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- Garland Waddington v Carpenter[2018] QDC 173
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Garland Waddington v Carpenter[2018] QDC 173
Garland Waddington v Carpenter[2018] QDC 173
DISTRICT COURT OF QUEENSLAND
CITATION: | Garland Waddington (a firm) v Carpenter & Ors [2018] QDC 173 |
PARTIES: | GARLAND WADDINGTON (a firm) (plaintiff) v GLEN JOSEPH CARPENTER (first defendant) And GRANT SHAUN CUNNING (second defendant) And SPIRE LAW PTY LTD ACN605392265 (third defendant) |
FILE NO/S: | 1/16 (Maroochydore) |
DIVISION: |
|
PROCEEDING: | Application |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 31 August 2018 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 19 June 2018 |
JUDGE: | Dearden DCJ |
ORDER: |
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – TIME, EXTENSION AND ABRIDGMENT – where an application has been made to take a new step in a proceeding – where an application has been made to strike out proceeding for want of prosecution – where proceedings commenced approximately two and a half years ago – where the last step in the proceeding occurred more than two years ago – where the delay is entirely attributable to the actions of the plaintiff |
LEGISLATION: | Uniform Civil Procedure Rules 1999 (Qld) rr. 5, 155, 213(1), 213(2), 214(1)(b), 389, 444 |
CASES: | Citypoint [Hotels] Pty Ltd v AIB Pty Ltd [2012] QCA 126 Tyler v Custom Credit Corporation [2000] QCA 178 Ure v Robertson [2017] 2 QdR 566 |
COUNSEL: | I Erskine (for the plaintiff) C A Wilkins (for the first, second and third defendants) |
SOLICITORS: | Garland Waddington (for the plaintiff) K&L Gates (for the first, second and third defendants) |
Introduction
- [1]The plaintiff, Garland Waddington (a firm) by application filed 8 June 2018, seeks leave to take a new step in the proceeding. The first defendant (Glenn Joseph Carpenter), second defendant (Grant Shaun Cunning) and third defendant (Spire Law Pty Ltd) in an application filed 17 May 2018, seek to strike out the proceeding for want of prosecution.
- [2]It is common ground that if the application for leave to take a new step succeeds, then the application to strike out the proceeding for want of prosecution fails, and conversely if the application for leave to take a new step fails, then the application to strike out the proceeding for want of prosecution must succeed.
Background
- [3]The plaintiff and the first defendant entered into an employment agreement on or about 13 February 2013, and that agreement contained a restraint clause pleaded at paragraph 3 of the Statement of Claim.[1]The plaintiff and the second defendant entered into an employment agreement on or about 5 October 2013, and that agreement relevantly contained a restraint clause pleaded at paragraph 6 of the Statement of Claim.[2]
- [4]The chronology of events is helpfully set out in the defendants’ Outline of Argument[3]as follows:-
Date | Event | Reference |
15.05.15 | The second defendant ceased his employment with the plaintiff. | Statement of claim, paragraph 7 (admitted) |
22.05.15 | The first defendant ceased his employment with the plaintiff. | Statement of claim, paragraph 4 (admitted) |
04.01.16 | The plaintiff commenced this proceeding against the first defendant, second defendant and the third defendant (being a company of which the first and second defendants are directors) by filing a claim and statement of claim. | Mr Hardman’s affidavit, paragraph 2; Court Index #1 and 2 |
05.02.16 | A notice of intention to defend and defence was filed and served. | Mr Hardman’s affidavit, paragraph 3; Court Index #3 and 4 |
19.02.16 | Pleadings closed. | UCPR, r. 169 |
31.03.16 | The plaintiff filed and served its list of documents. | Mr Hardman’s affidavit, paragraph 4; Court Index #5 |
31.03.16 | The plaintiff sent a letter under UCPR, r. 444 to the solicitors for the defendants regarding the failure of the defendants to have made disclosure within the time required by the rules. | Mr Hardman’s affidavit, paragraph 4, exhibit “PAH-1” |
06.04.16 | The defendants made disclosure under UCPR, r. 214(1)(a) by delivering a list of documents to the plaintiff. | Mr Hardman’s affidavit, paragraph 5, exhibit “PAH-2” |
06.04.16 | The solicitors for the defendants sent a letter dated that day to the plaintiff requesting a copy of certain documents from the plaintiff’s list of documents. | Mr Hardman’s affidavit, paragraph 6, exhibit “PAH-3” |
