Ferrari Estate Holdings Pty Ltd v Sovereign Resort Developments Pty Ltd & Ors [2015] QSC 126

SUPREME COURT OF QUEENSLAND CITATION: Ferrari Estate Holdings Pty Ltd v Sovereign Resort Developments Pty Ltd & Ors [2015] QSC 126 PARTIES: FERRARI ESTATE HOLDING PTY LTD (ACN 099 918 760) AS TRUSTEE (Plaintiff) v SOVEREIGN RESORT DEVELOPMENTS PTY LTD (ACN 010 434 018) (First Defendant) and COOKTOWN EARTHMOVING & QUARRYING PTY LTD (ACN 010 827 540) (Second Defendant) and MATTHEW TROY CAREY TRADING AS MTC BUILDER (BN17682757) (Third Defendant) FILE NO/S: SC 139 of 2010 DIVISION: Trial PROCEEDING: Application ORIGINATING COURT: Supreme Court at Cairns DELIVERED ON: 13 May 2015 DELIVERED AT: Cairns HEARING DATE: 13 February 2015 JUDGE: Henry J ORDERS: 1. The claim as against the first defendant is dismissed. 2. I will hear the parties as to costs and as to directions regarding the future of the remainder of the claim at 10 am on 19 June 2015. CATCHWORDS: PROCEDURE – COURTS AND JUDGES GENERALLY – COURTS – DISMISSAL OF PROCEEDINGS FOR WANT OF PROSECUTION – PRINCIPLES APPLICABLE – RELEVANT CONSIDERATIONS – where the defendant in the original claim seeks dismissal – where no step has been taken for more than 2 years – where the proceedings were characterised by periods of delay – whether it is in the interests of justice that the matter proceed. -- 1 of 10 -- 2 Bird v Ace Insurance Limited [2011] QSC 262, considered Tyler v Custom Credit Corp Ltd & Ors [2000] QCA 178, applied Paradise Grove Pty Ltd v Stubberfield [2000] QSC 214, cited Uniform Civil Procedure Rules 1999 (Qld) r 5, r 280, r 389(2), r 429, r 444, r 445 COUNSEL: Nil SOLICITORS: The plaintiff’s director, Ms EPD Ferrari, appeared without legal representation for the plaintiff. Williams Graham Carman Lawyers for the first defendant Gadens Lawyers for the second defendant Moray & Agnew Lawyers for the third defendant [1] The first defendant applies for the dismissal of the plaintiff’s claim against it for want of prosecution. Background [2] The plaintiff and the first defendant are adjoining lot owners of two properties located in Cooktown. The plaintiff owns the Ferrari Estates Building, said by its director Ms Ferrari to be heritage listed and have been built in 1886 for the then Bank of North Queensland. The first defendant owns the Sovereign Resort Hotel, the modern incarnation of which was the subject of development work in 2004. [3] The second and third defendants were engaged by the first defendant to carry out the development works. [4] The plaintiff alleges that the works carried out by the second and third defendants in 2004 were done negligently and also involved some transgression beyond the property boundary onto its land. The natural conformation and contours of both the first defendant’s land and the plaintiff’s land were allegedly altered by the works, resulting in the diversion of surface and subsurface water onto the plaintiff’s land from the first defendant’s land. It is alleged that the diverted water pooled, causing flooding, and that this flooding caused structural and superficial damage to the Ferrari Estates Building in 2004, requiring significant repairs. [5] The plaintiff did not file its claim, seeking damages from the defendants for negligence (or alternatively nuisance) and trespass, until about 6 years later in 2010. [6] Further delays by the plaintiff followed. The most recent delay involves no step having been taken by the plaintiff in the litigation for nearly three years. [7] The first defendant, which denies wrongdoing, seeks the dismissal of the claim for want of prosecution, alleging significant delay solely attributable to the plaintiff. [8] The second and third defendants also deny wrongdoing but take no active position on the first defendant’s application. [9] The plaintiff cannot continue the proceeding without leave to take a further step pursuant to r 389(2). The plaintiff’s director, Ms Ferrari, acting without legal -- 2 of 10 -- 3 representation for the plaintiff, effectively made oral application to do so without notice at the hearing of the first defendant’s application. The second and third defendants complain that if such an application is to proceed there ought be directions regarding the filing of materials in respect of it. They seek a directions hearing following this decision, in order to advance the determination of whether the plaintiff ought have leave to proceed. The course of proceedings [10] The works on the land owned by the first defendant commenced on or about 9 February 2004. The plaintiff claims that the works caused damage to its property on or about 19 March 2004. The plaintiff alleges that is when the cause of action accrued1 but the first defendant alleges the cause of action accrued earlier.2 [11] The plaintiff filed its claim and statement of claim against the first defendant on 19 March 2010, about 6 years after it had become aware of the damage to the property. Whether this initial claim and statement of claim filed by the plaintiff was done within time is an issue in the proceedings. [12] The plaintiff claims damages of $982,241.30 for negligence or alternatively nuisance and $114,990 for trespass. [13] In due course, the first, second and third defendants each filed a defence and the parties engaged in an exchange of further and better particulars, adhering to the time frames prescribed under the Uniform Civil Procedure Rules 1999 (“UCPR”). [14] In November 2010 the first, second and third defendants engaged a civil and construction engineer, Mr Eric Fox of EFC Consulting Engineers, to provide an expert report. This report was served on the plaintiff on 6 January 2011. The general theme of the report was that the works performed did not increase the surface or subsurface water flow between the first defendant’s land and the plaintiff’s land and did not cause or contribute to the building damage claimed by the plaintiff in its pleadings. [15] The pleadings closed on 7 December 2010. [16] The last step in the proceedings by the plaintiff was the service of a list of documents on the first defendant on 2 March 2012.3 [17] On 10 December 2014, the first defendant applicant sent a r 444 letter to the plaintiff, complaining of the plaintiff’s failure to prosecute her claim and seeking her consent to an order by the Registrar dismissing the claim. The plaintiff respondent sent a response to this letter on 19 December 2014, declaring an intention to proceed with the claim, without providing any material indication of what measures had been taken, or were to be taken, to do so. The plaintiff’s response letter did not, as required by r 445, state that it was a response to the first defendant’s r 444 letter. [18] The applicant filed its application to dismiss the proceedings for want of prosecution on 29 January 2015. 1 Statement of claim [13]. 2 Affidavit of TK Sturgeon affirmed 27 January 2015 [11] 3 Affidavit of TK Sturgeon affirmed 27 January 2015 [9]. -- 3 of 10 -- 4 Relevant Legal Principles [19] Rule 389(2) of the UCPR relevantly provides: “(2) If no step has been taken in a proceeding for 2 years from the time the last step was taken, a new step may not be taken without the order of the court, which may be made either with or without notice.” [20] If a plaintiff has failed to take a step within time r 280 provides a defendant in the proceeding may apply to the court for an order dismissing the proceeding for want of prosecution and the court may so order. [21] In Tyler v Custom Credit Corp Ltd & Ors,4 Atkinson J, with whom McMurdo P and McPherson JA agreed, observed the factors which the Court will consider in deciding whether the interests of justice require a case to be dismissed because of delay in advancing it include: “(1) how long ago the events alleged in the statement of claim occurred and what delay there was before the litigation was commenced; (2) how long ago the litigation was commenced or causes of action were added; (3) what prospects the plaintiff has of success in the action; (4) whether or not there has been disobedience of Court orders or directions; (5) whether or not the litigation has been characterised by periods of delay; (6) whether the delay is attributable to the plaintiff, the defendant or both the plaintiff and the defendant; (7) whether or not the impecuniosity of the plaintiff has been responsible for the pace of the litigation and whether the defendant is responsible for the plaintiff’s impecuniosity; (8) whether the litigation between the parties would be concluded by the striking out of the plaintiff’s claim; (9) how far the litigation has progressed; (10) whether or not the delay has been caused by the plaintiff’s lawyers being dilatory. Such dilatoriness will not necessarily be sheeted home to the client but it may be. Delay for which an applicant for leave to proceed is responsible is regarded as more difficult to explain than delay by his or her legal advisers; (11) whether there is a satisfactory explanation for the delay; and (12) whether or not the delay has resulted in prejudice to the defendant leading to an inability to ensure a fair trial.” [22] In the present matter the relevant considerations can conveniently be discussed under the following topics: periods of delay, explanation for delay, stage reached in litigation, prospects and prejudice. Periods of Delay [23] The events triggering the accrual of the action occurred in February and or March 2004, 11 years ago. The filing of the originating claim occurred about 6 years after the cause of action accrued. Whether or not it was filed within time is disputed, 4 [2000] QCA 178 [15]. -- 4 of 10 -- 5 however at best for the plaintiff it waited until the eleventh hour to file its claim. Against that background of delay the plaintiff ought have been particularly conscientious to avoid further delay in advancing the litigation and to comply with its implied undertaking pursuant to r 5 of the UCPR to proceed in an expeditious way. [24] Unfortunately the plaintiff’s lack of urgency in not commencing the proceeding in a timely fashion also characterised the manner in which she proceeded with the litigation once it was finally commenced on 19 March 2010. The ensuing