Antonio Sacco Plaintiff/Appellant v Renault (Wholesale) Pty Ltd Defendant/Respondent [1995] VSC 193; [1995] VICSC 193 (8 September 1995)

SUPREME COURT OF VICTORIA

ANTONIO SACCO Plaintiff/Appellant v RENAULT (WHOLESALE) PTY. LTD.
Defendant/Respondent
No. 1263 of 1985
Number of pages - 10
Practice and procedure - Misrepresentation

COURT

IN THE SUPREME COURT OF VICTORIA
COURT OF APPEAL
BROOKING(2) ORMISTON(3) AND CALLAWAY(1) JJA

CATCHWORDS

Practice and procedure - Want of prosecution -Inordinate and inexcusable delay - Prejudice - Filing of writ at end of limitation period - Defendant's having ceased to carry on business.

Misrepresentation - Duty to correct innocent mis-statement on discovering the truth.

HEARING

MELBOURNE, 19-20 July 1995
8:9:1995

Counsel for the Plaintiff/Appellant Mr J.R. Balfe, Q.C.

Mr M.J. Corrigan

Solicitors for the

Plaintiff/Appellant Holding Redlich

Counsel for the Defendant/Respondent Mr R.E. Cook

Solicitors for the

Defendant/Respondent Cornwall Stoddart

ORDER

Appeal dismissed with costs.

DECISION

CALLAWAY JA On 15th April 1985 the appellant instituted proceedings against the respondent in respect of an industrial accident which allegedly occurred on 31st May 1979. Service of the writ was not effected until 14th April 1986. Further delay occurred in circumstances which I shall describe later in this judgment. on 14th May 1993 the respondent filed a summons asking that service of the writ be set aside and that the proceeding be dismissed. The initial emphasis of the application was on the irregular manner in which it was said that the writ had been served, on which issue the respondent was unsuccessful, but it developed into an application for dismissal for want of prosecution. on 16th August 1993 a master dismissed the proceeding on that ground. An appeal to a judge was dismissed on 16th May 1994. It is from that order that the present appeal is brought.

2. The law relating to dismissal for want of prosecution on account of delay, as opposed to intentional and contumelious default, is relatively well settled. The authorities were most recently considered by the Full Court in Bishopsgate Insurance Australia Ltd. v. Deloitte Haskins and Sells (unreported, 9th September 1994) and Masel v. Transport Industries Insurance Co. Ltd. (unreported, 28th April 1995). They establish guidelines for what nevertheless remains an unfettered discretion in the sense that a judge may depart from them when it is just and equitable to do so. At the end of the day the defendant must persuade the Court that it is fair to dismiss the plaintiff's claim without its being heard.

3. The respondent so persuaded the very experienced primary judge in this case. Moreover his Honour's order involved an exercise of discretion attracting the principles explained in such authorities as House v. The King [1936] HCA 40; (1936) 55 CLR 499 at pp 504-505 and Australian Coal and Shale Employees' Federation v. The Commonwealth [1953] HCA 25; (1953) 94 CLR 621 at p 627.

4. One of the cases in which the power to dismiss for want of prosecution may, and usually will, be exercised is where there has been inordinate and inexcusable delay on the part of the plaintiff or the plaintiff's lawyers and that delay gives rise to a substantial risk that it will not be possible to have a fair trial of the issues in the action. Cf. Department of Transport v. Chris Smaller (Transport) Ltd. (1989) AC 1197 at p 1203. It is convenient to deal with the issues of inordinate and inexcusable delay together before turning to the question whether, if there had been such delay, it gave rise to a substantial risk of the kind that I have just described. The judge considered that there had been inordinate and inexcusable delay and concluded that a fair trial was no longer possible.

