Link Technology (2000) Limited v Collins & May Law
[2014] NZHC 1409
•20 June 2014
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2012-485-1952 [2014] NZHC 1409
BETWEEN LINK TECHNOLOGY (2000) LIMITED
First Plaintiff
HARRY MEMELINK and PATRICK JOHN RENSHAW as trustees of THE LINK TRUST (NO 1)
Second Plaintiffs
HARRY MEMELINK Third Plaintiff
AND
COLLINS & MAY LAW Defendant
Teleconference: 23 May 2014 Counsel:
K R Smith for plaintiffs
H Memelink in person, with K Terpstra, plaintiffs’ assistant
H M Twomey and W J Robertson for defendantJudgment:
20 June 2014
JUDGMENT OF DOBSON J
Introduction
[1] I convened a telephone conference in these proceedings on 23 May 2014 in the following circumstances.
[2] The proceeding constitutes a claim against the defendant firm of solicitors for professional negligence. The plaintiffs either were, or were associated with others that were, clients of the defendant firm in relation to component parts of the narrative
of events leading to the circumstances of alleged loss.
LINK TECHNOLOGY (2000) LIMITED v COLLINS & MAY LAW [2014] NZHC 1409 [20 June 2014]
[3] The defendant has filed an application for an order either striking out the plaintiffs’ statement of claim or for dismissal of the proceedings for want of prosecution.
Facts
[4] The proceedings have been inadequately handled on behalf of the plaintiffs from the outset. Mr Collins, the principal of the defendant firm whose conduct or omissions are the principal source of the plaintiffs’ complaints, completed an affidavit in support of the application, which sets out the numerous substantial delays and frustrations that have been incurred in the plaintiffs’ failures to provide an adequate pleading and to progress discovery.
[5] On 18 September 2012, the plaintiffs served a statement of claim on the defendant. On 6 November 2012, solicitors for the defendant sent a notice requiring the plaintiffs to file a more explicit statement of claim. In the absence of any response, those solicitors wrote again to the plaintiffs’ solicitor on 21 November
2012 pursuing the request and warning that a formal application would be made. No response was forthcoming and, on 10 December 2012, a formal application was made.
[6] My minute of the first case management conference convened on
13 December 2012 described the original statement of claim as “inadequate and opaque”. By reference to the schedule of required particulars in the notice filed by the defendant, and the allegations in the statement of claim to which they relate, I discussed additional inadequacies with counsel then acting for the plaintiffs (Mr Kevin Smith).
[7] Mr Smith explained those inadequacies on the basis that Mr Memelink, the principal plaintiff, had apparently suffered a relatively serious injury and that it had been difficult for Mr Smith to obtain instructions from him.
[8] The minute also dealt with timetabling. Counsel for the defendant proposed shorter timeframes for the taking of interlocutory steps in the proceedings than Mr Smith. Mr Smith justified his proposal for more time on the basis that he was in
the course of instructing counsel and anticipated on-going difficulties in getting access to Mr Memelink for confirmation of instructions. In those circumstances, counsel for the defendant accepted the timetable proposed for the plaintiffs, which required the plaintiffs to file and serve a more explicit statement of claim by
1 February 2013. The timetable also required the plaintiffs to file and serve an affidavit of documents on 22 March 2013.
[9] The plaintiffs duly filed and served an amended statement of claim on
1 February 2013. On 22 February 2013, counsel for the defendant wrote to the plaintiffs’ solicitor advising that the amended statement of claim did not provide the particulars set out in the schedule of required particulars annexed to the notice dated
6 November 2012. The letter also claimed that the amended statement of claim contained additional inadequacies and errors. Counsel for the defendant enclosed a further notice requiring the plaintiffs to file and serve a more explicit statement of claim within 14 days.
[10] On 27 March 2013, counsel for the defendant wrote to the plaintiffs’ solicitor regarding delays in the litigation and requesting a response to their request for particulars. The letter also noted that plaintiffs had not complied with the timetable requirement to file and service an affidavit of documents by 22 March 2013.
