Cummings & Anor v Davis & Anor [2000] QSC 158

SUPREME COURT OF QUEENSLAND CITATION: Allan James Cummings & Anor v Peter J Davis & Anor [2000] QSC 158 PARTIES: Allan James CUMMINGS AND Lynn Mari CUMMINGS (Plaintiffs/Respondent) v Peter J DAVIS AND Brian T EGAN (Defendants/Applicant) FILE NO: No. S2099 of 1994 DELIVERED ON: 7 June 2000 DELIVERED AT: Brisbane HEARING DATE: 23 May 2000 JUDGE: Chesterman J ORDER: 1. That the action be dismissed 2. That the defendants’ costs of the action and of the application be assessed on the standard basis and paid by the plaintiffs. CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – OTHER MATTERS BEFORE TRIAL – application to dismiss for want of prosecution – whether the interests of justice require that the proceedings be dismissed – factors relevant to court’s discretion – delay and lack of explanation for delay by plaintiff – affect on prospects for fair trial – attitude of plaintiffs towards accelerating action. COUNSEL: D McLure solicitor for the applicants P Sayer solicitor for the respondents SOLICITORS: Minter Ellison for the applicants Thomson Redhead as town agents for Saunders Downing for the respondents Uniform Civil Procedure Rules rr 280, 138, 214 Birkett v James [1978] AC 297 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Cooper v Hopgood & Ganim [1999] 2 Qd R 113 -- 1 of 8 -- 2 Shire of Myrtleford v Bowater Scott Ltd (1985) 62 LGRA 314 Stollznow v Calvert (1980) 2 NSWLR 749 Tricon Industries Pty Ltd v Able Lemon & Company Pty Ltd (No 2) [1998] 2 Qd R 55 [1] CHESTERMAN J: The defendants apply to dismiss the plaintiffs’ action for want of prosecution. The application depends upon the inherent jurisdiction of the court. In somewhat unusual circumstances for an application of this type the plaintiffs have not failed to take a step presently required of them nor have they failed to comply with an order of the court. UCPR 280 does not therefore provide a basis for the application. [2] The plaintiffs’ claim is essentially a simple one. They and companies owned and controlled by them contracted to sell two parcels of improved land to a company, Alimyawl Pty Ltd, in about November 1988. The defendants were at the time solicitors who carried on practice in partnership. The first named defendant acted for the plaintiffs in connection with the sales. Settlement occurred on 23 December 1988. Between execution of the two contracts of sale and their settlement it became apparent that Alimyawl Pty Ltd could not pay the whole of the purchase price under either contract. The contracts were varied to allow the purchaser to pay part only of the price on settlement. The balance was due about two months later, on 28 February 1989. In the event that Alimyawl Pty Ltd could not pay the balance on the due date the variation agreement provided, unusually, that the amount due was to be reduced by $54,000.00. The reduced sum was to be paid over three years and was to attract interest. The case against the defendants is that they failed to advise the plaintiffs not to settle the contracts on 23 December 1988 unless the purchaser had first executed second mortgages in registrable form to secure payment of the balance of the price due under each contract; or that they failed to prepare mortgages for the purchaser’s execution. The instructions given by the plaintiffs to the defendants, and the advices provided by the defendants, are all alleged to have been oral and to have occurred in conversations between Mr Cummings and Mr Davis. [3] The balance of the purchase price was not secured. The purchaser defaulted and went into liquidation. The plaintiffs recovered nothing. [4] The plaintiffs’ cause of action was probably complete on 23 December 1988 when they conveyed their properties to Alimyawl Pty Ltd and became unsecured creditors for the unpaid portion of the price. The action was commenced on 22 December 1994, a day before the limitation period expired. Another year went by before the writ was served on 20 December 1995. An entry of appearance was filed on 3 January 1996. The statement of claim was therefore due early in February of that year. It was not delivered for eighteen months, on 28 July 1997. It was defective, lacking in particularity and failing adequately to disclose a cause of action. A -- 2 of 8 -- 3 request for particulars was made on 15 August 1997. They were never supplied though the defendants’ solicitors wrote five times between 29 September 1997 and 16 April 1998 requesting them. On 3 December 1998 the defendants applied to the court for an order that the action be dismissed for want of prosecution. This prompted the plaintiffs to deliver draft particulars of the statements of claim. The plaintiffs appeared to have accepted that even with the particulars their pleading was irremediably bad and delivered an amended statement of claim on 25 February 1999. On 9 March 1999 the parties agreed to compromise the application to dismiss the action on terms that orders be made striking out the first statement of claim and giving leave to