for want of prosecution does not necessarily depend upon how long has passed since the commencement of the proceeding. Nor is it necessarily dependent upon there being a lengthy period of inaction on the part of the relevant party. One can have a case where, although the proceeding has only been on foot for under a year, when one looks at what has happened at that time one can see that the proceeding has not moved to first base, let alone beyond it.[26]
[26]Per Johnson J in Udowenko & Ors v Chief Executive Officer of the Board of Directors of St George Bank – A Division of Westpac Banking Corporation (No 2) [2011] NSWSC 1122, [117]; Knorr v Commonwealth Scientific and Industrial Research Organisation (CSIRO) [2012] VSC 529, [26]; Knorr [2014] VSCA 84, [49].
In the decision of the Court of Appeal in Knorr, it was also made clear that the dismissal of a proceeding is entirely consistent with, and indeed mandated by, the provisions of the CPA.[27] So far as presently relevant, the overarching purpose, and the overarching obligations relevant to an application of this kind are –
[27][2014] VSCA 84, [63].
(a) the overarching purpose in relation to the conduct of civil proceedings to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute (s 1(1)(c));
(b) the paramount duty of the parties to the Court to further the administration of justice (s 16);
(c) the overarching obligations to narrow the issues in dispute (s 23), to ensure costs are reasonable and proportionate (s 24) and to minimise delay (s 25);
(d) the overarching obligation not to make any claim that does not have a proper basis (s 18).
Of particular relevance to the application in this case are the powers of the Court in Part 2.4 of the CPA, in particular s 29(1)(f), pursuant to which the Court can make any order it considers appropriate in the interests of justice including, but not limited to, any other order that the Court considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations.
It is also clear, at least since the introduction of the CPA and the decision of the High Court in Aon Risk Services Ltd v Australian National University[28] that case management considerations and questions of the proper use of court resources are matters that can be taken into account in determining applications for adjournment, the amendment of pleadings and the dismissal of proceedings in circumstances like the present. The achievement of a just but timely and cost-effective resolution of a dispute has an effect upon the Court as well as upon other litigants.[29] Although the inevitable focus of the paramount purpose prescribed by the CPA may still be the ‘just’ resolution of the real issues in dispute, the other matters identified, the efficient, timely and cost-effective resolution, reflect the fact that speed and efficiency, in the sense of minimum delay and expense, are also essential to the just resolution of proceedings. As the plurality said in Aon Risk Services:
…what is a ‘just resolution’ is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re‑pleading, when delay and cost are taken into account ... the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution.[30]
[28](2009) 239 CLR 175 (Aon Risk Services).
[29]Aon Risk Services (2009) 239 CLR 175, [93].
[30]Aon Risk Services (2009) 239 CLR 175, [98].
This proceeding is managed in the Property List of the Court. It has been before the Court on six occasions and there have been five attempts (notwithstanding the numbering of the proposed statements of claim) to plead a case that satisfies the rules of pleading.
Mr Yu has still not filed a statement of claim which properly pleads the initiating process. Despite new Counsel for Mr Yu appearing to seek a further opportunity to formulate a proper pleading, there is in my view no reasonable prospect that if given further time Mr Yu will be able to formulate a pleading that will be permitted to be filed.
In addition, this is a case which has been characterised by non-compliance by Mr Yu with orders of the Court. The very first order made on 12 February 2019 required a proposed statement of claim to be filed by 5 March 2019. A proposed statement of claim was filed on 12 March 2019, but on the next date for hearing, 28 March 2019, Counsel for Mr Yu handed up a further proposed statement of claim. That was because Counsel for Ms Lu filed, on 26 March 2019, an outline of submissions that roundly criticised the proposed statement of claim. It was put that the proposed statement of claim failed in every way to satisfy the fundamental requirements of a pleading. It was said, in my view quite rightly, that it was confusing, lacked necessary facts and particulars, was filled with irrelevant allegations and failed to plead necessary elements to establish the relief sought.
Counsel for Mr Yu accepted the criticisms and sought an adjournment in order to put another further proposed statement of claim before the Court. He was given that opportunity. The proposed statement of claim was not able to be filed because of discrepancies between the spelling of the plaintiff’s name and related issues. New Counsel appeared on 14 May 2019 and relied upon the further proposed statement of claim handed up at that time. It was no better. Counsel for Ms Lu had again outlined in submissions the deficiencies in the proposed statement of claim. Again, because fresh Counsel briefed for Mr Yu had not had a proper opportunity to consider the criticisms, Mr Yu was given further time.
