Barton v Atlantic 3-Financial (Aus) Pty Ltd
[2010] QCA 223
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- Barton v Atlantic 3-Financial (Aus) Pty Ltd[2010] QCA 223
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Barton v Atlantic 3-Financial (Aus) Pty Ltd[2010] QCA 223
Barton v Atlantic 3-Financial (Aus) Pty Ltd[2010] QCA 223
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | SC No 6621 of 2003 |
Court of Appeal | |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | |
DELIVERED ON: | 24 August 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 17 August 2010 |
JUDGES: | Muir and White JJA and Mullins J Separate reasons for judgment of each member of the Court, each concurring as to the orders made |
ORDERS: |
|
CATCHWORDS: | PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – JUDGMENTS AND ORDERS – OTHER MATTERS – primary judge refused appellant’s application for reactivation of proceedings – Supreme Court Practice Direction No. 4 of 2002 paragraph 5.4 outlines the procedure for reactivating a matter that has been deemed resolved – whether primary judge erred in failing to correctly identify the principles or factors relevant to the exercise of the discretion under the Practice Direction – whether exercise of primary judge’s discretion miscarried – whether Court should exercise discretion afresh APPEAL AND NEW TRIAL – APPEAL - PRACTICE AND PROCEDURE – QUEENSLAND – APPEAL COSTS FUND – POWER TO GRANT INDEMNITY CERTIFICATE – GENERAL PRINCIPLES AS TO GRANT OR REFUSAL –second respondent sought to apply for an indemnity certificate under s 15(1) Appeal Costs Fund Act 1973 (Qld) – whether indemnity certificate should be granted Appeal Costs Fund Act 1973 (Qld), s 15 Uniform Civil Procedure Rules 1999 (Qld), r 5, r 389 Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27, cited Holdway v Arcuri Lawyers (A Firm) [2008] QCA 302, cited Mitchell v Pacific Dawn P/L [2003] QCA 526, cited Multi-Service Group Pty Ltd (in liq) & Anor v Osborne & Anor [2010] QCA 72, applied Sali v SPC Ltd (1993) 67 ALJR 841; [1993] HCA 47, cited |
COUNSEL: | D A Savage, with P D Tucker, for the appellant T Matthews for the respondents |
SOLICITORS: | Malcolm Johns & Company for the appellant Cusack Galvin & James for the respondents |
[1] MUIR JA: The appellant plaintiff appeals against an order of the primary judge made on 4February 2010 dismissing with costs the appellant's application, pursuant to Practice Direction 4 of 2002, to reactivate the proceedings.
[2] In her ex tempore reasons the primary judge stated that the principles relevant to the determination of an application to reactivate a proceeding which had been deemed resolved by operation of the practice direction were those propounded by her in Multi-Service Group Pty Ltd (In Liquidation) & Ors v Osborne & Ors[1] and Arc Holdings Pty Ltd v Riana Pty Ltd.[2]
[3] The primary judge summarised the matters which were required to be addressed on the hearing of such an application as including:
"1.The conduct of the litigation prior to directions being given: which may include how long ago the events in the alleged statement of claim occurred, what delay there was before the litigation was commenced, how long ago the litigation was commenced or causes of actions were added, and whether or not the litigation has been characterised by periods of delay;
- What explanation is provided for the failure to comply with the directions which has led to the matter being deemed resolved, and whether the failure to comply with Court directions is attributable to the plaintiff, the defendant or both the plaintiff and the defendant or their legal representatives;
- Whether or not the failure to comply with directions has resulted in prejudice to the defendant leading to an inability to ensure a fair trial;
- How far the litigation has progressed and how close it is to trial;
- What prospects the parties have of success in the action. A plaintiff must be prepared to show that it has sufficient prospects of success and, where relevant, a defendant that it has sufficient prospects of defending the action, that the litigation should be allowed to continue. If the case is not one needing judicial determination, then there is, as I have said previously no point in reactivating it."
[4] Her Honour concluded that: the appellant's delay in prosecuting the proceedings had been "egregious, and … insufficiently explained"; (inferentially) the delay would cause prejudice to the second respondent; the proceedings had not progressed substantially; the second respondent would have difficulty obtaining summary judgment and the appellant had "comprehensively failed to comply with its (sic) implied undertaking to prosecute his claim expeditiously".