07.04.16 | The solicitors for the defendants sent a letter under UCPR, r. 444 to the plaintiff complaining about the disclosure made by the plaintiff. | Mr Hardman’s affidavit, paragraph 7, exhibit “PAH-4” |
07.04.16 | The solicitors for the defendants wrote to the plaintiff expressing concerns about the plaintiff’s claim for legal professional privilege. | Mr Hardman’s affidavit, paragraph 7, exhibit “PAH-5” |
11.04.16 | The solicitors for the defendants sent a letter to the plaintiff challenging the plaintiff’s claim for legal professional privilege pursuant to UCPR, r. 213(1). | Mr Hardman’s affidavit, paragraph 8, exhibit “PAH-6” |
13.04.16 | The solicitors for the defendants requested further and better particulars of allegations made in the statement of claim. | Mr Hardman’s affidavit, paragraph 9, exhibit “PAH-7” |
March 2018 | The third defendant entered into negotiations to acquire part of a legal practice, for which it required finance. | Mr Carpenter’s first affidavit, paragraph 10 |
16.03.18 | The first and second defendants met with a bank manager from NAB who informed them that the ability of the third defendant to borrow for the proposed acquisition was adversely affected by the existence of this proceeding. | Mr Carpenter’s first affidavit, paragraph 11 |
April / May 2018 | The third defendant did not proceed with the proposed acquisition. | Mr Carpenter’s first affidavit, paragraph 12 |
17.05.18 | The defendants filed an application under UCPR, r. 280 for an order striking out the proceeding for want of prosecution. | Court Index #6 |
28.05.18 | The plaintiff served an amended list of documents (without first obtaining leave to do so). | Mr Bathersby’s affidavit, paragraph 9 |
29.05.18 | The plaintiff served further and better particulars of the statement of claim (without first obtaining leave to do so). | Mr Bathersby’s affidavit, paragraph 9. |
29.05.18 | The plaintiff provided a copy of the documents which had been requested by the solicitors for the defendants on 6 April 2016 (without first obtaining leave to do so). | Mr Bathersby’s affidavit, paragraph 9. |
30.05.18 | Rafter SC DCJ made orders transferring this proceeding to Brisbane; listing the application filed by the defendants on 17 May 2018 for hearing on 19 June 2018; and for any application by the plaintiff for leave to proceed, together with supporting affidavit material, to be filed and served by 8 June 2018. | Court Index #10 |
08.06.18 | The plaintiff filed an application under UCPR, rr. 389 and 377 for leave to proceed and for leave to amend the claim and statement of claim. | Court Index #11. |
15.06.18 | The plaintiff provided a copy of the proposed amended claim and proposed amended statement of claim to the solicitors for the defendants. |
- [5]
“Throughout their employment, each of the [first and second] defendants…had access to the plaintiff’s confidential business information, including client names and contact details, charge out rates and retention strategies as well as near unfettered control and management of the clients and files entrusted to them.”[6]
- [6]The plaintiff asserts that:-
“In April 2015, whilst still in the employ of the plaintiff, the first and second defendants took steps to incorporate the third defendant with the intention of carrying on a law practice in competition with the plaintiff in Maroochydore.[7]Each of the first and second defendants left the plaintiff’s employment in May 2015.[8]By July 2015, the plaintiff discovered the defendants were accepting instructions and undertaking legal work for persons who were clients of the firm during their employment.”[9]
- [7]
- [8]It is submitted (and I accept) that the steps taken by the plaintiff since the filing of the application by the defendants for strike out for want of prosecution on 17 May 2018[12]are irregular and ineffectual, and do not obviate the need for the plaintiff to obtain leave to proceed under Uniform Civil Procedure Rules (UCPR) r. 389.[13]
- [9]UCPR r. 389 provides:
“389 Continuation of proceeding after delay
- (1)If no step has been taken in a proceeding for 1 year from the time the last step was taken, a party who wants to proceed must, before taking any step in the proceeding, give a month’s notice to every other party of the party’s intention to proceed.
- (2)If no step has been taken in a proceeding for 2 years from the time the last step was taken, a new step may not be taken without the order of the court, which may be made either with or without notice.
- (3)For this rule, an application in which no order has been made is not taken to be a step.”
- [10]The classic elucidation of the relevant factors, which require the applicant to “show that there is a good reason for excepting the particular proceedings from prohibition”[14]is set out in the judgment of Atkinson J (with whom McMurdo P and McPherson JA agreed) in Tyler v Custom Credit Corporation [2000] QCA 178, [5]. The factors are:-
- how long ago the events alleged in the statement of claim occurred and what delay there was before the litigation was commenced;
- how long ago the litigation was commenced or causes of action were added;
- what prospects the plaintiff has of success in the action;
- whether or not there has been disobedience of Court orders or directions;
- whether or not the litigation has been characterised by periods of delay;
- whether the delay is attributable to the plaintiff, the defendant or both the plaintiff and the defendant;
- whether or not the impecuniosity of the plaintiff has been responsible for the pace of the litigation and whether the defendant is responsible for the plaintiff’s impecuniosity;
- whether the litigation between the parties would be concluded by the striking out of the plaintiff’s claim;
- how far the litigation has progressed;
- whether or not the delay has been caused by the plaintiff’s lawyers being dilatory. Such dilatoriness will not necessarily be sheeted home to the client but it may be. Delay for which an applicant for leave to proceed is responsible is regarded as more difficult to explain than delay by his or her legal advisers;
- whether there is a satisfactory explanation for the delay; and
- whether or not the delay has resulted in prejudice to the defendant leading to an inability to ensure a fair trial.
- [11]Dealing then with the Tyler factors:-
- How long ago the events alleged in the Statement of Claim occurred and what delay there was before the litigation was commenced.
- [12]It is common ground that the relevant events occurred in 2015, litigation commenced on 4 January 2016, so there has been no significant delay in the plaintiff commencing proceedings.
- How long ago the litigation was commenced or causes of action were added
The proceeding, as noted, was commenced on 4 January 2016.
- What prospects the plaintiff has of success in the action
- [13]It is common ground that the plaintiff has no prospects of obtaining the injunctions for restraint of trade sought at paragraph 1(a), paragraph 1(b) and paragraph 1(c) of the Claim for Relief, given that the relevant clauses of the employment agreements (Clause 6.2(a) of the first defendant’s employment agreement and Clause 19.2(a) of the second defendant’s employment agreement) provided for a maximum period of restraint of two years after the cessation of employment, which period passed in or about May 2017. The plaintiff’s proposed amended claim abandons the claim for these injunctions.
- [14]In respect of the claim for injunctions to enforce the non-solicitation clauses (Clause 6.2(b) of the first defendant’s employment agreement and Clause 19.2(b) of the second defendant’s employment agreement), it is submitted by the defendants that the prospects of success are poor given:-
- The unlimited durations of the purported restraints, being unenforceable as unreasonable restraints of trade having regard to:
- (1)their unlimited durations;
- (2)that they are otherwise extreme in terms, restraining the first and second defendants from seeking work from any of the plaintiff’s clients, even if those clients only became clients of the plaintiff after the first and second defendants ceased to be employed by the plaintiff;
- (3)they placed the first and second defendants in the awkward position of possibly breaching the obligation unknowingly; and
- (4)they provide the plaintiff with an excessive and unreasonable level of protection.[15]
- [15]The defendants submit that it is not possible to say whether the claim for damages has good prospects or not, given that Clause 6.2(a) of the first defendant’s employment agreement is arguably unenforceable as it goes beyond what is reasonably necessary to protect the legitimate interest of the plaintiff.[16]The defendants submit that, in any event, paragraph 15 of the Statement of Claim does not comply with UCPR r. 155, in that it is not a claim demonstrably within the court’s jurisdiction.[17]In these circumstances, the District Court (as a court of limited jurisdiction) would not be capable of granting relief by way of an injunction.
- [16]The plaintiff, on the other hand, argues that there is a substantive issue or cause to be tried, given that the restraint and non-solicitation clauses are in writing, the restraint clause is a cascading clause and the non-solicitation clause is reasonably necessary to protect the legitimate business interests and goodwill of the plaintiffs.[18]
- Whether or not there has been disobedience of court orders or directions
- [17]The plaintiff failed to comply with the order made by the learned District Court judge at Maroochydore on 30 May 2018 requiring all supporting material for the application for leave to proceed to be filed and served by 8 June 2018, but the proposed amended claim and proposed amended statement of claim were not served until 15 June 2018, with no explanation for the delay. This is, however, a relatively minor failure to comply with the relevant court order. There have also been failures to comply with UCPR r. 5 (“the implied undertaking to proceed expeditiously”), UCPR r. 213(2) (“the obligation to file and serve an affidavit stating a claim for legal professional privilege within seven days after another party challenges the claim”); and UCPR r. 214(1)(b) (“the obligation to deliver documents disclosed by a list of documents to another party who requests a copy of those documents.”).
- [18]In my view, none of those matters amount to a “contumelious disregard for or disobedience of any of the court orders or directions”, and although there were failures by the plaintiff to respond to UCPR r. 444 letters in March and April 2016,[19] the issues involved were resolved and particulars were provided.[20]
- Whether or not the litigation is being characterised by periods of delay
- [19]The last step in the proceeding occurred on 6 April 2016. The plaintiff submits that the delay has been explained and that the defendants contributed to the delay by a “tacit approach to the litigation”.[21]
- Whether the delay is attributable to the plaintiff, the defendant or both the plaintiff and the defendant
- [20]The plaintiff’s explanation for the delay is as follows:-
“Although it is correct that the plaintiff has delayed in the progress and prosecution of this litigation, the same criticism (to some extent at least) can be made against the defendants.
In so far as the delay can be attributed to the plaintiff, by way of explanation, I respectfully state that the plaintiff is:-
- (a)A small firm of solicitors consisting of two partners and three solicitors;
- (b)A busy practice, with the period of the delay being a particularly busy period that required my close focus and attention on other matters to the detriment of this matter.
A large part of the delay is due to my having to necessarily devote more attention to more pressing matters, rather than this matter, so as to properly and adequately service clients [of] the firm, rather than the firm itself.
Although, it is correct that the plaintiff has to this point in time, been dilatory and not given this litigation the attention it might otherwise deserve, the fault of the delay is not due to the members of the firm as a whole, but rather to a single member [me] in terms of the conduct of this matter. Apart from myself, there is no other person within the firm suited to carrying the conduct of this litigation.” [22]
- [21]It is submitted by the defendants that the plaintiff also failed to comply with obligations in respect of disclosure[23]and in providing particulars of the statement of claim when requested. Mr Wilkins, in oral submissions on behalf of the defendants, pointed to the decision in Citypoint [Hotels] Pty Ltd v AIB Pty Ltd [2012] QCA 126, where after setting out the history of the unexplained delay in those proceedings,[24]Fraser JA noted that: -
“I would affirm the primary judge’s conclusions… that the matter was characterised by delay ‘from start to finish’, Citypoint was responsible for the delay, the delay was excessive and there was no satisfactory explanation for the delay”.[25]
- [22]The oral submission by Mr Wilkins is that:-
“for a solicitor with a conduct of a proceeding to come along to the court and say ‘look I’m the person in charge of running this litigation and I’m a partner of the plaintiff in the action, and I’ve been too busy to do anything to prosecute it’… is not a satisfactory explanation for the delay”.[26]
- [23]The plaintiff on the other hand submits that the delay has been “explained”, that the defendants also contributed to the delay, and the delay has not been shown to have any adverse impact on witness recollection.
- Whether or not the impecuniosity of the plaintiff has been responsible for the pace of the litigation and whether the defendant is responsible for the plaintiff’s impecuniosity
- [24]There is no suggestion from either the plaintiff or the defendants that the plaintiff’s impecuniosity has been responsible for its delay.
- Whether the litigation between the parties would be concluded by the striking out of the plaintiff’s claim
- [25]Although the claim for an injunction is now otiose by the effluxion of time, the plaintiffs submit (and the defendants accept) that the other claims, including for breach of contract, are not time barred, so striking out the proceedings or not granting leave to proceed would not finalise the litigation between the parties, given the cause of action is not statute barred by a relevant limitation period.
- How far the litigation has progressed
- [26]The courts are generally more inclined to grant leave to proceed with litigation which is close to or ready for trial[27]but the litigation in this matter would still require significant steps to be taken before the matter could be listed for trial. The plaintiff, optimistically, asserts that the matter could be ready for trial and placed on the call over list “well before the end of this year”.[28]
- Whether or not the delay has been caused by the plaintiff’s lawyers being dilatory
- [27]The plaintiff is a self-acting firm of lawyers and is clearly responsible for the delay.
- Whether there is a satisfactory explanation for the delay
- [28]Mr Bathersby, the partner responsible for the litigation, sets out his explanation of the delay at paragraphs 28-30 of his affidavit.[29]In essence, he claims to have been too busy with other matters to progress the plaintiff’s claim, but fails to explain why the plaintiff did not, for example, brief another firm of solicitors to conduct the litigation. It is submitted by the defendants that the inadequate explanation for the delay “tells heavily against any grant of leave to proceed.”[30]
- Whether or not the delay has resulted in prejudice to the defendant leading to an inability to ensure a fair trial
- [29]The defendants concede that a fair trial is still possible, but submit they have suffered other prejudice, including a refusal of finance to the third defendant by National Australia Bank.[31]
Discussion
- [30]An overall assessment of the applicant’s position, in the light of the Tyler factors, is as follows: -
- There was no significant delay in the plaintiff commencing proceedings.
- Proceedings were commenced approximately two and a half years ago.
- The plaintiff has some prospects of success in respect of part of their action, but critically, paragraph 15 of the existing statement of claim does not comply with UCPR r. 155.
- There has been some disobedience of court orders or directions, but none amount to “a contumelious disregard for or disobedience of any of the court orders or directions”.
- The last step in the proceeding occurred on 6 April 2016 which is more than two years ago. The delay is, in my view, entirely attributable to the actions of the plaintiff, in particular, Mr Bathersby (partner of the plaintiff) who asserts that he has devoted more attention to servicing the clients of the plaintiff firm rather than this litigation on behalf of the plaintiff firm. However, Mr Bathersby has failed to explain why external lawyers were not briefed on behalf of the plaintiff to pursue its litigation in a timely fashion.
- Impecuniosity is not relevant.
- The litigation would not necessarily be concluded by a striking out of the plaintiff’s claim (but the plaintiff would have to consider carefully whether there was a value in re-litigating the matters in dispute between the parties).
- The litigation, in my view, has some significant steps still to be taken before it could be listed for trial, which I consider would be most unlikely to be before 2019.
- There is no discernible prejudice to the defendants in respect of a fair trial, although there are concerns in respect of access to finance.
Conclusion
- [31]The plaintiff, a self-acting firm of lawyers, is clearly responsible for its own delays.