deliver the amended statement of claim which had already been delivered. [5] Mr Davis ceased practice as a solicitor in June 1990 when he sold his practice to A.P. Hodgson & Associates. The plaintiffs did not wish their affairs to be conducted by Mr Hodgson and arranged to collect their files, which recorded the transactions the subject of the statement of claim, from Mr Davis. To that time the plaintiffs had not expressed any dissatisfaction to Mr Davis about the manner in which he had performed his retainer with respect to those transactions. Mr Davis had no reason to believe any contention would arise from those files and he did not make a copy of them before handing them over. It is his recollection that the files will contain records of advice given to the male plaintiff to the effect that the variation entailed the risk of financial loss and that the plaintiffs should not proceed. Whether Mr Davis’ recollection is correct or not the contents of the file will be of great importance to both parties in the conduct of the litigation. [6] On 15 August 1997 the defendants’solicitors wrote to the plaintiffs’solicitors “ . . . as you will appreciate, our clients will need access to the transaction file in order to give us detailed instructions . . . we would ask that it be made available to us now (it would obviously be discoverable) so as to assist our preparation of a meaningful pleading by way of defence. We would have thought that, in the end, this will be in all parties’ interests.” There was no reply. On 16 April 1988 when the defendants were still pressing for particulars of the first statement of claim their solicitors repeated their request for access to the transaction file. This letter, too, was ignored. [7] In an affidavit filed in opposition to the strike out application Mr Cummings explained that the delays in prosecuting the action had been occasioned by a lack of money which, he asserted, was a consequence of the losses he had suffered when Alimyawl Pty Ltd defaulted. His fortunes had improved. He told the court, and the defendants “With recent improvements in business opportunities, we expect to have the funds with which to continue to prosecute this action without any further unreasonable delay”. Neither Mr Cummings nor his solicitors have adduced any evidence to the effect that his optimism was unfounded. -- 3 of 8 -- 4 [8] On 26 March 1999, shortly after the consent order had been made and Mr Cummings had expressed confidence the action could progress satisfactorily, the defendants’solicitors wrote to the plaintiffs’solicitors “In relation to our defence to the amended statement of claim, it is clear that we will need access to Mr Davis’ files (which you or your client has) before our defence can be delivered in a final form. In the circumstances, we would be grateful if you could allow us to have access to these files before requiring us to deliver a defence. The alternative is that we deliver as detailed a defence as possible now, and then deliver an amended defence after discovery. If your client requires us to take this latter course, we will be seeking the costs of the application to deliver the amended statements of claim”. The reference to the “amended statement of claim” at the end of the passage as quoted was clearly a mistake. The writer must have intended to refer to the amended defence. The consent order made earlier on 9 March 1999 had already provided for the defendants’ costs incurred by reason of the delivery of an amended statement of claim to be paid by the plaintiffs. In any event the plaintiffs’ solicitors did not seek clarification of what was meant. Nor did Mr Downing in his affidavit of 19 May 2000 claim that he did not understand what was being said in the letter. [9] The letter of 26 March 1999 was ignored. There was no reply. The plaintiffs’ solicitors did not make the files available and did not say why they would not. They did not inform the defendants’ solicitors that they should defend and make what amendments might be thought necessary after disclosure. Mr Downing’s affidavit does not explain this refusal to respond to a suggestion to advance the action. It is not said that the plaintiffs have again run out of money. Even now, with the defendants pressing to have the action dismissed, the plaintiffs have not made the files available or even said they would. [10] The application is unusual because it is the defendants who have not complied with the rules. A defence was due twenty eight days after the amended statement of claim had been delivered. Though out of time the defendants could still have delivered a defence. See Rule 138(1). No defence has been delivered. The obligation to make disclosure does not arise until pleadings have closed. See Rule 214(2)(c). The plaintiffs argue that their silence is to be taken as an intimation that they “required” the defendants to deliver the best defence they could and the action cannot proceed until the defendants take that step. This is not, I think, a true view of the proceedings. The suggestion