[11] On 28 March 2013, Mr Pat Renshaw contacted counsel for the defendant seeking an extension to file the outstanding documents on 3 April 2013. That was agreed to, and on 3 April 2013 the plaintiffs served a second amended statement of claim and verified list of documents.
[12] On 11 April 2013, counsel for the defendant filed and served a memorandum of counsel outlining the delay in responding to the 22 February 2013 notice and highlighting inadequacies in the second amended statement of claim. The memorandum also noted the plaintiffs’ failure to comply with discovery orders.
[13] On 29 April 2013, counsel for the defendants advised the Court that the plaintiffs had failed to file an affidavit of documents that complied with the
High Court Rules and sought the assistance of the Court to enforce compliance with timetable orders.
[14] On 2 May 2013, the plaintiffs served an affidavit of documents. A teleconference took place on 6 June 2013. I directed that the plaintiffs serve their electronic discovery by 10 June 2013.
[15] On 12 June 2013, counsel for the defendant advised the Court that they had not been served with the plaintiffs’ electronic discovery. The following day, the plaintiffs sought an extension of time to file their electronic discovery on 28 June
2013.
[16] A teleconference was held on 25 June 2013. In a minute issued that day, I
noted that:
Without obtaining a dispensation from the requirement of the current rules, the plaintiff has purported to provide inspection of its discoverable documents in hard copy form. There have been numerous gaps in the documents provided, and also disclosure has been made of the documents that appear to solicitors for the defendant not to have been listed.
[17] Counsel for the defendant also raised concerns that there appeared to have been inadvertent inclusion of documents for which she anticipated the plaintiffs would claim privilege. Counsel for the plaintiff acknowledged that there had been inadequacies in discovery. I directed the plaintiffs to complete full disclosure in compliant form on 4 July 2013. I also observed:
The performance on behalf of the plaintiffs has been inadequate. Despite any pressures created by pending time bars arising, civil proceedings should not be commenced when the plaintiffs are unprepared to promptly progress them.
[18] On 10 July 2013, the plaintiffs’ solicitor sought a further extension of time for inspection to be completed and the supplementary affidavit of documents to be filed and served. I granted an extension until 16 July 2013.
[19] On 18 July 2013, the plaintiffs served an affidavit of documents and supplementary affidavit of documents and electronic discovery. On 31 July 2013, counsel for the defendant advised the Court of further aspects of the affidavit of
documents and supplementary affidavit of documents that did not comply with the High Court Rules. On 10 September 2013, I directed counsel for both parties to confer with a view to filing a joint memorandum identifying any outstanding interlocutory issues and outlining a timetable of steps needed down to trial.
[20] Counsel for the defendant wrote to the plaintiffs’ solicitors on 12 September
2013 attaching a draft memorandum of counsel for their comments. There was no response. A further letter was written on 17 September 2013. Again there was no response. On 19 September 2013, counsel for the defendant filed and served a memorandum of counsel outlining the outstanding issues from the defendant’s perspective. On 24 September 2013, the plaintiffs filed and served a response.
[21] On 2 October 2013, counsel for the defendant filed and served a memorandum of counsel raising again the plaintiffs’ failure to provide an adequate response to the 22 February 2013 notice requiring a more explicit statement of claim and stating that the affidavit of documents provided by the plaintiffs failed to state the nature of the privilege claimed for any of the documents in respect of which privilege had been claimed.
[22] In a further minute dated 3 December 2013, I directed the plaintiffs to respond to the defendant’s perspective of what constituted the substantive issues in the proceeding. The plaintiffs complied that same day. Two days later the solicitor for the plaintiffs filed a memorandum advising that counsel instructed was unavailable to assist further and that the plaintiffs were seeking new counsel.
[23] On 15 April 2014, counsel for the defendant filed and served a memorandum advising the status of the proceeding and noting that the issues set out in the memorandum dated 2 October 2013 remained unresolved.
[24] In a minute dated 5 May 2014, I directed that:
(a) If there is to be a change of solicitor on behalf of the plaintiffs then the appropriate documents need to be filed.
(b)Whoever has carriage of the proceeding for the plaintiffs is to review the concerns raised by the defendant. In particular, inadequacies in the plaintiffs’ pleading must be addressed.