When the matter came back before the Court on 19 June 2019, there had been no second further proposed statement of claim filed in accordance with the orders made on 14 May 2019, notwithstanding that Mr Yu had been given further time. There had been a complete failure by Mr Yu to comply with the orders made. A further adjournment was sought by Mr Yu. Notwithstanding forceful and well-formulated submissions made by Counsel for Ms Lu, I determined that Mr Yu should be given another opportunity to state his case. I made a self-executing order at that time.
When the matter came back again on 25 July 2019, the proposed statement of claim then considered was no better as a pleading than its predecessor. At that time, I refused an application made on behalf of Ms Lu to dismiss the proceeding for want of prosecution. The reason for doing so was essentially because of the time that had been allowed in the Possession Proceeding to fulfil the requirements of service under the Rules. In these circumstances I considered it was appropriate to give Mr Yu an opportunity to fix the deficiencies in his pleading. He did not do so, and provided no explanation at all as to why he failed to comply with the order of the Court to file a third further proposed statement of claim by 15 August 2019.
The conduct of Mr Yu, and his legal representatives, has delayed not only the progress of this matter, but has taken the time and resources of the Court that might have been applied more productively to other matters. In short, other litigants’ matters are affected adversely by the time that has been taken in dealing with this matter. Mr Yu has been afforded great latitude but has not been willing or able to comply with the Court’s orders. There has been disobedience to peremptory orders of the Court and conduct amounting to an abuse of the process of the Court by Mr Yu. There has been inordinate and inexcusable delay on his part or his lawyers, and that delay is likely to cause or to have caused serious prejudice to Ms Lu.
This is a case where prejudice suffered and likely to be suffered must be inferred from all the circumstances of the case. Prejudice has been suffered by Ms Lu being kept at risk and being put to costs in defending the hopeless attempts made on Mr Yu’s behalf to frame a case against her, some of which are undoubtedly irrecoverable. Her properties, and the property owned by Luou, have been burdened with the caveats and unable to be dealt with. The facts and circumstances of the matter show that Ms Lu is likely to suffer prejudice in the future comprised of the following:
(a) that Ms Lu is facing a claim that extends back in time to 1998, which will involve, in ways that are impossible at present to predict (because of the deficiencies in the proposed statement of claim), documentary evidence and witnesses as to the conduct of at least three businesses and four proprietary limited companies over about the period from about 2000 to 2014;
(b) despite that fact that Ms Lu has already faced a lengthy and no doubt expensive proceeding in the Family Court of Australia at the hands of Mr Yu which involved many witnesses and much documentary evidence, there is a high likelihood that there will be great difficulty in meeting claims that are so old (as it has proven difficult to plead them), by producing accounts and accounting records, tax returns and other records relevant to the claims;
(c) this proceeding has not moved to first base, as there is still not a statement of claim filed. The critical time to assess the prejudice to Ms Lu is the time at which the action is likely to be heard. On the basis that this proceeding, if it can be properly pleaded and prosecuted by Mr Yu, is likely to occupy about 5-10 days of trial time, there is no prospect of a trial before mid to late 2021;
(d) Although there may be no limitation period applicable to the constructive trust claims, the matters referred to above are likely to prejudice Ms Lu.
Finally, it is necessary to mention the proposition advanced by Counsel for Mr Yu that because of the agreed adjournment of the Caveat Proceeding it was now not appropriate (or even possible) to dismiss this proceeding. The two proceedings are linked, the Caveat Proceeding depending on the constructive trusts the subject of this proceeding.
The answer is simply that pursuant to s 89A(7)(b), where notice in writing of the kind referred to in s 89A(3)(b) is given to the Registrar (notice in writing that proceedings in a court to substantiate the claim of the caveator are on foot), if there is subsequently served upon the Registrar a copy of any order of the court disclosing that the proceedings have been dismissed—then the caveat shall lapse and the Registrar shall make all necessary amendments to the Register.
Conclusion
In these circumstances, I consider that the proceeding commenced by Mr Yu should be dismissed, with costs, pursuant to the inherent jurisdiction of the Court for want of prosecution and for non-compliance with the orders of the Court, and pursuant to s 29(f) of the Civil Procedure Act. In these circumstances, the order for the hearing of the Caveat Proceeding on 10 October 2019 will be vacated. Orders will be made accordingly.
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