Ormeau Realty Pty Ltd v Bardot Pty Ltd
[1998] QDC 291
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- Ormeau Realty Pty Ltd v Bardot Pty Ltd[1998] QDC 291
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Ormeau Realty Pty Ltd v Bardot Pty Ltd[1998] QDC 291
Ormeau Realty Pty Ltd v Bardot Pty Ltd[1998] QDC 291
IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND | Plaint No 652 of 1992 |
[Before Hinson ADCJ]
[Ormeau Realty Pty Ltd v Bardot Pty Ltd & Anor]
BETWEEN:
ORMEAU REALTY PTY LTD | Plaintiff |
AND:
BARDOT PTY LTD | First Defendant |
AND:
GEERING PTY LTD and JAPIE PTY LTD | Second Defendant |
JUDGMENT
Judgment delivered: | 6 October 1998 |
Catchwords: | |
Counsel: | Mr S Blaxland for the plaintiff Mr D Kelly for the defendants |
Solicitors: | Blanch Enders & Associates for the plaintiff Walsh Halligan Douglas for the defendants |
Hearing Date(s): | 3 September 1998 |
IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND | Plaint No 652 of 1992 |
BETWEEN:
ORMEAU REALTY PTY LTD | Plaintiff |
AND:
BARDOT PTY LTD | First Defendant |
AND:
GEERING PTY LTD and JAPIE PTY LTD | Second Defendant |
REASONS FOR JUDGMENT - HINSON A.D.C.J.
Delivered the 6th day of October, 1998
In this matter the plaintiff applies for leave to proceed under Rule 377, for an order vacating or varying an order made on the 1st June 1992 that the plaintiff provide security for costs, and for summary judgment or alternatively directions for an expedited hearing. The defendants apply to have the action dismissed for want of prosecution. The action was commenced on the 26th February 1992. After the order made on the 1st June 1992 no step has been taken in the action until the filing of the plaintiff's summons on the 18th August 1998.
The plaintiff's claim is for commission payable pursuant to written appointments made by the defendants on the 30th October 1995 appointing the plaintiff as their real estate agent for the purpose of selling two properties at Ormeau. By the terms of the appointments the defendants agreed to pay commission if the plaintiff introduced a purchaser who entered into valid and enforceable contracts of sale, and the purchaser completed the contracts or they were not completed in certain circumstances. The defence to the claim is that the contracts the defendants entered into with the purchaser Couronne Investments Pty Ltd were not valid and enforceable contracts in three respects. First, it is alleged that the contracts were conditional upon the approval of Westpac Banking Corporation as mortgagee and that no such approval was given. The condition to that effect is alleged to have been an oral condition expressed by the defendants' agent Mr Mostert to three named representatives of the purchaser and Mr Walker, a director of the plaintiff company, before the execution of the contracts. Secondly, it is alleged that the contracts are uncertain and therefore unenforceable because they failed to specify a date for the payment of the final instalment of the purchase price. Thirdly, it is alleged that the contracts have come to an end or have become incapable of performance because of the purchaser's failure to give notices under clause 35 and clause 44.
In late May 1992 the defendants filed their defence and a summons for security for costs. On the 1st June 1992 it was ordered that the plaintiff provide security for the defendants' costs in the sum of $10,000.00 on or before the 15th June 1992 in a manner acceptable to the Registrar, and that in default the action be stayed. Security has not been provided.
Early in 1992 Couronne Investments Pty Ltd commenced an action in the Supreme Court against the defendants and Mr Mostert. The purchaser claimed damages for breach of the contracts of sale and the defendants raised the same defences as are pleaded in the present action. Following a trial over eight days in October and November 1994 judgment was given on the 10th April 1996. In lengthy and comprehensive reasons for judgment White J rejected each defence. More particularly, Her Honour found that the contracts were not subject to the alleged oral condition, and that in any event that oral condition was inconsistent with the terms of the contracts and was unenforceable under the rule in Hoyts Pty Ltd v Spencer (1919) 27 CLR 133. The contracts would not have failed for uncertainty by reason of the omission of a date for payment of the final instalment of the purchase price, and had the contracts still been on foot rectification would have been ordered. The purchaser was found to have waived the benefit of clause 35 and the contracts were not frustrated by the failure to give notice under clause 44.
In January 1997 the plaintiff's solicitors wrote to the defendants' solicitors saying that having regard to the decision of White J it seemed obvious the defences must fail and asking that the defendants settle the action expeditiously. The defendants' solicitors replied that Mr Mostert was in South Africa and would not be returning until late February when instructions would be obtained to reply. No further reply was made. Mr Walker became seriously ill in May 1997 and passed away on the 25th August 1997. Between that date and the filing of the plaintiff's summons almost a year later the material does not disclose what if anything was happening in relation to the action.
