Aqwell Pty Ltd v BJC Drilling Services Pty Ltd & Ors [2009] QCA 281

SUPREME COURT OF QUEENSLAND CITATION: Aqwell P/L v BJC Drilling Services P/L & Ors [2009] QCA 281 PARTIES: AQWELL PTY LTD ACN 007 726 981 (plaintiff/appellant) v BJC DRILLING SERVICES PTY LIMITED ACN 086 032 742 (first defendant/first respondent) COLIN BRUCE DONEGAN (second defendant/second respondent) JON HUGH BEVERLEY CROSSKILL (third defendant/third respondent) BRIAN DALE WEBER (fourth defendant/fourth respondent) FILE NO/S: Appeal No 2733 of 2009 SC No 7523 of 2002 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal Miscellaneous Application – Civil ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 18 September 2009 DELIVERED AT: Brisbane HEARING DATE: 1 September 2009 JUDGES: Muir and Chesterman JJA and White J Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDERS: 1. Appeal allowed. 2. The orders made in the proceedings on 13 February 2009 be set aside. 3. The respondents pay the appellant’s costs of the application at first instance and of the appeal. 4. The appellant apply within seven days for directions as to the future expeditious progress of the proceeding. CATCHWORDS: PROCEDURE – JUDGMENT AND ORDERS – EFFECT OF JUDGMENTS – IN GENERAL – where respondents sought an order dismissing appellant’s action pursuant to r 374 of the Uniform Civil Procedure Rules 1999 (Qld) for failure to comply with orders of a Supreme Court judge – where orders prescribed steps to be taken by the parties, and -- 1 of 9 -- 2 times within which those steps were to be taken – where orders imposed the sanction of dismissal of proceeding in the event of default by the appellant – where respondents alleged appellant defaulted by failing to pay one-half of additional costs of a jointly appointed expert accountant – where primary judge dismissed the appellant’s action – whether primary judged erred in finding failure to pay additional costs necessitated dismissal of the proceeding Uniform Civil Procedure Rules 1999 (Qld), r 374 Australian Competition and Consumer Commission (ACCC) v Collings Construction Co Pty Ltd (Unreported, Supreme Court of NSW, Bainton J, 2 July 1997), cited COUNSEL: D McWilliams for the appellant R I M Lilley SC, with D J Morgan, for the respondents SOLICITORS: Carne Reidy Herd as town agents for John Morrow for the appellant Crilly Lawyers for the respondents [1] MUIR JA: The appellant plaintiff appeals against orders of a judge of the trial division made on 13 February 2009 that: the appellant's action be dismissed; there be judgment for the respondents; the appellant pay the respondents' costs of the application on the indemnity basis; and that the respondents be released from all undertakings given to the Court in respect of the drills, the subject of the proceeding. [2] The application referred to in the order was made by the respondent defendants and filed on 5 February 2009. It sought, inter alia, an order that judgment be entered against the appellant in favour of the respondents pursuant to r 374 of the Uniform Civil Procedure Rules 1999 (Qld) ("the Rules") for failure to comply with orders of Daubney J made on 14 May 2008 and 30 October 2008 in that: "(a) The appellant failed to pay one-half of the costs of the jointly appointed expert accountant; (b) The director of the appellant failed to file a personal guarantee in a form acceptable to the Registrar within the time specified in the order of 30 October 2008." [3] In order to understand the basis of the claims in the respondents' application and render intelligible the contentions of the parties, it is necessary to set out the terms of the orders of 14 May 2008 ("the May Order") and 30 October 2008 ("the October Order"). The May Order provided that: "1. Each party agree a set of directions to the appointed accountant (BDO) and relevant materials to be provided by BDO on or before 21 May 2008 and, to the extent that there may be directions to which the parties do not agree, each party can put before BDO any further directions or materials that they believe may assist in this proceeding (all referred to as "the Directions"); -- 2 of 9 -- 3 2. The Directions, materials and the pleadings in this proceeding be supplied to BDO by the plaintiff on or before 4.00 pm on 22 May 2008 together with a request that BDO provide an estimate of its fees for acting as expert in this proceeding to both the plaintiff's solicitors and the defendants' solicitors within seven days of the request; 3. Each of the parties pay to BDO one-half of its estimated fees within seven (7) days of receiving that estimate and provide any further materials or answers to questions as requested by BDO from time to time within seven (7) days of such request; 4. BDO provide to the Court and to the solicitors for the plaintiff and the defendants its report within thirty (30) days of payment of its estimate of fees, provided that in the event that BDO indicates to the plaintiff's solicitors that the report will not be available, the plaintiff's solicitors have liberty to apply on three (3) days written notice to the defendants' solicitors to extend the time for