Bellino v Douglas & Anor [2016] QDC 251

DISTRICT COURT OF QUEENSLAND CITATION: Bellino v Douglas & Anor [2016] QDC 251 PARTIES: ANTONIO BELLINO TRADING AS BELLINO’S TEA HOUSE AND RAINFOREST RESTAURANT (plaintiff) v HUGH WILLIAM DOUGLAS (defendant) and LINDSAY TERENCE LAWRENCE TRADING AS LAWRENCE & ASSOCIATES SOLICITORS (third party) FILE NO/S: 1609/13 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 6 October 2016 DELIVERED AT: Brisbane HEARING DATE: 30 September 2016 JUDGE: Smith DCJA ORDER: I make the following directions: 1. The third party provide to the defendant, copies of all documents referred to in the defence of the third party pursuant to r 222 of the UCPR by 11 October 2016. 2. The defendant deliver any letter pursuant to r 444 of the UCPR to the third party in respect of the defence of the third party by 17 October 2016. 3. The third party deliver any letter pursuant to r 445 of the UCPR to the defendant by 24 October 2016. 4. By 28 October 2016, the defendant file and serve: a. any reply to the defence of the third party; b. alternatively, any application in respect of the defence of the third party for striking -- 1 of 11 -- 2 out of particulars; 5. The parties complete disclosure by 7 November 2016. 6. The parties deliver any letter pursuant to r 444 of the UCPR in respect of disclosure by 14 November 2016. 7. The parties deliver any letter pursuant to r 445 of the UCPR in respect of disclosure by 21 November 2016. 8. The parties file and serve any application in respect of disclosure by 28 November 2016. 9. The parties deliver any expert reports to be relied on, on or before 3 February 2017. 10. The parties participate in a mediation to be held on or before 3 March 2017, the cost to be borne equally the parties (unless otherwise agreed.) 11. In the event that the matter does not resolve at mediation, the parties must sign and file a request for trial date by 10 March 2017. 12. I direct that the parties file and serve their submissions relating to the question of costs (if any) by 5.00pm on 11 October 2016. The submissions of each party is not to exceed 3 pages. 13. Liberty to apply. CATCHWORDS: PRACTICE AND PROCEDURE- Whether order for directions should be made Uniform Civil Procedure Rules 1999 (Q) rr 5, 196, 366, 367, 467 Harris and Anor v Australand and Anor [2010] QSC 385 COUNSEL: Mr C Upton for the plaintiff Mr L Jurth for the defendant Solicitors for the third party SOLICITORS: PPCS Lawyers for the plaintiff Londy Lawyers for the defendant Barry & Nilsson for the third party -- 2 of 11 -- 3 Introduction [1] This was an application by the plaintiff for the court to order that the defendant’s requirement to sign the request for trial date be dispensed with pursuant to r 469 of the Uniform Civil Procedure Rules 1999 (Q).1 This application was abandoned and in lieu thereof an order for directions was sought. The defendant opposes an order for directions, submitting that the provisions in the rules sufficiently govern the conduct of this litigation. The third party generally supports the plaintiff’s application for directions. Background [2] The claim and statement of claim2 were originally filed on 9 May 2013. An amended statement of the claim was filed on 20 June 2013.3 [3] In essence it is alleged the plaintiff carried on a tea house and restaurant at Mount Glorious. He entered into a lease with the defendant for a period of three years on 2 May 2011. It is alleged that in breach of the lease the defendant locked the plaintiff out of the premises without delivering a required notice under the Property Law Act. It is alleged that this amounted to a repudiation of the lease agreement. Damages are sought in the total sum of $676, 273. [4] The defence was filed on 12 July 2013.4 The defendant alleges the true position here is that the defendant granted the plaintiff a licence to manage the defendant’s business. It is also alleged that the plaintiff failed to pay all rent and outgoings. The lock out is admitted but it is alleged was justified. It was alleged that there was no breach of the lease (paragraph 12) and in any event says that a further lease would not have been granted to the plaintiff and the plaintiff has failed to mitigate its loss. Further, a counterclaim is brought in the total sum of $6, 953.95 for unpaid moneys under the lease agreement. [5] The defendant issued a further party notice to the third party on 8 August 2013.5 It is alleged in the third party statement of claim that the third party was the defendant’s solicitor with respect to the lease agreement. It is further alleged that on or about 21 October 2011 the defendant retained