(c) If the solicitors for the plaintiffs failed to comply with those directions by 16 May 2014, the defendant could file an application to have the claim struck out.
[25] A teleconference was scheduled for 23 May 2014.
[26] On 15 May 2014, counsel for the defendant received a letter from Mr Memelink personally, responding to the issues previously identified in respect of the plaintiffs’ discovery. The letter did not address any of the inadequacies in the second amended statement of claim.
[27] Representation for the plaintiffs has been somewhat unclear. There has been no notice of change of solicitor filed since the proceedings were commenced. Although Mr C J Tennet appeared as instructed counsel at one telephone conference in June 2013, Mr Kevin Smith filed a memorandum on behalf of the plaintiffs in July
2013. In recent months, Mr Memelink has taken to informally communicating with the Court Registry himself, and those communications included suggestions that Mr Smith was no longer involved. An employee of Mr Memelink, Ms Terpstra, who is not an admitted solicitor, has also communicated informally on behalf of the plaintiffs with the Registry and with solicitors for the defendant in respect of discovery and inspection. She also attended on the telephone conference.
[28] In anticipation of the telephone conference on 23 May 2014, Mr Smith filed a further memorandum dated 20 May 2014 in which he confirmed that Mr Tennet has withdrawn, but he anticipates instructing new counsel (Mr Pietras) in the near future. Mr Smith provided less than adequate explanations for the delays that have occurred, and expressed the view:
If the outstanding issues are resolved then the matter is back on track and ready to move forward with Mr Petris [sic] in control.
[29] Mr Smith’s memorandum asked for further time so that Mr Pietras may be instructed. Mr Pietras attended during the telephone conference, but acknowledged that he had not yet undertaken work on the matter so that it was inappropriate to record his appearance or to hear from him.
[30] The conduct of the proceedings on behalf of the plaintiffs has throughout been materially below the minimum standard that is to be expected for pursuit of a claim for professional negligence, for sums of up to approximately $400,000. Given the nature and extent of the inadequacies, it would be naïve to accept Mr Smith’s latest assurances that all problems have been resolved.
[31] At an early stage, Mr Smith blamed Mr Memelink, and more recently
Mr Memelink’s informal communications with the Court have blamed Mr Smith.
[32] As to the continuing unsatisfactory state of the plaintiffs’ pleading, Mr Smith attributed responsibility for the second amended statement of claim to Mr Tennet. However, Ms Twomey advised that when she telephoned Mr Tennet to discuss her concerns with it, he disavowed any responsibility for it.
[33] In his affidavit, Mr Collins also deposed to significant stress and anxiety having the proceeding hanging over him. He states that the stress has been added to by Mr Memelink making numerous complaints against him to the New Zealand Law Society (the Law Society), including a complaint about the subject matter of the proceedings. Mr Collins deposed that those complaints were determined in November 2013 by a Law Society Standards Committee concluding that it was satisfied with Mr Collins’ overall conduct and that no further action was necessary or appropriate.
[34] During the telephone conference, I heard from Mr Memelink personally at some length. He claimed to have been unaware of the inadequacies in the conduct of the case, and in particular of any basis for criticism of the statement of claim. He pleaded that serious physical injuries and dyslexia have impaired his ability to personally progress the proceedings. He argued that the claim had merit, and that positive prospects for a claim against Mr Collins had been recognised by another
High Court Judge in an aside during other proceedings arising out of some of the transactions in issue in these proceedings.
[35] Mr Memelink also disputed Mr Collins’ statements to the effect that the grounds for the present claims had also been the subject of disciplinary complaints made to the Law Society in respect of Mr Collins. Mr Memelink argued that he had not had sufficient time to complete an affidavit responding to that served by Mr Collins. Mr Collins’ affidavit had been sworn and filed two days before the telephone conference.
[36] In light of Mr Memelink’s comments, I adjourned consideration of the defendant’s strike out application to enable him to file an affidavit in reply to Mr Collins’ affidavit, particularly to address his denial that he had pursued disciplinary complaints with the Law Society in relation to Mr Collins’ conduct on the transactions that were the subject of the present proceedings.
