Bruce v Jenner & Ascendia Accountants (Maroochydore) Pty Ltd [2015] QDC 138

DISTRICT COURT OF QUEENSLAND CITATION: Bruce v Jenner & Ascendia Accountants (Maroochydore) Pty Ltd (A.C.N. 149 783 844) [2015] QDC 138 PARTIES: Gordon Bruce and Kellie Bruce (plaintiff) v Sherman Jenner (First defendant) AND Ascendia Accountants (Maroochydore) Pty Ltd (A.C.N. 149 783 844) FILE NO/S: D40/12 DIVISION: Civil PROCEEDING: Applications ORIGINATING COURT: District Court at Maroochydore DELIVERED ON: 5.6.15 DELIVERED AT: Maroochydore HEARING DATE: 15.05.15 JUDGE: Robertson DCJ ORDER: Application dismissed with costs CATCHWORDS: PRACTICE AND PROCEDURE: where Plaintiffs applied for leave to proceed pursuant to r. 389(2) UCPR and Defendants cross-applied for claim to be struck out for want of prosecution pursuant to r. 280(2) UCPR; where Tyler considerations included explanation for delay, prospects of success, and prejudice, where claim is still within time, other discretionary considerations. Legislation Uniform Civil Procedure Rules 1999 r. 389(2), r. 280(2), r. 5 Cases Hall v RH and CE McColl P/L [2007] QCA 182 -- 1 of 6 -- 2 IMB Group v ACCC [2007] 1 Qd R 148 Tyler v Custom Credit Corp. Ltd [2000] QCA 178 COUNSEL: Mr T. C. Somers of counsel for the Plaintiffs Mr K. Ashton of counsel for the Defendants SOLICITORS: Griffiths Parry for the Plaintiffs Moray & Agnew for the First Defendant Ascendia Lawyers for the Second Defendant [1] There are cross-applications before the Court. The first in time is an application for leave to proceed by the Plaintiff pursuant to r. 389 (2) of the Uniform Civil Procedure Rules 1999 (UCPR). The Plaintiffs claim was filed 19.3.12, and it is common ground that no step has been taken in the proceedings since 9.5.12, now over (3) years ago. On 17.4.14, i.e. prior to the expiration of the (2) year period, the Plaintiffs solicitors gave notice of their intention to proceed, but the application for leave was not filed until 31.3.15. The Defendants cross-apply pursuant to r. 280(2) UCPR for the proceedings to be dismissed for want of prosecution. The primary focus of the Defendants’ argument is that, on the material before the Court, there are very limited prospects of the Plaintiffs succeeding. Background [2] The Plaintiffs’ claim is for damages for breach of contract and/or breach of statutory duty under various provisions of the Australian Consumer Law. To describe the Statement of Claim as a confusing pleading would be an understatement. Both defendants filed formal defences “pending disclosure, (and) the receipt of further particulars … ”. Both defences were filed 18.4.12. It seems to be common ground that the plaintiff provided some particulars in August 2012, although, to add to the confusion, a document filed by the Plaintiffs solicitor (without leave which was required) on 28.1.15 suggests that particulars were provided by email on 3.8.12 and 15.10.12. [3] The Second Defendant did file an Amended Defence on 9.5.12, i.e. prior to receipt of particulars and many of its pleaded paragraphs are subject to disclosure and particulars. The First Defendant, who is represented by different Solicitors, has not filed an Amended Defence. [4] It is common ground, that on 4.6.11, a business contract was entered into between Archer Gowland Pty Ltd as vendor and the Second Defendant as purchaser whereby the Vendor sold an accountancy business to the Purchaser, which contract settled on 7.7.11. Although the relevant pleading (like many) at paragraph 9 of the Statement of Claim is subject to an “unable to admit” response in the Second Defendant’s Amended Defence (paragraph 9), it seems to be admitted that the male Plaintiff did execute the business contract at paragraph 23(c) of the Amended Defence. [5] It is also common ground that the Plaintiffs held 7.138 % of the Ordinary Shares in the vendor prior to settlement. -- 2 of 6 -- 3 [6] The Plaintiffs case is not predicated on any alleged breach of that contract, but rather on the basis of some type of “pre-condition” in favour of the Plaintiffs, made up of documents that came into existence prior to execution of the business contract. Of particular importance to the Plaintiffs case seems to be a document referred to as “The 24th May Term Sheet” at 5(c) of the Statement of Claim. It is common ground that this document provided that: “(a) A company yet to be formed (“the proposed company”) was to pay $100,000.00 to Buth and his wife, Lyndal; (b) The proposed company was to transfer 12.5% of the share capital in the Defendant to the male Plaintiff; (c) The proposed company was to employ key employees including the male Plaintiff; (d) The male Plaintiff (as well as some other persons) were to be subject to certain restraints for a minimum two year period.” [7] In admitting these facts at para (7) of its Amended Defence, the Second Defendant: (i) Makes the aforementioned admissions upon the basis that the May Term Sheet was not provided as a document containing the proposed terms of purchase of the business of Archer Gowland by Ascendia but rather a document containing terms to be