Shammah Pty Ltd v Jewel[2005] QDC 315

[2005] QDC 315

DISTRICT COURT

CIVIL JURISDICTION

JUDGE ROBIN QC

No 391 of 1998

BRISBANE

DATE 12/10/2005

ORDER

CATCHWORDS:  Uniform Civil Procedure Rules r 389 – plaintiff's application for leave to proceed after delay of almost 6 years – only explanation of delay was impecuniosity – limitation period still has years to run – action uncomplicated, but uncertainty what documents might become available – defendant says it would be premature to allege prejudice – leave granted.

HIS HONOUR:  This is a plaintiff's application under rule 389.2 of the Uniform Civil Procedure Rules for leave to proceed, notwithstanding delay in excess of two years since the last step was taken.  That was as long ago as the 18th of November 1999 when the plaintiff filed a notice to admit facts, presumably under rule 189.

In an application heard yesterday there was discussion whether that amounted to a step, whether or not it was a step or "proceeding" under the former Supreme Court rules.  It seems to me that the serious consequences of failing to respond to a notice to admit facts under rule 189 which can lead to a deemed admission make it clear that there is a step.  Those consequences did not flow from RSC order 36 rule 2, rather the recipient of the notice remained free to contest the alleged facts contained in the notice.  Only days before 18 November 1999 other "steps" were taken which undoubtedly qualify as such.

The delay of nearly six years is by any standards inordinate.  It is curious against a background of considerable activity after 30th of January 1998 when the plaint was filed under the then District Court rules; a judgment summons was filed, adjourned and then dismissed by consent. 

The Court is given to understand that the parties are theatrical entrepreneurs.  Relevantly they had dealings to do with a special purpose company called Peter Pan The Production Pty Ltd.

The dealings led to a deed of agreement being executed by Peter Pan The Production Pty Ltd as borrower on or about the 9th of January 1996.  At that time the defendant executed the deed of agreement as guarantor.  Arrangements were envisaged in which persons participating by way of providing the finance for the intended production could seek to withdraw or obtain equity and the like.  The plaintiff obtained the advantage of an instrument under seal which might give it the entitlement to claim $150,000 from Mr Jewel as guarantor.

His defence asserted that he had made relevant payments aggregating virtually the whole sum.  There was a counterclaim seeking rectification of the deed by deletion of identified words so as to give effect to some oral agreement.  The reply and answer disputed that the payments asserted in the defence were made against the $150,000 liability, but did acknowledge a payment in a sum slightly under $40,000 which reduced the defendant's liability to about $110,000.

There is no persuasive explanation by the plaintiff for its delay, but there are vague references to impecuniosity and I suppose to that extent to the defendant being responsible.  If he is right about what he has paid, there is nothing in those claims.  It is not suggested that the plaintiff is in breach of any Court order for the purposes of one of the components in the Court of Appeal's list of factors for consideration in circumstances like this in Tyler v. Custom Credit Corporation Ltd [2000] QCA 178 in paragraph [2].

Ms Muir and Mr Murphy who have represented the applicant/plaintiff and the defendant respectively take the view that the factor (8) relates to what appears to me the overwhelming factor here which is that the limitation period is yet to expire.  On the face of it, it would be open to the plaintiff if it failed to obtain the leave sought to commence a new proceeding in which the defendant would have to confront whatever circumstances prejudicing his ability to defend effectively he would confront if this claim proceeded. 

Mr Murphy referred the Court to the judgment of Judge McGill in Bendich v. Clout [2003] QDC 305 where there is an interesting and comprehensive discussion from paragraph [44] on of the effect of the limitation period not having run.  There as here the 12 year limitation period still had a couple of years to run.  His Honour considered many authorities including some which raise the possibility that a further action in circumstances where leave to proceed has been refused, which was the outcome his Honour settled on, could be seen as an abuse of process and struck out or stayed.  He did not decide that that would happen.

The circumstances in Bendeich, where the delay may have been slightly shorter than it is here, were factually very complex - lending weight to considerations of the importance of witnesses' failing recollections and so forth.  The present matter seems to me simple factually.  Mr Bendeich was a solicitor who blamed his own legal representatives' breaching their instructions for the delay.  Judge McGill at [4]-[5] apparently regarded this as a factor unfavourable to the plaintiff.  It is unfortunate that documents appear to be missing which might establish the transmission of a facsimile message said by the plaintiff to have been transmitted on or about the 2nd of March 1996.  There is correspondence from the solicitors as long ago as the 11th of March 1999 by which Mr Jewel asserts that he did not receive the second page of the document, which contains the most important sentence:

"Kerry, I seek to exercise my rights under the loan agreement and exit the project."

There has been a search for records, including telephone records which might corroborate the transmission, to no avail.  It is common ground that the plaintiff's rights probably depend on Mr Kim Andrews having sent such a communication.  It may well be, as Ms Muir suggests, that if matters relating to transmission remain uncertain, it is the plaintiff rather than the defendant who is going to be embarrassed. 

Mr Murphy has opposed the granting of leave but not presented any material to the Court, apart from a company search of another company of Mr Andrews.

He says his client lacks funds to mount any substantial defence and also is embarrassed in not being able to positively allege prejudice because of continuing uncertainty as to what documents may emerge.  All he has at this stage are assurances from the plaintiff that best efforts will be employed to obtain documents from various sources, including the liquidators of Peter Pan The Production Pty Ltd and relevant records of The Andrews Corporation Pty Ltd, which it is suggested played some role that cannot clearly be identified in the movement of moneys.

There is a paucity of financial records available to assist the parties in identifying just who owed or paid what to whom at particular times.  Mr Murphy suggests it is inappropriate for the Court to make the order sought unless and until the extent of prejudice to the defendant is identified.  I find it difficult to give effect to that submission in light of the limitation situation.  I agree with Judge McGill that the fact that the limitation period has not yet expired is not conclusive.  Nevertheless, I think it is the predominant consideration here.  Apropos prejudice, it is clear that some (at least) of the prejudice Mr Murphy is concerned about was already present in 1999 and has not changed.

I am not persuaded that it would be any kind of abuse by the plaintiff to start again if leave to proceed were denied it today.  In such circumstances, there is simply no point in requiring the repetition of effort.  The Court would be involved in compelling the plaintiff if, as appears to be the case, it is intent on proceeding to enforce its alleged entitlements in a new claim.  I would, in the circumstances, grant leave to proceed.  Ms Muir's draft order suggests costs be costs in the cause, but I am not so sure that is appropriate.

...

HIS HONOUR:  I will amend your draft order accordingly.  Paragraph 2 will become "the plaintiff pay the defendant's costs of the application to be assessed".

...

HIS HONOUR:  That is on the standard basis.