Wickham v Bells Securities Pty Ltd
[2006] QSC 167
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- Unreported Judgment
- Wickham v Bells Securities Pty Ltd[2006] QSC 167
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Wickham v Bells Securities Pty Ltd[2006] QSC 167
Wickham v Bells Securities Pty Ltd[2006] QSC 167
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO: | |
Trial | |
PROCEEDING: | Application |
ORIGINATING COURT: | |
DELIVERED ON: | 5 July 2006 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 23 June 2006 |
JUDGE: | Chesterman J |
ORDER: | 1.The plaintiff is granted leave to discontinue his action against the second defendants on the condition that: (a)he not commence any further proceedings in any court against the second defendants based upon the allegations made in the current proceeding or asserting the same causes of action; and (b)he not resist any bankruptcy notice based upon the judgment obtained against him by the first defendant in action 4962 of 2000, or any creditor’s petition or enforcement proceedings in respect of the said judgment based upon the causes of action or allegations made in the present proceedings; 2.The plaintiff is to pay the second defendants’ costs of and incidental to the action, including any reserved costs, to be assessed on the standard basis. |
CATCHWORDS: | PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – DISCONTINUANCE – whether appropriate to grant leave to discontinue proceedings on terms that there be no fresh proceedings Uniform Civil Procedure Rules 1999 (Qld), r 310 Covell Matthews & Partners v French Wools Ltd [1977] 1 WLR 876, followed Carlovers Carwash Ltd v Sahathevan [2001] NSWSC 351, cited Tarleton & Peters Pty Ltd v McNamara Property Management Ltd (Unreported, Supreme Court of New South Wales, Young J, 11 September 1991), cited |
COUNSEL: | P Davis SC for the plaintiff No appearance for the first defendant M Luchich for the second defendants |
SOLICITORS: | Freehills for the plaintiff No appearance for the first defendant Gadens Lawyers for the second defendants |
Background to proceedings
[1] In 1997 and 1998 as trustee of a managed investment scheme (‘the scheme’) the first defendant (‘Bells’) made advances to Wickham Developments Limited (‘WDL’) totalling $4,435,000 pursuant to a Deed of Loan and Deeds of Variation. The plaintiff in these proceedings, Mr Wickham, guaranteed the loan to WDL.
[2] The loan funds secured the purchase of certain real property. WDL caused a 52 room strata titled motel with an additional manager’s unit, known as the Parkview Motel, to be constructed on that real property.
[3] The monies lent were not repaid when due. On 3 August 2000 in proceedings no. 4962 of 2000 in this Court, Bells obtained summary judgment against WDL and Mr Wickham in the sum of $4,250,000 plus costs of and incidental to the proceedings to be assessed on an indemnity basis (‘the judgment’).
[4] On 6 June 2002 the Honourable Justice Wilson made orders, inter alia, as follows:
(a)by Order 5, Bells was removed as trustee of the Scheme;
(b)by Order 3, the second defendants, as liquidators, were appointed to wind up the Scheme,
(‘the order’).
Bankruptcy proceedings in New Zealand
[5] On 29 April 2003 the second defendants issued a bankruptcy notice against Mr Wickham in New Zealand based upon the judgment which had previously been registered in the High Court of New Zealand (‘the bankruptcy notice’). The amount claimed in the bankruptcy notice was $1,927,220.25 plus costs.
[6] Mr Wickham applied to have the bankruptcy notice set aside (‘the bankruptcy proceedings’). He asserted a set-off or counterclaim which exceeded the amount claimed. It was alleged, as against the second defendants, that they had breached their duty to Mr Wickham, as guarantor, in conducting the sale of the security property in 2002 such that he suffered loss equal to or greater than the amount claimed against him.
[7] Mr Wickham’s application was adjourned by order of Master Faire on 27 November 2003 to give Mr Wickham the opportunity to file proceedings against the second defendants to have the claim raised by him in the bankruptcy proceedings determined.
[8] Mr Wickham duly commenced proceedings against the second defendants in the High Court in New Zealand (‘the New Zealand proceedings’). By order of Faire AJ on 17 June 2004, those proceedings were stayed pending further order on the basis that this Court was the appropriate jurisdiction for Mr Wickham to bring his claim against the second defendants.
[9] Proceedings having been commenced in this court on 4 August 2004 the bankruptcy notice issued by the second defendants was set aside.
The current proceedings
[10] The plaintiff commenced proceedings in this court in August of 2004. The claim and statement of claim raise the same causes of action which were the subject of the counterclaim alleged in the bankruptcy proceedings and the claims in the New Zealand proceedings.
[11] The proceedings before this court were placed on the commercial causes list on 22 December 2004. Interlocutory steps took place in the course of 2005 and various directions were made with a view to a trial of the action starting on 29 May 2006.
[12] Both the plaintiff and the second defendants prepared and delivered statements comprising the evidence in chief of the parties’ witnesses.
Application for adjournment of the trial in the current proceedings
[13] The plaintiff sought an adjournment of the trial of these proceedings by application on 25 May 2006, just days prior to the date set for commencement of the trial on 29 May 2006, on two bases:
(a)a general assertion that the late provision of the second defendants’ witness statements had been detrimental to the plaintiff’s preparation for trial and had caused the plaintiff difficulties in instructing counsel to prepare for trial; and
(b)the withdrawal of senior and junior counsel acting for him, without explanation.
[14] The trial was adjourned until 31 May 2006.
[15] New counsel were retained by the plaintiff and, on 30 May 2006 he renewed his application for adjournment on the basis that the matter was not ready for trial because the pleadings needed consideration, the written statements needed attention, further enquiries needed to be made of experts and counsel were unprepared by reason of having been briefed late. The application was granted upon the plaintiff giving undertakings in relation to the payment of interest and the payment of costs.
[16] The matter was listed for mention on 9 June 2006 at which time the plaintiff sought:
(a)leave to discontinue the proceedings against the first defendant;
(b)further time to obtain expert reports and to permit final assembly of particulars of the Property Law Act s 85 case against the second defendants; and
(c)an adjournment of the mention for two weeks by which time the plaintiff would deliver any expert reports and any amended statement of claim.
[17] The mention was adjourned, and on the next return date on 23 June 2006 the plaintiff sought, inter alia, leave to discontinue the proceedings against the second defendants.
[18] The statement of principle usually followed is that expressed by Graham J in Covell Matthews & Partners v French Wools Ltd [1977] 1 WLR 876 at 879 which is:
‘… that the court will, normally at any rate, allow a plaintiff to discontinue if he wants to, provided that no injustice will be caused to the defendant. It is not desirable that a plaintiff should be compelled to litigate against his will. The court should therefore grant leave, if it can without injustice to the defendant, but in doing so should be careful to see that the defendant is not deprived of some advantage which he has already gained …’.
[19] The second defendants submit that they will suffer injustice should the plaintiff have leave to discontinue. The injustice they identify can be summarised:
‘(a)Discontinuance will not result in a final judgment so the Plaintiff can again rely upon the matters the subject of these proceedings in proceedings involving the Second Defendants and in particular in defence of any further bankruptcy notice or creditor’s petition issued by the Second Defendants to enforce the Judgment;
(b)The Second Defendants have incurred considerable cost in bringing the matter to a stage where they were ready to proceed for trial; and
(c)The Second Defendants are court appointed trustees of an unregistered managed investment scheme. The trustee’s ability to recover funds for investors is being prejudiced by the delay in obtaining a judgment in these proceedings.’
[20] In an attempt to meet the point the plaintiff offers an undertaking that:
‘[He] will not again commence proceedings in any court against the second defendants based upon the allegations made in the current proceedings.’
[21] This is said to be deficient by the second defendants because it will not prevent the plaintiff from reasserting in any bankruptcy proceedings that might be commenced afresh against him in New Zealand that he has a cross-demand equal to or greater in amount than the judgment debt and interest. This is the basis on which he defeated the last bankruptcy notice and the undertaking will not, in theory, prevent the plaintiff utilising the same claim for the same purpose a second time. It is, I think, clear from the terms in which the undertaking is cast and the remarks of counsel for the plaintiff when leave to discontinue is sought that the plaintiff does intend, or at least hope, to defeat any fresh bankruptcy proceedings by the same means.
