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- Unreported Judgment
SUPREME COURT OF QUEENSLAND
Drake v PKF (Gold Coast) Pty Ltd & Anor  QCA 83
PETER CHARLES DRAKE
PKF (GOLD COAST) PTY LTD
ACN 137 531 250
SCOTT JAMES McMURTRIE
Appeal No 10289 of 2020
SC No 2822 of 2019
Court of Appeal
General Civil Appeal
Supreme Court at Brisbane – Unreported, 26 August 2020 (Dalton J)
30 April 2021
17 March 2021
Fraser and Morrison and McMurdo JJA
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COURT SUPERVISION – WANT OF PROSECUTION OR LACK OF PROGRESS – where the appellant seeks to challenge orders made refusing leave to file an amended statement of claim and dismissing proceedings – where the original statement of claim was struck out and the party was given six months to re-plead – where the amended pleadings contained the same defects as the earlier pleadings – where the primary judge dismissed proceedings without relief of that kind being sought and without consideration being given to matters relevant to such an application
Uniform Civil Procedure Rules 1999 (Qld), r 280, r 293, r 374, r 376
Tyler v Custom Credit Corporation Ltd  QCA 178, applied
The appellant appeared on his own behalf
M Jones for the respondents
The appellant appeared on his own behalf
Hall & Wilcox for the respondents
- THE COURT: The appellant, Mr Drake, seeks to challenge orders made on 26 August 2020, refusing leave to file an amended statement of claim, and dismissing proceedings instituted by him on 14 March 2019.
- The proceedings concerned a claim by Mr Drake in relation to the appointment of administrators to a company with which he was involved, LM Investment Management Limited (LMIM). In essence he claimed that his accountants (the respondents to this appeal) were negligent by not advising him how to respond to a proposal by the other directors to appoint administrators to LMIM, and that such an appointment would have a detrimental effect on his personal income. Further, part of the case claimed that the respondents “chose to remain silent” about various aspects of the proposal to appoint administrators and the options available to Mr Drake. It was claimed that had the respondents given appropriate advice, Mr Drake would have been able to prevent the appointment of the administrators by exercising the LMIM shareholders’ powers in general meeting, and taking over LMIM’s affairs by himself and continuing to trade.
- For the reasons which follow, whilst Mr Drake had been unsuccessfully attempting to properly plead his case for some years, the proceedings should not have been dismissed, and the orders made by the learned primary judge must be set aside.
Progress of the proceedings
- The material shows that the relevant steps and other aspects of the proceedings below have been as follows:
- (a)Mr Drake first retained solicitors in June 2017;
- (b)he commenced the proceedings on 14 March 2019;
- (c)on 25 June 2019 it was conceded that the original statement of claim was deficient, and it was the intention to re-plead by 2 September 2019;
- (d)on 21 August 2019 an application was filed by the respondents, seeking to strike out the claim and statement of claim on the basis that the loss claimed was reflective of loss suffered by LMIM, or the same as that loss;
- (f)the hearing date for each application became 16 September 2019;
- (i)the hearing was adjourned to 18 December 2019, and when a further draft statement of claim was produced the hearing was further adjourned to 11 February 2020;
- (k)on 11 February 2020 the draft statement of claim was considered by Dalton J; leave to file that document was refused;
- (l)on 11 February 2020 Mr Drake’s counsel accepted the proposal that six months was to be given so that the necessary steps to re-plead could be addressed; Dalton J granted the six months period; her Honour also placed the matter on the commercial list so that directions could be sought quickly if there were problems;
- (m)no application for directions was made;
- (n)on 17 April 2020 Mr Drake advised his solicitors that he could no longer continue with them as his solicitors;
- (o)on 25 May 2020 Mr Drake requested his files from his former solicitors; and
- (p)as at 26 August 2020 Mr Drake had taken no steps to obtain the documents he said he needed to re-plead.
- With that chronology in mind we turn to the two hearings conducted by the learned primary judge, the first on 11 February 2020 and the second on 26 August 2020.
