Dore & Ors v Seymour Nulty & Company [1994] QCA 300

IN THE COURT OF APPEAL [1994] QCA 300 SUPREME COURT OF QUEENSLAND Appeal No. 229 of 1993 Brisbane [Dore & Ors v. Seymour Nulty] BETWEEN: JOSEPH LEONARD DORE, GIACONDA MAY DORE, CARPENTARIA MANAGEMENT PTY LTD, TOWERS TRADING CO PTY LTD, CARPENTARIA OIL PTY LTD, TOWNSVILLE TAVERN PTY LTD, GULF BOWEN PTY LTD, VIEREST PTY LTD (Plaintiffs) Appellants -and- SEYMOUR NULTY AND CO (a firm) (Defendant) Respondent The Chief Justice The President Mr Justice Demack Judgment delivered: 16/08/1994 Judgment of the Court Appeal dismissed with costs. CATCHWORDS: PROCEDURE - striking out for want of prosecution - whether delay inordinate - whether prejudice suffered by defendant - whether explanation for delay satisfactory - whether leave to proceed ought to be granted pursuant to O.90 r.9 - whether fresh evidence ought to be admitted on appeal. Counsel: Mr J.W. Lee for the Appellants. Mr G.A. Thompson for the Respondent. Solicitors: Cranston McEachern & Co. for the Appellants. Corrs Chambers Westgarth for the Respondent. Hearing date: 09/06/1994 -- 1 of 7 -- IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 229 of 1993 Brisbane Before: The Chief Justice The President Mr Justice Demack BETWEEN: JOSEPH LEONARD DORE, GIACONDA MAY DORE, CARPENTARIA MANAGEMENT PTY LTD, TOWERS TRADING CO PTY LTD, CARPENTARIA OIL PTY LTD, TOWNSVILLE TAVERN PTY LTD, GULF BOWEN PTY LTD, VIEREST PTY LTD (Plaintiffs) Appellants -and- SEYMOUR NULTY AND CO (a firm) (Defendant) Respondent REASONS FOR JUDGMENT - THE COURT Judgment delivered: 16/08/1994 A Judge in Chambers heard together a summons issued on behalf of the plaintiff appellants seeking leave to proceed with their action pursuant to O. 90 r. 9 and a further summons issued on behalf of the defendant respondent seeking to have the plaintiffs' action struck out for want of prosecution. The summons for leave to proceed was issued on 31 August 1993 and the summons for dismissal on 8 October 1993. When the matters were heard on 11 October 1993 orders were made dismissing the appellants' application for leave and ordering that the appellants' action be dismissed with, in both cases, an order for the respondent to have the costs. An appeal is now brought against the two orders. The grounds taken are that insufficient weight was placed by the Chamber Judge on certain circumstances and too much weight on others. On the hearing of the appeal an attempt was also made by counsel for the appellants to introduce fresh evidence, but before coming to that the circumstances as they were established before the Judge below should be outlined. The respondent is a firm of solicitors and the appellants' action against it was based -- 2 of 7 -- 2 upon alleged breaches of contract of retainer or, alternatively, negligence in connection with the provision of advice and in respect of actions taken or omitted to be taken on the appellants' behalf. The relevant contract of engagement and instructions on the appellants' behalf were arranged by Mr Joseph Dore and the respondent firm acted and advised through a member of that firm, Mr Charles Seymour. The interests and involvements of the various appellants were not identical in all aspects but it is not necessary to go into that at length. It is sufficient to say that the individual plaintiffs Mr and Mrs Dore owned and controlled the companies who were joined with them as plaintiffs and now are appellants. Certain hotel properties were in the ownership of companies listed amongst the appellants. The statement of claim which was delivered in the present action by the appellants recites that under a deed dated 22 June 1979 a finance company General Credits Limited lent to one of the appellants as principal debtor and to the other appellants jointly and severally a total amount of $1,055,000.00. In consideration of General Credits lending this sum the various appellants provided security which included first mortgages over two hotel properties, debentures over company assets and undertakings and joint and several guarantees from the male and female appellants. In or about 1980 a default occurred under this loan transaction and, the statement of claim alleges that the appellants orally retained the respondent to advise and act for them in the matter. In or about January of the following year, 1981, General Credits purporting to exercise its power of sale under the mortgages over the two hotels sold them to certain companies controlled by two persons named Francis. The sale price agreed was $2,800,000.00. As the statement of claim recites, the sale price was provided by the purchaser companies making a deposit of $100,000.00, a loan of $1.7m granted to the purchasers by General Credits and the balance of $1m furnished by the appellants. It is obvious that this transaction was designed to achieve some re-arrangement of obligation as between the appellants and General Credits and it did this by introducing purchasers of the two hotels. The complaint made in the statement of claim is that the appellants instructed Mr Seymour that they would agree to the arrangements for the sale of the two hotels to the Francis interests and the associated mode of financing only if the purchasers provided security in the form of second mortgages over the two hotels, second debentures over the assets of the Francis companies making the purchase and joint and several guarantees by the two Francises and other Francis group companies as well as such other security as would, "in the normal course of events, with reasonable certitude" secure the repayment of the $1m provided by the appellants. The statement of claim alleges that the appellants then entered into a further deed with General Credits dated 17 March 1981 on the advice of Mr Seymour assuring them that the appellants' instructions had been carried out and their interests secured accordingly. The -- 3 of 7 -- 3 security referred to was not in fact in place and the two purchaser companies subsequently defaulted in their obligations to both General Credits and the appellants. The two hotels were subsequently sold in circumstances where it was alleged that the appellants were unable to exercise any security or recover any part of their $1m loan. The alleged breaches of the contract of retainer and the duty of care owed by the respondent firm were specified in the statement of claim. They involve allegations of failing to advise and act appropriately in the circumstances. A very lengthy period followed the execution of the deed of March 1981 and because of prejudice perceived by the Judge as affecting the respondent's position the Judge refused the application for leave to proceed, it not being sought until 1993. The Judge has outlined the reasons for his decision. The Judge characterised the appellants' delay as "inordinate". This, of course, was not the end of the matter. The Judge noted that an explanation was offered for the delay essentially referring to certain financial problems of Mr Dore but the Judge said that in the end the critical question to his mind was the possible prejudice to the respondents if the action were now to proceed. The approach adopted by the Judge is consistent with the authorities. Long delays and the existence or otherwise of satisfactory explanations for delay are relevant matters for consideration although a satisfactory explanation is not regarded as a condition precedent to the granting of leave to proceed. The question on an application under O. 90 r. 9 involves the applicant for leave in showing "that there is good reason for excepting the particular proceedings from the general prohibition". Connolly J. in delivering the judgment of the Full Court in Dempsey v. Dorber [1990] 1 Qd. R. 418 at 420 mentioned the relevant principles referring to the High Court decisions in William Crosby & Co. Pty Ltd v. Commonwealth (1963) 109 C.L.R. 490 at 496 and Australian Broadcasting Commission v. Industrial Court of South Australia (1985) 159 C.L.R. 536. At the same page Connolly J. stated further propositions which can be accepted as correct. The question whether there is good reason for making an order excepting from the general prohibition involves an identification and consideration of all relevant matters assessing the weight to be given to them in the circumstances so arriving at a conclusion whether on balance there is good reason for making the order sought. It will always be a relevant factor whether the defendant is likely to suffer prejudice as a result of the delay. Sometimes an examination of the history of the matter and its complexity will demonstrate this prejudice. Witness actions in particular that depend upon the recollection of persons who must swear to events present problems with the passing of time. Inordinate delay combined with evidence of specific prejudice to a defendant will constitute a very substantial obstacle for a plaintiff seeking leave and can be expected to result -- 4 of 7 -- 4 in a refusal of leave. Campbell C.J. in Bruce Pie & Sons Pty Ltd v. Mainwaring [1987] 1 Qd. R. 304 at 309 in delivering the reasons of the Full Court said "the appellant must, in addition to showing inordinate delay, establish that it has been thereby seriously prejudiced either as between itself and the respondent company or between itself and a third party, or that the delay will cause a substantial risk of the impossibility of a fair trial of the issues". The approach of the Judge below was not inconsistent with any of the statements of principle which have been referred to. A selection of relevant dates indicates the appellants' difficulties. The deed and the advice complained of in respect of it are dated March 1981 and the appellants' cause of action accordingly dates from that time. The writ was not issued until 16 March 1987, just within the six year limitation period which commenced from the date of the deed, 17 March 1981. The writ was not served promptly but was renewed on 16 March 1988 and served only on 13 March 1989. The statement of claim was not delivered until 27 June 1989 and the delivery of that document had to be compelled by the respondent which brought a striking out application because of the non-delivery. By the time that the present applications eventually came on for hearing in October 1993 about 12 and a half years had gone by since the alleged cause of action arose. On 2 April 1990 a letter had been written by the solicitors for the appellants to the solicitor for the respondent answering a request by the latter for discovery of certain documents but thereafter no step was taken by the appellants in the action prior to the issue of their summons for leave on 31 August 1993. The only member of the defendant firm who had been significantly involved in the events associated with the appellants' complaints was Mr Charles Seymour and he had died on 20 September 1987. The first notice that the respondent had that a claim was being made was when the writ was served upon it. Had the writ been served promptly after it had been issued in March of 1987 a proof of evidence could have been taken from Mr Seymour based on the relief claimed so far as it appeared from the writ and based on a consciousness that the appellants were embarking upon a claim and had the statement of claim been delivered within the time prescribed by the rules then the opportunity to take a useful proof of evidence from Mr Seymour would have been of even greater value. A Mr Postle, who had been a hotel broker and valuer and involved in the sale of the appellants' hotels died in February 1990. The respondents clearly also had an interest in having the account of Mr Francis who because of his involvement as purchaser of the appellants' hotels and his presence on certain occasions with Mr Dore and Mr Seymour could have been expected to be an important witness, that is if his recollections were adequate. However, after an approach had been made to Mr Francis the information which the respondent's solicitors obtained was that he had no helpful recollection of the events in controversy and had no documents to which he could refer to aid his recollection. On the -- 5 of 7 -- 5 hearing of the appellants' summons the Judge was made aware of this fact and there was no challenge to it below. The central dispute was whether Mr Seymour had failed to provide the advice which was reasonably called for as Mr Dore alleged or whether, on the other hand, Mr Seymour had advised a course of action directly contrary to what Mr Dore claimed. In coming to his conclusion the Judge declared himself satisfied that if the action proceeded the respondent would be likely to be prejudiced in a significant way. He made that statement in view of the matters which have been outlined. He also had in mind that over the time that had elapsed General Credits who originally had 35 boxes of documentation which could be expected to contain relevant matters had lost the major part of them and was left with only four. Solicitors who had previously acted for the appellants did have a considerable amount of documentation but there was no reason to conclude that its existence would adequately compensate for the loss of General Credit's documents. The Judge did not overlook circumstances which had placed obstacles in the way of the appellants. The corporate appellants had been deregistered and in May of 1988 the estate of Mr Dore had been sequestrated. In the end the Judge declared himself not satisfied that he should exempt the action from the general prohibition which is part of O.90 r.9. That view was based on the aggregation of the particular factors which were involved in the delay and on the likelihood of prejudice. Mr Dore's explanation for the delay did not in the Judge's mind assume critical significance in the balancing assessment which he undertook. It should be concluded that in the exercise of the discretion committed to him under O.90 r.9 the Judge was quite entitled to take the view he expressed and it cannot be said that error was involved or that there is reason shown to interfere. One further matter should be mentioned. On the hearing of the appeal counsel for the appellants attempted to introduce fresh evidence but in accordance with the usual rules which apply in such cases that application should be rejected. One difficulty for the appellants was that if reasonable efforts had been made by them the matters which they now wished to place before the Court could have been introduced below but, although that opportunity was available to them, they were content to allow the matter to be determined by the Judge on the basis of the material then before him. A possible qualification of this position might be thought necessary in respect of two written responses which Mr Seymour made to the Queensland Law Society following complaints made to that body by Mr Dore in respect of Mr Seymour's conduct. Mr Seymour's responses were dated respectively 7 May 1986 and 24 July 1986. Those documents were not referred to below. The first document mentions a number of complaints by Mr Dore over a range of matters extending well beyond those material for present purposes. The second is more closely devoted to complaints in respect of Mr Seymour's allegedly deficient advice as referred to in -- 6 of 7 -- 6 the subject action. On behalf of the respondent the submission had been made to the Judge below that because the writ had not been served until after Mr Seymour died the respondent had been deprived of an opportunity to take a proof of evidence from him. The appellants submitted to this Court that the result may have been that the Judge was misled in respect of the disadvantage caused by loss of opportunity to take a proof of evidence. Accordingly, this Court received the two letters on a limited basis hearing argument and reserving the question of what it would do in respect of them. It did this, not because the appellants were regarded as having satisfied the rules governing the admissibility of fresh evidence on appeal, but because of the suggestion that some significant misconception for which the respondent was responsible may have disadvantaged the Court. However, it appeared that Mr Dore had been given a copy of at least one of the two letters received, that dated 24 July, although it was said that he did not appreciate its significance at the time of the hearing below. On consideration not too much should be made of the appellants' point now taken. There is every reason to think that a careful taking of a proof in respect of matters outlined in the writ and later particularly the statement of claim, had it been available, would be likely to be of considerably greater value to the respondent than Mr Seymour's responses to Mr Dore's complaint to the Law Society even though they touched on certain matters to be relied on in the statement of claim. The defendant had no notice of the proceedings taken against it until the writ was served on 13 March 1989, about a year and a half after Mr Seymour had died. The substance of Mr Seymour's responses to the Law Society serves to emphasis the extent to which matters of credit would be important if the case were allowed to proceed. Mr Seymour's very emphatic denials of the matters complained of by Mr Dore show this. In all of the circumstances the two letters should not be accepted as fresh evidence on the appeal. Even if they were admitted, they would not affect the outcome. There is no reason to conclude that the trial Judge suffered any disadvantage or was in any significant way misled in making the statement which he did about the loss of opportunity to take a proof of evidence from Mr Seymour. The appeal should be dismissed with costs. -- 7 of 7 --