DISTRICT COURT OF QUEENSLAND

1. [1]
   This application, for leave to proceed, was brought simultaneously in 69 actions filed in Southport District Court. Each action has a separate plaintiff claiming damages for losses sustained from investments each allegedly made with the failed “Wattle” group. The claimants’ solicitors act, in fact, for 70 plaintiffs but one^[1] does not require the relief sought in the present applications by the other 69, none of whom have taken a step for two years and, therefore, now require leave under UCPR 389.

2. [2]
   Fifty of the 69 matters involve six defendants, and the other 19 have seven. By agreement between all parties and their representatives, applications for leave under r 389 were filed in all 69 but supporting material was only filed in one, Welsh^[2]. All parties agree the result in the other 68 matters will be the same..

3. [3]
   For convenience sake I have annexed to these reasons (Annexure “A”) a schedule prepared by the solicitors for all 70 plaintiffs showing, in respect of each, the steps taken; (p 33 of that schedule, relating to Hall’s action, is superfluous).

4. [4]
   Each plaintiff seeks damages alleged to arise from failed investments in the Wattle Group which, each claims, were made in reliance upon representations from the defendants (in various combinations, and legal relationships) about that group, and the potential return on investments with it. The representations are alleged to have been:

1. (a)
   false, and made in circumstances involving a contravention of the Trade Practices Act 1974; and/or

2. (b)
   made negligently, in circumstances attracting a remedy in damages; and/or

3. (c)
   made in circumstances in which some of the defendants owed the plaintiff a fiduciary duty, of which those defendants were in breach.

The History of the Actions

5. [5]
   As Annexure “A” shows, in 47 of the 69 matters the last step taken by the plaintiff was the service of a plaint in March, or April 1999. In all of them the second, fifth and sixth defendants took a step by filing a request for further and better particulars on 29 March 1999. The first, third and fourth defendants served a request for particulars on 26 May 1999. The seventh defendant is a party to 16 of those 47 matters and, in all of them, has filed an entry of appearance and defence.

6. [6]
   In another 17 matters, the last step was the plaintiff’s provision of further and better particulars, in response to a request from the second, fifth and sixth defendants, by letters dated 3 and 23 September 1999. In the remaining five, the plaintiff’s last apparent step was the delivery of an amended claim and statement of claim under cover of a letter dated 8 August 2000. In one of those matters, Brooks, the first, third and fourth defendants delivered a defence to that amended statement of claim under cover of a letter 4 October 2000 which indicated defences in the other four would be quite similar, and be delivered shortly.  In fact, that has not occurred.  In two of the five matters in which the seventh defendant was involved, that defendant objected to delivery of the plaintiff’s amended pleading without a preceding notice of intention to proceed under r 389(1), and has never resiled from that stance.

7. [7]
   On 23 May 2002 the plaintiffs’ solicitors wrote to the Court suggesting that in view of the large number of claimants for whom they acted (in total, 74), five cases should be selected for management and Court supervision. On 14 June 2002 I replied suggesting the plaintiffs’ solicitors liaise with the lawyers for the other parties and resolve a date when management might be considered and, if appropriate, directions given. Thereafter, the plaintiffs’ solicitors arranged for the matter to be listed before me on 22 August 2002. As submissions on that day revealed, however, it was only after that had been arranged that the plaintiffs’ advisors realised, or were told (or somehow learned) that all actions except Hall came up against the hurdle created by r 389(2), which provides:

3. (2)
   If no step has been taken in a proceeding for 2 years from the time the last step was taken, a new step may not be taken without the order of the Court, which may be made either with or without notice.

8. [8]
   Because of that difficulty, the intended directions hearing on 22 August involved, ultimately, nothing more than directions concerning the procedure by which the plaintiffs’ applications under that rule would be prepared, and heard on 17 October.

Matters Relevant to the Discretion Arising Under r 389(2)

9. [9]
   The proper approach to applications of this kind is, as Chesterman J said in Lillyville Pty Ltd v Colonial Mutual Life Assurance Society (1999) QSC 372, to identify the relevant factors, assess the weight to be given in the circumstances of the case to each of them and, then, to determine whether on balance there is good reason for making the order.  As His Honour went on to say:

Whether there is a satisfactory explanation for the delay in the prosecution of the action and whether the defendant will suffer prejudice if the action proceeds are always relevant factors.  The discretion conferred under r 389 is one to allow an action to proceed despite the general prohibition against an action continuing in which no step has been taken for three years.  The applicant must satisfy the Court that grounds exist for exercising the discretion in its favour.  There is an evidentiary onus on the defendant to raise any consideration telling against the exercise of the discretion, but the ultimate onus of satisfying a Court that the action should be allowed to proceed remains on the applicant.