It is appropriate to deal with the applications for leave to proceed and to dismiss for want of prosecution first. If leave to proceed is not granted the plaintiff's application for other relief fails at the threshold.
Leave to Proceed
The plaintiff must show that there is good reason for excepting these proceedings from the general prohibition on the taking of a fresh proceeding without the order of the court or a judge.
The relevant factors to be considered include the length of the delay, any reason for the delay, the conduct of the parties and any hardship or prejudice to either party should leave to proceed be refused or granted.
For the defendants, Mr Kelly relied on seven factors as warranting the refusal of leave. The same factors were relied upon in support of the defendants' application for dismissal for want of prosecution under the second limb of Birkett v James [1978] AC 287.
First, the delay is submitted to be inordinate, being a delay of more than six years. That is plainly correct, but the mere fact of delay is not of itself of any great weight. The consequences of the delay are far more important. Secondly, Mr Kelly submitted that there was no satisfactory explanation for the delay. The existence of a satisfactory explanation is not a condition precedent to the granting of leave to proceed: Wilson v Bynon [1984] 2 QdR 83 and Dempsey v Dorber [1990] 1 QdR 418. Nevertheless, the absence or existence of a satisfactory explanation is a factor which goes into the balance. Mr McGrath, a director of the plaintiff company, advances four reasons for the delay being the plaintiff's decision to await the outcome of the Supreme Court proceedings; the plaintiff's change of solicitors; the plaintiff's attempt to give the defendants an opportunity to settle the action; and the death of Mr Walker which caused some delay in giving instructions to the plaintiff's solicitors. It was reasonable for the plaintiff to await the outcome of the Supreme Court proceedings. I do not imagine that the defendants would have been content to be litigating the same issues simultaneously in the Supreme Court action and this action. Mr Kelly relies on the dictum of Lord Goddard in Battersby v Anglo-American Oil Company Ltd [1945] 1 KB 23 at 32 that it is ordinarily not a good reason for excusing delay in serving a writ that the plaintiff desires to hold up the proceedings while some other case is tried or to await some future development. Lord Goddard went on to say that it was not right that people should be left in ignorance that proceedings had been taken against them if they were able to be served. The Court of Appeal in that case was dealing with an application for leave to renew a writ and limitation considerations were critically important. The present case is very different - the plaint had been served and a defence was filed in materially identical terms to the defence delivered in the Supreme Court action. In my opinion there is a satisfactory explanation for the delay until April 1996. Thereafter the plaintiff's delay is not satisfactorily explained by the other reasons advanced by Mr McGrath. No doubt some delay was occasioned by those matters but they do not satisfactorily explain a delay of some 28 months from April 1996 to August 1998. The fact is that during that period the action was stayed because of the plaintiff's failure to provide security for costs, and it would have been reasonable for the plaintiff to attempt to negotiate a settlement of the action. No real effort appears to have been put into settlement negotiations and it may be fair to say that after May 1997 Mr Walker had more important and pressing matters demanding his attention. While the plaintiff can be criticised for not doing anything after April 1996, it is not to be punished for that inaction if there is otherwise good reason for granting leave to proceed. I do not regard the unsatisfactory explanation for the delay after 1996 as being a particularly weighty factor against the grant of leave to proceed.
Mr Kelly next submitted that the delay has caused the defendants to suffer “inferred prejudice” of the kind described in Dempsey v Dorber at 420 and 421 and in Brisbane South Regional Health Authority v Taylor (1996) 70 ALJR 866 at 871. In the circumstances of this case there is little reason to suppose that any such prejudice would be substantial and would preclude a fair trial of the issues in the action. As the Court of Appeal has recently noted, it will usually be the case that the more complex the issues and unavailability of contemporaneous documents and relatively early statements of evidence, the greater will be the prejudice from delay; and conversely, the simpler the issues and the greater the availability of contemporary material and relatively fresh statements, the less the perceived prejudice: Smith v Harvey-Sutton (Appeal 6188 of 1997, judgment delivered 21-08-98). The defendants have already litigated the substantive issues in dispute in this action in the Supreme Court. It is not suggested that any of the witnesses who gave evidence in the Supreme Court or any documentary evidence in those proceedings are not now available. The issues in dispute are relatively simple. I am unable to conclude that there is any inferred prejudice of such significance that leave to proceed ought to be refused.