litigation of the claim involved continued delay by the plaintiff. [25] Following the close of the pleadings on 7 December 2010, the expert report of Mr Eric Fox was served on the plaintiff on 6 January 2011. [26] The plaintiff professes an intention to procure an expert report. Pursuant to r 429 it should have procured and obtained any expert report on which it was intending to rely within 90 days of 7 December 2010, the close of pleading. It did not do so, indeed it still has not done so. [27] The next step taken by the plaintiff after the service of the defence expert report was the service of a list of documents on the first defendant over a year later, on 2 March 2012.5 The plaintiff did respond to the first defendant’s request for documents from this list on 28 June 2012 however its last substantive step in the action was its service of its list of documents of 2 March 2012.6 [28] Some two years and nine months later, on 10 December 2014, the first defendant served the plaintiff with a letter pursuant to r 444 of the UCPR. Ms Ferrari’s letter in response, of 19 December 2014, lacked focus. Despite generalised comments, such as it being “on the agenda in the New Year to re-commence legal action”, the letter provided no credible basis for anticipating improved progress of the litigation.7 [29] The application to dismiss the proceedings for want of prosecution was filed by the first defendant on 28 January 2015. Explanation for delay [30] Ms Ferrari maintains that the plaintiff has tried to finalise this action, asserting various reasons but little cogent evidence to explain the delay. In summary her reasons involve complaints about the plaintiff’s former lawyer, her ill health and issues regarding the resourcing of the litigation. Even considered collectively they do not provide satisfactory explanation for the delay. Complaint about plaintiff’s former lawyer [31] The plaintiff has apparently filed claims against the Cook Shire Council and the Seagren Hotel in connection with the damage allegedly occasioned to its property. 5 This date appears variously as 1 or 2 March 2012 in the affidavit of TK Sturgeon affirmed 27 January 2015 and his exhibited r 444 letter. 6 See Paradise Grove Pty Ltd v Stubberfield [2000] QSC 214. 7 Affidavit of EPD Ferrari affirmed 10 February 2015 p 20. -- 5 of 10 -- 6 Ms Ferrari contends it was her intention, on legal advice, to consolidate those two matters with the claim against the first defendant in this matter.8 [32] The plaintiff engaged Marino Moller Solicitors in 2010 to act in respect of her claim in this matter. She engaged Daniel Towne & Associates for the other two matters. On 21 February 2012 a notice of address for service was filed for the plaintiff showing Daniel Towne & Associates as solicitor for the plaintiff in this matter.9 On 27 October 2014 a notice of a party acting in person was filed for the plaintiff in this matter.10 [33] In her submissions at the hearing of this application, Ms Ferrari asserted that Daniel Towne had no authority to deal with the file in this matter.11 She alleges that on a number of occasions in 2011 she urged Mr Towne to prepare the Cook Shire Council and Seagren matters so counsel could be briefed to advise on whether the proceedings could be consolidated and prosecuted together.12 On the plaintiffs own materials however it appears she wanted Mr Towne to assist in the potential consolidation of all three matters.13 [34] In August 2012 the plaintiff alleges she paid the sum of $7,920 to the trust account of Mr Towne on the understanding that this was the fee required by counsel for his advice on the three matters (being $2,640 for each matter).14 The plaintiff asserts that this money was never paid to counsel and that this caused a delay in the progress of the case. The plaintiff further claims that Mr Towne did not adhere to her instructions with respect to the consolidation of the proceedings.15 [35] The only evidence advanced in respect of these allegations is Ms Ferrari’s affidavit. Its content and exhibits do not present a coherent or complete evidentiary account in support of the above allegations. The lack of clarity of expression in some of the exhibited correspondence by Ms Ferrari to Mr Towne heralds the obvious prospect of some misunderstanding or miscommunication. Her affidavit does exhibit an email to the Legal Services Commission apologising for her delay in responding to their letter about her complaint against Mr Towne,16 which at least suggests the plaintiff lodged a complaint. However the content of the complaint is not evidenced and the outcome of the complaint is unclear on the materials and was not even clearly articulated by Ms Ferrari at the hearing.17 [36] In any event, regardless of whether or not some delay could be attributed to the conduct of the plaintiff’s solicitor with respect to the consolidation of the three matters, the last evidence in time of any communication by the plaintiff with Mr Towne was 25 September 2012.18 Further the last evidence of any interaction by the plaintiff with the Legal Services Commission was 1 August 2013.19 8 Affidavit of EPD Ferrari affirmed 10 February 2015 [5]. 