the third party to provide him advice on whether the plaintiff was in breach of the lease and what steps could be taken to terminate the lease. It is alleged that the lock out was advised by the third party and if the plaintiff’s allegations are found to be true (paragraph 20) then the plaintiff’s loss and damage was caused by the third party’s negligence in advising him to re-enter the premises prior to delivery of a Property Law Act notice and did not advise him as to the consequences of this, in particular, the possibility the plaintiff could regard the lease has being repudiated. [6] The defendant applied for an order for substituted service of the third party notice on 15 October 2013.6 1 Application filed 2 September 2016, document 29. 2 Document 1. 3 Document 2. 4 Document 3. 5 Document 5. 6 Document 6. -- 3 of 11 -- 4 [7] The affidavit in support of that application7 clearly indicates that the third party was not answering calls, emails or letters concerning the matter. [8] Samios DCJ made an order for substituted service on 30 October 2013.8 An amended reply and answer was filed by the plaintiff on 4 June 2014.9 An enforcement hearing was heard concerning a costs order made against the third party on 23 June 2014.10 Indeed a warrant was issued for the arrest of the third party to lie in the registry until further order. [9] A further amended reply and answer was filed by the plaintiff on 13 August 2015.11 Affidavit material [10] Mr Pravilesh Chand has affirmed an affidavit filed 2 September 2016.12 He has also affirmed two affidavits dated 29 September 2016 which were filed by leave. [11] The defendant relies on three affidavits of Charles George Londy, the first filed 27 September 2016;13 the second filed 27 September 201614 and the third sworn 30 September 2016.15 [12] On 20 June 2013 Mr Chand via email forwarded to the defendant’s then lawyers, amongst other things, a forensic accounting report dated 28 February 2013 by Steven Ponsonby setting out a calculation of the losses alleged to have been suffered by the plaintiff.16 [13] The Third Party Mr Lawrence was bankrupted on 5 February 2014. On 21 October 2014 Cronin Litigation Lawyers, the previous lawyers acting for the defendant, notified Mr Lawrence’s trustees of the claim. [14] On 31 October 2014 Mr Chand forwarded a request for a trial date to Cronin Litigation Lawyers.17 [15] Cronin Lawyers, on behalf of the defendant, replied on 12 November 2014 stating that they were of the view the matter was not ready for trial by virtue of the fact that the insurer for the third party was considering the third party claim and was likely to file pleadings in respect of the matter shortly. Barry & Nilsson Lawyers had contacted them to advise they acted on behalf of the insurer and therefore it was premature for the matter to be listed for trial.18 [16] On 6 January 2015 Mr Chand via email sent a rule 444 letter to Cronin Litigation Lawyers concerning the failure to return the request for trial.19 The letter in particular 7 Affidavit of Mia Kershaw filed 15 October 2013 – Document 7. 8 Document 12. 9 Document 19. 10 Document 21. 11 Document 27. 12 Document 30. 13 Document 32. 14 Document 33. 15 Filed by leave. 16 Exhibit PPC1 to affidavit of Mr Chand affirmed 29 September 2016. 17 Exhibit PPC1 to affidavit of Mr Chand affirmed 29 September 2016. 18 Exhibit PPC2 to affidavit of Mr Chand affirmed 29 September 2016. 19 Exhibit PPC3 to affidavit of Mr Chand affirmed 29 September 2016. -- 4 of 11 -- 5 pointed out that six weeks had passed since the correspondence on 12 November 2014 and yet no defence had been filed to the third party claim and no further steps has been taken by the defendant regarding the third party claim. [17] On 6 January 2015, no doubt spurred on by that letter, Cronin lawyers wrote to Barry & Nilsson noting the request for trial and seeking their client’s defence.20 [18] On 7 January 2015 Barry & Nilsson wrote to Cronin Lawyers advising they were still awaiting receipt of Mr Lawrence’s file but they suspected they could obtain instructions to participate in a mediation.21 [19] On 13 January 2015 Cronin Litigation Lawyers replied to the Plaintiff’s lawyers.22 Cronin Litigation contended the matter was not ready for trial and further pointed out that Barry & Nilsson had yet to receive Mr Lawrence’s file and had difficulty in obtaining instructions. Barry & Nilsson though indicated they were happy to propose a settlement conference or mediation. [20] On 17 January 2015 Mr Chand via email wrote to Barry & Nilsson and Cronin Litigation Lawyers proposing a mediation with the costs borne equally between the