[37] Mr Memelink duly swore and filed an affidavit on the day of the telephone conference. Mr Memelink drew a distinction between general complaints in relation to Mr Collins’ handling of a transaction, and what he contended was now the specific criticism of Mr Collins’ firm’s failure to advise that a component of the transaction ought to have been reflected in a cheque swap. Mr Memelink deposed that the cheque swap issue was not part of the Law Society complaint.
[38] Under the terms of leave reserved, Mr Collins responded in a further affidavit sworn on 27 May 2014. In that affidavit, he reiterated that as best he understood the nature of the criticisms being pleaded in the present proceedings, they alleged breaches of duty owed to the plaintiffs in various aspects of the same transaction that had indeed been referred to and considered by the Law Society.
[39] Both affidavits annexed copies of the determination by the Wellington Standards Committee No 1 dated 19 November 2013 in relation to Mr Memelink’s complaints against Mr Collins. Paragraphs 61 to 69 of that determination review criticisms advanced by Mr Memelink of Mr Collins’ conduct on behalf of Mr Memelink’s entities in relation to a property at 4 Suzetta Place in Auckland and
occupiers of that property, a Mr Hoyte and a Ms Mathews. The determination concluded that Mr Collins had conducted the matter in an appropriate way and that Mr Memelink had failed to provide sufficient evidence to support the allegations that he had made.
[40] As best I can understand the allegations in the second amended statement of claim, they certainly appear to criticise Mr Collins’ conduct in relation to those same transactions involving Mr Hoyte and Ms Mathews and the property at Suzetta Place.
[41] Rejection of Mr Memelink’s claim that the matters are separate and distinct is not determinative of the defendant’s claim that the manner of pursuit of these proceedings has become an abuse of process, but it is indicative of an unrealistic attitude in relation to them. It provides support for the submission on behalf of the defendant that the pattern of deficiencies in the conduct of the proceeding on behalf of the plaintiffs has persisted in such serious respects and for so long as to justify a view that the plaintiffs would not, within any further reasonable period granted to them, transform their performance sufficiently to warrant having the matter go to trial.
[42] On 10 June 2014, the plaintiffs filed a notice of opposition (dated 4 June
2014) to the defendant’s application to strike out or dismiss the claim. No explanation was offered as to why that notice of opposition, which, if at all, ought to have been filed before the telephone conference on 23 May 2014, was filed at the time it was. The notice of opposition formalised grounds for resisting a strike out or dismissal of the proceedings, as Mr Smith had advanced them during the telephone conference. These were that the plaintiffs had relied on professional advice and should not be prejudiced by failings of counsel and professional advisers. Further, that fresh counsel had been appointed who was “prepared to move with diligence to comply with the directions of this Court in a timely manner”. It also stated that the claim has merit, attaching a copy of the judgment in the Auckland High Court proceedings that had been adverted to during the telephone conference.
[43] More recently, Mr Memelink communicated informally by email with the
Registry attaching email communication he had had with the complaints service at
the Law Society. It appears the purpose of the communication was to seek confirmation that the aspects of the transaction in relation to 4 Suzetta Place that are now the subject of the proceedings were not the subject matter of a complaint by Mr Memelink. The response thus far is inconclusive so it remains appropriate to draw relevant inferences from the terms of the determination by the Standards Committee.
The application
[44] On 21 May 2014, the defendant filed an application for an order pursuant to r 15.1 of the High Court Rules striking out the plaintiffs’ second amended statement of claim. The grounds cited are that the continued failure of the plaintiffs to provide adequate particulars of their pleadings is prejudicial to the defendant, and that that failure has continued to an extent that now constitutes an abuse of process. The second amended statement of claim is criticised as being pleaded in a highly prolix way in relation to material facts which are spread throughout the pleading in an incomprehensible manner and that the allegations lack clarity and precision.
[45] Alternatively, the defendant seeks an order pursuant to r 15.2 of the High Court Rules dismissing the second amended statement of claim for want of prosecution because the plaintiffs have failed to prosecute the claims to trial. The defendant cites the delays which are characterised as inordinate and inexcusable.