[5] The construction of the practice direction and the correct approach to the exercise of the court's discretion on applications for reactivation were explained as follows by the Court in Multi-Service Group Pty Ltd (in liq) & Anor v Osborne & Anor:[3]
"[43]… There was no application by the respondents under rr 280, 371 or 374 and the primary judge (assuming she had power to do so) did not call on the appellants to show cause why the proceedings should not be set aside under r 371. Consequently, there being no serious question that the appellants lacked an arguable case, the focus of the primary judge on the application for reactivation should have been on the matters identified in paragraph 5.4 of the Practice Direction, namely, whether the appellants had:
(a)explained and justified the circumstances in which the proceeding was deemed resolved; and
(b)prepared a plan to facilitate its timely determination.
[44]The nature and extent of the explanation and justification of the circumstances which led to the deemed resolution are, of course, relevant to, but not determinative of the exercise of the discretion to reactivate. That discretion needs to be exercised consistently with the objectives of the Practice Direction. The focus of the Practice Direction is on the timely disposition of proceedings, not on their retention by means of a de facto stay: its objectives could not be served by allowing the proceedings to linger indefinitely in the twilight zone of 'deemed resolution'."
[6] The Court had said earlier:
"[40]The deemed resolution of a proceeding may be contrasted with a process under the Rules which brings the proceeding to an end with the consequence that parties' rights and obligations are permanently affected. Such processes include:
• the dismissal of proceedings for want of prosecution (r 280)
• judgment by default (rr 283 – 288)
• summary judgment (rr 292, 293)
• an application to set aside all or part of a proceeding for failure to comply with the Rules (r 371).
[41]The Practice Direction does not purport to establish another mechanism extraneous to the Rules for concluding proceedings. Rather, it is apparent from its terms and, in particular, paragraphs 1.3, 5.1 and 6.2, that its provisions are intended to be utilised in conjunction with the Rules. The Practice Direction's character as a case management tool is further recognised by its inapplicability to proceedings on the Supervised Case List and the Commercial List and by the provision in paragraph 6.2 that non-compliance with the Practice Direction or directions under it may 'on the application of a party, or at the court's own initiative' result in an order pursuant to r 371(2)."
[7] In my respectful opinion the exercise of the primary judge's discretion miscarried as a result of undue focus on past delay and the giving of insufficient consideration to the appellant's prospects of advancing the proceedings in a timely way. Consequently, this Court is required to exercise the discretion afresh. Counsel for the appellant argued in their outline of argument that the primary judge had erred by giving undue weight to case management principles at the expense of "determining where justice lies". The justice of the case was said to be found by "examining the relevant, and quite unique, factual matrix to the application". In oral submissions a different approach was adopted. Senior counsel for the appellant focussed his attention on: the absence of any incentive for the appellant to activate these proceedings as long as the first respondent (A3F) and the second respondent (A3FM) were not actively pursuing him in proceedings in the Supreme Court of New South Wales; the respondents' own inertia in the proceedings which suited their convenience and the appellant's present resolve to have these proceedings transferred to New South Wales and concluded.
[8] Before considering the merits of the appellant's submissions it is desirable to summarise the facts. A3F lent the appellant $278,900 on the security of a mortgage over his farm in Wellington, New South Wales, in August 1999. In about November 1999, the appellant guaranteed the obligations of Loawave Pty Ltd under a Deed of Loan between it and A3F and gave A3F a second mortgage over his farm to secure his obligations to A3F in that regard. The two mortgages became assets of an unregistered management investment scheme known as the Barton Scheme.
[9] The appellant alleges that A3F breached its obligations under the Loawave Deed of Loan causing Loawave to default and that A3F sold Loawave's property at under value. Loawave also alleged that its default was caused by a breach of the Deed of Loan by A3F and that it suffered loss in consequence of the breach.
[10] The appellant defaulted under the first mortgage and commenced proceedings in New South Wales (the NSW proceedings) against A3F, Loawave and another to set aside the Deed of Loan. A3F counter-claimed in respect of the two mortgages. The NSW proceedings were compromised on terms that the appellant pay A3F $420,000 and that the appellant consent to the dismissal of the NSW proceedings against A3F.
[11] In May 2003 Loawave assigned its rights against A3F to the appellant who commenced these proceedings claiming in his own right and as Loawaves' assignee.
[12] The appellant contended that the terms of the offer "to compromise this action as against [A3F]" which was accepted by A3F in June 2003 left it unclear whether or not the compromise encompassed A3F's counter-claim. He also alleged that he was not bound by the compromise agreement, as A3F and subsequent assignees of A3F's rights could not procure the release of the mortgages which was a requirement of an express or implied term of the compromise.