the preparation of the expert's report; 5. The plaintiff file and serve within twenty-one (21) days of receipt of the expert's report affidavits containing all evidence in chief upon which it intends to rely at the trial of these proceedings; 6. The defendants file and serve affidavits containing all evidence in chief upon which they intend to rely in the trial of these proceedings within a further twenty-one (21) days of receipt of the affidavits of the plaintiff; 7. In the event of the plaintiff failing to take any step in this proceeding as required by this order then the proceeding shall stand dismissed and there shall be judgment for the defendants; 8. Each party have liberty to apply upon two (2) written days notice to the other; 9. The plaintiff pay the defendants' costs of and incidental to the application filed on 8 May 2008 and thrown away whether by non-compliance with the order of 12 October 2007 or the fabrication of an order of 11 March 2008 on an Indemnity basis." [4] The October Order was: "1. The defendants' application for security for costs be adjourned for a further 21 days to permit the lodgement with the Registrar of the Court of an irrevocable guarantee by Peter Davis Rogers, in a form acceptable to the Registrar, in favour of the Defendants and each of them whereby Mr Rogers guarantees every obligation which the plaintiff may have to pay any costs order made against the plaintiff in this proceeding. -- 3 of 9 -- 4 2. Upon lodgement of the said guarantee, the defendants' application for security for costs will stand dismissed. 3. The parties will have liberty to apply. …" The primary judge's reasons [5] The primary judge commenced his reasons by observing that "This is an application for orders, among other things, to strike out the [appellant's] claim and to give judgment for the [respondents]." His Honour observed that the trial of the action was set down for 10 days commencing on 2 March 2009. He noted in relation to paragraph 2 of the May Order that BDO provided an estimate of its fees which, apparently, were paid by the parties in accordance with the requirements of the May Order. He stated: "After that, on 21 August 2008, BDO informed … all parties - that due to the large quantity of documents involved that firm would need an extension of time in which to complete the report and would need time to consider revising the fees which had been estimated and paid. On 30 October, BDO sent a further invoice for additional estimated fees to the parties." [6] The primary judge found that the fees so estimated should have been paid by 6 November 2008 as "both estimates provided by BDO [came] within the order relating to payment." It was held that as the appellant did not pay half the amount of the second estimate within seven days the self-executing May Order took effect. [7] The primary judge concluded that, "The effect of failing to comply with the order is that a further order made on that day [paragraph 7 of the May Order] was activated." Reference was then made to the fact that the appellant did "not seek to be relieved of the effect of that order." [8] The primary judge, referred to the October Order and remarked that it did not "specifically require that" the guarantee referred to in the order be filed within a particular time. He noted that the guarantee had been provided the previous day and that it had been provided only because of the application made by the respondents. There was no finding that the appellant was in breach of that order. [9] The reasons then continue as follows: "The history of this matter shows that the plaintiff has been dragged along by the defendants who, not unreasonably, wish to see this matter concluded. They have had to bring a number of applications to have the matter progress. The plaintiff's woefully slow behaviour is referred to by Justice Daubney in his Reasons given on 30 October. The plaintiff, having agreed last year that this matter was ready to go to trial, now seeks to have it adjourned until later this year on the basis that the accountant's report would not be ready in time for the proposed trial. There is no reason to do that. By virtue of the self- executing order made on 14 May 2008, the plaintiff's proceeding was dismissed upon its failure to pay the estimated fee. If it is necessary, I make these formal orders: The plaintiff's action is dismissed. I give judgment for the defendants." -- 4 of 9 -- 5 The issues for determination on the appeal [10] There were a number of grounds of appeal but it is necessary to address only one. Did paragraph 3 of the May Order apply to BDO's second fee estimate - the parties' submissions [11] It is submitted on behalf of the appellant that when the May Order was made only one estimate of fees was in contemplation. That order required the appellant to request BDO to provide "an estimate" within seven days of the request and then required the appellant and the respondents to each pay half of "that estimate" within seven days of receiving it. It was accepted that an order is a statutory instrument and there is a rebuttable presumption that the singular includes