10. [10]
    In Tyler v Custom Credit Corporation Limited [2000] QCA 178 Atkinson J identified those factors which will, commonly, fall for consideration in applications under the rule, and said they included:

3. (1)
   how long ago the events alleged in the statement of claim occurred and what delay there was before the litigation commenced;

3. (2)
   how long ago the litigation was commenced or causes of action were added;

3. (3)
   what prospects the plaintiff has of success in the action;

3. (4)
   whether or not there has been disobedience of Court orders or directions;

3. (5)
   whether or not the litigation has been characterised by periods of delay;

3. (6)
   whether the delay is attributable to the plaintiff, the defendant or both the plaintiff and the defendant;

3. (7)
   whether or not the impecuniosity of the plaintiff has been responsible for the pace of the litigation and whether the defendant is responsible for the plaintiff’s impecuniosity;

3. (8)
   whether the litigation between the parties would be concluded by the striking out of the plaintiff’s claim;

3. (9)
   how far the litigation has progressed;

3. (10)
   whether or not the delay has been caused by the plaintiff’s lawyers being dilatory.  Such dilatoriness will not necessarily be sheeted home to the client but it may be.  Delay for which an applicant for leave to proceed is responsible is regarded as more difficult to explain than delay by his or her legal advisers;

3. (11)
   whether there is a satisfactory explanation for the delay; and

3. (12)
   whether or not the delay has resulted in prejudice to the defendant leading to an inability to ensure a fair trial.

11. [11]
    As her Honour also went on to say, however, the Court’s discretion is not fettered by rigid rules, but should take into account all of the relevant circumstances of the particular case^[3].

The Issues Here

12. [12]
    According to Annexure “A” only two plaintiffs are alleged to have made investments with Wattle in 1995^[4], with all the rest occurring in 1996, 1997, or 1998.  All of the plaints save Hall were filed in March 1999.  The events giving rise to the actions are not, themselves, particular old, and neither are the actions.  No defendant argued that any plaintiff’s prospects were so apparently poor as to make it, in effect, merciful to refuse leave.  There has been no apparent disobedience of Court orders or directions.  There is no allegation the impecuniosity of any plaintiff has caused delay in any action, or that the defendant is responsible for that.  The litigation has, in each instance, progressed to the various stages discussed earlier.

13. [13]
    In almost all matters the causes of action for damages for negligent mis-statement and breach of fiduciary duty are not, yet, statute barred so the litigation between the parties would not, in respect of those claims, be necessarily concluded even if leave is refused. The claims under s 82 of the TPA would, however, be barred because the claimants take no benefit from the amendment of that section in 2001, which extended the limitation period under it to six years.

14. [14]
    There is no evidence any plaintiff has been personally responsible for delay. Rather, the affidavits filed by the plaintiffs’ solicitor Ms Ianna give rise to a fairly clear inference that deliberations by their legal advisers, and the views they formed concerning the possible effect of proceedings in the Federal Court involving the Wattle Group and some of the defendants in these actions; and, the best way to advance all of these claims were the sole, or at least, principal, reasons for delay.

15. [15]
    The major factors here (of those identified by Atkinson J) are, then, the delay itself; whether there is a satisfactory explanation for it; and, the possibility that prejudice has been suffered by some or all of the defendants.

16. [16]
    The first, third and fourth defendants are respondents to an action commenced in the Federal Court by David Clout (trustee in bankruptcy of the estate of Geoffrey Robert Dexter). Dexter allegedly ran a scheme under the name “The Wattle Group” through which he offered very high returns, of 50 per cent per annum, to investors. It is alleged, in that action, that all the plaintiffs in the matters before me invested in that scheme, which collapsed in about March 1998. Dexter has been convicted of 31 offences against the Criminal Code Act 1899 (Qld) and, on 8 May 2001, sentenced to 10 years’ imprisonment.  His trustee claims relief under s 120 of the Bankruptcy Act 1966 concerning commissions allegedly received by the first, third and fourth defendants from Dexter.  (In oral submissions at the hearing of this matter the plaintiff’s counsel, Mr Collins, said the proceedings were against the first and third defendants, but not Mr Corbett himself^[5]).  The trial of those proceedings finished in about September 2001 but, as at the date of hearing of this application, judgment had not been delivered.  I think it is reasonable that the plaintiffs advisors would conclude the outcome of that action might well affect the financial position of some of the defendants here, and understandable that they would prefer to know the result before pressing the plaintiffs’ claims too far towards trial. It is also possible, of course, that evidence there, and the ultimate findings of the trial judge, would be relevant to issues in these matters.

17. [17]
    The other explanation advanced for the delay was the plaintiffs’ advisors attempts to induce the defendants’ representatives into an agreement that a selected few, rather than all of these actions, would be advanced to trial. Ms Ianna deposes that her firm, in consultation with the plaintiffs’ counsel, resolved to propose to the defendants’ representatives that five actions be managed by the Court and advanced to trial before the others. Some telephone calls and letters passed between the parties’ lawyers about this proposal, commencing around May 2000^[6].  Mr Saunders, the solicitor who appeared for a number of defendants before me, (and, at an earlier time, represented more of them) fairly conceded that those communications were “genial and cooperative”; but he also said, again quite fairly,  that he considered it was up to the plaintiffs’ lawyers to advance the matters, and no concrete proposals were advanced by them until last year when they began corresponding with the Court and, ultimately, listed the matter for directions in August.

18. [18]
    None of the defendants seriously contended that delays on the plaintiffs’ part induced them to think the actions might have been abandoned. Nor, in light of the history just set out, could they reasonably do so. Such delay as occurred is not particularly long. The decision to refrain from advancing the claims quickly pending the decision in the Federal Court was not an unreasonable one. The complexity involved in running such a large number of claims to trial is daunting, and some delay would usually be expected. While the plaintiffs’ advisers might have advanced both the actions and steps toward case management by the Court more diligently, I consider that on balance the reasons advanced for the delay are satisfactory.

19. [19]
    It was also argued by Mr O'Sullivan (for the seventh defendant) that the plaintiffs ought not be granted leave to proceed unless and until each stipulated what step it would take, in that event. At the hearing, the plaintiffs’ solicitors presented a proposed draft order in three actions^[7] involving directions that they be heard together, with a timetable for delivery of further pleadings, etc.  Those three matters, Mr O'Sullivan submitted, might reasonably be exempted but in all of the others leave should be refused until a similarly clear proposal was put forward.  R 389(2) does not, however, attach a requirement of that kind.  The obvious explanation is that a plaintiff who is granted leave, but then fails to take a proper step promptly would very likely attract a further application to have his action struck out and, in that event, little sympathy from the Court.

20. [20]
    As to the possibility of prejudice to the defendants, only Mr Ross, the seventh defendant, filed an affidavit raising matters relevant to that issue. He complained that with passing time his recollection of relevant events may dim but the risk, as he described it, did not imply the relevant issues could not, now, be fairly tried^[8].  He also said that ASIC may have seized some documents but there is no evidence to suggest they have, in the process, been lost or destroyed.

21. [21]
    Mr Saunders pointed out that each and every one of the 69 actions relies upon representations made, variously, by 13 different persons on behalf of the second respondent, many of them oral. Accepting, again, that memory may fade, there was no suggestion any of these persons was now dead, or unable to be located; and, the fact the proceedings were now issued almost four years ago and within, generally, two years of the representation having allegedly been made means the defendants have had ample opportunity to proof those witnesses, in the face of the plaintiffs’ pleadings.

22. [22]
    The issue of prejudice is also to be considered, of course, in light of the fact some of the plaintiffs’ causes of action are still in time.

23. [23]
    These submissions do not establish that the delay has resulted in prejudice to the defendants which gives rise to an inability to ensure a fair trial.

24. [24]
    In light of these conclusions it is proper, in my view, to exercise the discretion in the plaintiffs’ favour, and grant each of them leave to proceed.

Further Steps

25. [25]
    In general terms the defendants’ representatives accepted there was some merit in the proposal that a small number – probably, three – of the actions be heard together and, to that end, be the subject of directions from the Court. Draft orders concerning those three actions were, however, delivered very late to the defendants’ representatives (during hearing of the matter on 17 October 2002) and the defendants’ lawyers ought, in my opinion, be given a further opportunity to consider those matters.

26. [26]
    Implicit in the proposal is the notion that a decision in those three matters is likely to lead to a conclusion in the others, outside court. My concern is that the actions may not be amenable to resolution by running a few ‘test’ cases. If, as was suggested in argument, representations are alleged to have been made by a large number of persons, and reliance is an issue, each case might turn very much on its own facts.

27. [27]
    These reasons will, therefore, be delivered to all the parties’ legal representatives in draft form, accompanied by a letter requiring that they liaise with each other, and with the Court, in arranging a further hearing date when the reasons may be published, the order granting leave made, and further submissions received, and directions made, about the future conduct of all these matters.

Costs

28. [28]
    Although the plaintiffs’ counsel did not admit so much, it was clear the hearing on 22 August 2002 was always intended to be one for directions concerning the future conduct of all the actions and only at a very late hour did the plaintiffs’ advisors realise (or they were told) of their difficulties with r 389(2). The proceedings on that date became, then, of no more use than an opportunity to give directions about an exchange of affidavits and submissions for the application the plaintiffs had necessarily to bring under that rule on 17 October. The latter application involved no fault on the part of any of the defendants and was only required because of the plaintiffs’ delay. In those circumstances, the plaintiffs ought to pay the defendants’ costs of the hearings on both dates, assessed on the standard basis. Again, I will make an order in those terms when these reasons are published at the forthcoming directions hearing.