9 Court file document 13. 10 Court file document 14. 11 T1-18 L20-22. 12 Affidavit of EPD Ferrari affirmed 10 February 2015 [4]-[6]. 13 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-5 p 6. 14 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-5 p 12. 15 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-5 p 14. 16 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-5 p 16. 17 T1-19 LL11-16. 18 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-5 p 12. 19 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-5 p 16. -- 6 of 10 -- 7 [37] None of this explains the ensuing continued failure to advance the litigation. The plaintiff’s ill health [38] Ms Ferrari asserted from the bar table that the initial delay in filing the claim, around 6 years since the initial damage occurred, was due to the fact that she had fallen into a state of deep depression, heightened by the ongoing damage that was occurring at her home.20 [39] Ms Ferrari advanced no evidence of a clinical diagnosis of depression. She exhibited a medical certicate from her doctor who writes that she had advised him she had been suffering from depression. The medical certificate, dated 9 February 2015, also states that the plaintiff had three skin cancers on her right leg removed, and underwent emergency surgery to remove a malignant cancer. The doctor certified that Ms Ferrari’s recovery “has been slow but her health is improving” and the plaintiff’s severe arthritis has added to her slow recovery.21 [40] The plaintiff also cites her medical issues as causing the delay in responding to the first respondent’s applicant’s r 444 letter of 10 December 2014. In her letter to the first defendant applicant of 19 December 2014, she states that she is still recovering from urgent surgery to a malignant cancer on her leg.22 [41] Ms Ferrari’s health problems are of course unfortunate but none of them explain such prolonged delays as have occurred in this case. The plaintiff’s resourcing of the litigation [42] The plaintiff has not specifically asserted it, but it obviously would have advanced this litigation more quickly if it had been willing or able, as the case may be, to expend more money on it. [43] In the correspondence provided by the plaintiff’s Ms Ferrari in support of her affidavit she repeatedly expressed unhappiness with the cost of the litigation. [44] In an email to Mr Towne on October 20, 2011, Ms Ferrari spoke of doing all “presentations and searches” to keep costs down and stated she would serve documents on the defendants because she “cannot afford any more legal costs at this point of time I have gone over budget now”.23 [45] In a letter to Towne & Associates dated 6 August 2012, Ms Ferrari stated: “I have just received your account dated 31 July 2012. Stop all communications with all Solicitors etc., from today’s date 6 August 2012 at 10 am until we have a meeting and your get further instructions from me.”24 [46] In another letter from the plaintiff to Mr Towne, also dated 6 August 2012, Ms Ferrari said “…I’m not paying Solicitors to shuffle paper at my expense” in 20 T1-18 LL1-5. 21 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-6. 22 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-5 p 20. 23 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-5 p 7. 24 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-5 p 18. -- 7 of 10 -- 8 response to Mr Towne’s concern at the absence of expert reports that were to be provided to counsel for him to provide his opinion.25 [47] In her affidavit of 10 February 2015 the plaintiff outlined the approximate costs of the expert reports required to support her claim against the defendants.26 The deposed cost of these reports amount to $130,000, with the plaintiff asserting that one of the reports, by the architects, could increase by $40,000 or more. [48] Whether the plaintiff is in a position to meet the costs of these reports has not been specifically evidenced, however in her oral submissions Ms Ferrari agreed with this proposition put to her by me: “…the bottom line is that there are reports you want to seek but you haven’t obtained because they cost too much money”.27 [49] The plaintiff’s appreciation of the desirability of expert evidence to support a claim of this kind would have been obvious to it for years, long before its relatively short dispute with Mr Towne. Further, the plaintiff’s apparent reluctance to expend funds on expert reports for use in the litigation is not said to be a result of the plaintiff company’s impecuniosity, let alone impecuniosity occasioned by the alleged conduct of the first defendant. The challenge of resourcing the obtaining of expert reports is not a satisfactory explanation for the delay in advancing this litigation Stage reached in litigation [50] The question of how far litigation has progressed is a relevant consideration.28 In Bird v Ace Insurance Limited,29 in a matter where no step had been taken for three and a half years and only disclosure had occurred McMeekin J described the parties as being