parties.23 Barry & Nilsson were agreeable with this,24 however Cronin Lawyers in an email dated 25 February 2015 has stated: “Our client has instructed us that he is agreeable to participate in mediation on with Mr Peter Lane (or such other mediator briefed). However, it not commercial for our client to engage an accredited mediator and our client will not bear the cost of doing so, particularly in circumstances where the third party is yet to file a defence. If it is the case that the parties insist the mediation to be conducted by Mr Lane next month, our client is agreeable and will participate in the mediation meaningfully, but only on the basis that the plaintiff and the insured bear the costs of the mediator.”25 [21] I consider that an unreasonable position to take. [22] The mediation did not proceed. [23] As noted previously also, pleadings finally closed in August 2015 when the further amended reply and answer was filed by the plaintiff. [24] When Mr Londy took over conduct of the defendant’s action in early February 201626 he ascertained that the third party was bankrupt and it would be necessary to obtain leave to proceed to enable the defendant to continue with proceedings against the third party. [25] On 3 February 2016 he wrote to Barry & Nilsson pointing out that whilst the plaintiff had taken a slow approach to the litigation, on 13 August 2015 an amended reply had been delivered and on 13 January 2016 a supplementary list of documents had been 20 Exhibit CGL10 to affidavit of Mr Londy filed 29 September 2016- document 33. 21 Ibid. 22 Exhibit PPC4 to affidavit of Mr Chand affirmed 29 September 2016. 23 Exhibit PPC5, to affidavit of Mr Chand affirmed 29 September 2016. 24 Exhibit PPC6, to affidavit of Mr Chand affirmed 29 September 2016. 25 Exhibit PPC9, to affidavit of Mr Chand affirmed 29 September 2016. 26 Par [3] of affidavit of Charles Londy filed 27 September 2016-document 32. -- 5 of 11 -- 6 delivered. Having regard to this, he asked Barry & Nilsson to urgently provide the third party’s defence and noted that he was acting on the assumption there would be a consent for an application for leave to proceed under s 58(3)(b) of the Bankruptcy Act 196627. [26] On 8 February 2016 Mr Londy sent a letter to the solicitors for the plaintiff pointing out that he was reviewing the matter in particular the pleadings, the further amended reply and answer, issues concerning adequacy of disclosure and pointing out that it would be necessary for the defendant to apply to the court for leave to proceed against the third party who had become bankrupt. It was also pointed out that another expert would need to be briefed and once all matters were completed it was suggested there be a mediation or settlement conference28. [27] The plaintiff’s lawyers responded by email dated 7 April 2016, pointing out that beside the material disclosed all other documents relating to the matter were in the defendant’s possession at the restaurant site, and disputed matters raised in the 8 February letter.29 [28] On 7 April 2016 the plaintiff’s lawyers forwarded a CD containing photos and a video to the defendant’s lawyers.30 [29] Further, on 18 May 2016 documents from the plaintiff’s supplementary list of documents were disclosed via memory stick to the defendant’s lawyers.31 Mr Londy swears that on 3 June 2016 he briefed counsel to settle the necessary documents to obtain leave to proceed. [30] On 11 July 2016, Mr Chand wrote to the defendant’s lawyers enclosing the original request for trial.32 [31] On 19 July 2016 Mr Londy caused an application to be filed in the Federal Circuit Court for leave to proceed.33 [32] On 20 July 2016 Mr Londy responded to the Plaintiff by letter.34 In that letter, he advised the plaintiff’s lawyers that his client was not in a position to sign the request for trial date. The reason for this is the third party was a bankrupt and leave had not yet been obtained for the defendant to proceed against the bankrupt. Barry & Nilsson also had not yet forwarded their client’s defence. Mr Londy pointed out they were delayed in bringing the leave application, which by coincidence was received by counsel the day before the receipt of request for trial. He enclosed, for the information of the plaintiff, a copy of the application for leave to procced which had been filed on 19 July 2016, which had been served. He noted: “In the premises, we are presently unable to sign and return the Request for Trial Date, and respectfully request that you wait until after leave has been granted to proceed against the Third Party, and 27 Exhibit CGL-1 to affidavit of Charles Londy filed 27 September 2016-document 32. 