Hearing 11 February 2020
- By 11 February 2020 the position was that:
- (a)the original statement of claim had been struck out;
- (b)a draft amended statement of claim had been delivered;
- (c)the application filed by the respondents on 21 August 2019 had been dealt with; and
- (d)the application for leave to amend under UCPR r 376 was still on foot.
- Mr Drake’s application for leave to amend was brought under UCPR r 376(4). That applies where leave to amend is sought to raise a new cause of action after a limitation period has expired. It is not at all clear why that rule was considered relevant. The original cause of action pleaded was negligence, by the failure to give advice about the appointment of administrators. The amended cause of action was the same. Counsel appearing for Mr Drake on 11 February 2020 expressed doubt as to whether it was the appropriate rule.
- In any event the learned primary judge did not embark on that issue. Relevantly, the orders made that day were to “strike out” the draft statement of claim.
- At the hearing counsel for Mr Drake identified the first issue as being whether the fourth draft statement of claim was sufficient in terms of the requirements under UCPR r 376. The learned primary judge, however, did not embark upon a consideration of those issues, instead focussing on whether the draft statement of claim was a sufficient pleading in itself. Her Honour made it plain that she was not dealing with questions arising under r 376, because of the deficiency of the draft pleading, describing those questions as “academic”.
- It was in that context that her Honour granted a six month adjournment of the application, to permit time to gather documents and amend the pleading.
- It is therefore clear that the learned primary judge did not determine the application under r 376. What was equally clear is that there was no other application on foot that day. Mr Jones of counsel, appearing for the respondents, conceded as much then, and before this Court.
- The learned primary judge gave notice that if a proper pleading could not be produced by the end of the six months then what might follow was the termination of the proceeding. This was variously expressed as: “I think I’m obliged to give you more time, but it would have to be on the basis, really, that it’s your last chance”; “this proceeding will have to be put to an end”; “the plaintiff needs to either present a proper pleading so that we can then have the arguments that you foreshadow, or face the fact that he can’t bring this proceeding”; the six months was “a generous amount of time, but … there must be some consequences and … the proceeding probably should be dismissed, I would have thought, if you can’t plead properly by then”.
- That it was only what might occur was made plain when counsel for Mr Drake commenced to address what had been said in that regard. The learned primary judge responded, “I can’t really say that to you, definitively, because I don’t know what you might say in August”. Instead her Honour put it this way: “… my view will be, unless there’s something extraordinary, you can’t just keep this action alive when you can’t plead a viable claim”; and “I think the plaintiff can work on the basis that … unless there’s something pretty extraordinary at the next hearing, I think this proceeding has to be dismissed without a hearing”. Just what the learned primary judge meant by “something extraordinary” was never identified.
Hearing 26 August 2020
- By 26 August 2020 the position was that:
- (a)a fifth draft statement of claim had been delivered;
- (b)the application for leave to amend under UCPR r 376(4) was still on foot; and
- (c)no application seeking judgment or dismissal of the proceedings had been filed by the respondents.
- On 26 August 2020 Mr Drake represented himself. The learned primary judge read the fifth draft pleading and observed to Mr Drake:
“… this is version number 5; it’s only a draft. I’ve read through the changes; it still doesn’t address the things that are raised with the people who were your lawyers in February. If you can’t articulate the claim in a sensible legal way, I can’t see why you should be allowed – this proceeding should be allowed to continue, and, as I say, it’s been three years now; there’s five versions; it’s still in draft; you don’t have lawyers any more. I just – I can’t see – I can’t possibly see how this matter can keep proceeding.”
- Mr Drake then responded, making these points:
- (a)he needed discovery of his own and LMIM’s accounting records;
- (b)whilst he was aware of her Honour’s remarks from the previous hearing, he had trouble meeting with lawyers he could work with;
- (c)he had done the draft statement of claim himself;
- (d)he understood that that the “opposition here are seeking … to not allow me to carry on”; and
- (e)he sought another chance to get the documents to plead and prove his case.
- The learned primary judge then confirmed that the only application on foot was that of Mr Drake, to amend:
“HER HONOUR: All right, then. Thank you. Is there any – wait a minute. Do you actually make – is it – nobody’s actually made an application, have they, Mr Jones?
