Black & Anor v Greenwich Financial Services Pty Ltd & Ors [2006] QDC 55

DISTRICT COURT OF QUEENSLAND CITATION: Black and Black v Greenwich Financial Services Pty Ltd and Ors [2006] QDC 055 PARTIES: CHRISTOPHER KEVIN BLACK and MICHELLE FAY BLACK Plaintiffs v GREENWICH FINANCIAL SERVICES PTY LTD First Defendant AND MARY BELL Second Defendant AND RICHARD EBBOTT AND CO Third Defendant AND STEWART GRANT Fourth Defendant AND RICHARD EBBOTT Fifth Defendant AND BETHANIA GARDENS PTY LTD Sixth Defendant FILE NO/S: BD717/02 DIVISION: PROCEEDING: Application ORIGINATING COURT: District Court, Brisbane DELIVERED ON: 10 March 2006 DELIVERED AT: Brisbane HEARING DATE: 9 February 2006 -- 1 of 6 -- 2 JUDGE: McGill DCJ ORDER: Application dismissed CATCHWORDS: PRACTICE – Renewal of claim – whether another good reason to renew claim – desire to await outcome of other litigation – whether prejudice – renewal set aside. UCPR r 5(3), r 24(2), r 667(2)(a) and (b). COUNSEL: R. G. Bain QC for the plaintiffs K. A. Barlow for the third and fifth defendants SOLICITORS: Carter Capner for the plaintiffs Richard Ebbott and Co for the third and fifth defendants [1] This is an application by the third and fifth defendants for an order setting aside the decisions of the registrar on each of 5 February 2003, 4 February 2004 and 9 February 2005 to renew the claim in this matter, in each case for a period of 12 months. The claim was filed on 25 February 2005, and was served on the fifth defendant1 , who is also the person who carries on the business named as the third defendant, on 17 November 2005.2 A conditional notice of intention to defend was filed on behalf of the defendant on 14 December 2005, and the application filed on 23 December 2005. [2] This application was heard in conjunction with similar applications by the defendant in Woollard v Looker Estates Pty Ltd and Ors, D4519/02, in which he is also a defendant, and Hansell v Mariner Bay Investments Pty Ltd and Ors, D610/03, involving other parties. There were some similarities between the circumstances in all three actions, and the same solicitor had the carriage of all three actions on behalf of the respective plaintiffs.3 She was cross-examined by counsel for the defendant, and by senior counsel for the applicant fourth defendant in Hansell. I have prepared separately full reasons in Hansell; I will not in these reasons repeat any discussion from that judgment which is also relevant here, and will concentrate on the differences between that case and the present. Background [3] The current pleading, the amended statement of claim filed 5 October 2005, alleges that on 9 January 2000 the plaintiffs signed a contract to purchase a townhouse at Lot 3 Bethania Gardens, apparently from the sixth defendant. It was alleged that the plaintiffs engaged the third defendant and/or the fifth defendant as their solicitors in relation to the contract, and relevantly that there were various breaches of the retainer by the third and/or fifth defendants, including allegations of a failure to correct the mistaken belief it is alleged the plaintiffs had, that someone lending them money to pay the purchase price would obtain a valuation of the property and only lend if the valuation showed that the market value was no less than the purchase price; a failure to warn of the risks inherent in rental guarantees; a failure to advise that the plaintiffs should obtain some security for their rental guarantee; a failure to 1 It is convenient to refer to the fifth defendant as “the defendant”. 2 Affidavit of Ebbott filed 23 December 2005 para 2; affidavit of Teitzel filed 7 February 2006 para 8. 3 It is convenient to refer to her as “the solicitor”. -- 2 of 6 -- 3 disclose that a significant portion of the purchase price was paid by way of commission or marketing expense, that a significant portion of the defendant’s business was comprised of conveyancing work referred by the Epic Group and the first defendant to act on behalf of persons such as the plaintiff, and the relationship between Epic, the company marketing the property and the first defendant. It was alleged that as a result of those breaches the plaintiffs entered into the contract, a brokerage agreement and an interest only mortgage to cover the purchase price and all expenses, and that as a result the plaintiffs had suffered loss and damage in an amount of over $44,000. It was alleged that the plaintiffs sold the property in June 2002 for about $25,000 less than they had paid for it. The losses are claimed from the defendant as damages for negligence, or damages for breach of contract. The renewals [4] On 4 February 2003 a deputy registrar renewed the claim for 12 months from 25 February 2005 pursuant to rule 24. This was done after an affidavit by the solicitor was filed on 4 February 2003. That affidavit was quite similar to the affidavit filed on 2 February 2004 in Hansell, with only relatively minor differences. The statements made about D3966/00 were the same, and the statements made about D4108/01 were similar, though instead of stating that the matter was at an advanced stage of readiness for trial it was simply said that defences had been received from a number of the defendants. No reference was made to D301/02. The date for filing the claim and statement of claim was wrong, and reference was made to there being in excess of only 200 claims awaiting the outcome of the “test cases”. The expectation was said to be that the test cases would be finalised some time towards the early part of 2003, something that in February 2003 must have been decidedly optimistic. No reference was made to questions of prejudice or that evidence in the form of the solicitor’s file had been preserved by the plaintiffs. [5] Under cross-examination the solicitor conceded that there was no correlation of parties between the test cases and this matter: page 36. Various criticisms were made of this affidavit, along the lines of the similar affidavit in Hansell, but ultimately, although there is much in this affidavit which is unsatisfactory, I am not persuaded that it was fraudulent by being deliberately false or in displaying