5. The time taken to file a writ will not constitute inordinate or inexcusable delay in itself, but it entitles the Court to look critically at any delay thereafter. That subsequent delay will more readily be regarded as inordinate and inexcusable. Moreover, if the defendant has suffered prejudice as a result of the writ's being filed towards the end of the limitation period, that magnifies the significance of any additional prejudice suffered as a result of the post writ delay. Cf. the Chris Smaller (Transport) Case at pp.1207-1208. No explanation was offered for the 12 months between the issue of the writ, which in 1985 was the equivalent of filing under the present rules, and its service. The appellant's solicitors were uncertain of the date of the accident and of which company in the Renault group had been the appellant's employer, but there is no evidence that they tried to resolve those issues during that period. So great was their uncertainty that they issued four separate writs, a tactical choice which caused confusion at a later stage.

6. Between 14th April 1986 and 8th April 1987 a statement of claim was delivered in two of the other actions and there was some correspondence between the parties' solicitors. on one occasion the respondent's solicitors asked for and were given additional time to consider the matter. On another they requested the provision of group certificates to establish the identity of the appellant's employer. A group certificate for the financial year that began on 1st July 1979 was provided. On 8th April 1987 the respondent's solicitors pointed out that it did not cover the relevant period. Nearly five months elapsed before the appellant's solicitors replied to the effect that they had been unable to obtain any further group certificates from their client. They asked the respondent's solicitors to "advise us immediately as to the identity of our client's employer at the time of the subject accident." They also said that they would then ask that a defence be delivered as they were anxious to proceed with the matter. The reference to a defence suggests that that correspondence was concerned primarily with the other two actions, for in the proceeding out of which this appeal arises no statement of claim had yet been delivered or served.

7. Indeed no appearance had been entered.

8. Meanwhile a development was occurring unbeknown to the solicitors on either side. In November 1985 application was made to the New South Wales Corporate Affairs Commission for cancellation of the respondent's registration on the ground that it had given up business and was not likely to commence business again. There is some uncertainty as to the dates. It would appear that the form was signed and lodged in the month I have mentioned but that action under s.459 of the Companies (New South Wales) Code was not approved until 15th September 1987. The respondent's registration was eventually cancelled on 26th July 1988.

9. On 28th September 1987 Renault Australia Pty.Ltd. had written to the Insurers' Guarantee and Compensation Supplementation Fund saying that the respondent had ceased trading in November 1981 "and the company has now been cancelled." The respondent's solicitors forwarded a copy of that letter to the appellant's solicitors on 9th October 1987. (They also enclosed the relevant group certificate. Both documents identified the respondent as the appellant's employer, but his solicitors did not obtain instructions and reply in a substantive way until 23rd June 1988.) On 12th July 1988 the respondent's solicitors wrote to the appellant's solicitors saying that they had been informed by the Fund that the respondent had ceased trading in November 1981 and that "the company was struck off the Register of Companies approximately eighteen months ago." They enclosed a copy of a letter from the Fund to that effect. That letter indicates that the Fund was relying not on the letter of 28th September 1987 but on a more recent communication from Renault Australia Pty.Ltd.

10. The appellant's solicitors instituted company searches on 25th July and 29th August 1988. Neither of them disclosed the application for cancellation, the approval of action under s.459 or the cancellation of the respondent's registration. It is not surprising that the first search failed to predict an event the following day. The other omissions from the search notes may be explained by the scope of the instructions that were given. There are indications in the search notes and elsewhere in the material that questions may have been asked about liquidation but not concerning action under s.459. The true position did not become apparent to either side until 13th January 1989, when Sydney solicitors advised the respondent's solicitors that the respondent's registration had been cancelled and the company had been dissolved on 26th July 1988.

11. In view of the correspondence to which I have referred, and in particular their letter of 12th July 1988, I should have thought that the respondent's solicitors were under a duty to correct the misstatement which they themselves had made, albeit in good faith and in reliance on others. Cf. Robertson and Moffat v. Belson (1905) VLR 555 at pp 561-563 and With v. O'Flanagan (1936) Ch 575 at p 582. it was not until 28th June 1989 however that they wrote to the appellant's solicitors, who requested details and were provided with a copy of the search results under cover of a letter dated 7th August 1989. The respondent must therefore accept some responsibility for the delay in the first half of 1989, but the appellant's solicitors did not instruct their agents in Sydney to apply to have the respondent restored to the register until 19th April 1990. During that time a further search was undertaken.

12. It was to be a further 27 months before an order was obtained on 10th August 1992 restoring the respondent to the register. A variety of difficulties was encountered, but two periods of delay stand out for which the appellant or his solicitors must bear most of the responsibility. First, on 13th September 1990 the Sydney agents repeated their request for $1,000 on account of costs and disbursements. Although instructions were sought from the appellant by telephone, it was not until 1st March 1991 that the request was first discussed in conference and not until 3rd May 1991 that funds were provided after an alternative course of action had been considered and found to be impracticable. Secondly, although the instructions that were then given to the Sydney agents on 9th July 1991 emphasized the urgency of the matter, the appellant's solicitors did not enquire as to its progress until 3rd February 1992.

13. On 21st August 1992 they informed the respondent's solicitors that the company had been restored to the register and forwarded a copy of the order made by the Supreme Court of New South Wales. The respondent's solicitors replied four weeks later to the effect that they expected to receive instructions shortly. That reply would justify a brief delay but not the delay that ensued. It was 16th April 1993 before the appellant's solicitors wrote again, referring to their letter of 21st August 1992 enclosing the copy order, noting that they had not as yet received a response and intimating that they would apply for judgment if they did not hear from the respondent's solicitors within 14 days. Thereafter there were two requests for indulgence, but the period they cover is very short for the summons was filed on 14th May 1993.

14. Although none of the individual periods of delay exposed by the history that I have recounted exceeded 12 months and although the appellant's solicitors kept the respondent's solicitors informed of the progress (if that word is not ironic) of their endeavours to have the company restored to the register, there was cumulatively a great deal of delay that may fairly be described as inordinate and inexcusable. The writ had not been issued until almost the end of the limitation period, so that the post writ delay assumes a more serious aspect. Moreover the appellant's solicitors were aware from 9th October 1987 that the respondent had ceased trading. Whatever uncertainties there may have been about the nature and date of its demise, it should have been apparent that the respondent would in any event be at a disadvantage in the conduct of its defence. Unlike the prejudice caused by the death of a potential witness, referred to in Niemann v. Electronic Industries Ltd. [1978] VicRp 44; (1978) VR 431 at p 444, that disadvantage would increase over time. In those circumstances it was all the more incumbent on the appellant and his solicitors to ensure that they were not responsible for postponing the trial of the action.

15. I turn to the question whether the delay that occurred prior to the filing of the summons gave rise to a substantial risk that it would not be possible to have a fair trial. The respondent bore the burden of proof on that question before the learned primary judge, as it did on the issues of inordinate and inexcusable delay. Mr. Warren, who had the carriage of the matter on behalf of the respondent's solicitors, deposed that the respondent had ceased trading many years ago and that there was no entity in Australia that continued to conduct its business, that it would not be possible to trace all the relevant witnesses and that it would be impossible to investigate the appellant's claim properly. He said that, even if some witnesses could be found, it was highly unlikely that they, or indeed the appellant, would have a reliable recollection of an incident in 1979. At a later stage, when Mr. Warren was away, one of his partners deposed to further difficulties, but his affidavit is of no practical utility.

16. I agree with counsel for the appellant that the evidence of specific prejudice, as opposed to the prejudice that may be inferred from the company's closure of business and the passage of time, is insubstantial. Counsel went further and submitted that some of the affidavits filed on behalf of the respondent were misleading and formed part of a pattern of conduct designed to frustrate, deflect and delay prosecution of the appellant's claim. I do not think we are entitled to draw that inference from the material but I have assumed, in favour of the appellant, that his earlier workers' compensation claim, like the other three writs that were issued, all related to the same incident and that such knowledge as the respondent's solicitors had concerning that application and the other actions may be imputed to the respondent.

17. Affidavits were filed on behalf of the appellant, including two by former employees, but neither of them remembered the appellant or the alleged accident. Both had left the employ of the Renault Group in 1980. The appellant himself deposed that, to the best of his knowledge and belief, no-one had witnessed the accident. Even if the summons had not been filed and the action had been tried last year, the respondent would have had greater difficulty in preparing and conducting its defence, and it would have been harder to test the appellant's credit, than would have been the case if the appellant and his solicitors had proceeded with the required degree of expedition. That may be inferred, as a matter of experience and common sense, from the time that has elapsed. Cf. Shepperdson v. Lewis [1966] VicRp 59; (1966) VR 418 at p 422; Muto v. Faul [1980] VicRp 3; (1980) VR 26 at p 31; McKenna v. McKenna [1984] VicRp 58; (1984) VR 665 at pp 673-674 and 683 and the Bishopsgate Case at pp 23-24.

18. An order for dismissal is to be made if, but only if, the Court is satisfied that the justice of the occasion demands it. See, for example, Alginates (Australia) Pty. Ltd. v. Thomson and Carroll Pty.Ltd. [1970] VicRp 74; (1970) VR 570 at p 574 and Masel's Case at p 11. Despite the stringency of that requirement, I am not persuaded that the order made by the learned primary judge was wrong. The facts were more fully examined before us and some of the expressions used in his Honour's reasons were criticized, but the better view remains that the cumulative period of delay for which the appellant and his advisers must bear responsibility was both inordinate and inexcusable and such as to give rise to a substantial risk that there could no longer be a fair trial. Accordingly I would dismiss the appeal.

BROOKING JA I concur in the reasons for judgment of Callaway, J.A. Like his Honour, I see no inconsistency between the decisions of the Full Court in Bishopsgate and Masel or between the approaches in those two cases. I do not share the concern (which I apprehend troubles Ormiston, J.A.) that the decision in Masel foreshadows the desertion of "principle" in favour of palm tree justice.

2. The order of the court is:

Appeal dismissed with costs.

Liberty to appellant to apply to vary order for costs by notice in writing -

we will not require a summons served on the respondent's solicitors and filed within 7 days.

ORMISTON JA I have had the benefit of reading the judgment of Callaway, J.A. in draft form and agree with him that this appeal should be dismissed. The facts and circumstances summarized in his judgment more than adequately demonstrate why the justice of the case required that this action be dismissed for want of prosecution. As I have reached my conclusions by a slightly different course, I shall briefly state those reasons.

2. There were, in my opinion, a number of errors in the learned primary judge's reasons of the kind which ought to lead to the setting aside of his order, if it were not concluded by an independent examination of the materials before the Court that the discretion to stay the action should be exercised in favour of the respondent.

3. Two kinds of error in his Honour's reasoning were relied upon in the extensive grounds of appeal. In the light of the conclusion to which I have come it would serve little purpose to examine each of those asserted errors. Insofar as errors of fact were relied upon I would conclude that there were sufficient errors of that kind for the appellant rightly to feel that his case had not been fairly considered by the trial judge. Many of the alleged errors of fact were not made out on the hearing of this appeal but the few that were clearly made out were sufficient, in combination with the error of principle to which I am about to turn, for this Court to reconsider whether the action should be stayed in favour of the respondent.

4. More importantly his Honour appeared, in considering whether there had been inordinate and inexcusable delay, to take into account in an impermissible way the delay up to the issue of the writ. For example he stated that there was no satisfactory explanation why six years were allowed to elapse before the proceeding was commenced and later asserted that "a period of delay between accrual of a cause of action and delivery of the statement of claim of 14 years in a proceeding in this court is most exceptional and excessive by reasonable professional standards". After having said that a substantial proportion of this period could not be excused he continued:

"Cumulative delay may be taken into consideration, if there is a
sufficient nexus between the period of delay following accrual of
the cause of action and the inexcusable delay following receipt of
instructions, for the purposes of determination whether a fair trial
is possible or serious prejudice to the respondent has resulted."

5. To be fair to his Honour, he then cited a number of authorities amongst which was Department of Transport v. Chris Smaller (Transport) Ltd, (1989) AC 1197, including the passage from the speech of Lord Griffiths (at pp 1207-1208) in which he said that: "Long delay before issue of the writ will have the effect of any post writ delay being looked at critically by the Court and more readily being regarded as inordinate and inexcusable ... ". Nevertheless, overall the passage seems to concentrate unduly on periods of delay from accrual of the cause of action to the receipt of instructions and from receipt of instructions until the time when the writ is actually issued, and as to whether delay during those periods is excusable or not. In my opinion, the manner of dealing with delay was unsatisfactory and appeared to rely upon considerations which have been held to be irrelevant in the authorities to which we were referred.

6. However, to say that a consideration has been held to be irrelevant or that a consideration is relevant only in a particular way connotes that there are binding authorities as to the exercise of the discretion possessed by this Court to dismiss for want of prosecution. That discretion, whether it be derived from Rules of Court such as Rule 24.01 or from the inherent jurisdiction of the Court, has recently been considered in two decisions of the Full Court of this State in Bishopsgate Insurance Australia Ltd. (In liquidation v. Deloitte Haskins and Sells (9th September 1994, as yet unreported) and Masel v. Transport Industries Insurance Co.Ltd. (28th April 1995, as yet unreported) and what are there variously called "principles" or "guidelines" relating to the exercise of the discretion were exhaustively analysed. If there be a difference (and the later case appeared to accept what had been held only a few months earlier) it may be thought to be as to the nature of the discretion which the Court possesses in these circumstances and whether what the Courts have said in the past amount to principles or mere guidelines. If they be mere "guidelines" then it is the harder to assert that authorities as to their application have any binding authority, inasmuch as any statement that a particular consideration is relevant or irrelevant might be said to have no future consequences in that the discretion must always be exercised so as to produce a "just and equitable" result.

7. Nevertheless the differences may be treated as largely semantic. In the case upon which the Full Court in Masel's Case placed great reliance, Norbis v. Norbis (1986) 161 CLR 531 (and in particular on two passages at p 538) the Court was concerned to construe a statutory discretionary power. It was thus not surprising that members of the High Court tended to refer in Norbis' Case to the use of "guidelines", especially having regard to the well known principle of statutory interpretation which would treat as a mere gloss on the words of a statute any exposition of the statute which goes beyond the proper process of construing its actual language: cf. Gratwick v. Johnson [1945] HCA 7; (1945) 70 CLR 1 at 19 and Kavanagh v. The Commonwealth [1960] HCA 25; (1960) 103 CLR 547 at 578.

8. However, in describing a discretionary power whether expressed in such general terms as are used in Rule 24.01 or derived from the inherent power of the Court presently under consideration, every authoritative exposition of rules relating to the stay of proceedings for want of prosecution may fairly be described as principles, albeit principles relating to the exercise of a discretionary power. Unless the Court were to conclude that such a power is truly unfettered, the Court would be abnegating its powers if it were not to express the manner in which those powers should be exercised in terms of principles. There are some areas in which it has been seen to be desirable that the exercise of a discretionary power should be entirely uncontrolled and unfettered, but this Court should be cautious about cultivating palm trees on the sands of procedural law.

9. Thus a contrast between dismissal for "abuse of process" and the power to dismiss for want of prosecution was drawn in the Bishopsgate Case as follows:

"While we would not wish to trammel the Court's powers to deal with
abuse of process, there is virtue in laying down understood
guidelines for the exercise of the power to stay or dismiss for want
of prosecution if only to prevent a profusion of such applications
in circumstances which could not justify dismissal, for, as the
present application demonstrates, those very applications are
frequently long, complex and expensive." (per Tadgell and Ormiston,
JJ. at p.19.)