The fourth factor relied on is actual prejudice to the defendants because of the death of Mr Walker. In his affidavit Mr Mostert refers to paragraph 8 of the defence which alleges that Mr Fitzgerald, a representative of Couronne Investments Pty Ltd, told Mr Mostert prior to the execution of the contracts that the contracts would be dated the following day and, when Westpac's approval was obtained, the date would be altered to the date of such approval. Mr Mostert deposes that it is his recollection that Mr Walker was present during his conversation with Mr Fitzgerald. Both Mr Mostert and Mr Fitzgerald gave evidence of their conversation prior to the execution of the contracts in the Supreme Court trial. Neither side called Mr Walker and White J noted at page 16 of the reasons for judgment a concession by Mr Mostert that Mr Walker would not give evidence favourable to the vendors. Mr Mostert does not say in his affidavit that Mr Walker was in a position to hear and did in fact hear what he alleges Mr Fitzgerald said. Nor does he offer any reason for supposing that Mr Walker would have been able to give evidence corroborating his version of the conversation. In those circumstances it is entirely speculative to regard Mr Walker's death as causing any prejudice to the defendants. In any event, the defendants face the difficulty that even if they could establish an oral condition in the terms contended for it is unenforceable under the rule in Hoyts Pty Ltd v Spencer
The final three factors relied on are related. Japie Pty Ltd went into liquidation on the 31st May 1995. The liquidator deposes that the winding up (a creditors' voluntary winding up apparently) is nearing completion and when a clearance from the Australian Taxation Office is received a distribution to creditors will be made. It is estimated that creditors will receive approximately 8.5 cents in the dollar. No application for leave to proceed under the Corporations Law has been served on the liquidator. Japie Pty Ltd and Geering Pty Ltd were co-owners of one of the properties sold. Mr Kelly submitted that Geering is prejudiced by the deterioration in the financial position of Japie, and Japie will be prejudiced if leave to proceed is granted because the winding up will be disrupted.
Any disruption to the winding up of Japie will only occur if leave to proceed under the Corporations Law is given. An application for such leave could have been made at any time without infringing the prohibition in Rule 377(2): see Re M&M Outdoor Centre Pty Ltd (In Liq) [1997] 2 QdR 370. No such application has been made and it is not clear whether the plaintiff intends to make such an application. The liquidator's affidavit was filed by leave at the hearing and Mr Blaxland told me that the plaintiff was unaware of the liquidation until service of that affidavit. If an application under the Corporations Law were now made it is most unlikely that leave would be given. Leave to proceed under Rule 377 will not, of itself, cause any disruption to the winding up of Japie. Unless and until leave to proceed under the Corporations Law is given, the plaintiff's action against Japie is stayed by the operation of s.500(2) of the Corporations Law.
So far as Geering is concerned, it will be prejudiced to the extent of being unable to recover any contribution from Japie in respect of its liability to the plaintiff. Any liability of Geering and Japie to pay commission to the plaintiff in respect of the sale of their land is a joint and several liability in respect of which Geering, if it is required to pay the whole of the commission, would be entitled to recover half from Japie. That prejudice to Geering has existed since at least the 31st May 1995. The potential for that prejudice existed before then. Any delay since about early 1995 has not caused prejudice to Geering's prospective right of contribution from Japie and has not caused any substantial additional prejudice. Had Geering been in a position to claim contribution from Japie in about May 1995, Geering was only likely to recover a maximum of $2,125.00 being 8.5 cents in the dollar on a maximum claim for half the $50,000.00 commission. If the liquidation is completed in the near future before any possible claim for contribution can be made by Geering, so that any future claim becomes impossible, Geering has been prejudiced to the extent of losing the opportunity of recovering at most $2,125.00. Delay before early 1995 may have deprived Geering of a better opportunity of recovering contribution if the plaintiff had by then obtained a judgment against Geering and Japie, Geering had paid the whole of the judgment debt, and Japie's financial position was sufficient to satisfy a claim for contribution. There was evidence in the proceedings in the Supreme Court pointing to Geering being without assets or resort to assets and Japie having an excess of liabilities over assets: see p46 of the reasons for judgment. The trial in the Supreme Court, it will be remembered, was in late 1994. In any event, any delay prior to early 1995 was excusable and justifiable.
None of the factors relied on by the defendants, either singly or in combination, persuades me that leave to proceed should be refused and this action dismissed for want of prosecution. There is in my opinion good reason to grant leave to proceed being the absence of any sufficient prejudice to the defendants and a satisfactory explanation for a substantial part of the delay. I should add that a refusal of leave to proceed will cause substantial prejudice to the plaintiff. Under the written appointments the commission was payable in instalments on specified dates. More than six years have elapsed since the last of those dates and any fresh action would now be statute barred. On the face of it, having regard to the outcome of the Supreme Court proceedings, the plaintiff has a strong case, and the loss of the chance of further prosecuting its claim would be a substantial prejudice.