now made three times, that the plaintiffs should disclose the contents of the defendants’ transaction files to their solicitors to enable the early and complete preparation of a defence, was sensible. If adopted it would have led to the more efficient conduct of the action. The real point behind the application is that the plaintiffs did not take up the offer, did not advance any reason why they did not, and did not do anything to move the action along on any different basis. [11] The principles on which a court should act when asked to dismiss an action for want of prosecution are now to be found in the judgement of the Court of Appeal in -- 4 of 8 -- 5 Cooper v Hopgood & Ganim [1999] 2 Qd R 113 confirming the doubts expressed in Tricon Industries Pty Ltd v Able Lemon & Company Pty Ltd (No 2) [1998] 2 Qd R 551 that the approach favoured by the House of Lords in Birkett v James [1978] AC 297 provided a satisfactory or adequate response to excessive delays in litigation. The approach now commanded by the Court of Appeal is to decide, as a matter of discretion, whether the interests of justice require that a proceeding be dismissed for want of prosecution. Decided cases have identified factors that will commonly be relevant to the exercise of the discretion. The decision is to be made after a process in which the factors relevant to the particular case have been identified and, where they point in different directions, balanced. “Everything must depend upon the circumstances disclosed in each particular case. It is, of course, proper to consider whether any explanation or excuse has been offered for the delay, and whether any explanation or excuse . . . is credible and satisfactory. It is proper to consider whether or not there is evidence of particular prejudice . . . by reason of the delay. When more relevant factors have been taken into account, a decision is then to be reached as to the manner in which the discretionary power should be exercised.” Per Moffitt P in Stollznow v Calvert (1980) 2 NSWLR 749 at 751 quoted with approval by Pincus JA in Cooper at 118. [12] A feature of the recent cases is the readiness with which courts are prepared to infer that substantial delays in bringing and/or prosecuting an action will give rise to prejudice and will substantially reduce the chances of a fair trial. In Tricon Industries Pincus JA quoted with approval remarks made by the Supreme Court of Victoria in Shire of Myrtleford v Bowater Scott Ltd (1985) 62 LGRA 314 at 317: “If such a delay (fifteen years) occurs, it takes little to satisfy a court that there is a real risk, or as it is sometimes called, a substantial risk, that at the eventual trial of issues, justice could not be done.” (at 556.) In Cooper Pincus JA said (119): “Even if default has not been “intentional and contumelious”, it may yet be so substantial and persistent that it is a potent consideration in favour of striking an action out. Where it cannot be established that the plaintiff’s delay in pursing the action (as opposed to the total period which has elapsed since the events in issue occurred) has led to a substantial risk of the kind mentioned in Birkett v James, it must surely sometimes be the case that the delay is of such a character as, with other circumstances, to provide a good ground for bringing the action to an end.” -- 5 of 8 -- 6 In Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 McHugh J said at 551, 552: ““Where there is delay the whole quality of justice deteriorates”. Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. . . . “what has been forgotten can rarely be shown”. So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now “knowing” that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose . . . the longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.” “. . . the effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods . . . courts . . . have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost. Second, it is oppressive, even “cruel”, to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed. Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them . . . the final rationale . . . is that the public interest requires that disputes be settled as quickly as possible.” [13] The following factors appear to me relevant in the present application: (a) The delay in (i) commencing proceedings (ii) serving the writ (iii) delivering the statement of claim (iv) responding to requests for particulars (v) replying to correspondence designed to expedite the action (b) The sufficiency of the explanation for delay. (c) The nature of the action and the likely affect of delay upon its fair outcome. (d) The attitude of the plaintiffs and their solicitors to the action as that attitude indicates whether in the future proceedings might accelerate. [14] The factors in (a) and (b) can be considered together. I think it is relevant to look at the whole of the delay that has occurred not just that since the first strike out application in March last year. Earlier delay would have become irrelevant had