a reckless disregard for the truth. [6] On 3 February 2004 a deputy registrar renewed the claim for 12 months from 25 February 2004. That order was made following the filing the previous day of an affidavit by the solicitor. As in Hansell, this succeeded an affidavit filed 14 January 2004 except that again the passage about the test cases being finalised towards the latter part of 2003 was changed to their being finalised during 2004. This affidavit is strikingly similar to the affidavit filed in Hansell on 2 February 2004. It is subject to the same criticisms, but again I am not persuaded that it was fraudulent in the relevant sense. [7] On 9 February 2005 a deputy registrar renewed the claim for 12 months from 25 February 2005. That order was made following the filing that day of a further affidavit by the solicitor. That affidavit was strikingly similar to the affidavit filed in Hansell on 27 January 2005, the main difference being that the date on which the claim was originally filed was now correct, and that it referred to both of the previous renewals whereas in Hansell there had been only one previous renewal. -- 3 of 6 -- 4 The same criticisms can be made of that affidavit, but again I am not persuaded that the affidavit was fraudulent. The solicitor maintained that she had the expectation in relation to the test cases at the relevant time and it has not been shown that that was false. So far as the application relies on rule 667(2)(b), it is not made out. Nevertheless, the order was made in the absence of the applicant defendant, so rule 667(2)(a) applies. Prejudice to the defendant [8] The defendant said4 that the work undertaken on this file, which was opened on 18 January 2000, was actually done by two particular employed solicitors, one of whom he had not been able to trace. He retains a copy of that conveyancing file. In June 2002 he received a facsimile from the plaintiff’s solicitors informing him that they intended to bring claims against him on behalf of a number of former clients, which included the plaintiffs in the present action. So far as the present plaintiffs are concerned, the statement was not correct, because the proceedings had already been commenced5 , but the defendant was not told that, nor was there any other notice given to him of the fact that these proceedings had been commenced prior to service on him of the claim and statement of claim, in November 2005. He also said that he had not been served with any other proceedings on behalf of any other former clients who had purchased property in the Bethania Gardens development, nor had he been informed that any former clients had commenced such proceedings against him. He assumed that none of those purchasers, who included the plaintiffs, had decided to commence proceedings against him. [9] Inquiries by the solicitor indicated that apparently the missing witness is now in Germany working for the Australian Embassy.6 The other solicitor, who opened the file, is available and has some recollection of the kind of work that was being done.7 Indeed, she said that she was given by the defendant a script to follow in what she told clients buying lots in Bethania Gardens. The defendant denied that he gave the employees written scripts.8 The solicitor said that she was advised by another firm that the defendant was notified in around July 2002 of a number of claims which that firm had, but none of these related to a property in Bethania Gardens.9 [10] In this case the relevant events occurred in January 2000. That is some time ago, but the delay is not as great as in Hansell. The person who saw the plaintiffs is apparently available and has some recollection of the matter, though it may be that her evidence would not assist the defendant; I doubt if that is a relevant consideration. The solicitor’s file is available, and the solicitor was evidently aware in a general way of this work being done. He has a copy of the firm’s file, and there was some notice, although it said incorrectly that a claim was to be made, rather than that one had been made. Nevertheless, it was the sort of notice which ought to have caused him to give some consideration to preserving the documentation relevant to this matter, and, if he wished, to investigate it. To some extent the considerations referred to in Hansell apply in this matter as well, but because of this 4 Affidavit of Ebbott filed 23 December 2005. 5 The solicitor said she did not write that letter (p.35) but admitted that no notice was given of the claim having been filed, or of the “test cases”. 6 Affidavit of Teitzel filed 7 February 2006, paras 76, 77, 84. 7 Ibid paras 80-83. 8 Affidavit of Ebbott sworn 8 February 2006 para 3(a). 9 Affidavit of Teitzel sworn 8 February 2006 paras 9, 10 and Exhibit JT3. -- 4 of 6 -- 5 notice and because the period since the relevant events occurred is not as long, they do not have the same significance in this matter. Overall, there is no specific prejudice, there is some prospect of prejudice to the defendant in the conduct of the proceeding as a result of the delay, but it is not as great as in Hansell. Analysis [11] The considerations referred to in Hansell in relation to the deliberate failure to serve the claim apply equally here; if anything, this is a worse case because the failure extended for a longer period. There was also no notice given to the defendant of the fact that the proceeding had been commenced. Although there was notice of an intention to commence proceedings, that is not the same as notice that one has commenced; the significance of notice of intention to commence is that it may have the effect of mitigating the prejudice caused by the delay, in circumstances where the limitation period has not expired prior to the service of the claim. In the present case the absence of notice also tells against the renewal of the claim. I am prepared to proceed on the basis that the plaintiffs have reasonable prospects of success in an action against the defendant. In this matter a particular of breach is pleaded which would seem to make the reasoning in Littler v Price [2005] 1 Qd R 275 applicable, though