only “in the foothills of litigation”.30 His Honour identified that a factor against granting leave to proceed.31 [51] Here the plaintiff’s professed intention to procure an expert report suggests that not even disclosure is complete. The litigation is still in the foothills, a long way short of being ready for trial. Prospects [52] As to the plaintiff’s prospects of success, were its case against the first defendant allowed to linger on, a minor component of its trespass case appears to allege direct infliction of damage. The proof of that feature of the case would likely depend on the testimony of such lay witnesses as still profess to have a recollection of the events. No sensible forecast of prospects can be made about that feature. [53] The major component of the plaintiff’s case depends on proof of indirect causation of water damage. While lay witnesses may testify to seeing how the works did or did not appear to cause water to flow into the plaintiff’s property it is likely that greater weight will be given to expert evidence on the topic. The report of Eric Fox 25 Affidavit of EPD Ferrari affirmed 10 February 2015 ex EPDF-5 p 9. 26 Affidavit of EPD Ferrari affirmed 10 February 2015 [28]. 27 T1-20 LL4-7. 28 Tyler v Custom Credit Corp Ltd & Ors [2000] QCA 178 [2]. 29 [2011] QSC 262. 30 Ibid [57]. 31 Ibid [58]. -- 8 of 10 -- 9 obtained by the defendants support their defence that the building works carried out by the second and third defendants on the first defendant’s land did not cause or contribute to any damage suffered by the plaintiff.32 [54] It is not possible to reach a fully informed view as to the plaintiff’s prospects. However, in light of the continued absence of any expert report supporting the plaintiff’s claim and the existence of one contradicting it, the plaintiff does not appear to have good prospects of proving the major component of its claim against the first defendant. Prejudice [55] As previously noted, whether the initial claim was filed within the statutory time limit is a live issue in these proceedings. It need not be determined in this application. However, it is obviously a relevant consideration that if this application succeeeds the plaintiff will then be so far out of time as to be precluded from further pursuit of its case against the first defendant. [56] The applicant complains that the delay has impaired its right to a fair trial. Its director, Mr Lucas, deposes to his fading recollection of events. It is inevitable that, some 11 years and counting after the alleged cause of action accrued, the capacity to adduce reliable evidence will be impaired. To the extent that is a prejudice suffered by the first defendant it is attributable to the plaintiff’s delay. [57] The prolonged threat of the litigation endured by the defendants is also a relevant consideration. As Atkinson J observed in Tyler: “[O]rdinary members of the community are entitled to get on with their lives and plan their affairs without having the continuing threat of litigation and its consequences hanging over them.”33 [58] There is no reason why this consideration ought not be given weight merely because the first defendant is a company. As with humans, companies with significant litigation pending against them will inevitably experience uncertainty and an impaired ability to plan future activity and expenditure. They are as entitled as human litigants are to the protection of the court from the prejudice caused by litigants who do not honour their obligation to proceed expeditiously. Conclusion [59] The plaintiff in these proceedings engaged in prolonged delays before and after instituting the litigation. It failed to comply with its implied undertaking under r 5 of the UCPR to proceed in an expeditious way. After all this time the plaintiff’s case against the first defendant cannot be said to have developed good prospects of success. Such explanation as the plaintiff has advanced for its delay provides no satisfactory explanation for the long delays attributable to it. Even now, 11 years after the cause of action is said to have accrued, the case is far short of being ready to be listed for trial. The plaintiff has exhibited no material regard to the prejudice its delay has occasioned to the first defendant as a litigant. Its approach to the litigation appears to have been and remains that it will progress the case as and when it suits its director Ms Ferrari to progress it. 32 Affidavit of Stephen John Aiton Lucas affirmed 28 January 2015. 33 Tyler v Custom Credit Corp Ltd & Ors [2000] QCA 178 [2]. -- 9 of 10 -- 10 [60] For these reasons this is a proper case in which to exercise the discretion to dismiss the plaintiff’s claim against the first defendant for want of prosecution. [61] It will be necessary to hear the parties as costs and as to directions in respect of the remainder of this litigation. Orders My orders are: 1. The claim as against the first defendant is dismissed. 2. I will hear the parties as to costs and as to directions regarding the future of the remainder of the claim at 10am on 19 June 2015. -- 10 of 10 --