28 Exhibit CJL-2 to affidavit of Charles George Londy filed 27 September 2016-document 32. 29 Exhibit PPC10 to affidavit of Mr Chand affirmed 29 September 2016. 30 Exhibit PPC11 to affidavit of Mr Chand affirmed 29 September 2016. 31 Exhibit PPC12 to affidavit of Mr Chand affirmed 29 September 2016. 32 Exhibit PPC1 to affidavit of Mr Chand filed 2 September 2016-document 30. 33 Exhibit CJL-3 to affidavit of Charles George Londy filed 27 September 2016-document 32. 34 Exhibit PPC2 to affidavit of Mr Chand filed 2 September 2016-document 30. -- 6 of 11 -- 7 the pleadings close and disclosure has been made in the third party proceedings.” [33] He also pointed out that there were two further reasons why the request could not be signed. Firstly, the defendant needed to obtain an expert report and finally there was not full disclosure. The plaintiff’s solicitors were advised that the application was to be heard in the Federal Circuit Court on 29 August 2016. [34] Despite this, on 20 August 2016 the plaintiff’s lawyers wrote a rule 444 letter complaining that the request for trial date had not been signed and advising that failing the signature, an application would be brought before the District Court for an order dispensing with a signature.35 [35] Mr Londy responded by letter dated 28 August 2016.36 In this letter, he pointed out that the plaintiff’s rule 444 email overlooked the important issue about the third party being bankrupt. He pointed out that the deadline set for replying to the demand was 30 minutes after the commencement of the hearing of the application for leave. He pointed out that he was confident the Federal Circuit Court would make an order granting leave and pointed out that once the order was made, the matter would proceed. Mr Londy pointed out it was not possible on those circumstances to sign the request for trial. [36] On 29 August 2016 Mr Londy advised the plaintiff’s lawyers that the Federal Circuit Court (Judge Vasta) had ordered leave to proceed under s 58(3)(b) of the Bankruptcy Act enclosing a copy of the sealed order.37 [37] Despite this, on 2 September 2016 the plaintiff’s lawyers filed an application for dispensation of the signature on the request for trial date also seeking “such further or other orders as the court considers appropriate.” [38] Mr Londy on 16 September 2016 via email referred to the application and stated: “For reasons set out in our previous correspondence, the matter is not ready for trial, and the request for trial date cannot be signed. We request that you confirm, by close of business on Tuesday 20 September, that you will consent to an order that the application be dismissed with no order as to costs.”38 [39] On 26 September 2016 Mr Londy received the defence of the third party from Barry & Nilsson Lawyers.39 [40] Mr Londy swears it is now necessary for him to: (a) take instructions in relation to the third party’s defence; (b) consider whether copies of documents should be required; (c) consider whether any challenge should be made to the pleading of the third party’s defence; (d) consider whether further and better particulars should be requested of the defence; (e) draft such request; 35 Exhibit PPC3 to affidavit of Mr Chand filed 2 September 2016-document 30. 36 Exhibit PPC4 to affidavit of Mr Chand filed 2 September 2016-document 30. 37 Exhibit PPC5 to affidavit of Mr Chand filed 2 September 2016-document 30. 38 Exhibit CJL7 to affidavit of Mr Londy filed 27 September 2016-document 33. 39 Document 31. -- 7 of 11 -- 8 (f) draw a reply; (g) engage in disclosure of the third party. [41] In the second affidavit of Mr Londy filed 27 September 201640 he encloses the affidavit he swore in support of the application filed in the Federal Court. This affidavit reveals that Cronin Litigation Lawyers were aware of the bankruptcy as early as October 2014. [42] On 27 September 2016 Mr Chand forwarded a copy of the application and supporting affidavit to Barry & Nilsson.41 [43] On 28 September 2016 Barry & Nilsson, solicitors for the third party, wrote to Mr Londy and the plaintiff’s lawyers42 setting out a chronology of events relevant to the application and further pointing out that the third party ought to have been named in the application and pointing out that the application was defective and non-compliant with the UCPR. Applicant’s submissions [44] The applicant submits that there is no evidence before the court of the defendant having taken any steps to progress this matter between March 2015 and February 2016. It is submitted that despite the defendant advising that it would be necessary for leave to