[13] On 9 January 2004 A3F assigned its rights in respect of its causes of action against the appellant to A3FM.
[14] On 3 November 2004 the appellant obtained a declaration in these proceedings that the rights acquired by A3FM in respect of the loan to the appellant were subject to a set-off of any amounts due from A3F to the appellant in his own right or as assignee. A3FM was joined as a party and reactivation of the proceedings was ordered.
[15] An amended claim in the proceedings filed on 18 November 2004 showed A3FM as the second defendant, but claimed relief against A3F, which was then in liquidation. No statement of claim against A3FM was delivered. On 28 July 2005 a notice to admit facts was served by the appellant and A3FM served a notice to dispute facts on 5 August 2005.
[16] A summary judgment application by the appellant in the NSW proceedings was dismissed on 2 December 2004 and an appeal against that decision was dismissed on 18 October 2005.
[17] According to the appellant, when his former solicitor, Mr Loel, ceased acting for him after July 2005 he did not retain another legal advisor until 2009.
[18] A case flow management hearing was held on 10 May 2007 before the primary judge. A solicitor from MrLoel's firm purported to represent the appellant but the appellant had no notice of the application and was not aware of Mr Loel's place of work. The primary judge was told by the solicitor that they were having difficulty in contacting the appellant. The primary judge ordered that if an application for leave to proceed was not filed by the appellant by 10 August 2007 the matter would be deemed resolved. No such application was filed.
[19] A3F was deregistered on 21 August 2007.
[20] On 18 May 2009 A3FM assigned its rights in the Barton Scheme and in relation to the compromise agreement to investors in the Barton Scheme. The investors brought an application in the NSW proceedings on 4 September 2009 to be joined in the proceedings and for judgment against the appellant in the sum of $420,000 plus interest.
[21] On 28 October 2009 Macready AJ refused the investors' application on the basis that the extent to which the applicants were entitled to recover all or any part of the compromise sum of $420,000 depended on determination of the appellant's entitlement, in his own right and as Loawaves' assignee, to have losses claimed in the Queensland proceedings set off against the sum of $420,000. His Honour referred to other possible impediments to the investors' claim. He expressed the view that Queensland may be the more appropriate forum to settle the net balance of the investors' claim and remarked that "for that to occur it will be necessary for the Queensland proceedings to be reinstated and prosecuted to finality".
[22] In an affidavit sworn on 15 December 2009 the appellant deposed to having retained solicitors, as well as senior and junior counsel, "in order to facilitate a timely determination of the matter". He swore to an intention to "actively prosecute" the proceedings. In an affidavit sworn on 16 November 2009, the appellant asserted that "it is anticipated that a cross-vesting application will be made to have either the NSW Proceeding or the present proceeding transferred to the other jurisdiction in order that they be determined together".
[23] On the hearing at first instance on 4 February 2010, counsel for the appellant informed the primary judge that his instructions were that an application would be made to transfer the proceedings to New South Wales. The primary judge stated that the matter had to be reactivated first. Counsel for the appellant did not dispute the correctness of the proposition and there was no contention to the contrary on appeal. However, why an application for reactivation and one involving the taking of a step in the proceedings or their cross-vesting could not be disposed of in the one hearing is not immediately clear to me.
[24] What emerges from the foregoing account is that the appellant has done very little to prosecute his claims in these proceedings and has been in comprehensive breach of his obligations under r 5(3) of the Uniform Civil Procedure Rules 1999 (Qld) to proceed in an expeditious way. From the appellant's perspective, it was sensible enough for him not to pursue these proceedings while no steps were being taken to enforce the compromise of the NSW proceedings against him. The only benefit he could gain from success in the proceedings was the ascertainment of a sum able to be set off against any amount ordered to be paid by him the NSW proceedings. It is also true and it was conceded by counsel for the respondent, that A3FM had no interest in advancing the proceedings. But a party's convenience and motivations, whilst they may have relevance to the exercise of a discretion on an application to reactivate proceedings, cannot excuse that party from the performance of his or her obligations under the rules. The rights of the other party or parties as well as the principles stated in r 5 of the Uniform Civil Procedure Rules need to be considered. As was remarked in the joint reasons in Aon Risk Services Australia Limited v Australian National University:[4]
"Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings."
Their Honours had earlier[5] implicitly approved the observation of Toohey and Gaudron JJ in Sali v SPC Ltd[6] that case management reflected:
"[t]he view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard …"