Howarth v Go Gecko Franchise Pty Ltd
[2017] QDC 283
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- Unreported Judgment
- Howarth v Go Gecko Franchise Pty Ltd[2017] QDC 283
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Howarth v Go Gecko Franchise Pty Ltd[2017] QDC 283
Howarth v Go Gecko Franchise Pty Ltd[2017] QDC 283
DISTRICT COURT OF QUEENSLAND
CITATION: | Howarth v Go Gecko Franchise Pty Ltd & Hockey [2017] QDC 283 |
PARTIES: | DENISE HEATHER HOWARTH (first plaintiff) AND RONALD GORDON HOWARTH (second plaintiff) AND GEMMEAH LOUISE HOWARTH (third plaintiff) v GO GECKO FRANCHISE PTY LTD (ACN 118 573 836) (defendant) AND WAYNE LESLIE HOCKEY (third party) |
FILE NO/S: | 638 of 2014 |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 28 November 2017 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 4, 31 October 2017 |
JUDGE: | Rackemann DCJ |
ORDER: | Leave is granted to the plaintiffs to take a new step in the proceeding. The defendant’s application is dismissed. The plaintiffs are to pay the defendant’s costs of each of the applications. |
CATCHWORDS: | PROCEDURE – application under UCPR r 389(2) to take a new step in the proceeding – cross-application for dismissal of the proceeding for want of prosecution – where proceeding has progressed with a history of delay – where recent delay is largely attributable to the solicitors of the plaintiffs – where the delay is in part attributable to the plaintiffs – where the prospects of success of the plaintiffs are difficult to ascertain – where no history of disobedience of court orders or directions – where limitation period has expired – where the parties appear to be in a position to progress the matter to trial – where the delay has not led to an inability to ensure a fair trial. |
COUNSEL: | K A Gothard for the plaintiffs J D Byrnes for the defendant |
SOLICITORS: | Jason Nott Solicitors for the plaintiffs Thomson Geer for the defendant |
- [1]This is an application, by the plaintiffs, for an order under r 389(2) of the UCPR that a new step may be taken in the proceeding. The defendant cross-applies for the proceeding to be dismissed for want of prosecution. The same considerations apply for each application. If leave to proceed is refused, it is appropriate for the action to be dismissed.
- [2]In Tyler v Custom Credit Corp Limited [2000] QCA 178, Atkinson J (with whom McMurdo P and McPherson JA agreed) set out a non-exhaustive list of factors which will be taken into account in considering whether to dismiss a proceeding or alternatively to grant leave.
- [3]The first and second plaintiffs are husband and wife. They are the parents of the third plaintiff who is the former wife of the third party. The third party is a former director of the defendant. The third plaintiff and the third party also had an interest in a related company.
- [4]The first and second plaintiff’s claim arises out of an alleged oral loan agreement of 4 March 2008 said to have been entered into between them personally on the one hand and their then son-in-law, the third party, on behalf of the defendant on the other, pursuant to which they lent the defendant $100,000 on terms that it would be repaid within six weeks with interest of $1,000 per week. They claim the only money received from the defendant was a payment of $13,000 (the first payment) on 5 June 2018, representing 13 weeks of interest accrued to that point. In the alternative, they seek restitution.
- [5]In the alternative, the third plaintiff’s claim is for $50,000 (the second payment) paid to her parents in 2010, at the request of the third party and a Mr Doyle on behalf of the defendant, in order to reduce the indebtedness.
- [6]The defendant denies the loan agreement and the third party’s authority to enter into it on behalf of the defendant. It does not admit that the first and second plaintiffs drew a cheque payable to the defendant in the amount of the loan, but says that if it was drawn and deposited then it was not pursuant to a loan, but as a capital contribution on behalf of the third party as a director. Similarly it pleads that if a payment of $13,000 was made (which is not admitted) it was part repayment of the third party’s capital contributions. It does not admit the second payment and denies that it, if made, it was made at the request of the defendant or with the expectation of being repaid by the defendant.
- [7]The third party pleads that the loan agreement between the first and second plaintiffs and the defendant was entered into by negotiation between the first and second plaintiffs and a Mr Doyle, with the authority of the defendant, and was repaid, with a waiver of interest arrears and any further charges, by payment in the sum of $100,000 jointly made by the third plaintiff and the third party in or about February 2012.
- [8]Although the events date back to 2008, the proceeding was not commenced until 25 February 2014. That delay is explained in the affidavits of the first and third plaintiffs. The first and second plaintiffs entrusted their daughter and son-in-law (the third party) to secure repayment. No action was taken during a period of forbearance from 2008 through to July 2011 in the context of the third party’s continual assurances that the money would be repaid. Further, prior to 19 July 2011 the third plaintiff and the third party owned shares in the Go Gecko business group and it was in their interests that the business of its related entities continued to trade. The period of forbearance is understandable in that context. On 19 July 2011, Go Gecko Pty Ltd was placed into external administration and shortly thereafter it became evident that payment would not be forthcoming from the defendant. The third plaintiff and the third party then took steps to engage lawyers to pursue the debt. It appears that lawyers were instructed in December 2011. The third plaintiff, who had young children at the time, left the third party to deal almost exclusively with the lawyers.
- [9]In or about February/March 2012 when the third plaintiff discovered that proceedings had not yet commenced in relation to the loan and that the same solicitors had been retained by the third party in relation to matters concerning Go Gecko and in respect to his personal obligations as a director, she assumed responsibility and instructed different solicitors. The third plaintiff felt some responsibility to recover the monies that had been obtained from her parents, and her parents were content to entrust their daughter with the process of instructing solicitors. That is an understandable arrangement in the circumstances.
- [10]By this time, the third plaintiff was in a matrimonial dispute with the third party in respect of which she also instructed the same firm of solicitors. This took her focus from pursuing the loan matter. The subject proceedings were commenced eight days after a consent order was made in the Federal Circuit Court in the matter between the third plaintiff and the third party.
- [11]The material does not adequately explain why, during this period of distraction, the third plaintiff had neither followed up her solicitors about the instructions she had given with respect to the loan matter, nor asked her parents to deal with that matter whilst her focus was otherwise distracted.
- [12]The litigation commenced more than three and a half years ago. It proceeded with a reasonable pace early on. The claim and statement of claim were filed on 25 February 2014, followed by the notice of intention to defend and defence on 31 March 2014. Further and better particulars of the statement of claim (in response to a request of 17 March 2014), were provided on 4 April 2014. That was followed by an amended defence on 17 April 2014. A further amended third party statement of claim was filed the same day. The third party filed a notice of intention to defend and defence on 4 June 2014.
- [13]From then until May 2015 however, there was a lack of activity by either side until the plaintiffs provided disclosure by a list of documents on 5 May 2015. That was followed by disclosure by the defendant by way of list on 13 May 2015. The defendant then made application for disclosure from the third party on 5 June 2015, which ultimately resulted in a consent order on 6 July 2015.
- [14]At about this time, the third plaintiff withdrew instructions from the solicitors with whom she had fallen into dispute in relation to their earlier handling of her matrimonial matter. The plaintiffs’ current solicitors filed a notice of change of solicitor on 18 June 2015. On 5 September 2016, those solicitors gave notice of intention to take a step in the proceeding, but subsequently took no step. On 21 August 2017 the solicitors for the defendant wrote regarding the expiry of two years since the taking of a step, which provoked the plaintiffs’ application and the defendant’s cross-application. The plaintiffs’ current solicitors claim responsibility for the delay.
- [15]The third plaintiff deposed that, having instructed the new solicitors to act on behalf of the plaintiffs, she did not initially press the solicitor in charge of the file to ensure the matter was progressing, because she believed that he would take the necessary action to prosecute the matter, in accordance with her instructions. Further, she realised, from her Family Court proceedings, that court matters do not progress quickly and can be expensive. She frankly conceded that she was happy not to be receiving numerous expensive bills.
- [16]Towards the end of 2016, she was contacted by the solicitor in charge of the matter who recommended that counsel’s advice be obtained. She gave those instructions. Counsel’s advice was obtained on 27 October 2016. During the course of 2017, she either contacted or was contacted by the solicitor on a number of occasions and together with her parents, met him on at least two occasions for the purposes of being asked questions to assist with preparing statements. Because of these communications, the third plaintiff thought that the matter was proceeding as it should. Her affidavit went on to detail a further five occasions in May and June of 2017 where she had spoken with the solicitor and was assured that the proceedings were moving forward. The discussions included as to the third plaintiff and her parents being required as witnesses at trial. Although the third plaintiff was not told that a trial date had been set, she believed, from the discussions about the trial and from the fact that statements were being taken and counsel’s advice had been obtained, that it would not be too far away.
- [17]The first plaintiff also deposed that she and her husband have had a number of dealings with the solicitor, of recent times, in order to complete their statements. The first plaintiff deposed to at least 9 dealings since March 2017. She believed from those dealings that the proceedings were being attended to and work was being done to progress the matter to trial.
- [18]The solicitor who was handling the matter deposed that since obtaining counsel’s advice, he had been obtaining detailed statements of evidence from the plaintiffs. He further deposed that:
“ The delay in preparing the statements of evidence has been caused by my conflicting obligations and commitments. The delay is on my part and not on the part of the client. Over the last few months when addressing the matter I have been concentrating on the preparation of those statements without giving a close consideration to the progression of the matter before the court.”
- [19]The principal of the firm has now taken over the conduct of the matter. He deposed that the solicitor who previously had the conduct of the matter was an experienced commercial litigator who was considered, in all respects, a diligent practitioner. He has however, recently been placed on indefinite leave for personal reasons and is undergoing treatment for depression, anxiety and stress disorder. This has resulted in a careful review of his files, which has revealed a lack of diligence which was entirely out of character with his past performance. The principal deposes that with respect to the subject matter, the delay in the prosecution of the proceedings is wholly attributable to the firm and that, were the court to grant leave, the plaintiffs would prosecute the proceedings expeditiously under his direct supervision.[1]
- [20]It was submitted for the defendant that, notwithstanding their current solicitors preparedness to take responsibility for the recent delay, that the plaintiffs should share the blame for sitting by and allowing their solicitors to do nothing or very little to carry the action forward. As has been noted, the proceeding progressed relatively promptly through to mid-2014. The period from mid-2014 to May 2015 was a period of mutual delay. It is true that, having instructed their current solicitors in 2015, the plaintiffs adopted a passive approach until towards the end of 2016 and, to that extent, share blame for some of the delay but, from that point, they appear to have been in reasonably regular contact with their solicitor and to have had no reason to be put on notice that there was anything untoward about the progress of the matter or any need to give any further specific instruction. The delay, particularly of recent times, is substantially the fault of the solicitors.
- [21]The litigation has progressed to a significant degree although it is not yet ready to be set down for trial. The plaintiffs’ solicitors have foreshadowed a proposed late reply, a draft of which was exhibited to the material together with a draft supplementary list of documents.
- [22]This is not a case where there has been a history of disobedience of court orders or directions.
- [23]The plaintiffs point out that a failure to grant leave and the dismissal of the action will have the effect of depriving them of their cause of action, since the limitation period has expired.
- [24]The plaintiffs contend that they have good or at least reasonable prospects of success in the action. In that regard they point to the existence of documentary evidence by way of a cheque for $100,000 made out from the first and second plaintiffs to the defendant dated 4 March 2008, a corresponding debit in their bank account for that amount, on the same day, and a deposit for the same amount on the same day appearing in the account of the defendant. They also point to a withdrawal of $13,000 appearing in the defendant’s bank statement for 5 June 2008. Reference was also made in the affidavit of the solicitor who used to have the carriage of the plaintiffs’ file to what are said to be notes made by the third party at the time, referring to the terms of the loan and to the subsequent acknowledgement of a loan by Mr Doyle, who was another director of the defendant at the time.
- [25]The documentary evidence of the cheque being drawn by the first and second plaintiff and deposited into the defendant’s bank account is certainly helpful for the plaintiffs’ case, but is not the end of the matter. It was submitted for the defendant that the prospects cannot be assessed at this stage. Central to the case is the basis on which the money was paid (whether as a loan by the first and second plaintiffs or as a payment by them on behalf of the third party, of his capital contribution as a director), and, if a loan, the terms upon which the money was agreed to be lent. That depends upon the content of the oral agreement, the strength of the evidence of which cannot be assessed on this application. It may be noted that the largest part of the claim, in relation to the loan, relates to interest. Further, the documents referred to do not relate to the third plaintiff’s claim.
- [26]It was also pointed out, in relation to the withdrawal of $13,000 from the defendant’s account, that it is described, in the defendant’s bank statement, as a payment to the third party. Further, the accounts and returns of the defendant did not identify the loan.
- [27]Insofar as the asserted acknowledgements by Mr Doyle are concerned, whilst counsel for the defendant did not concede the relevance of post-contractual conduct, he nevertheless pointed out that one of the so-called acknowledgements, refers to an oral loan agreement entered into between the third plaintiff and the third party with a different entity, Go Gecko Group Pty Ltd, in the sum of $100,000, whilst another disclosed document dated 4 March 2008 purportedly signed by Mr Doyle (the authenticity of which is not accepted), also referred to a loan of that amount between those parties. It was pointed out that the solicitors instructed in 2011 had sent a letter of demand to Mr Doyle, again referring to a $100,000 loan by the third party and the third plaintiff to Go Gecko Group Pty Ltd.
- [28]Given the extent to which the cause of action depends upon ascertaining the parties to, and the terms of, those oral agreements, it is difficult to form a view about the plaintiff’s prospects of success.
- [29]The defendant claims that the delay has resulted in prejudice to its ability to achieve a fair trial, particularly in a case where there will be a need for oral evidence in connection with the loan agreement of 4 March 2008, the circumstances of the alleged payment of 2010 and the circumstances of the alleged repayment and waiver of interest in February 2012 and the usual course of conduct in respect of loans to the defendant at the relevant time (pleaded to be relevant to the director’s authority to borrow from third parties). The defendant submits that it would suffer prejudice given the importance of the oral evidence, particularly of Hockey and Doyle for the defendant, given that Hockey and Doyle are no longer directors of the defendant and that the current sole director, Mr Scully, took office in 2011 when the ownership of the defendant changed and access to potential documentary evidence has been affected by changes of office and liquidation and deregistration of a related entity. To that is added the consideration of allowing members of the community to go on with their lives without the continuing threat of litigation and its consequences hanging over them.
- [30]There is no suggestion that any of the relevant witnesses are not available or claim to have any difficulty with recalling the relevant events, nor has the loss of any relevant documentary evidence been identified or established. Whilst I acknowledge that it can be inferred that memories fade with the passage of time, the transaction or transactions in this case are of relatively limited compass. Insofar as the defendant is placed at any disadvantage by the change of ownership, directors and officers, that occurred at a relatively early stage, in 2011. I do not consider that the delay to date has led to the inability to ensure a fair trial. I accept that prolonged litigation can be a cause of distress, but that is a matter which must be weighed in the balance with other considerations.
- [31]This is a case where there are considerations both ways but, on balance, I consider that the interests of justice lie in granting leave to take a step and in dismissing the defendant’s application. In the circumstances however the plaintiffs should pay the defendant’s costs of each of the applications.
Footnotes
[1]See also the undertakings in the affidavits of the first and third plaintiffs.