Thornton v Russo[2004] QDC 35

DISTRICT COURT OF QUEENSLAND

1. [1]
   In this matter there are cross-applications to dismiss the action for want of prosecution, and by the plaintiff for leave to proceed under r 389.  The plaintiff’s application was filed in response to the defendants’ application.  The action was commenced by a plaint filed on 12 January 1993.  It alleges that the plaintiff was defamed by a letter sent on 1 October 1992, by the first defendant on behalf of the second defendant to one Anthony Johnson, and circulated to a number of other individuals capable of identification on some date not alleged in the pleading, but presumably in about October 1992.  On the same day a plaint was filed by a company, GWA Pty Ltd, claiming that the same letter had also defamed it.  To a large extent developments in relation to the two matters proceeded in parallel.  What happened in the actions appears in the following chronology.

Chronology

Background

2. [2]
   The background to the litigation appears in some detail in the judgment of Williams JA in the Court of Appeal in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2002] QCA 380.^[2]  In early 1989 companies associated with the Anthony Johnson referred to in the plaint began marketing an aquaculture scheme called the “Red Claw” project.  There were to be a series of limited partnerships under the Partnerships (Limited Liability) Act 1988.  An investor could purchase units and become a limited partner in a partnership.  Each limited partnership would lease from the farm owner, Farmer Johnson Aquaculture Limited, ponds to be used for farming crayfish.  Each partnership would be managed by a general partner, Forestell Securities (Australia) Ltd, and it would contract with Johnson Farm Management Pty Ltd to manage the crayfish farm on behalf of the partnership. 

3. [3]
   The Johnson group engaged a Mr Hasell to market units in the project, and he made contact with Thornton who was interested in pursuing investment opportunities for himself and some associates. He was provided by Hasell with a document which indicated that a potential investor could borrow money to finance the investment, and gave the following example of the capacity of the investment to be structured as a means of obtaining a large tax deduction for a small cash outlay: “In this instance an investor would have an initial cash outlay of $781 and a deduction of $5,061.”^[3]  The promotional material at that stage indicated that the project was expected to be self funding, that is, apart from an initial period, the project would generate sufficient profit to repay the moneys borrowed.  At that stage however no restriction was proposed on the liability of investors to repay the moneys borrowed if for any reason the project was unable to fulfil this expectation. 

4. [4]
   The Johnson group had earlier marketed investments in a similar scheme on the basis that the loans to investors were to be “non recourse” loans, that is to say apart from some initial payments the loans were to be repayable only out of profits from the venture, so that the lender assumed the risk of the venture failing. This had the advantage of insulating the investors from any risk of further financial exposure from the project, and would have made it more attractive, particularly to people whose interest in the project was not in potential future profits, but in the opportunity to obtain a large tax deduction for a relatively small cash outlay.

5. [5]
   Later in 1989 the Johnson group told^[4] potential investors that a company Rural Finance Pty Ltd would advance six year loans to approved borrowers to purchase units in the Red Claw project.  Up to 100 percent of the investment could be borrowed, at interest of 18 percent per annum, on security only of the borrower’s interest in the project.  The first year’s interest was payable in advance by the investor “personally,” with subsequent interest payable “from projected project cash, yearly in arrears”.  The first 16.4 percent of the loan principal was repayable from the investor in cash during the first six months;  the balance was repayable over five years “from projected project cash”.  What was proposed was that “the loan is not non-recourse and the project profits are not guaranteed.”  On that basis, the generous tax deductions available for a relatively small cash outlay came with a potential sting in the tail;  if the project did not make money, the balance of the borrowed funds and considerable interest would have to be paid by the investor.

6. [6]
   There were then further negotiations between Thornton and Hasall about whether this aspect could be modified. Ultimately a loan contract was drawn up between Rural Finance Pty Ltd and Thornton and each of his associates who was investing in the project, which however did not provide that most of the principal and most of the interest was to be payable only out of profits from the business. There were then some further negotiations between Thornton and Hasall, in which Anthony Johnson at one point briefly became involved, before the loan contract was signed on 30 June 1989.  The transactions were all supposedly carried out on the same day.  The documentation was signed, and there were then a series of transactions in an office at the Westpac Bank in the course of which Rural Finance Pty Ltd purported to pay to the trustee receiving the subscriptions on behalf of the investors a sum which reflected the whole amount payable by Thornton and his associates for their units, and the trustee then purported to transfer the payment to a Forestall Securities (Australia) account.  From there it went to the accounts of Johnson Farm Management Pty Ltd and Farmer Johnson Aquaculture Limited.  The funds were then transferred back to Rural Finance Pty Ltd by way of a deposit.  The whole process is one commonly described as a “round robin”.

7. [7]
   Subsequently the “loans” were assigned by Rural Finance Pty Ltd to the second defendant, and the second defendant sought to enforce the loans, relying on the terms of the loan agreement, which made no reference to any limitation on the responsibility of the borrowers to repay from their own pockets if the profits of the venture proved nonexistent (as was the case). Mr Thornton and his associates defended those proceedings on the basis that, as pleaded in paragraph 3(d) of the plaint, “the investors’ obligation to repay the loans and pay interest thereon from their own funds was limited to one payment of interest payable on 30 June 1989 and two repayments of capital payable on 30 September 1989 and 31 December 1989 and thereafter all further payments of principal and interest were to be paid from the income, if any, earned by the investors from their investment in Red Claw …”  As appears from the pleadings, that litigation was underway at the time the letter alleged to be defamatory was written, having been commenced in October 1991.^[5] 

8. [8]
   Those actions did not come to trial until February 2000. Judgment was reserved on 8 March, but on 22 May there was an application by the plaintiff filed for further and better disclosure which was heard by the trial judge in July.  Further disclosure was ordered, and evidently made;  an application to reopen the trial was successful, and further evidence was heard in September 2001.  Judgment was then delivered on 30 November 2001:  [2002] QSC 464.  The trial judge held that as a result of the conversations on 30 June 1989 the loan agreement was partly oral and partly in writing, and that the effect of the oral part was that the obligation of the investors to repay the loans was limited in the way they alleged.  His Honour also held that in any case the agreement for loan could not be enforced, there having been no real loan of moneys by Rural Finance on 30 June 1989;  the “round robin” had been “a complete artifice or façade” and a “charade”, not “a real loan of real moneys”.

9. [9]
   The plaintiff in those actions appealed to the Court of Appeal, which on 27 September 2002 dismissed the appeal.  The court however upheld the defendants’ contention only in relation to the second point;  that there had been no real loan of real money, and therefore there was no obligation to repay anything.  The court overturned the finding as to the terms of the loan contract, and held that the loan contract was simply the written agreement.

10. [10]
    There is authority that a “round robin” does create valid transactions, at least for tax purposes,^[6] but the Court of Appeal, following an earlier decision of the Court of Appeal^[7], distinguished those decisions on the basis that in those cases all the parties to the transaction had acquiesced in the “round robin” transaction and agreed that it should have legal effect according to its tenor.  In other words, the crucial issue on which the recoverability of the loans ultimately turned was the proposition that Thornton and his associates had not on 30 June 1989 acquiesced in a round robin transaction which they intended to be effective.  That reflected a finding by the trial judge that it was not until about 10 February 2000 that the facts became clear to them as to what had occurred at the Westpac Bank on 30 June 1989.^[8]  On appeal Williams JA would not have interfered with that finding, but Chesterman J considered that there were substantial grounds for thinking that in May 1991 Thornton was made aware that no money had changed hands between Rural Finance and the partnership:  para [158].  However his Honour concluded that it was not necessary to decide whether the finding of the trial judge on this point should be varied, because whether or not they knew the true situation at that stage there had not been anything in the way of affirmation which could have the effect of rendering the investors liable to repay nonexistent loans.  Mackenzie J seems to have adopted a similar position:  para [142].

11. [11]
    Equuscorp Pty Ltd applied for special leave to appeal to the High Court from the decision of the Court of Appeal. On 14 November 2003, after the hearing of the applications before me, the High Court granted special leave to appeal.^[9]  The High Court decision is not yet available, but there is a good chance that something will happen as a result of the examination of this matter by the High Court.

12. [12]
    One of the matters which was relied on at the trial of the Glengallan actions, as amounting to affirmation of the loan agreement, was that Thornton and his associates had claimed deductions in their tax returns for the years 1991, 1992 and 1993 on the basis that they had incurred liabilities to the full extent of the amount which Rural Finance had agreed to lend to them.^[10]  The project had apparently at a fairly early stage come to the attention of the Australian Taxation Office.  In a notice to investors dated 14 March 1991 Johnson Farm Management Pty Ltd said among other things:  “The implication in ATO’s mind seems to be that the loans might not be repayable by the investor personally, but might be part of a non-recourse device to gear up tax deductions.  To protect the deductions already claimed, there is now an onus on [Rural Finance Pty Ltd] and on each Red Claw investor/borrower to demonstrate that the loans are genuine.”^[11] 

13. [13]
    The attitude of the ATO is unsurprising. If the true position of Thornton and his associates was that, for the payment of a relatively modest cash outlay, they were able to claim a large tax deduction, with no future liability in respect of the “loans” or the “investment” if the project failed, then the scheme is one which I would characterise as simply a tax avoidance device.^[12]  If at the end of the day the scheme managed to generate some profits, that was just the icing on the cake.  Ultimately the ATO appears to have come to the same conclusion.  The deductions claimed by Thornton and his associates were disallowed.  Notices of objection were lodged.  Ultimately the disputes were compromised, on the basis that the deductions were reduced to the amount actually paid out by each of the investors.^[13]  I would regard that as a substantial vindication of the ATO’s position, and of my characterisation of this scheme, from the point of view of the “limited recourse” investors.

14. [14]
    The Red Claw project rapidly failed. At one stage in 1991 figures were provided to suggest that, out of a total of $15 million invested, $13 million was provided by loans from Rural Finance Pty Ltd, which was immediately returned to Rural Finance on interest bearing deposits.^[14]  The practical effect of this was that the project was seriously under-capitalised.  The loans were then sold (to the second defendant) for $6 million, the consideration paid essentially for loans to persons other than Thornton and his associates, where presumably there was no question but that the loans were repayable by the investors.  The consideration paid for the assignment of the loans to Thornton and his associates was only one dollar “up front”, although the assignment agreements provided in effect that if any money was repaid by the borrowers or was recovered from them part of this would be paid to Rural Finance Pty Ltd,^[15] and in that way mitigate the difficulties faced by the creditors of the scheme, and the investors who had put real money, either real cash or real loans, into the scheme.

15. [15]
    Although the project proved disastrous for those who had the misfortune to invest real money in it, and probably did not do the crayfish much good either, it has proved a veritable bonanza for the lawyers. Apart from the present actions, and the Glengallan actions which went to trial in the Supreme Court, there are other matters similar to the Glengallan actions which are in effect awaiting the final disposition of the appeal in the High Court of Australia.  There were also two appeals to the Court of Appeal from interlocutory orders in those matters.^[16]  There was also Supreme Court litigation by Rural Finance Pty Ltd and the Johnson Group against the second defendant and others, which was settled in 1996.^[17]  At least in the District Court, there appears these days to be much less civil litigation than there used to be, and litigation lawyers need all the work they can get.  However, I cannot regard that as a relevant consideration in the determination of these applications.

Applicable principles and authorities

16. [16]
    If two years have passed since the last step was taken in the proceeding, the court may dismiss the proceeding for want of prosecution.^[18]  Furthermore, if no step has been taken in the proceeding for two years from the time the last step was taken, a new step may not be taken without the order of the court:  UCPR r 389(2).  Under the former District Court Rules 1968, the position was similar except that the period was three years rather than two years:  r 377(2).^[19]  In Cooper v Hopgood & Ganim [1999] 2 Qd R 113 the Court of Appeal concluded that exercising the court’s discretion to dismiss for want of prosecution should not be fettered by rigid rules, but required a decision to be reached on a balance of the relevant circumstances.  Pincus JA, with whom Derrington J agreed generally, at p. 118 quoted with approval a passage from the judgment of Walsh JA in Witten v Lombard Australia Ltd (1968) 88 WN (Pt 1) NSW 405 at 412:  “Everything must depend upon the circumstances disclosed in each particular case.  It is, of course, proper to consider whether any explanation or excuse has been offered for the delay, and whether any explanation or excuse that has been offered is credible and satisfactory.  It is proper to consider whether or not there is evidence of particular prejudice to the opposing party by reason of the delay.  When all relevant factors have been taken into account, a decision is then to be reached as to the manner in which the discretionary power should be exercised.”

17. [17]
    Some of the factors said to be relevant to the exercise of the discretion were referred to by McPherson JA at p. 124: “Matters such as the duration of the time lapse involved; the cogency of any explanation for delay; the possible impact of procrastination on fading recollection; the death or disappearance of critical witnesses or records; costs already or likely in future to be expended or thrown away; the apparent prospects of success or otherwise at a trial of the action; and the progressively growing problem of effectively hearing and determining questions of fact arising out of events that have taken place many years before. The list is not, and is not intended to be, exhaustive; and it takes no account of another factor that is often likely to be material, which is that ordinary members of the community are entitled to get on with their lives and plan their affairs without having the continuing threat of litigation and its consequences hanging over them. The psychological as well as the commercial effects of such a state of affairs ought not to be underestimated.”

18. [18]
    In Quinlan v Rothwell [2002] 1 Qd R 647 de Jersey CJ at p. 652 said:  “The discretion to dismiss for want of prosecution may these days confidently be exercised, in appropriate cases, with more robustness than would previously have been considered appropriate.”  His Honour went on to refer to r 5 and the implied undertaking it contains to proceed in an expeditious way.  At p. 657 Thomas JA said:  “It is a noteworthy feature of recent cases that courts appear more ready than before to infer that substantial delays will substantially reduced the chance of a fair trial.”  His Honour went on to refer to a change in attitude about the extent to which litigation could be allowed to languish.  His Honour also said at p. 658:  “The former laissez faire attitude by courts towards the leisurely conduct of actions at the will of the parties has ended.”  His Honour also cited with approval the passage from the judgment of McPherson JA in Cooper quoted above.  On the other hand, both their Honours went on to qualify those statements with a warning that the discretion should only be exercised to dismiss for want of prosecution in appropriate cases. 

19. [19]
    In that particular case, where there are some similarities to the present, an order that the action be dismissed for want of prosecution was overturned. The similarities are that it involved an action for defamation, which had taken in the order of ten years to come to trial, and where there had been substantial and serious delay on the part of the plaintiff. But there the similarities largely end. The case was not one where the recollection of matters of detail was going to assume a great importance in the resolution of the issues, and the major difficulty associated with the delay was the difficulty in testing the plaintiff’s claim of loss of income as a result of the defamatory statement. Further, the judge at first instance had placed some importance on the death of a witness, but he was an expert witness and the Court of Appeal took the view that he could simply be replaced by a different expert witness, so there was no real prejudice as a result of his death. More significantly perhaps, in the period leading up to the order for dismissal, the action had been actively pursued by the plaintiff, and it was regarded by both parties at one point as being ready for trial. An issue about further disclosure arose at that point, which however had been resolved by a further order which had been complied with. Accordingly the matter was treated by the Court of Appeal as being essentially ready for trial at the time when it was dismissed, after a period when it was being actively pursued by the plaintiff. As is apparent from the above chronology, the position in this case is very different.

20. [20]
    Another list of factors which a court would take into account in applications of this nature was given in the judgment of Atkinson J, with whom McMurdo P and McPherson JA agreed, in Tyler v Custom Credit Corp Ltd [2000] QCA 178 at [2].  Those various factors apply in the present case as follows.

21. [21]
    The publication alleged to give rise to the cause of action occurred eleven years and five months ago, and the plaint was filed about three months later, that is 11 years and two months ago.  No causes of action had been added in the course of the proceeding, although it took until February 1997, four years, for a pleading to be filed which would survive a strike out application.  I will for the moment defer consideration of the prospects of the plaintiff’s success in the action.  There has been little in the way of orders or directions by the court in the course of the proceedings.  The plaintiff was only one day late in filing an amended pleading pursuant to my direction of 23 January 1997, the defendants filed amended defences within the time provided by the consent order varying my timetable, and presumably no amendment to the reply was thought necessary;  certainly no amended reply was filed by the plaintiff within the time limited by the direction.  The plaintiff took three months to file an amended plaint pursuant to leave given in December 1997, although no date was specified, and the plaintiff took two years and four months to comply with the order of 3 February 1998 to provide further particulars, an order which again did not carry any time limit.  The defendants in the GWA action took just over eight months to deliver further particulars ordered on 3 November 2000, but again there was no specific time limit.

22. [22]
    The litigation has been characterised by significant periods of delay. The plaintiff did nothing between May 1993 and April 1996, when notice of intention to proceed was given and followed up by the filing on 14 May 1996 of a further amended plaint.  The amendments on that occasion were insignificant;  paragraphs 7 and 8 which had referred to the assignment from Rural Finance to the second defendant of the benefit of the debts claimed to be owed by the plaintiff and his associates, were amended to refer to a “purported assignment”, and publication to investors in the projects throughout Australia, which had already been alleged in paragraph 9, was repeated in a new paragraph 12.  I doubt whether those amendments were sufficiently substantial to constitute a step in the proceeding, bearing in mind that neither they nor subsequent amendments prior to January 1997 produced a pleading which survived a strike out application.  The position is simply that after May 1993 the plaintiff did nothing to carry the action forward until faced with the imminent prospect of time running under the rules. 

23. [23]
    Even then there was only very leisurely progress in the action in 1996 and 1997. Things slowed down even further in the first part of 1998, and following the order made on 3 February 1998 no step was taken by the plaintiff in the Thornton action until June 2000 (the previous step by the defendants in that action was in May 1998).  That was the last step taken by the plaintiff in the Thornton action.  In July 2001 further and better particulars of the defence in the Thornton action were delivered, but apparently not filed.  In the GWA action there was an application by the plaintiff filed in June 2000, on which the order was made on 3 November 2000, but no step was taken by the plaintiff in that action after June 2000.  The defendants took the last step in the GWA action by filing further particulars on 10 July 2001.

24. [24]
    It will be apparent from that summary, and the chronology, that the bulk of the delay has been the fault of the plaintiff, who has persistently pursued the action in a half-hearted and desultory way. Although a lot of letters have been written, little else in the way of useful progress in the action has ever been forthcoming. The position is perhaps best illustrated by the fact that, after the comment of Brabazon DCJ in November 2000, the defendants’ solicitors tried to put together a timetable for getting the action to trial, but the plaintiffs’ solicitors were not interested. It would have been very easy at that stage, if the plaintiff and his solicitors really wanted to get these actions on for trial, to get his Honour to make appropriate directions which would probably have produced a trial in the first half of 2001. I regard the failure of the plaintiffs and their solicitors to respond to his Honour’s invitation as a clear indication that they were not then really all that interested in pursuing these actions.

25. [25]
    There is no suggestion that there was any difficulty caused by impecuniosity of the plaintiff. The litigation between the parties would be concluded by striking out the plaintiff’s claim. The litigation has not progressed very far; the plaintiff is still threatening to amend the pleadings further, although claiming that that cannot be done until the Glengallan actions have been resolved in the High Court.^[20]  I shall return to this issue later, but if after ten years even the pleadings have not been finalised it does not augur well for the future conduct of the action. 

26. [26]
    Although an affidavit of documents was filed by the plaintiff a long time ago, the defendants do not accept that there has been proper disclosure made, and the defendants have never given disclosure at all, on the basis that that should not occur until the pleadings have been finalised. I can see the sense in that position, although strictly speaking the obligation to make disclosure arises on the basis of the pleadings as they stand, and the defendants really ought to have made disclosure a long time ago. No doubt from a practical point of view disclosure will be a very substantial exercise, and in circumstances where it did not appear that the actions were being pursued very vigorously by the plaintiffs, the defendants were keen not to incur the significant costs which would be involved in completing disclosure unless a situation arose where the actions were being taken seriously by the plaintiffs. The action is not ready, or almost ready, for trial. I suspect that a great deal more work has to be done to prepare it for trial. I will return to some aspects of this later, when referring to the particulars, which suggest that very little in the way of preparation for trial has actually yet been undertaken by the plaintiff.

27. [27]
    There is no material in this matter to suggest that any delay has been caused by the plaintiff’s lawyers being dilatory rather than by the plaintiff personally. That issue has not been raised by the plaintiff at all. The only explanation for the delay which has been put forward is that it was necessary or appropriate to complete the Glengallan litigation in the Supreme Court before this matter was brought to trial.  Apart from that, there is no explanation or excuse for the delay put forward on behalf of the plaintiff.  Indeed, it seems to me that, but for the possibility that the Glengallan action had to be dealt with and finalised first before this action could be properly tried, the case is really a clear one to dismiss for want of prosecution.  There has been excessive and unacceptable delay by the plaintiff, and no serious attempt to pursue the action at all in recent years, and the delay has made it difficult to have a fair trial of the action, as I explain below.  The crucial issue therefore it seems to me is whether there is substance in the plaintiff’s assertion that his action is in some way depended on or was related to the Glengallan action in the Supreme Court, and so could not have been usefully progressed until that action had been finally resolved.

Are the actions truly related?

28. [28]
    An affidavit filed 23 October 2003 by the solicitor for the plaintiff deposed (para 4.4) to the proposition that “having regard to the common issues of fact and law which exist between the defamation actions and the Supreme Court actions, the defamation actions cannot proceed to trial until such time as the Supreme Court actions are finally concluded.  That is, and has been at all times, well known to the defendants’ solicitors and accepted by them.”

29. [29]
    I do not accept that proposition. In my opinion there are no significant common issues of fact or law between the two actions. The Glengallan actions were concerned with the question of whether the loan agreements which had been assigned to the second defendant were enforceable against the plaintiff and his associates.  But the present action is concerned with whether a particular publication was defamatory.  That is something which depends on what occurred at the time of publication, against the background of the situation as it existed at that time.^[21]  Something which was not an actionable defamation at that time does not become one as a result of the determination of some question of fact or law in other legal proceedings in relation to whether or not money is payable by one party to the other.  Conversely, something which was defamatory does not cease to be because of such a determination.  It is in my opinion a fundamental misconception that the defamation action is affected by the ultimate determination of whether the second defendant’s contention that the plaintiff and his associates were liable to pay on the loan agreements is correct, or whether the plaintiff and his associates were correct in saying that they were not liable to pay on them.  Either the publication was defamatory at the time when it was made or it was not defamatory, and the only facts which are relevant to the determination of whether or not the publication was defamatory are facts which existed at that time, or had previously existed so that they were relevant by way of background facts.

30. [30]
    To over-simplify the plaintiff’s claim to illustrate this point, the plaintiff essentially says that he was defamed because the defendant said that the plaintiff owes money. That is treated as a proposition of fact, which is falsified by the conclusion of the courts that the money was not owing. But that conclusion had not at that stage occurred, so the question of whether or not money was owing was not a question of fact. In circumstances where the issue was in dispute and had not been resolved by the court, the statement “he owes me money” is really a statement of the speaker’s opinion. It is just as much an opinion as an opinion by counsel advising someone that the money is owing.

31. [31]
    This is clearly the case in circumstances where the person to whom the statement is published knew that there was a dispute as to whether or not the money was owing, and in the present case that proposition is expressly alleged by the plaintiff in paragraph 10, although not admitted by the defendant (also in paragraph 10).  Whether or not the statement of that opinion is defamatory depends on the circumstances under which the opinion was stated, and is not something which is going to be changed in any way by the final outcome of other litigation which determines whether or not the opinion was accurate.  Either in the circumstances prevailing at the time it was defamatory to express that opinion, or it was not.  Evidence of the circumstances prevailing at the time is relevant in the determination of that issue, but strictly speaking in my opinion evidence of what happened later, including decisions of courts upon the issue, is irrelevant and indeed inadmissible.

32. [32]
    As the matter is presently pleaded, there are some allegations in the plaint of propositions of fact which cannot stand with the decision of the Court of Appeal, at least as between the plaintiff and the second defendant.^[22]  Paragraph 3(c) in which it is alleged that Rural Finance “provided funds (‘the loan’) to the majority of investors who acquired partnership units in the projects and in particular the Red Claw project (‘Red Claw’)” is falsified by the conclusion of the Court of Appeal that funds were not provided.^[23]  Paragraph 3(d), most of which I have quoted earlier, is also inconsistent with the conclusion of the Court of Appeal that the loan agreement was not limited in the way alleged by the plaintiff and his associates, the point on which the decision of the trial judge was reversed.  If those facts were crucial to the plaintiff’s cause of action, the action against the second defendant would be bound to fail because the plaintiff would be caught by an issue estoppel arising from the Glengallan actions, at least unless those conclusions were reversed by the High Court on appeal.  But plainly they are not essential factual elements of the cause of action in defamation.  They are pleaded merely as background facts, but really they are irrelevant to the issue of whether the publication was an actionable defamation.

33. [33]
    A long list of defamatory imputations was pleaded in paragraph 13 of the plaint.  Some of these, like paragraph (d) “is the subject of an investigation by the Australian Taxation Office” seem to have been obviously true, although there was no plea of justification.  Some others, such as “(i) was engaged in misleading or deceptive conduct”, do not obviously arise from the publication.  Paragraph 13(c) asserts as an imputation that the plaintiff “was knowingly and wrongfully defending Supreme Court claims against him.”  This is a somewhat puzzling assertion.  It is not obviously defamatory to accuse someone of knowingly defending a proceeding in the Supreme Court, and it is unclear what is meant by defending a proceeding “wrongfully”.  Does it mean, other than in accordance with the applicable rules? 

34. [34]
    If what this allegation was intended to mean was that the publication contained the imputation that the plaintiff was defending a claim which was entitled to succeed, and the plaintiff knew it was entitled to succeed, that went beyond an expression of opinion on the part of the defendant, and amounted to an assertion of fact as to the plaintiff’s state of mind. But it is the plaintiff’s state of mind at the time of the publication, or perhaps before the time of the publication, which is relevant. Even then, in the absence of a plea of justification, and none is pleaded, it is unnecessary to consider whether at the relevant time the plaintiff had that state of mind. For the purpose of the action, it is in effect presumed that he did not. The issue then is whether the publication carries this imputation, and whether it is defamatory. Whether or not the plaintiff succeeds in defending successfully the Supreme Court proceeding is irrelevant to those questions, and is equally irrelevant to the issues which arise from the defence.

35. [35]
    This raised two specific grounds of qualified protection, under s 377(1)(c) and (e) of the Criminal Code.^[24]  These provide that it is a lawful excuse for the publication of defamatory matter – (c) if the publication is made in good faith for the protection of the interests of the person making the publication, or of some other person, or for the public good;  (e) if the publication is made in good faith for the purpose of giving information to the person to whom it is made with respect to some subject as to which that person has, or is believed, on reasonable grounds, by the person making the publication to have, such an interest in knowing the truth as to make the person’s conduct in making the publication reasonable under the circumstances.”

36. [36]
    In relation to this, the defendants plead that the letter was written in response to a letter sent by Anthony Johnson to investors in the project on or about 24 August 1992 containing allegations critical of the conduct of the defendants.  The letter as quoted in the plaint seems to be principally concerned with criticising the conduct of Johnson, but it is to some extent at least concerned to defend the position adopted by the defendants, and, to the extent that it was distributed to investors of the project it may be reasonable to conclude that this was for the protection of the interests of the defendants, and to give them information about matters, noting in particular the defendants’ attitude to the loans to the plaintiff and his associates, in which these people have an interest in knowing the truth.  In relation to the defence therefore a crucial issue may be whether the publication was in good faith.  That depends on whether “the matter published is relevant to the matters the existence of which may excuse the publication in good faith of defamatory matter;  if the manner and extent of the publication does not exceed what is reasonably sufficient for the occasion;  and if the person by whom it is made is not actuated by ill will to the person defamed, or by any other improper motive, and does not believe the defamatory matter to be untrue.”^[25]  The plaintiff has the onus of showing the absence of good faith:  s 378.

37. [37]
    The applicability of either of those defences depends on the situation as it existed at the time when the document was published. Whatever happened afterwards cannot alter that. Either the publication was in good faith at that time or it was not. Either it was then published for the purpose of protection of the interests of the defendants (or perhaps the interests of the investors, as alleged in the alternative in the defence) or it was not. Either it was then providing information to people reasonably believed to have an interest in knowing the truth of the situation, or it was not.

38. [38]
    Whether the publication was in good faith was disputed in the reply, where it was alleged that what was published went beyond the letter from Johnson, and was sent to investors who had not received Johnson’s letter. It was asserted that the interests of the defendant and the other investors was not affected because the obligation of the plaintiff to repay the money borrowed had no relevance to or effect on the validity of the project. That I think misses the point of the defence. It is not a question of whether repaying the money affected the viability of the projects, or even whether the money was really repayable. If it is relevant to establish that the other investors had a financial interest in the repayment of the money, that may well have been provided by the entitlement of Rural Finance Pty Ltd to a share in any money ultimately recovered from the plaintiff and his associates, which would presumably have had the practical effect of making more money available for the creditors and investors of the project.

39. [39]
    The plaintiff also alleges that the defendants knew the statement published was untrue, or displayed reckless indifference as to whether it was true or false. It was also alleged that the plea of illegality had been withdrawn from the allegation in the Supreme Court proceedings “subsequently”. What matters is whether the defendants knew it was untrue at the time of publication, not whether they subsequently accepted (if that is the correct characterisation of what occurred) that it was untrue.

40. [40]
    That brings me to the other strand of the defamatory imputations; that the participation by the plaintiff in what I characterise as a tax avoidance scheme was illegal, a fraud on the Commonwealth, or otherwise wrongful. Insofar as these are assertions as to the legal characterisation of what had occurred, they are statements of opinion, but insofar as they imply assertions as to the state of mind of the plaintiff, they included assertions of fact. But the position is really the same in that respect as for the other category of assertion. There is no plea of justification. There are issues about whether any of these more serious imputations are carried by the publication, but if any of them are they would be plainly defamatory and the real issue then would be identification, and whether either of the defences is made out.

41. [41]
    This analysis shows that in truth there is no inter-relationship between the defamation actions and the Glengallan actions.  The issues in the defamation actions are quite separate, and depend on what occurred at or before the time of publication.  Far from the ultimate determination of the question of whether the plaintiff or the second defendant succeeds in the Glengallan actions being crucial to some aspect of the defamation proceedings, it is irrelevant to them.  There is no substance in the proposition that it was necessary or appropriate for the Glengallan actions to be tried first, or to wait until they were finalised. 

42. [42]
    This might not necessarily matter however if the plaintiff and his advisers did not appreciate the true situation, and mistakenly believed that there was some dependence on the Glengallan litigation.  But the difficulty with that proposition is that there is simply no contemporaneous evidence to that effect.  On occasions in the last decade the plaintiff’s solicitors have actually done something apparently directed to carrying this litigation forward.  Letters were written asserting that things should be done by the defendants.  On two occasions applications were made seeking orders requiring the defendants to do things.  All of that is entirely inconsistent with the notion that the action could be in some way left in abeyance pending the determination of the Glengallan actions.  Furthermore, nowhere in any of the letters from the plaintiff’s solicitors which have been put in evidence before me is there any assertion that the present action is being, or should be, left in abeyance pending the determination of the Glengallan actions.

43. [43]
    To the contrary, in a letter dated 27 October 1997^[26] the plaintiff’s solicitors said inter alia:  “As the pleadings are closed there is in our view no reason why discovery should not proceed.  …  We would therefore request that your clients provide their affidavit of documents as soon as possible.”  On 30 October 1997 they wrote again pressing for an affidavit of documents “without delay”.  This is not consistent with the proposition that the pleadings cannot be finalised until the Glengallan actions are completed.  In a letter from the plaintiff’s solicitor dated 3 May 2001^[27] the first paragraph included the statement:  “We are now instructed by our client to proceed to trial as soon as possible …”  An application for an order for further and better particulars was threatened unless there was a response within 14 days.  A letter dated 18 May 2001 included the statement that after amended pleadings were provided by the defendants: “The progress of the action can then be assessed and any further interlocutory steps considered including interrogatories …”  A letter of 6 June 2001 contained a similar statement.   

44. [44]
    There is certainly nothing from the defendants’ solicitors asserting that, or amounting to any acceptance of the proposition that, the Glengallan actions had to be concluded first.  The one letter relied on by Mr Marshall, a letter of 3 July 2000, referred to the proposition that many of the issues also arose in the Glengallan actions in support of an argument that the disclosure by the plaintiff in the present action has been inadequate.  In circumstances where the issues are different it would be unsurprising if the disclosure was different, although, because both actions arise out of the same factual background, one would expect that many of the documents properly disclosed in the Glengallan actions would also be subject to disclosure in the present action.  But there is nothing in that letter to suggest any acceptance of the notion that the defamation actions should be in some way left in abeyance pending the conclusion of the Glengallan actions, or even suggesting that that occur.  The penultimate paragraph suggests the exchange of complete lists of documents within a period of four weeks.

45. [45]
    Mr Marshall referred to other litigation which is similar to the Glengallan actions, in that in all of them the second defendant was seeking to enforce the loan agreement against various people associated with the plaintiff.  Apart from the group that went to trial and then on appeal, there are four such actions in the District Court of Queensland, twelve actions in Victoria, including one in the Supreme Court, and two in the Australian Capital Territory.  These presumably raise exactly the same issues as are raised in the Glengallan actions, and have sensibly been left in abeyance pending the final determination of the Glengallan action.  It would be a very sensible approach in that situation to pick one or a small group of actions to run as a test case, and allow the others, particularly actions pending in inferior courts, to await the outcome of the test case.  But those actions really do raise the same issues as the Glengallan actions.  The position with the defamation actions, as I have indicated, is completely different.  I regard the reference to those other actions as little more than a red herring.

46. [46]
    There was some reference to the Glengallan litigation, and other actions against associates to the plaintiff, in the defendants’ pleading.  Those actions were on foot at the time of the publication of the letter, and insofar as they are included in the factual background they may well be material facts.  But all that can be material to the defamation actions is the state of that litigation as at the date of publication of the defamation.  Paragraph 7 of the defence in the GWA action provides an explanation for the denial of paragraph 7 of the amended plaint by reference to evidence to be led in the Glengallan actions.  That is not an allegation of a material fact;  it is inserted as an explanation for the denial, which is what is required in the case of a denial by r 166(4).

47. [47]
    Mr Marshall in paragraph 5.16 asserted that a report provided by the receivers and managers of Rural Finance Ltd on 23 November 1992 “confirmed what was known to Equuscorp on 11 January 1991 when it agreed to acquire the loans of Mr Thornton and others for one dollar each.  It also confirms what facts were known to Mr Russo when he wrote the letter the subject of the defamation actions.”  The reports sets out details of the way in which the scheme involving finance from Rural Finance Ltd operated, but says nothing about the state of knowledge of the first defendant either in January 1991 or at the time when the relevant letter was published.  It does refer to the contents of the report having been “the subject of detailed discussion and correspondent with you and your solicitors”, but there is nothing to show that that process commenced prior to 1 October 1992.  I do not consider that letter provides any support for the assertions in paragraph 5.16. 

48. [48]
    Mr Marshall referred to some evidence which emerged at the trial of the Glengallan actions which was relied on in support of the proposition that in early 1991 the first defendant knew that the “advances” by Rural Finance Ltd had been effected by means of round robin transactions and that that company had not had funds available otherwise to advance.  But the witness in question was one called by the defendants in the Glengallan actions.^[28]  Unless his evidence of this in the witness box came as a surprise to the parties calling him, this did not represent the first occasion on which this information, and the fact that the witness was willing to testify to this effect, came into their possession.  Mr Marshall does not say when that first occurred.  But even if this information first  became available on the date when it was given, or shortly before that date^[29] there is no particular reason why that material should have been the key to the more enthusiastic pursuit of the defamation actions.  It is certainly of no great significance in the context of the relevant question, whether it can be shown that the first defendant lacked an actual belief in the truth of what he said in the letter. 

49. [49]
    The Court of Appeal concluded that what distinguished this round robin from the round robins which had been held to be valid in other cases was that on this occasion Thornton and his associates were not aware that that process was being undertaken. This distinction was based on the earlier decision of the Court of Appeal^[30] which was not delivered until 9 December 1997, therefore could not have been known to the first defendant at the time when he wrote the letter in question.  No earlier authority on the point is referred to in that decision, and it appears that the significance of this distinction was first appreciated on that occasion.  The first defendant can therefore hardly be blamed for failing to appreciate the significance of that distinction in 1992.  But in any case, the crucial factual issues in relation to this distinction was whether Thornton and his associates knew as at 30 June 1989 that there was to be a round robin, and acquiesced in its use.  This provides no evidence that, prior to the time when the letter in question was written, the first defendant did not honestly believe that the round robin was effective.  I therefore do not regard the fact that this evidence was given at the trial as providing any justification or excuse for delaying the proceedings.  Indeed, even if it otherwise did, it could not provide any justification or excuse for delaying the proceedings after the middle of 2000.

50. [50]
    It may well be that the preparation of the defamation action was in some way assisted by evidence which emerged in the course of the trial of the Glengallan actions, or there was some expectation that that would occur.  But apart from the fact that that is not directly claimed by Mr Marshall, in my opinion it would not amount to a legitimate excuse for delaying this litigation.  If the plaintiff had not available to him in 1993 when the present action was started evidence to support his claim, he should not have commenced the proceeding.  He ought not to have commenced an action which he otherwise could not support in the hope that in the course of the trial of other proceedings some evidence would emerge which would show that he really had a good claim.

51. [51]
    Mr Marshall said that the last step in the GWA action, in July 2001, occurred during a period of intense activity in the Supreme Court actions. There was certainly some activity in the actions at about that time. In September 2000 the defendants in the Glengallan actions were ordered by the trial judge to make further and better disclosure, but the following month that order was stayed pending an appeal.  That appeal was argued on 19 February 2001, and dismissed on 30 March 2001.  Presumably the plaintiff’s lawyers were occupied to some extent in the lead up to the hearing of the appeal, but there would have been few demands put on them between 19 February and 30 March 2001.  After the dismissal of the appeal they then made further disclosure during April 2001, and there were further hearings on 16 May and 5 June 2001.  A decision was then reserved by the trial judge, and judgment was not delivered until 18 July 2001.  Although there would have been considerable attention required to that action during April, May and early June, it did not require any great attention from 5 June to 18 July 2001.  There was then a relatively brief further hearing on 10 and 14 September 2001, when judgment was again reserved.  Nothing else would have happened until the trial judge delivered judgment on 30 November 2001.  There was an appeal in December 2001, said to have kept the plaintiff’s solicitors busy from January to May 2002, but it would not have occupied them after 16 May 2002 the second day of the hearing of the appeal, when judgment was reserved.  The affidavit therefore shows that, although there were some periods when the plaintiff and his lawyers might well have been reasonably distracted by the exigencies of the Glengallan litigation, there was plenty of opportunity during other periods after July 2001 to carry forward the defamation actions, had the plaintiff been seriously interested in pursuing them.  Indeed, Mr Marshall said at paragraph 6.3 of his affidavit that the Glengallan actions “were characterised by long periods of delay.”  If that was the case, then the plaintiff and his lawyers had plenty of opportunity to devote time and effort to the defamation actions, had they chosen to do so.

52. [52]
    In fact what happened is that on two occasions nothing was done for a period which was just short of the three year limit then provided under the rules, and then from 2001 nothing was done for more than the two year limit now applying under the rules. Even then, it was not the plaintiff who sought leave to proceed first; his application was only in response to the defendants’ application to dismiss for want of prosecution. The explanation and excuse offered for the delay are not credible or satisfactory.

Point of evidence

53. [53]
    Senior counsel for the plaintiffs objected to parts of the affidavit of Ms Forrest filed 22 September 2003, on the ground that it was hearsay, and the hearsay was not admissible in an application to dismiss for want of prosecution.  It is well established that hearsay can be included in an affidavit on an application for leave to proceed:  Campbell v United Pacific Transport Pty Ltd [1966] Qd R 465 at 471 per Gibbs J;  Amos v Barbi [1999] 1 Qd R 342.  The evidence is therefore admissible in the plaintiff’s application, which as explained elsewhere in my opinion is the dominant application. 

54. [54]
    The reasoning in those decisions suggests that the position is the same in an application to dismiss for want of prosecution. This is because the crucial issue is the legal effect of the order which is made, not its practical effect: Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246 at 248 per Gibbs CJ.  In Campbell (supra) Gibbs J referred to decisions of Krakauer v Katz [1954] 1 WLR 278 where it was assumed, and Galka v O'Connor [1965] VR 361 at 365, where it was held, that an application to dismiss an action for want of prosecution was interlocutory.  The reasoning in Campbell appears to me to be equally applicable to the two applications.  See also Shepperdson v Lewis [1966] VR 418 at 419 per O'Bryan J (with whom Pape J agreed).  In Hughes v Gales (1995) 14 WAR 434 the Western Australian Full Court held that an order dismissing an action for want of prosecution was properly classified as an interlocutory order, for the purposes of determining whether leave to appeal from such an order was necessary.  The Full Federal Court came to the same conclusion in National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Qld) Pty Ltd (2001) 183 ALR 700.  I am not aware of any decision of the Queensland Court of Appeal to the contrary, and I was not referred to any.  In my opinion the defendants’ application is not an application for final relief, and therefore hearsay evidence is admissible under r 430(2).

55. [55]
    Senior counsel for the plaintiff also took the point that, even if hearsay was admissible under r 430, the affidavit did not comply with the requirements of that rule, because it did not state the ground of belief in the information provided.  It is true that there is no express statement in the paragraphs in question that the information is believed because it is the deponent’s client who is providing the information, but he is the first defendant and that she is the solicitor with the conduct of these proceedings on his behalf is stated in paragraph 2.  It seems to me obvious enough that she believes his instructions because he is her client, and that in substance the ground of the belief adequately appears from the affidavit.^[31]  If there is a failure to comply strictly with the rule I would excuse it, notwithstanding the approach of the Full Court in Deputy Commissioner of Taxation v Ahern (No 2) [1988] 2 Qd R 158.  The formula used in the affidavit was entirely conventional, and is used in practice in the overwhelming majority of affidavits of this nature in the court.  Since that decision, the rules now include UCPR r 394, permitting evidence of a fact to be given at any other stage of the proceeding in any way the court directs.  In the present circumstances, if necessary I would direct that the evidence be given in the manner adopted in Ms Forrest’s affidavit.

56. [56]
    Even if I were not of that view, the contents of the relevant paragraphs amount to original evidence of the instructions given to the solicitor. For present purposes it does not matter whether the factual matters asserted by the client are true; what matters is what is likely to be in issue at the trial, and that can be ascertained just as readily by my being informed of the instructions to the solicitor. Had the objection succeeded, it would have made no difference to the outcome of the applications.

Prejudice

57. [57]
    The plaintiff is not directly identified in the letter complained of. It is however alleged by him that it was known by other investors that the plaintiff was an investor and was one of a group of borrowers who were claiming to have the benefit of “limited recourse” loans, and who were alleged to have been identified by the expressions “the GWA group of borrowers”, “the GWA Pty Ltd group of borrowers”, and “the Brisbane based borrowers.” Accordingly there is an issue about identification; whether those references in the letter, in the light of the extrinsic facts known to the investors, meant that they identified the plaintiff as being one of the persons referred to by the first defendant in that letter by those general expressions. There were some 350 investors in the projects.^[32]  It is plausible that at least one of the investors, and possibly a number, knew of the plaintiff and identified him as one of the persons referred to in the letter.  However, the significance the defamation would depend on the extent of its dissemination, which for practical purposes depends of how many investors actually made the connection. 

58. [58]
    The defendants submit that there is a real issue regarding the state of knowledge of understanding of the other investors in the project, and any connection that they made, and that the passage of time since the publication has made it impossible for the defendants to meet such a case. It would certainly make it much more difficult now to deal with the question of what the various individual investors knew about the situation as at the date of the letter, and what connection if any they made with the plaintiff as a result of reading the letter. The other investors had no particular reason to be taking any great notice of this letter at the time,^[33] and after ten years it would be surprising if any of them would be able to give any reliable evidence as to what was in their mind as a result of their receiving the letter (assuming they could even remember having received it). 

59. [59]
    In these circumstances I have great difficulty in seeing how there can be a fair trial of that issue so long after the event. Yet this aspect is crucial to the plaintiff’s case. The plaintiff when asked for particulars of the investors to whom the plaintiff and his associates were commonly identified by the expression used in the letters, replied:^[34]  “The plaintiff cannot precisely identify the other investors in the project until the defendants have made discovery and answered interrogatories, and therefore the best particulars he can give at this time are that the other investors include all the persons who were at the time the registered holders of a unit or units in any one of the partnerships established pursuant to the Forestall Securities (Australia) Ltd, Red Claw partnership deed dated 14 June 1989.” 

60. [60]
    It is not immediately obvious how discovery and interrogatories are going to be of assistance in identifying the relevant investors. The identity of the investors has always been a matter of public record; these syndicates were established as limited partnerships under the Partnership (Limited Liability) Act 1988.  Under s 7 of that Act formation of the limited partnership is achieved by the registration in the office of the registrar of a statement containing various particulars including “the full name and address of each partner”:   s 7(2)(c).  The register is open for inspection at any office of the registrar in the state by any person:  s 8(2).  So it has always been possible for the plaintiff to obtain a complete list of all investors, and therefore all people who might possibly be included among those to whom the alleged defamatory publication was effectively communicated.  There is no reason at all to assume the defendants would have any discoverable documents, or any capacity by way of answering proper interrogatories, to throw any light on the question of which if any of these investors had knowledge of the things that the plaintiff alleges they knew at the relevant time, and in fact identified the plaintiff as a person within the scope of the general statements in the letter.

61. [61]
    Further, the fact that such particulars were given in October 1997 suggests that at that stage the plaintiff had not even begun to investigate this question. By then of course it was already five years after these events, and there may well have been considerable difficulty in getting any meaningful response from any of the investors. This does not give any great confidence in the plaintiff’s capacity to prove his case; on the other hand, the issue is one which could also have been investigated by the defendants at any time after the plaint was delivered, although it was certainly appropriate to seek particulars of just which investors the plaintiff was alleging had the relevant knowledge and made this connection, so as to confine their enquiries to those individuals. In these circumstances the lack of timely preparation by the defendant is not as serious as the similar lack by the plaintiff.

62. [62]
    There is the further issue that the plaint alleges that the defendants knew that other investors identified the plaintiff and his associates by these expressions: para 7.  Particulars were sought of that, and ordered on 19 December 1997.  The particulars provided by the plaintiff on 26 June 2000 are as follows:  “Brian Prendergast attended Red Claw project investor meetings on behalf of the Brisbane based borrowers on 16/9/91, 19/12/91, 20/2/92 and 25/9/92 (‘the meetings’) and advised those present (including the first defendant) that he represented certain borrowers and used the terms referred to [in paragraph 7 of the plaint] to describe or identify them.  Further, in the presence of the first defendant, the other investors used those terms during the course of the meetings when referring to the borrowers represented by Prendergast.”

63. [63]
    In response the first defendant’s instructions^[35] are that he did not attend such meetings on 16 September, 19 December 1991, or 20 February 1992.  He attended a meeting on 5 September 1991 but while he was there, there was no reference to any group of investors as “the GWA group of borrowers”.  He was aware of a meeting on 6 September 1991 but he did not attend.^[36]  He has however what is supposed to be a tape recording of the meeting, but it does not contain the matters alleged by the plaintiff in his particulars, or any identification of the plaintiff to the meeting.  That indicates that there would be at a trial a conflict of evidence as to the state of the first defendant’s knowledge at the time he wrote the letter, which may well depend on differing recollections as to what was said in the course of meetings held over ten years ago.  The significance of this knowledge is not to the question of whether the publication was defamatory, or indeed whether the plaintiff was identified by the publication to any or all of the persons to whom it was sent, but to the issue of whether the defendant was acting in good faith at the time he wrote the letter.^[37]  It is also relevant to the question of actual malice on the part of the first defendant, which is pleaded as a basis for a claim for exemplary damages against him.

64. [64]
    The first defendant of course can give evidence about what he did or did not do himself, but his capacity to gather and lead evidence to support the defendants’ case from persons not otherwise connected with the defendant, whose evidence may well carry more weight for a jury, will undoubtedly have been prejudiced by the fact that this aspect of the case that the defendants have to meet was disclosed only in June 2000, long after the relevant facts occurred, and because the action has not yet been brought to trial.

65. [65]
    In these circumstances it does appear that in relation to some important aspects of the issue of liability, oral evidence of what occurred on various occasions, and the state of mind of various individuals, over ten years ago, is going to be crucial. In particular, it is a case where it would be of some importance to obtain evidence from persons who were independent of both the plaintiff and the defendants, but because of the lapse of time it is unlikely that there will be any significant evidence available from those persons. There is also the consideration that the damages, in circumstances where the publication is only to a limited and specific class, ought to depend in my opinion on the extent to which persons within that class actually identified the plaintiff as the person spoken of, and actually thought worse of him as a result of the publication. At worst he was defamed to 350 people. But it may well be that the number who actually made the connection with the plaintiff was far smaller than that. Many of the investors might have been completely ignorant of the existence of the plaintiff. The letter in question was essentially an attack on Johnson and his companies, and any adverse imputation against the plaintiff was only indirect and peripheral. These seem to me to be obviously relevant considerations for the assessment of damages.

66. [66]
    Apart from this, among the people who were aware of the plaintiff and did make the connection there may already have been, as a result of the knowledge of the background facts of the dispute which the plaintiff alleges these investors had, an attitude of resentment towards the plaintiff and his associates because they appeared to have obtained more favourable treatment than the other investors, to the detriment of the other investors. I would not regard it as a very serious matter to be criticising the plaintiff to people who already had a low opinion of him, essentially because they were already aware of some of the allegations contained in the letter. The difficulty for the defendants is that damage is presumed in a defamation action, and therefore there is at least an evidential onus on the defendants to explore these questions, but because of the passage of time the defendants are likely to have great difficulty in getting anything useful out of any of the investors who do qualify as persons to whom the plaintiff was defamed.

67. [67]
    In these circumstances I think there is some not insignificant prejudice to the defendants as a result of the passage of time in this matter. That prejudice arises because of the whole period of time which has passed, but by analogy with the approach in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, I consider that this is of some relevance, and it is not necessary to confine attention just to the period since the last occasion on which there was a step in the action, or some effort by the plaintiff to carry the action forward.

Prospects of success

68. [68]
    In these circumstances, it seems to me that the plaintiff is bound to face some real difficulties in relation to the question of identification. The defamatory statement was obviously published, its terms are not in dispute, and it is likely that the plaintiff will establish that at least some of the imputations were carried by it, and that at least some of them were defamatory. The question of identification is of some importance, both in relation to liability (the plaintiff has to show that at least one of the investors made the connection) and quantum (if the plaintiff was defamed to no more than a handful of people, no substantial award of damages would be justified). In relation to the matters raised by the defence, I am not in a position to draw any conclusions one way or the other about whether the plaintiff will succeed in showing an absence of good faith, and whether the defendant would otherwise succeed in making out one or other of the grounds of defence relied on. Overall I would not classify this either as a case where the only issue is how much, or one where the plaintiff’s prospects look shadowy. All I can say is that, insofar as I am able to form any impression, the plaintiff faces some difficulties, and it does not look to me like the sort of case where, assuming things otherwise go well for him, the plaintiff might reasonably expect a substantial award of damages. In this case, insofar as this is a relevant consideration, I think it tends against allowing the action to continue.

Conclusion

69. [69]
    There is, at least in theory, this difference between the two applications: on the defendants’ application it is necessary for the defendants to show that the discretion to dismiss the proceeding for want of prosecution should be exercised. On the other hand, on the plaintiff’s application it is necessary to show that there is good reason for excepting the particular proceeding from the general prohibition which the rule imposes: William Crosby & Co Pty Ltd v The Commonwealth (1936) 109 CLR 490 at 496.  In theory it would be possible for a court not to be satisfied that leave should be granted on the plaintiff’s application, but still not affirmatively persuaded that the proceeding should be dismissed.  Ordinarily, however, where there are cross-applications, if it is not an appropriate case to allow leave to proceed, so that the plaintiff’s application is going to fail, that is ordinarily treated as a relevant consideration for the purposes of an application to dismiss for want of prosecution, so that the consequence follows that the action is dismissed.  I am not aware of any case where cross-applications have both been unsuccessful.  Accordingly it is appropriate to consider first whether leave to proceed should be granted.

70. [70]
    In summary, this is an action concerning events that occurred over ten years ago, where there has been little real progress made in the action since it commenced, and where there have been substantial periods where the plaintiff has done nothing to advance the action, including a period of over three years prior to the filing of the defendants’ application. The explanation and excuse offered for the delay are not credible or satisfactory. The failure of the plaintiff to pursue the action has been remarkable; even when an application was filed by GWA seeking further and better particulars, it did not seek either disclosure or some timetable for the further conduct of that action. When the judge who heard that application suggested that directions be given, attempts by the defendants’ solicitors to implement the suggestion were rebuffed. There was no attempt on the part of the plaintiff to take advantage of what was in effect an offer by the court to case manage the actions.

71. [71]
    That, and the plaintiff’s subsequent lengthy inaction, makes the plaintiff’s behaviour that of someone who is not seriously interested in pursuing the action at all. Whether or not that corresponds to the subjective view of the plaintiff, that is not a pattern of behaviour which courts ought to be prepared to tolerate. The action is one where there are significant aspects where oral evidence, and the recollection of individuals about events over ten years ago, particularly individuals not directly associated with one party or the other, are likely to be important. I cannot see how there can be a fair trial of those issues after so long a delay. I think there has been some prejudice to the defendants in their defence of this claim. So far as I am able to assess it, the action is not one where it is likely that any large award of damages would be justified. I suspect that, if the plaintiff had suffered any substantial harm as a result of this defamation, he would have pursued the action a good deal more vigorously than he has.^[38] 

72. [72]
    In all the circumstances, in my opinion this is not a matter which should be exempted from the general prohibition provided under the rules, and the plaintiff’s application should be dismissed. In those circumstances, the appropriate course is to dismiss the plaintiff’s action for want of prosecution. I also order that the plaintiff pay the defendants’ costs of the action, including the costs of both applications, to be assessed.