the plural. The appellant submitted, however, that "that estimate" in paragraph 3 of the May Order was a deliberate reference to a single estimate and was not intended to include multiple estimates. In support of the construction urged by the appellant, it was pointed out that the time for payment was to run from the receipt of "that estimate" and that given the drastic consequences of non-compliance – dismissal of the appellant's claim without consideration of its merits – paragraph 3 of the May Order ought to be strictly construed.1 [12] Counsel for the respondents argued that the May Order must be construed so that the singular includes the plural, as no contrary intention is revealed by its terms. It is further submitted that, considered as a whole, the May Order would make no sense unless so construed. The proper construction of the May Order [13] BDO provided an estimate of fees of $44,000 on 27 May 2008. The appellant paid its half share of that estimate on 3 June 2008. On 2 July 2008, within 30 days of payment of BDO's estimated fees, Daubney J extended the time by which the report was to be provided, to 29 August 2008. BDO wrote to both parties on 21 August 2008 requesting a further extension of time in which to compile the report and foreshadowing the possibility of a revised fee. The respondents' solicitors wrote to the appellant's solicitors on 24 September 2008 seeking confirmation that the appellant would pay one-half of any additional estimated fee. The appellant's solicitors did not reply to that letter. [14] BDO wrote to the solicitors for the parties on 30 October 2008 advising that it would "require until 12 December" in order to complete its report. The letter to the solicitors for each party had enclosed with it an invoice for $16,500. In a letter of 15 December 2008 to the parties' respective solicitors, BDO advised that the report would be completed by 23 January 2009. The appellant paid its $16,500 on 11 February 2009 and the respondents made their payment on 5 February 2009. [15] In my view, the construction advanced on behalf of the appellant is to be preferred. The purpose of the May Order was twofold: to prescribe the steps to be taken by the parties, and the times by or within which those steps were to be taken with a view to readying the matter for trial and to impose the sanction of the dismissal of the proceeding in the event of default by the appellant. As counsel for the appellant argued, at the time the May Order was made, the primary judge and the parties had in contemplation that the appellant, on or before 4.00 pm on 22 May 2008, would supply specified materials to BDO with a request that BDO provide an estimate of 1 Compare Australian Competition and Consumer Commission (ACCC) v Collings Construction Co Pty Ltd (Unreported, Supreme Court of NSW, Bainton J, 2 July 1997). -- 5 of 9 -- 6 fees "within" seven days of the request. It was contemplated that within seven days of the receipt of BDO's fee estimate, each of the appellant and the respondents would pay to BDO one-half of the estimated fees. The report was to be provided within 30 days of such payment. [16] The timetable established by the May Order contemplated performance of a series of acts by specified dates or within prescribed times. In particular, BDO was to provide its report within 30 days of payment of its estimate of fees. If the report was not available within the prescribed time, the appellant's solicitors were given liberty to apply for an extension of time for the preparation of the report. The May Order did not contemplate that an estimate of fees would be given by BDO, payment of the estimated fees would be made by the parties but that, without any further court order adjusting the timetable, a further estimate of fees could be provided by BDO which the parties would be required to pay within seven days. [17] If the primary judge's construction of the May Order is correct and "that estimate" in paragraph 3 includes reference to the initial and any subsequent estimate of fees provided by BDO, it would follow that it is also to be implied that the BDO report is to be provided within 30 days of the giving by BDO of the last of its estimates. But such a conclusion would be quite contrary to the timetable established by the Order. The Order did not contemplate that the timetable could be reset by any conduct on the part of BDO. [18] The appellant's construction is supported by the language of the Order. Paragraph 2 refers to "a request that BDO provide an estimate of its fees". Paragraph 3 refers to receipt of "that estimate" i.e., a particular estimate. Paragraph 4 refers to payment of "its estimate of fees". That is a reference to the estimate referred to in paragraphs 2 and 3. Paragraph 3 contemplates that BDO may make more than one request for materials or information and requires the parties to "provide any further materials or answers to questions as requested by BDO from time to time within seven (7) days." There is no reference to the giving of fee estimates from time to time. [19] The language of the Order therefore does not readily accommodate the