the plaintiffs got on with things after the delivery of the amended statement of claim. Not having done so the court is entitled, and indeed obliged, to consider the whole -- 6 of 8 -- 7 history of the action. The amended statement of claim makes it evident that the plaintiffs were aware of their losses in March 1989. Their writ was issued almost six years later, the day before the limitation period expired. Mr Cummings explanation for delay, his impecuniosity, does not explain why the writ was not served for a year. It was sent by post, the cost of which cannot have been beyond his means. Nor does his lack of funds explain why his solicitors did not respond at all to the requests for particulars, nor to the suggestion that the defendants’ file be made available for inspection. Nor does financial embarrassment explain the eighteen months delay in obtaining and delivering the first statement of claim. That pleading cost the plaintiffs only $650.00. It is difficult to believe that the payment of so modest a sum delayed the pleading for eighteen months. I cannot accept that much, if any of the delay of eleven years, (six years to commence proceedings and then a further five to deliver a statement of claim in proper form) can truly be explained by impecuniosity. Mr Downing does not offer any other explanation. [15] As to factor (c), the circumstances out of which the action arises makes it likely that the period of time that has since elapsed will substantially affect the prospect of a fair trial. The case appears from the statement of claim and Mr Davis’ affidavit to be largely one of word against word. Mr Cummings and Mr Davis have different recollections of the conversations in which the retainer and the defendants’ advices are contained. It is not to be expected that any witness can have a clear idea of what was said twelve years ago, particularly when self interest will struggle with honesty to influence memory. This is the very sort of action towards which the remarks of McHugh J are particularly apposite. The first real intimation given to Mr Davis of what he was required to recollect came in February 1999 with the delivery of the amended statement of claim. It is probably also right that documents relevant to the settlement of the contracts and in the possession of third parties will not now exist. There must be a real risk that the financiers involved destroyed their files after seven years. [16] Of particular relevance is the last factor. There has been further delay since the amended statement of claim was delivered for which the plaintiffs are responsible. Moreover, the plaintiff’s inactivity since the consent order on 9 March 1999 indicates a lack of commitment on their part to the proper prosecution of the action. If nothing else the events leading up to the order should have persuaded the plaintiffs, and their solicitors, of the need to move the action along diligently. They have not done so. The failure of their material to address the criticism that they have again allowed the action to go to sleep suggests that they do not appreciate their obligation to move it towards trial. It is not right to regard the lack of progress as the defendants’ responsibility. The reason no defence has been delivered is that the defendants suggested a practical means by which time and money could be saved by providing limited disclosure before defending. Given the delay in delivering the statement of claim and the relative complexity of the allegations of fact it was clearly sensible to allow Mr Davis to look through his files before providing instructions for the defence. The plaintiffs’ failure to respond positively (or at all) is the cause of this further delay and gives rise to the inference that they cannot or will not progress the action. I have no confidence that if it is allowed to continue that the plaintiffs will take any step unless in response to further applications for sanctions. This is an entirely unsatisfactory state of affairs. -- 7 of 8 -- 8 [17] In summary • There has been substantial delay which has not been satisfactorily explained. If it matters I would regard the delay as inexcusable. • The delay is such, and the nature of the action is such, that the delay is very likely to have caused prejudice to the defendants in the dimming of recollection and obtaining documentary records. • The plaintiffs’ inactivity in the past fourteen months, their failure to respond to positive suggestions to expedite the action and their inability or unwillingness to progress it themselves suggest strongly that the action will be allowed to loiter in the future as it has in the past. The failure of the plaintiffs, even now, to respond to the proposal or to make the files available underscores this concern. These circumstances lead me to the view that the action should not be allowed to continue. I therefore order that it be dismissed. I further order that the defendants’ costs of the application and of the action be assessed on the standard basis and paid by the plaintiffs. -- 8 of 8 --