proceed to occur on 8 February 2016, this was not done until after the delivery of the request for trial date. Ultimately it was submitted that whilst the request for dispensation has not been proceeded with, directions should be given which require a mediation on or before 31 December 2016 and if not resolved, the parties must sign and file a request for trial date by 31 January 2017. It was submitted that when one looks at all of the material the real cause of the delay here was the conduct of the defendant in failing to pursue the leave application in the Federal Circuit Court. It is also submitted that the third party’s position was in essence irrelevant to the plaintiff’s claim against the defendant and in those circumstances the application was not misconceived and because of the delay in all of the circumstances the directions proposed should be made. Defendant’s submissions [45] The defendant on the other hand submits that the application for dispensation was misconceived, premature and defective. It is submitted that the proceedings were not ready for trial, the request for trial date was defective because it did not name the third party, nor was it served on the third party contrary to the rules. It is submitted that the applicant is attempting to use the supposed need of court supervision and directions to avoid the consequences of bringing and maintaining an utterly hopeless application. It is submitted the plaintiff has repeatedly and consistently refused to acknowledge the significance and effect of the application for leave to proceed against the third party. It is pointed out that the r 444 letter was delivered requiring a signature on the request for trial 30 minutes after the hearing of the application for leave before the Federal Circuit Court and it ignored the reasons set out in Mr Londy’s letter dated 20 July 2016. It is submitted the matter is not ready for trial, other steps need to be taken and in all of the 40 Document 33. 41 PTC3 to affidavit of Mr Chand affirmed 29 September 2016 – filed by leave. 42 CGL11 to affidavit of Mr Londy sworn 29 September 2016. -- 8 of 11 -- 9 circumstances directions are unnecessary because the rules provide for the orderly conduct of the proceedings and the application should be dismissed. Third party [46] The third party’s position is it does not oppose directions being made by the court. Disposition [47] In my opinion the request for trial was defective. Rule 196 of UCPR provides: “196 Effect of service on third party On being served with a third party notice, the third party becomes a party to the proceeding with the same rights in relation to the third party's defence to a claim made against the third party in the notice as the third party would have if sued in the ordinary way by the defendant.” [48] In those circumstances the third party was a party to the proceedings. [49] Rule 467 of UCPR provides: “467 Request for trial date (1) A party who is ready for trial may prepare and sign a request for trial date in the approved form. (2) The party who prepared the request for trial date must serve copies of the request on each other party and, if the party served is ready for trial, that party must sign the request and return it to the party who prepared it. (3) The party who prepared the request for trial date must file as soon as practicable a copy of the request signed by all parties, other than a party whose signature has been dispensed with by the court. (4) For this rule, a party is ready for trial if – (a) any order or requirement by notice under chapter 7, part 1 for the making of disclosure by or to the party or for the inspection of documents by or to the party has been complied with; and (b) any order requiring particulars to be given by or to the party has been complied with; and (c) any interrogatories delivered by or to the party have been answered under chapter 7, part 1, division 2; and (d) as far as the party is concerned, all necessary steps in the proceeding (including steps to obtain disclosure or inspection of documents, admissions, particulars and answers to interrogatories) are complete; and (e) all the party's necessary witnesses will be available for the trial; and (f) as far as the party is concerned, the proceeding is in all respects ready for trial; and -- 9 of 11 -- 10 (g) if in the proceeding there is a claim for damages for personal injury or death - chapter 14, part 2 has been complied with.” [50] In the circumstances in my opinion, for there to have been a valid request for trial it needed to have named the third party and it needed to be served on the third party. In this case whilst