- [32]In my view, the explanation that Mr Bathersby has been too busy with other matters to progress the plaintiff’s firm’s claim, and did not see fit to brief another firm of solicitors to conduct the litigation in the alternative, is not a satisfactory explanation for the delay.
- [33]In the light of those findings, I consider that the applicant has failed to show that there was a good reason for accepting these proceedings from the prohibition in UCPR r. 389(2). Accordingly, I consider that the application to strike out the proceeding for leave to take a new step in the proceeding should be refused, and the application to strike out the proceeding for wanted prosecution should be granted.
Orders
- 1.The plaintiff’s application for leave to proceed under UCPR r. 389 is dismissed.
- 2.Pursuant to UCPR r. 280 the proceeding be dismissed for want of prosecution.
- 3.The plaintiff pay the defendants’ costs of the applications and the proceeding.
Footnotes
[1] Statement of Claim filed 4 January 2016.
[2] Statement of Claim filed 4 January 2016.
[3] Exhibit 2, [3].
[4] Affidavit of Brendan Bathersby sworn 8 June 2018, [2]- [4].
[5] Affidavit of Brendan Bathersby sworn 8 June 2018, [3]-[4] (Exhibits BJB-1 & BJB-2).
[6] Exhibit 1 – Plaintiff’s Outline of Argument, [6]; Affidavit of Brendan Bathersby sworn 8 June 2018, [7].
[7] Statement of Claim, [1(d)]; admitted in defence at [1].
[8] Affidavit of Brendan Bathersby sworn 8 June 2018, [2].
[9] Affidavit of Brendan Bathersby sworn 8 June 2018, [33]; Exhibit 1 (Plaintiff’s Outline of Argument), [7].
[10] Exhibit 1 (Plaintiff’s Outline of Argument), [8].
[11] Exhibit 1 (Plaintiff’s Outline of Argument), [8].
[12] Application filed 17 May 2018.
[13] Ure v Robertson [2017] 2 QdR 566 per Bond J at [39] – [42].
[14] Tyler v Custom Credit Corporation [2000] QCA 178, [5].
[15] Smith v Ryngiel [1988] 1 QdR 179, 186; BDO Group Holdings (Qld) & Anor v Sully [2015] QSC 166, [64]; Cactus Imaging Pty Ltd v Peters [2006] NSWLR 9, [36].
[16] Burton & Eising v Wright Trading [2007] QSC 17 [60].
[17] Startune Pty Ltd v Ultra-Tune Systems (Aust) Pty Ltd [1991] 1 QdR 192, 197.
[18] Exhibit 1 – Plaintiff’s Outline of Argument para 11(d).
[19] Affidavit of Paul Hardman sworn 16 May 2018 paras 4 and 7 (Exhibits PAH-1 & PAH-4).
[20] Affidavit of Brendan Bathersby sworn 8 June 2018 para 9; affidavit of Paul Hardman sworn 16 May 2018 para 9 (Exhibit PAH-7); affidavit of Brendan Bathersby sworn 8 June 2018 para 9(b).
[21] Exhibit 1 – Plaintiff’s Outline of Argument para 11(f).
[22] Affidavit of Brendan Bathersby sworn 8 June 2018 paras 27-30.
[23] UCPR r. 213(2) & r. 214(1)(b).
[24] Citypoint Hotels Pty Ltd v AIB Pty Ltd [2012] QCA 126, para 15.
[25] Citypoint Hotels Pty Ltd v AIB Pty Ltd [2012] QCA 126 para 16.
[26] Transcript 1-14.
[27] Quinlan v Rothwell (2002) 1 Qd R 647, [9], [35].
[28] Exhibit 1 – Plaintiff’s Outline of Argument para 11(h).
[29] Affidavit of Brendan Bathersby sworn 8 June 2018.
[30] Exhibit 2 – Defendant’s Outline of Argument para 6(k).
[31] Exhibit 2 – Defendant’s Outline of Argument para 6(l).