10. So in considering the relevant principles in that case the Court adopted the relatively succinct statement of Lord Griffiths in the Chris Smaller (Transport) Case (at p.1203), but expressing the powers of this Court in these terms:

"We would not wish to travel outside those principles but it should
not be understood from this decision that they are immutable or
incapable of adaptation according to the circumstances of the case
... " (Per Tadgell and Ormiston, JJ. at pp.19-20.)

11. The reason for examining why the exercise of the discretion to stay proceedings is governed by principles (whether or not called guidelines) which the Courts ought to be seen to be applying as a matter of consistency, subject to the natural and accepted qualifications as to the exercise of discretions, is that, in my opinion, there has come to be accepted a sub-rule or principle relating to this kind of application which, as a matter of policy, treats the time before issue of writ within the limitation period as irrelevant, subject only to a qualification which was examined in the Bishopsgate case in some detail (see per Tadgell and Ormiston, JJ. at pp.21-23). There it was said (at p.22):

"Undoubtedly it has been said from time to time that plaintiffs are
entitled to wait the full limitation period before issuing
proceedings and are not for that to be penalised on an application
such as the present. This was an issue carefully examined by the
House of Lords in Birkett v. James ... (where) their Lordships
concluded that to justify dismissal for want of prosecution the
relevant delay must be that which the plaintiff allows to lapse
unnecessarily and without excuse after the proceedings had commenced
... On the other hand it is clear from the reasoning in Birkett v.
James and in subsequent cases that plaintiffs are obliged to move
with greater speed if they have left the issue of proceedings until
very late in the limitation period."

12. On the following page approval was given to a passage in the unreported decision of the Full Court in Australia and New Zealand Banking Group Ltd. v. Donovan (19th December 1986) where it was said (at p 9) that it was now "settled law" that a party allowing the limitation period almost to expire is "obliged to process those proceedings with expedition". Finally the passage in the speech of Lord Griffiths in the Chris Smaller Transport Case at pp.1207-1208 cited above was approved and later applied (cf. at pp.35 and 42).

13. To my way of thinking the statement and re-statement by appellate courts of the effect of allowing limitation periods nearly to expire is a principle which ought ordinarily to be applied, subject to the qualification relating to the need to move thereafter with expedition to which I have referred. In the present case the primary judge appeared to ignore that principle or at least failed to take account of relevant considerations arising from the appellant's delay in issuing his writ. It is for that reason that I think the primary judge erred and it is necessary to reconsider the exercise of the discretion to dismiss for want of prosecution.

14. In the end, however, this Court's conclusion should not differ from that of the primary judge. As the principles relating to delay in issuing proceedings referred to above demonstrate, a plaintiff such as the present who has left the issue of his writ for a period in excess of five and a half years without apparent reason must act with speed thereafter and the Court is entitled to be highly critical of any delay which exacerbates the risks inherent in having a trial years after the event. The facts which have been succinctly analysed by Callaway, J.A., and which are more than demonstrated by a consideration of the whole of the relevant materials before the judge at first instance, can lead to no other conclusion but that the plaintiff's delay in this case was inordinate and inexcusable. Whether one concentrates on the excessive delay immediately after the issue of the writ, including the unexplained slowness in attempting to serve the writ and to formulate a statement of claim, or whether one looks at the leisurely proceedings adopted to restore the respondent company to the register, the combination of all events meant that an inordinate period had expired at the time the application was made to stay for want of prosecution. The consequential prejudice which has been and would be caused to the respondent in the circumstances described is obvious and thus I would conclude that the discretion had to be exercised by dismissing this action for want of prosecution. Whatever other remedies the appellant has are a matter for another day.