Rules 15.1 and 15.2 of the High Court Rules
[46] Delay in complying with procedural requirements and court orders may be an abuse of process of the Court warranting strike out pursuant to r 15.1. Generally however, such delay is dealt with by way of an application for dismissal for want of prosecution under r 15.2.
[47] The basic principles in relation to r 15.2, summarised by the authors of McGechan on Procedure, are well settled.1 The application must establish three factors. First, that the other party has been guilty of an inordinate delay. How long a delay is “inordinate” will depend upon the facts of each case, considered in light of
what is common or accepted practice. It is the cumulative effect of delays at various stages of the proceedings that must be looked at.
[48] Second, that such delay is inexcusable. Delay may be due to unavoidable circumstances to which no blame can attach, or may be necessary to the conduct of the proceedings.
[49] Third, that the delay has seriously prejudiced the applicant. This is the most significant of the three factors. The overriding consideration in determining serious prejudice will be whether, in all of the circumstances, it is still possible at a hearing to do justice between the parties.
[50] The focus when determining prejudice has generally been on the extent to which a defendant’s ability to prepare for trial has been affected by the delay. The Court of Appeal’s decision in Mead v Day is instructive.2 In that case, the plaintiff commenced an action against the defendant on 17 July 1979. A statement of defence was filed on 20 August 1979. The defendant commenced interlocutory proceedings for discovery and further particulars. The Court file was mislaid, which contributed
to delay in hearing the motion. On 7 August 1980, the High Court ordered the plaintiff to give the defendant certain further particulars. By August 1983 no particulars had been received.
[51] The plaintiff was not personally responsible for the delay and had complained to the Law Society about the lack of progress being made by his advisers. Nor was the delay entirely caused by the plaintiff’s solicitors who had unsuccessfully instructed several counsel.
[52] The defendant’s application for dismissal of the action for want of prosecution was heard in the High Court on 21 May 1984. The Judge found that, although the delay was inexcusable, there was no real prejudice attributable to the delay and dismissed the defendant’s motion. On appeal, the Court did not disturb the High Court’s ruling. The prejudicial effect of the delay on the defendant’s ability to defend the claim was ameliorated by the availability of sufficient written material to
assist the recollection of events. The defendant also complained of personal and professional prejudice as a result of the action “hanging over his head” for several years. The Court of Appeal said:3
[I]t has to be remembered that while it is a factor to be taken into account in considering the overall position it is not a matter that ordinarily affects a person’s position so far as the actual conduct of his defence is concerned.
[53] In general, the Court is reluctant to prevent a plaintiff from having his or her day in Court. As the Court of Appeal has observed:4
In cases of delay and alleged want of prosecution, the right of all citizens and organisations to have access to the Courts for the determination of the issues they have raised should be denied only if that important right is outweighed by a stronger right vested in the defendant to have the case dismissed because justice can no longer be done in the light of the delay … Case management principles and practices are important, indeed vital, for controlling crowded calendars and promoting the expeditious despatch of Court business; but they should not be allowed to obscure or undermine the fundamental purpose of any system of justice which is to deliver justice to all concerned.
Discussion
[54] In the present case, there is no doubt that an ordinate delay has occurred. Proceedings were issued on 18 September 2012. The plaintiffs have, on numerous occasions, sought, and generally been granted, extensions of time for the taking of interlocutory steps. There have been acknowledged deficiencies in both the form and content of discovery provided, and inappropriate and inadequate responses to requests on behalf of the defendant for particulars of the allegations against it.
[55] It is now June 2014. The second amended statement of claim runs to
20 pages and is accompanied by a series of schedules which, although unnumbered, appear to exceed 100 pages of what is essentially evidentiary material. The allegations remain opaque, and I accept concerns raised on behalf of the defendant that it would be prejudiced in attempting to prepare for trial on the basis of the terms
of the present allegations against it.
3 At 105.
4 Commerce Commission v Giltrap City Ltd (1997) 11 PRNZ 573 (CA) at 579.
[56] Two orders for costs have been made against the plaintiffs in relation to additional burdens imposed on the defendant because of inadequacies in the plaintiffs’ carriage of the proceedings. In contrast, the defendant appears to have complied with procedural obligations on it in all respects.