Security for Costs and the Stay
I am not prepared to accede to the plaintiff's application to vacate the order made on the 1st June 1992. Despite Mr Kelly's submission that I have no power to do so, I consider that there is power under O.45 r.1 of the Rules of the Supreme Court as applied by Rule 4(1) of the District Court Rules. Under O.45 r.1 application may be made for relief against the continued operation of an order if, after it is made, new facts come into existence or are discovered which render its enforcement unjust: see generally Drabsch v AMP Fire and General Insurance Company Limited [1991] 2 QdR 614 at 621-623 for a discussion of the rule. Mr Blaxland relies on two circumstances as justifying relief against the order to provide security for costs. The first is that the plaintiff has continued to trade profitably since 1991 and has assets exceeding $10,000.00 and the second is that the defendants are apparently in financial difficulties. The latter circumstance is, I think, irrelevant. As to the first circumstance, all of the assets referred to are moveable assets being office equipment and a motor vehicle. Mr McGrath is prepared to provide a guarantee - he owns two residential properties worth approximately $330,000.00 which are encumbered to the extent of $40,000.00. There is no suggestion that the provision of security will stifle the litigation. The plaintiff's prospects of success in the action can be said to be good but it is not clear whether prospects of success were considered to any great extent when the provision of security was ordered in June 1992.
In the circumstances I do not think that the plaintiff ought to be relieved of the obligation to provide security for costs. The form of security now proposed seems acceptable, although that is really a matter for the Registrar under the terms of the order: see also Rule 282 in this regard.
It is appropriate that the action be stayed until the security for costs is provided. The action is presently stayed because of the plaintiff's failure to provide security by the 15th June 1992. Rule 375 permits an enlargement of the time for providing security upon such terms as the justice of the case may require and allows an application to enlarge time to be made after the expiration of the time originally allowed for the provision of security. The alternative order sought by the plaintiff is an order removing the stay absolutely so as to permit the making of the application for leave to proceed. It is appropriate, I think, to enlarge the time for providing security to the 16th October 1998. That ought to be effective to lift the stay presently in place so as to permit the making of this application.
Summary Judgment
Mr Blaxland did not press the application for summary judgment. He submitted that the defendants are estopped from denying the validity and enforceability of the contracts by the judgment of White J. Mr Kelly submitted that no issue estoppel arose because the parties in the two actions are not the same. That is, of course correct, but an issue estoppel binds or benefits not only the parties but also their privies. Since the defendants were common parties in both actions, an estoppel will only operate in the present case against the defendants and in favour of the plaintiff if the plaintiff can be said to be a privy of the plaintiff in the Supreme Court action: see Ramsay v Pigram (1968) 118 CLR 271 at 276 per Barwick CJ and at 282 per McTiernan J. The plaintiff and the purchaser are plainly not privies in blood or privies in estate or title. They could only be privies in interest which requires that the privy claim under or through the person with whom he is in privity: see 118 CLR at 279 per Barwick CJ. The plaintiff's claim for commission is not derived from any right of the purchaser and has not devolved upon the plaintiff from the purchaser, whether by operation of law or transfer. The plaintiff's claim depends upon the terms of the written appointments which is entirely a matter between the plaintiff and the vendors.
The absence of an estoppel is not the end of the matter, because it may nevertheless be vexatious or an abuse of process to raise again an issue which has been so dealt with in earlier proceedings that it would be inequitable to allow it to be raised again: see, for example, South Australian Housing Trust v State Government Insurance Commission (1988) 5 ANZ Insurance Cases 60-865. No submissions to that effect were made and I refrain from making any further comment.
Conclusion
Subject to any further submission which may be made as to the form of orders and costs, the orders I propose to give effect to these reasons are as follows:—
- That the plaintiff be given leave to proceed in this action notwithstanding that more than three years has elapsed since the last proceeding was taken.
- That the time limited by the order made on the 1st June 1992 for the plaintiff to provide security for costs be enlarged to the 16th October 1998.
- That the defendants' summons filed on the 31st August 1998 be dismissed.
- That the plaintiff pay the defendants' costs of and incidental to the plaintiff's summons filed on the 18th August 1998 to be taxed.
- That the defendants pay the plaintiff's costs of and incidental to the defendants' summons filed on the 31st August 1998 to be taxed.