I have no evidence before me to support the allegations in that respect in the pleading. Some of the other aspects of the claim seem at first sight to be more speculative, and the large number of particulars of negligence pleaded does not suggest any great confidence in any of them. Nevertheless, on the face of it, so far as I can tell at the present time, the plaintiffs probably have a good cause of action for damages against the defendant. [12] It was also submitted that the defendant had been prejudiced because his prospects of obtaining contribution from other parties whose negligence may have contributed to the plaintiffs’ loss has been diminished by the passage of time. This argument was advanced particularly by counsel for the applicant in Hansell, but those submissions were adopted by counsel for the defendant. I am not aware of any authority directly on point, but in my opinion it must in principle be correct that there can be prejudice as a result of the loss of the opportunity to obtain indemnity or contribution from someone else, or the fact that obtaining such indemnity or contribution has been made more difficult because of the delay. The difficulty in the present case, however, is that this is largely speculative. There is no evidence directly dealing with it, and in addition it may be doubted whether rights to obtain contribution from other tortfeasors were ever worth very much anyway. In all the circumstances, I am not persuaded that this is a matter which should be given any weight in this application. [13] The complicating feature in this matter is the timing of the application and the expiration of the limitation period. In my opinion, looking first at the last renewal of the claim, the claim then ought not to have been renewed. The predominant consideration at that point was that there had been persistent inappropriate withholding of service, and there was the further consideration that at that time refusal of renewal would not have had the effect of stifling the claim. Had renewal then been refused, it may be that the plaintiffs would have served the claim promptly before it became stale. (Had that occurred, the same application might have been made by the defendant, and the same reasoning might have applied; logically this leads to the conclusion that none of the renewals should have been allowed.) -- 5 of 6 -- 6 [14] Alternatively, the limitation period not having expired, the plaintiffs could have simply discontinued and issued fresh proceedings. Had they taken the latter course prior to the expiration of the limitation period, they would have had another 12 months within which to serve the claim. In these circumstances, a claim in similar terms to the one served might well have been served on the defendant anyway in late 2005. In other words, if the registrar had properly refused to renew the claim, the plaintiffs had then the opportunity to take an alternative course if they wished to pursue a cause of action against the defendant. [15] That alternative course is apparently not now open to them. Presumably the limitation period expired six years after the time when the plaintiffs signed the contract, in January 2000. If I now set aside any of the decisions to renew the claim, and set aside the service as irregular, it will not be open to the plaintiffs to issue a fresh proceeding. Had the limitation period not yet expired, or had it expired prior to the time of the last renewal, this issue would not arise. Had the claim been served sufficiently promptly to enable the application to be heard and determined prior to the expiration of the limitation period, it also would not matter; in those circumstances, the plaintiff would not necessarily be deprived of a cause of action by setting aside the service and dismissing the current action, and so the balance would clearly be in favour of taking that course. The difficulty is that the limitation period expired before the application came to be heard. [16] There is I think an argument that the plaintiffs should not be put in a worse position by an order I make now than they would have been in if the deputy registrar had correctly refused that application for renewal in February last year (or the earlier ones). To some extent, of course, it can still be said that any prejudice of this kind is self-inflicted, because the order which was made was the order sought by the plaintiffs, and it was then their choice to delay service of the claim until a couple of months before the limitation period expired. On the other hand, the defendant did not file the application until 23 December, over a month after being served, and when it was too late to have it heard in the ordinary way last year, and then it was returnable on 6 February, after the expiration of the limitation period. I am not particularly blaming the defendant for this; I expect it would have been difficult to do everything that needed to be done in order to enable the application to be made and heard prior to the expiration of the limitation period. But it does mean that this particular difficulty arises. [17] On balance I think that the fact that the claim was served, although far later than it ought to have been, still within the limitation period, is a relevant consideration, as is the fact that the limitation period has now expired so that if I make an order which has the effect of setting aside that service now, the plaintiffs will be worse off than would have been the case if the orders for renewal had not been made. Although the plaintiffs’ conduct in the litigation has been improper, it would have been possible for litigation to have been conducted properly and the defendant not to have been served any earlier. In view of this, and in view of the fact that no significant prejudice to the defendant is shown as a result of the delay, on balance I think it would not be appropriate now for me to make an order different from the orders of deputy registrars renewing the claim, or to set aside service of the claim. The application must therefore be dismissed. I shall hear submissions as to what other orders are appropriate. -- 6 of 6 --