primary judge's construction. Orders of the nature of that under consideration are not normally drafted, as is a commercial contract, with a view to accommodating any contingency which the parties can reasonably envisage. In the drafting of court orders, clarity, simplicity and freedom from ambiguity are predominant considerations. That there may well be variations of the Order required in order to accommodate unexpected delays or contingencies is acknowledged by the "liberty to apply" provision. And, having regard to the consequences of non-compliance, the terms of the Order should not be construed liberally. The respondents' alternative basis for supporting the judgment under appeal [20] Counsel for the respondents argued that even if there had been no failure to comply with the terms of either order, and no breach of the October Order was asserted on appeal, the primary judge, appropriately, had struck out the proceeding for want of prosecution and that the appeal should be dismissed. [21] As the earlier discussion of, and quotation from, the reasons demonstrates, although there was passing reference by the primary judge to the appellant's failure to prosecute the proceeding with proper diligence, the primary judge's decision was -- 6 of 9 -- 7 not based on this conduct. Rather, the decision was based on his finding that the proceeding had been dismissed by operation of the May Order. That this finding was erroneous appears from the foregoing reasons. The primary judge was unlikely to have based his decision on the failure by the appellant to duly prosecute the proceeding for the reason that the application was for judgment be to entered against the appellant "for failure to comply with the" May and October Orders. [22] In written and oral submissions before the primary judge, counsel for the respondents made something, in a general way, of the appellant's failure to prosecute the proceeding in accordance with the Rules. Reference was made to "rules 5(3) and (4) which authorise the Court to apply appropriate sanctions on a party that breaches the implied undertaking to proceed in an expeditious way." However, the application was not amended and the thrust of the argument remained that the proceeding should be dismissed for non-compliance with the Orders. Certainly, there was no reason for the solicitor who represented the appellant before the primary judge to understand that he needed to prepare for or address an application to strike out for want of prosecution. [23] But even if there had been an application to dismiss the proceeding for want of prosecution, its success was not inevitable. [24] It is true that the appellant had not paid its half share of the further account rendered by BDO until 11 February 2009 but the respondents only paid their half share on 5 February 2009, the day they filed their application. The evidence does not disclose that any delay in the provision of the BDO report was any more the fault of the appellant than that of the respondents. Also, the respondents were aware by the end of August 2008 that the timetable set by the May Order could not be followed. Yet, nothing was done by the respondents about resetting the timetable and their application was brought just before the trial was due to commence. By the time of the hearing, the appellant had paid his share of the additional fees requested by BDO and had filed the guarantee referred to in the October Order. Faced with an application to dismiss for want of prosecution, the appellant may have filed an affidavit explaining its recent dilatory conduct and swearing to its readiness and willingness to adhere to the Rules in the future. In making these observations, I am not seeking to criticise the respondents' conduct. The respondents were in a difficult position. Believing that any further costs incurred by them would be likely to be irrecoverable, they wished to avoid incurring unnecessary expense. Conclusion [25] The material discloses that the appellant has been responsible for gross delays. The proceeding has been lurching along for years with lamentable consequences for both sides. The appellant's sole director swore that the appellant's legal expenses in the proceeding, from its commencement in about 2002 to 1 July 2008, are in excess of $600,000. Plainly, the proceeding must be taken in hand and promptly brought to a conclusion. [26] For the above reasons, the Orders made by the primary judge should be set aside. The appellant should be directed to make application within the next seven days to a judge in the applications list with a view to the making of directions to ensure that the proceeding, or part of it, is tried as soon as is practicable. I use the words "or part of it" advisedly, as the most appropriate way of ensuring an earlier hearing and -- 7 of 9 -- 8 avoiding substantial expense which may prove unnecessary may be for liability to be tried in advance of quantum. [27] I would order that: the appeal be allowed; the orders made in the proceeding on 13 February 2009 be set aside and that the respondents pay the appellant's costs of the application at first instance and