it has been served it was defective in the sense as the third party was not named. [51] It seems to me on the material that it was necessary for leave to be obtained under the Bankruptcy Act prior to the hearing of this trial. However it seems to me on the material clear that the defendant (particularly through his previous solicitors) delayed in the bringing of this application. Additionally, there has been a four month delay between February and July 2016 in Mr Londy bringing such application. Also the plaintiff was not made aware of the bankruptcy issue until more recent times. [52] Having said this, it seems to me the plaintiff ought to have appreciated the importance of leave being granted and of the pleadings closing as between the third party and the defendant. [53] As the parties agreed, in this case blame can be cast on all of the parties here. [54] Regardless the matter is now before the court on the question of directions. [55] Rule 5 of UCPR provides: “5 Philosophy—overriding obligations of parties and court (1) The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. (2) Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules. (3) In a proceeding in a court, a party impliedly undertakes to the court and to the other parties to proceed in an expeditious way. (4) The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court. Example— The court may dismiss a proceeding or impose a sanction as to costs, if, in breach of the implied undertaking, a plaintiff fails to proceed as required by these rules or an order of the court.” [56] Rule 366 provides: “(2) the court may give directions about the conduct of a proceeding at any time. (3) a party may apply to the court for directions at any time. (4) a party may apply for directions either on application made for the purpose or an application for other relief.” -- 10 of 11 -- 11 [57] Rule 367 gives the court wide powers to make orders or directions about the conduct of the proceeding it considers appropriate. [58] The fact is the plaintiff in paragraph three of the application did seek any other order which the court thought appropriate. [59] In considering the power to give directions the interests of justice are paramount.43 [60] In light of the lengthy history of this matter it seems to me appropriate for the court to make directions. I particularly note the cause of action arose in 2011 (some 5 years ago now); the nature of oral conversations may well be an important matter in this case and the proceedings were filed in 2013 (some 3 years ago now). [61] It would not be within the spirit of the rules or in the interests of justice to allow the case to proceed without directions. [62] I agree with Mr Jurth that the directions sought by the plaintiff are too restrictive bearing in mind the recent defence filed and served by the third party. [63] In the circumstances, I will make the directions sought by the defendant (the more expansive ones) specified in Exhibit 5 as follows: 1. The third party provide to the defendant, copies of all documents referred to in the defence of the third party pursuant to r 222 of the UCPR by 11 October 2016. 2. The defendant deliver any letter pursuant to r 444 of the UCPR to the third party in respect of the defence of the third party by 17 October 2016. 3. The third party deliver any letter pursuant to r 445 of the UCPR to the defendant by 24 October 2016. 4. By 28 October 2016, the defendant file and serve: (a) any reply to the defence of the third party; (b) alternatively, any application in respect of the defence of the third party for striking out of particulars; 5. The parties complete disclosure by 7 November 2016. 6. The parties deliver any letter pursuant to r 444 of the UCPR in respect of disclosure by 14 November 2016. 7. The parties deliver any letter pursuant to r 445 of the UCPR in respect of disclosure by 21 November 2016. 8. The parties file and serve any application in respect of disclosure by 28 November 2016. 9. The parties deliver any expert reports to be relied on, on or before 3 February 2017. 10. The parties participate in a mediation to be held on or before 3 March 2017, the cost to be borne equally the parties. 11. In the event that the matter does not resolve at mediation, the parties must sign and file request for trial date by 10 March 2017. 12. I direct that the parties file and serve their submissions relating to the question of costs (if any) by 5.00pm on 11 October 2016. The submissions of each party is not to exceed 3 pages. 13. I give liberty to apply. 43 Harris and Anor v Australand and Anor [2010] QSC 385 at [3] per Margaret Wilson J. -- 11 of 11 --