negotiated and further provided commentary and suggestions to elucidate a further understanding of the parties to continue negotiations. [8] The Statement of Claim refers to a large number of documents, some of which are admitted to exist, some not, and alleges that all these “agreements” were “interdependent” with each other and the business contract. Clause 22 appears to be the nub of the Plaintiff’s claim: “22. Further, the First Defendant represented to the male Plaintiff (“the Benefit Representations”) that if the male Plaintiff gave his agreement and consent to the Transaction Agreements so as to allow them to proceed: (a) The male Plaintiff would be offered employment with the Second Defendant; and (b) The Plaintiffs would be issued with 12.5% of the shareholding of the Second Defendant.” [9] The Second Defendant’s response is at paragraph 22 of its Amended Defence: “22. In relation to paragraph 22 of the Statement of Claim, the Second Defendant; (a) Denies the allegation of fact expressed therein; -- 3 of 6 -- 4 (b) Believes the allegation to be untrue for the reasons pleaded in the following subparagraph; and (c) Says that First Defendant did not at any time represent to the male plaintiff, that if he gave his agreement and to allow the transaction agreements to go through he would be offered employment and would be issued with a 12.5% holding of Ascendia. (d) Will require further and better particulars of the alleged representations.” [10] The claim is for $162,500 which was the paid up value of the 162,500 shares held by the Plaintiffs prior to settlement and for damages for loss of employment. Discussion [11] Both parties referred to the (12) non-exhaustive list of matters set out in the judgment of Atkinson J in Tyler v Custom Credit Corp. Ltd [2000] PC A 178 at [2], which have been applied frequently since in applications of this kind. As the principles come into play in relation to the exercise of discretion involved in both applications, it is convenient to deal with the contrary argument advanced by each party, in relation to the matters that arise here. Delay [12] Clearly proceedings were commenced quite soon after the events the subject of the proceedings. The only attempt to explain the delay comes from paragraph 9 of the Affidavit of the Plaintiff’s solicitor Mr McClymont filed 31 March 2015 (court Doc11): 9. In August 2014 the solicitor with the carriage of the matter left the employment of GPL, and the file was left with another practitioner with a busy ‘family law’ practice. There was a delay in obtaining the chronology requested by Counsel, and the matter has not progressed with any diligence on the part of GPL. [13] There is no explanation for the delay in prosecuting the matter prior to August 2014, but I can infer that it was in part due to dilatoriness on the part of the solicitors (not Mr McClymont). As Mr Ashton submits there is simply no evidence as to the Plaintiffs part in the delay. Mr Mc Clymont notes that his firm is conducting the litigation on a speculative basis; so I think I can fairly infer that the Plaintiffs have not acted to push the matter further, as well as the solicitors. Mr Somers for the Plaintiffs submits that the Defendants have delayed as well by not honouring their duty to disclose. It can be accepted that the overriding philosophy contained in r. 5 applies to all litigants, but here, in the absence of any counterclaim, the Plaintiff has the primary obligation to advance the proceedings expeditiously, which it has not. Prospects of success [14] As I have noted above, this was the primary focus of the Defendants’ submissions. Mr Somers complained that Mr Ashton’s argument amounted to an “ambush” in that, in effect, he was mounting a form of demurrer argument in relation to the -- 4 of 6 -- 5 Statement of Claim in circumstances in which at least the Second Defendant had felt able to plead to it, even in the absence of particulars. I did not understand the argument to be of that kind. Rather, Mr Ashton submits, by reference to what is a confusing and perplexing pleading, on his client’s application to strike out for want of prosecution, there is no evidence at all from the Plaintiffs, and, more importantly not one of the documents they rely upon has been placed before me by way of exhibit, for example, to an Affidavit of the male Plaintiff, which bears upon their prospects of success. Mr Somers relies only upon a statement in paragraph 8 of Mr Mc Clymont’s affidavit filed 31.3.15 to the effect that he “believes that the Plaintiff’s case has merit.” [15] I think this is an analogous situation (confined only to this discrete issue) to that confronting the unsuccessful Plaintiff in Hall v RH and CE McColl P/L [2007] QCA 182. There were other factors that came into play in the Court’s dismissal of an appeal against the primary judge’s striking out of the Plaintiff’s claim pursuant to r 280(2) UCPR, however the failure of the Plaintiff to provide any evidence as to his prospects of success was decisive. In my opinion, like that case, the Plaintiffs’ prospects of success here are entirely unknown. In his judgment (at para [20]) Jerrad JA (with whom McMurdo P and Holmes JA agreed) said: “Solely because of the complete absence of any affidavit evidence from the appellant as to the reasons for the delay or the prospects of success, I would dismiss the appeal…” [16] In that case, the delay was much greater, leading to a potentially important party not being joined during the limitation period, but his Honours’ remarks are apposite here on the discrete issue of prospects of success. On this issue, especially in light of Mr McClymont’s characterisation of his client’s case in his affidavit at para 8 of his affidavit, it is especially important for there to be some evidence on which I could make some assessment of prospects of success. This is particularly so when the test (at this early stage) is whether the Plaintiff has “an apparently worthwhile action”: IMB Group v ACCC [2007] 1 Qd R 148. Although involving the consideration of the renewal of a claim which had not been served, and not a consideration of “prospects of success” in the “Tyler List”, the statement that “an apparently worthwhile action is … a factor favouring the exercise of the Court’s discretion where the action can proceed without prejudice to the defendant”, is equally apposite here. Prejudice [17] I have referred to a number of documents referred to in the Statement of Claim. As I have noted, it is common ground that the business contract settled on 7.7.2011, and the pleading focusses on exchanges and documents pre-dating the formation of the contract on 4.6.2011 and/or the date of settlement. The Statement of Claim at paragraph (25), refers to an email dated 15.6.2011 from (solicitors acting in the commercial transaction) “to various other parties” (the Plaintiffs are not mentioned). In the email of 3.8.12 from the Plaintiffs Solicitors referred to earlier, another 6 emails are mentioned. It is alleged that the Defendants (one or other) were a party to these documents. The list of documents of the Plaintiffs annexed as TAM 4 exhibited to Mr McClymont’s affidavit filed 31.3.15 refers to more than 60 -- 5 of 6 -- 6 documents, mostly emails passing internally at the accountancy practice prior to its acquisition by the Second Defendant. [18] The affidavit of the solicitor for the Second Defendant refers to information received from the First Defendant who is also a director of the solicitors for the First Defendant. Relevantly the information provided is that: (a) at the time of acquisition of the business, one Scott Shellshear held 25% of the “voting shares” in Arthur Gowland Pty Ltd. (I note that this person is not said to have executed the business contract). (b) Negotiations regarding the acquisition of the business occurred chiefly between the First Defendant and David Barlow and Gowland of Archer Gowland. (c) The Second Defendant took possession of a business server at settlement. It does not include any emails relating to the negotiation and sale, or to the arrangements between the shareholders and directors of the company which owned the business, and the Defendants have no way of accessing such material. (d) Mr Shellshear died on 20.12.12. [19] Mr Ashton’s argument is that the delay has therefore prejudiced the rights of the Defendants to a fair trial. He does not explain how the death of Mr Shellshear contributes to that prejudice. Mr Somers submits that the loss of information from the server was a fact before his clients commenced their litigation. The difficulty with that argument, is of course the disclosure of many more documents than those pleaded at a very late stage. On its own, I do not think this issue is enough to refuse to give leave/or to strike out. [20] As to other less relevant issues, there is no evidence that the Plaintiffs are impecunious and in any event, the solicitors are acting speculatively so this does not assist the Plaintiffs. The fact that the limitation period has not expired is a relevant factor. In my view, the litigation has not advanced significantly, and is certainly not ready for trial. In this regard, the parties seem to accept that the suggestion in Mr McClymont’s affidavit filed by leave on the 15.5.15 that the Plaintiffs list of documents was served by post on 24.8.12 is not borne out by the files and records of the Defendants. This is not surprising as his affidavit filed with the application on 31.3.15 (paragraph 11) suggests the list of Documents (about which Mr Ashton complains) was not served until February 2015. In that same paragraph Mr McClymont himself acknowledges the need to “make necessary amendments to the … Statement of Claim.” It is hardly indicative of advanced litigation ready for trial as suggested by Mr Somers at the hearing. Conclusion [21] In the exercise of discretion and for the reasons set out above, I dismiss the Plaintiffs application filed 31.3.15. I order that the Plaintiff’s claim be dismissed for want of prosecution and I order the Plaintiffs pay the Defendants’ costs of and incidental to both applications and the action as agreed or on the standard basis. -- 6 of 6 --