[22] The currency of this litigation is delaying the winding up of the investment scheme. No funds can be returned to investors until the second defendants’ proceedings, 7184 of 2003, are determined. Many of those investors are elderly and invested all or part of their retirement savings in the scheme. The second defendants’ proceedings cannot be determined until this action is finalised. It has already been going too long.
[23] The plaintiff should have leave to discontinue but only on the basis that any advantage the second defendants might have from the litigation to date should be preserved. They cannot, however, have any more.
[24] If leave to discontinue is refused the plaintiff cannot be compelled to go to trial. His action may be dismissed for want of prosecution but that will not give the second defendants what they want: the ability to plead res judicata or issue estoppel should the plaintiff raise in other proceedings the same complaints which are the subject of the present action. They may, however, be entitled to judgment obtained summarily pursuant to UCPR 293. About that I express no concluded view.
[25] UCPR 304 does not, in terms, permit the court to impose conditions on the grant of leave to discontinue but UCPR 310 clearly contemplates that conditions may be imposed to which the grant of leave is subject. There are a number of cases in which leave to discontinue was made conditional upon the plaintiff not commencing fresh proceedings arising out of the same cause of action, or circumstances, which were the subject of the proceedings allowed to be discontinued. They are Covell Matthews; Carlovers Carwash Ltd v Sahathevan (2001) NSWSC 351; Tarleton & Peters Pty Ltd v McNamara Property Management Ltd (Unreported, Supreme Court of New South Wales, Young J, 11 September 1991).
[26] I was not referred to any case which considered the consequence of the breach of such a condition imposed by the term of granting leave to discontinue. Presumably the condition would provide a persuasive basis for the court in the jurisdiction where a proceeding was commenced in breach of the condition to stay or strike out the new proceeding. If that be the appropriate sanction the second defendants may gain from the imposition of the condition an advantage which they would not gain if the action were not discontinued but struck out for want of prosecution. In that event there would be no ground for the staying of fresh action commenced within time alleging the same causes of action. There will however be a disadvantage to the second defendants if the action is discontinued without the condition being imposed. In that event the plaintiff will be able to resist any fresh bankruptcy proceedings on the basis of the cause of action which he has abandoned in these proceedings. I think it likely that that is his intention.
[27] One side or the other must suffer some disadvantage if the action is to be discontinued. I think it should be the plaintiff. He has been brought to the ring but refuses to dance. He has expressly declined to litigate the causes of action which he brought against the second defendants but has been reluctant to prosecute for two years. The trial dates in May were set to meet the plaintiff’s convenience. He obtained an unmeritorious adjournment by forcing the Court’s hand. When a strict regime of directions was put in place to ensure that the plaintiff’s claim was prepared and prosecuted expeditiously the plaintiff first abandoned his claims against the first defendant and then the second defendants. This followed the appointment of new solicitors and counsel who assured the Court that they had given careful attention to the investigation of the plaintiff’s claims and their preparation for trial.
[28] In the circumstances it is hard to resist the inference that there was an element of humbug in the plaintiff’s case until the recent change of legal representation. As between plaintiff and defendants it is only fair that the disadvantage which might accrue from the imposition of the conditions sought should fall on the plaintiff.
[29] I give the plaintiff leave to discontinue his action against the second defendants on condition that:
(a)he not commence any further proceedings in any court against the second defendants based upon the allegations made in the current proceeding or asserting the same causes of action; and
(b)he not resist any bankruptcy notice based upon the judgment obtained against him by the first defendant in action 4962 of 2000, or any creditor’s petition or enforcement proceedings in respect of the said judgment based upon the causes of action or allegations made in the present proceedings.
I order the plaintiff to pay the second defendants’ costs of and incidental to the action, including any reserved costs, to be assessed on the standard basis.