Hodgetts v Champion[2002] QDC 252

DISTRICT COURT OF QUEENSLAND

 REASONS FOR JUDGMENT

1. [1]
   This is an application by the plaintiff in the action for leave to proceed, countered by one by the second defendant to strike out the action, apparently for want of prosecution.  The principles relevant to this application are conveniently expressed in the decision of the Court of Appeal in Tyler Custom Credit Corporation Ltd & Ors (2000) QCA 178 and I take those principles into account without enumerating them.  The action was commenced by a plaint dated 20 June 1997 by which the plaintiff claimed as against the first defendant, damages for breach of contract and negligence pursuant to a removal contract and as against the second defendant for breach of contract and negligence as the bailee of the plaintiff’s goods which were the subject of that removal contract.  The claims arise out of the loss by fire of the plaintiff’s property delivered by the first defendant into storage provided by the second defendant.

2. [2]
   By an amended plaint dated 26 June 1997 an additional cause of action under the Trade Practices Act was added.  The first defendant has not been located and was never served with either plaint and the second defendant filed an entry of appearance and defence on 7 August 1997.  That pleading contained a large number of non-admissions of allegations contained in the amended plaint, together with denials of allegations made in paragraphs 12, 13(c) and 13(d) of the amended plaint.

3. [3]
   No further pleadings were filed.  A request by the second defendant for further and better particulars of the plaintiff’s claim was entered by the plaintiff on 11 September 1997 together with a notice requiring discovery.  It seems that discovery by both parties was completed by 7 October 1997.  To this point the action had progressed with reasonable despatch.  However, there has been no further step taken in the action by the plaintiff since their affidavit of documents was filed on 27 September 1997.

4. [4]
   The male plaintiff explains in his supporting affidavit that the loss of his property in the aforesaid fire caused him substantial financial loss which led him to travel overseas to obtain lucrative employment.  His financial condition led also to conflict with his solicitors resulting in their refusal to act further jfor him in the action in October 1998.  Those solicitors subsequently obtained judgment against him in respect of outstanding legal costs on 30 June 1999.

5. [5]
   The male plaintiff says that because of his financial state he was unable to fund the litigation and “was forced to abandon it until now”.  Further, the stress occasioned by his losses led to the breakdown of his marriage with the female plaintiff and subsequently to divorce.  During that process he claims to have been unable to contemplate other litigation.  Now he says he has stabilised his home life and has no further impediments to continuing this action.

6. [6]
   The second defendant resists the application and seeks that the action be struck out.  The principal ground relied upon is that of prejudice.  Mr Smith, solicitor for the second defendant, swears that on or about July 1989 (sic) (which must have been intended to be 1999) he wrote to his client advising that as nearly two years had passed since the last step in the action, it was appropriate to close the file.  Nevertheless, he retained records of the second defendant in his possession until 28 April 2000 when he wrote inviting the second defendant to collect them.  This was done subsequently and nothing was heard of the action until the plaintiff’s application was served on Mr Smith’s firm on 16 August 2002. 

7. [7]
   Mr Smith has been informed by a Peter Greer, that the business formerly carried on by the second defendant has since been sold three times to successive purchasers and is now owned by National Mini Storage Pty Ltd of which Mr Greer is the current manager.  Mr Smith also swears that Mr Trevor Blaney, to whom the above letter of 28 April 2000 was delivered, has advised him that he had placed the second defendant’s documents obtained from Mr Smith in the storage facility at the Springwood branch of the second defendant’s business. 

8. [8]
   He also advised Mr Smith that “to the best of his knowledge none of the staff who were previously located at that centre were still there”.

9. [9]
   Mr Smith next spoke to one Anne MacDonald, the manager of the Springwood facility on 3 September 2002.  She advised that there were a number of boxes belonging to the second defendant stored in that facility but, there being no indexing of their contents, a very time-consuming search would be required.  At her suggestion Mr Smith contacted one Shane Michael O'Kane, an ”executive” of Babcock & Brown and also a director of the second defendant.  Mr O'Kane made a search of his records and reported that the only indexes of the second defendant’s records in his office related to employees of that company.

10. [10]
    In the meantime, Ms MacDonald had commenced a search of the second defendant’s documents and, after opening 40 to 50 boxes of archived material had not located the document specifically described in Mr Smith’s affidavit as relevant to the plaintiff’s claim.  There were, however, a further 200 to 250 boxes yet to be opened.

11. [11]
    The second defendant also alleges that in any event the plaintiff’s action is doomed to fail.  It relies upon the contractual terms pleaded in its defence excluding any liability to the plaintiff.  To the answer by the plaintiff that the contract referred to in the pleadings was between the first defendant and the second defendant, it responds that the first defendant contracted as agent for the plaintiff.  As to the negligence claim, the second defendant alleges that if the plaintiff succeeds in proving that claim, his damages are limited, at most, to $1,000.00 pursuant to the terms of the said contract.

12. [12]
    Of course, the express terms of the exclusion for limitation clauses may not be considered in the manner contended for by the second defendant.  Each counsel referred me to the High Court decision in Darlington Futures Limited v Delco Australia Proprietary Limited (1986) 161 CLR 500.  There the High Court restated the principles relating to exclusion and limitation clauses in commercial contracts.  At pages 510-511 in the judgment of the whole Court the following appears:

 “These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra preferentum in case of ambiguity.  Notwithstanding the comments of Lord Fraser in Ailsa Craig (FN) 31, the same principle applies to the construction of limitation clauses.  As King CJ noted in his judgment in the Supreme Court, a limitation clause may be so severe in its operation as to make its effect virtually indistinguishable from that of an exclusion clause.  And the principle, in the form in which we have expressed it, does no more than express the general approach to the interpretation of contracts and it is of sufficient generality to accommodate the different considerations that may arise in the interpretation of a wide variety of exclusion and limitation clauses in formal commercial contracts between business people where no question of the reasonableness or fairness of the clause arises.”

13. [13]
    The plaintiff argues that the position in Darlington’s case is distinguishable on the ground that the fire which caused his loss was caused by acts of the second defendant which were not authorised by its agreement with the first defendant.  That argument cannot be addressed at this stage but it is one that does appear to be open to the plaintiff.

14. [14]
    The plaintiff is undoubtedly the creator of his present situation.  He deliberately decided to “abandon” his action for the time being while he was beset with financial difficulties followed by the emotional and other stresses of marital breakdown and divorce.  In a sense, all those setbacks arose as a consequence of what the plaintiff alleges to be the negligence and breach of contract of the defendants.  However that may be determined, the second defendant was led, by the plaintiff’s inaction, to believe that his action was now dead and it needed no longer to leave relevant documents with its solicitors.  If there was credible evidence that the defendant would be prejudiced by the loss of those documents as a result of the plaintiff’s apparent “abandonment” of his action, then I would have not hesitated to dismiss the plaintiff’s application on the ground that the second defendant had suffered an irreversible prejudice.

15. [15]
    But on that issue the second defendant has failed to satisfy me that it would be irremediably prejudiced if the plaintiff’s action were to be allowed to proceed.  I am informed by his counsel without demur by counsel for the second defendant, that the relevant limitation period has not run and the plaintiff could recommence his action if it was struck out (Raabe v Brisbane North Regional Health Authority & Ors (2000) QSC 257).  More importantly however, the material relied upon by the second defendant is unreliable hearsay and lacks cogency.  For example, the statement attributed to Mr Blaney of the second defendant (that none of the staff previously located at the Springwood Centre of the second defendant’s business was still there) conceals more than it reveals in my view.  Moreover the information that Ms MacDonald still has 250 boxes of documents to search leaves wide open the strong possibility that the second defendant will not be prejudiced at all if the plaintiff’s application succeeds. 

16. [16]
    In my view the plaintiff has given a reasonable explanation for his failure to prosecute his action over a period of almost five years and that “there is good reason for excepting (these) proceedings from the general prohibition.” (Tyler V Custom Credit Corp., Supra at p. 4) Further, I am satisfied that any prejudice the Second Defendant may suffer, and there is a real doubt that there is any, is not such as to cause injustice to it if the action is allowed to continue.  I allow his application and give him leave to proceed in the action.  The respondent’s application is dismissed.

17. [17]
    I order that the respondent pay the applicant’s costs relating to the respondent’s application to be assessed.  I make no order as to the costs of the plaintiff’s application.