MR JONES: I thought that there was still a live application for leave to amend from Mr Drake.
HER HONOUR: All right, then. There – and that was adjourned by my order of February, was it?
MR JONES: I believe so. I’ll check that from my records now.
HER HONOUR: Lewis – I’ll just – can you see if my order from February is there. And your submissions, Mr Jones, say that I shouldn’t give leave and that you want the costs of the proceedings. I assume you want the costs of the proceedings because you want them dismissed.
MR JONES: Yes, your Honour.
HER HONOUR: All right, then. Yes, you’re right. There was the application filed the 12th of September for leave to amend.
MR JONES: Yes. And I had a strikeout application, your Honour, but I understood that was determined by your last order.”
- What then followed was her Honour’s reasons on the application for leave to amend.
- The learned primary judge began the reasons by observing that the hearing on 26 August 2020 was the resumption of the hearing that took place on 11 February 2020. Her Honour then noted the progress of the proceedings, essentially as set out above at paragraph .
- Her Honour then observed that the pleading being propounded by Mr Drake on 26 August 2020 was “not propounded by Mr Drake as the pleading he wants to run with”, but rather it was “just his best effort to date”. As to that pleading her Honour found that it had substantial defects:
- (a)it had all the same defects as the version considered on 11 February 2020;
- (b)there was no sensible pleading of causation;
- (c)there were unparticularized allegations such as to how he would have prevented the other directors from appointing administrators to LMIM, and what would have happened in the alternative; and
- (d)there were difficulties with the pleading of loss, in that at least in part, the loss claimed was that of LMIM, and in so far as he claimed that he would have received profits of LMIM, there was “no pleading of the legal framework in terms of entitlements, obligations, rights, to make that claim good”.
- Her Honour referred to what had occurred since the February hearing:
“I warned on the 11th of February that, unless there was something extraordinary presented today, there would not be another chance for [Mr Drake], so far as pleading its case. In my view, there is nothing extraordinary shown today. In fact, what Mr Drake says, really, is that the matter is no further progressed than it was in June 2017. Mr Drake does not have the documents he says he needs to plead. He has been aware that he needs those documents since 2017. He has not obtained them. He blames his lawyer. I am not interested in the rights and wrongs of that. If his lawyer was not doing a proper job for him, he ought to have got a new lawyer well before now.”
- Then her Honour turned to an assessment of whether Mr Drake had a realistic prospect of ever being able to plead a coherent case, and whether there was any justification in allowing the proceedings to continue:
“So the first thing Mr Drake would need to do is find a lawyer. Then he would need to somehow get hold of the documents he says he needs to plead, and after all of that had happened, he could make another attempt, or his lawyer could make another attempt to plead what would be, as I say, a very complicated cause of action. I just cannot see that there is a realistic chance of that happening, and I think that, given the history of this matter, and the warnings that Mr Drake has had in relation to what would be required today, there is no justification for this proceeding continuing.”
- In our view, there are considerable difficulties that confront the orders made on 26 August 2020, in terms of the legal framework under which they were made.
- First, there was no application brought by the respondents seeking relief of the kind ordered, that is, dismissal of the proceedings. True it is that counsel agreed that they sought costs of the proceedings “because you want them dismissed”, but no application was made to that effect. Therefore, her Honour was not called upon for the exercise of powers under rules such as UCPR r 280 (noncompliance with the rules or an order) or r 293 (summary judgment by a defendant).
- Secondly, the only extant application at that time was that under UCPR r 376(4), by Mr Drake seeking leave to amend. But her Honour made it plain on 11 February 2020 that she was not embarking on that application, and it is evident that she did not do so on 26 August 2020. There is nothing in the reasons to suggest that her Honour was addressing matters such as whether there was a new cause of action that was being added, and whether it was based on the same or substantially the same facts as the currently pleaded cause of action.