[57] I am also satisfied that the delay has been inexcusable. The inadequacies that existed on 13 December 2012 were explained by reference to difficulties obtaining instructions. Since then, delay has been attributed to the failings of Mr Smith and Mr Tennet. This is not a situation where the delay was due to unavoidable circumstances to which no blame can attach, or was necessary to the conduct of the
proceedings. Nor is it the result of the conduct of both parties.5
[58] The final matter is whether there is real prejudice to the defendant, to the extent that justice can no longer be done between the parties. It is a significant step to deprive the plaintiffs of their opportunity to pursue the claims to trial. On the other hand, the delay that has occurred to date has to be seen in light of the Court’s overall concern to manage proceedings towards efficient disposition, and the entitlement of a defendant not to be endlessly imposed upon by the inadequate conduct of proceedings.
[59] The defendant has consistently sought to progress this matter to trial. From
22 February 2013, the defendant has complained consistently of deficiencies in the
plaintiffs’ statement of claim. Those inadequacies were reiterated again on 25 June
2013 when I emphasised that the performance on behalf of the plaintiffs had been inadequate.
[60] This is not a situation, as in Mead v Day, where matters were progressed for some time before activity ceased for a number of years. The defendant has consistently identified issues with the plaintiffs’ pleadings and discovery, and pressed for progress. Timetable orders have been set and then adjusted. All of this has been to little or no avail. Case management of civil proceedings is substantially more
proactive now than it was in the era of Mead v Day. All parties must expect
5 See, for example, Commerce Commission v Ophthalmological Society of New Zealand Inc
HC Wellington CP354/97, 10 March 2003.
sanctions for non-compliance with timetables intended to prepare disputes promptly and efficiently for trial.
[61] I advised both parties on 6 May 2014 that, if the inadequacies in the plaintiffs’ pleading were not addressed by 16 May the defendant could file an application to have the claim struck out. That put the plaintiffs on notice that their claim was in danger of being dismissed. The second amended statement of claim remains deficient.
[62] Legal practitioners can be expected to be more understanding of the tolerant standards that the Court adopts in forgiving breaches of timetabling requirements, and inadequacies in pleading. However, that does not mean that when a firm of solicitors finds itself as a defendant, it should be required to continue responding to a claim that is being inadequately conducted to any more egregious standard of default by a plaintiff than would ordinarily be sufficient to warrant dismissal for want of prosecution.
[63] For all these reasons, the plaintiffs’ case hangs by the most slender of threads. There is only one feature of the evaluation that persuades me to give the plaintiffs one final opportunity. That is that whilst the presence of the proceedings is inarguably stressful for the defendant, and the level of stress is made worse by the disorganised and inadequate way in which the plaintiffs’ case is being pursued, there is not at this point a compelling aspect of prejudice to the defendant in terms of the passage of time. It is not suggested that the passage of time has substantially dimmed relevant recollections, or led to the loss of documents that might be relevant to a determination of issues raised.
[64] If the plaintiffs were promptly to replead their claims in a fully particularised and appropriately ordered manner, then the prospect remains for the defendant to either pursue an application to strike out such a pleading, or to be able adequately to prepare a defence to it for trial. If that is not done competently and promptly, then the scales fall decisively in favour of bringing the proceeding to an end.
[65] In these circumstances, I propose making a conditional order to strike out the proceedings on the following terms. The proceedings will be struck out unless, within 21 days of the delivery of this judgment, the plaintiffs file and serve a fresh statement of claim pleading, in logical sequence, the circumstances relevant to the scope of the duty of care alleged against the defendant, and the circumstances in which that duty is claimed to have been breached. The pleading is to address concisely all of the requests for particulars made thus far on behalf of the defendant. Evidentiary material is to be excluded. If it is vulnerable to criticism as prolix or confused, it will not be sufficient to avoid triggering the unless order.
[66] In the absence of such a statement of claim, the proceeding will be struck out
22 days after this judgment.
Dobson J
Solicitors:
Peter C Gilbert, Wellington for plaintiffs
Robertsons, Auckland for defendant
Copy to:
H Memelink
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