of the appeal. [28] CHESTERMAN JA: I agree that the appeal must be allowed for the reasons given by Muir JA. The only and particular ground on which the respondents launched their attack and sought both judgment and the dismissal of the appellant’s proceeding was not made out. The result is that the appellant has had another, perhaps undeserved, reprieve. [29] Although the material on appeal was not definitive it appeared that the appellant’s former solicitors had done nothing to prepare the action for trial on the allocated dates in March last. Were that the case when the action was called on for hearing judgment must inevitably have been given against the appellant. The respondent however sprung its trap prematurely, the appellant has escaped and is free to fight again. I do not wish to be taken as expressing any criticism of the respondent. It was faced with an unresponsive and impecunious opponent. It wished to bring things to a head cheaply, but unhappily its economy now seems to have been false. [30] I agree with Muir JA that the parties should give urgent and earnest consideration to having a trial first on the issue of liability and subsequently, if necessary, on quantum. Such a course would seem to offer several advantages: economy, simplification, and an early means of testing whether the appellant genuinely intends to take the matter to trial. I also agree that the parties should go at once to an applications judge for directions. The appellant’s opportunity to prosecute its action should be closely controlled. [31] Apart from the provision of the accountant's report which was delayed the action should have been ready for trial last March. Three weeks were thought to be sufficient from the receipt of the report for the preparation and filing of affidavits to serve as evidence-in-chief. It appears, though it is not certain, the affidavits had not been prepared. There is no obvious reason why their preparation should await the delivery of the accountant's report. The statements deal, I presume, with questions of liability, not quantum. They should be prepared immediately. [32] The accountant’s report itself appears to have become contentious. Despite the passing of 15 months and the expenditure of $44,000 the report is not ready and will not be until the parties pay at least another $33,000 and the accountant spends a month or six weeks in further examination of the records. More worryingly the parties seem unsure what function the accountant’s report, which was jointly commissioned, is to play at the trial. One would have thought that it should determine authoritatively the quantum of the appellant’s loss as though it were the report of a Referee. Neither side appear to give whole hearted support to that proposition which gives rise to the possibility that the joint report will be but the first of many. The resolution of quantum appears to offer scope for further confusion, delay and expense. Firm directions are necessary to prevent that occurrence. [33] I agree with the orders proposed by Muir JA. -- 8 of 9 -- 9 [34] WHITE J: I agree that the appeal should be allowed for the reasons given by Muir JA. The appellant’s case has undergone many changes and been the subject of numerous applications to the Court including the appointment of receivers and managers to the joint venture, the subject of the litigation, for a year. Thus the assertion that in excess of half a million dollars has been expended in costs by the appellant in pursuing the respondents is believable. [35] The claim as presently constituted, after extensive amendments allowed by Helman J in 2007,2 is for damages for breach of a number of agreements and for breach of fiduciary obligations by the first respondent. The appellant claims against the other respondents who are, or were, the directors of the first respondent, damages or compensation for being accessories to the first respondent’s breaches of its fiduciary obligations. The agreements concerned a number of mining drills, their rehabilitation and use. The appellant seeks to have a term implied into one of the agreements which is resisted. There are extensive areas of disagreement between the parties about the performance or lack thereof of the various agreements and the reasons therefore. [36] Unless the appellant’s claims are established there is no purpose in embarking on an assessment of the damages. Furthermore, the saga of the joint accounting report, which, despite the retained accountants having received $44,000 in June 2008 and a further $33,000 in February this year for its preparation, has not in any form, however incomplete or provisional, been provided to the parties, does not engender confidence about its timely completion. In order to avoid any more expense or delay on that front I agree with Muir JA and Chesterman JA that an application ought to be made to the Trial Division for directions to determine issues of liability between the parties in advance of quantum which may prove unnecessary. [37] I agree with the orders proposed by Muir JA. 2 Aqwell Pty Ltd v BJC Drilling Services Pty Ltd [2007] QSC 140. -- 9 of 9 --