- Thirdly, in so far as it might be thought that her Honour was exercising the power to dismiss for want of prosecution it could only have been pursuant to the inherent jurisdiction of the court to control its own processes, as the respondents submitted before this Court. However, the reasons do not reveal that any consideration was given to the matters that are relevant to such an application, as identified in Tyler v Custom Credit Corporation Ltd. Those factors include: (i) how long ago the events alleged in the statement of claim occurred; (ii) how long ago the litigation was commenced or causes of action were added; (iii) the prospects the plaintiff has of success in the action; (iv) whether or not the impecuniosity of the plaintiff has been responsible for the pace of the litigation; (v) any delay before the litigation was commenced; (vi) how far the litigation has progressed; and (vii) whether there is a satisfactory explanation for the delay.
- Most significantly to this case, one relevant factor recognised in Tyler v Custom Credit was whether or not the delay has resulted in prejudice to the defendant leading to an inability to ensure a fair trial. That aspect was not addressed at all, seemingly because the learned primary judge focused only on the prospects of re-pleading and whether “something extraordinary” had occurred between the hearing on 11 February 2020 and that on 26 August 2020. What was meant by the phrase “something extraordinary” was not articulated at either hearing, and it is not a commonly expressed test as to the sufficiency of pleadings nor the diligence required in pursuing proceedings.
- Fourthly, because the respondents had not brought an application to terminate the proceedings, that issue was not one that was required to be addressed by Mr Drake. Tellingly, the respondents’ outline for the hearing on 26 August 2020 concentrated entirely on reasons for refusing leave to amend, thus answering the application under UCPR r 376(4), and said nothing about dismissal for want of prosecution. In fact, those submissions conceded that whilst it was poorly pleaded, the case was not one apt for summary judgment. Thus this was a case where the very issue upon which the proceedings were resolved was not one joined as between the parties. The consequence was that neither party addressed the considerations relevant to that issue.
- For these reasons the orders made on 26 August 2020 must be set aside.
- The orders made on 26 August 2020 included an order that Mr Drake pay the costs of the proceedings, including reserved costs. Costs were reserved on two occasions, namely 16 September 2019 and 18 December 2019. In each case it was the costs of the hearing that day of Mr Drake’s application to amend the pleading. Costs were ordered against Mr Drake on 13 November 2019 and 11 February 2020. Setting aside the orders made on 26 August 2020 leaves the question of the costs reserved on 16 September 2019 and 18 December 2019. As the proceedings will continue to be managed on the Commercial Causes List those issues will be dealt with there.
- There is no issue as to costs of the appeal itself given that Mr Drake appeared for himself both below and on the appeal.
- We make the following orders:
- Appeal allowed.
- Set aside the orders made on 26 August 2020.
Appeal Book (AB) 132.
AB 160, 198.
AB 19, 208.
AB 215, 218.
AB 219; r 374 applies to failure to comply with an order.
Report by Dr Lotz, AB 228.
AB 265, paragraphs 14-15.
AB 266, paragraphs 16-17.
AB 299, 301.
AB 315, 320.
AB 284 line 44 to AB 285 line 9.
AB 479 line 47 to AB 480 line 7.
AB 480 line 25 to AB 482 line 21.
AB 482 lines 30-33, AB 483 lines 1-11, AB 484 lines 27-35.
AB 484 line 44 to AB 485 line 3.
AB 483 lines 18-19.
AB 485 lines 21-27.
AB 485 lines 36-37.
AB 487 lines 33-39.
AB 488 lines 8-12.
AB 488 lines 16-18.
AB 489 lines 6-8.
AB 498 lines 1-7.
AB 498 line 17 to AB 499 line 37.
AB 500 lines 18-40.
AB 5 line 28.
AB 5 lines 29-46.
AB 6 lines 1-9.
AB 6 lines 11-17.
 QCA 178 at ; Mathieson v Lawson & Ors  QCA 35 at -.
AB 99 paragraph 72.
- Published Case Name:
Drake v PKF (Gold Coast) Pty Ltd & Anor
- Shortened Case Name:
Drake v PKF (Gold Coast) Pty Ltd
 QCA 83
Fraser JA, Morrison JA, McMurdo JA
30 Apr 2021