Court of Appeal (Qld)|2012-10-05|Before: Margaret McMurdo P, Fraser JA and Peter Lyons, J, Separate reasons for judgment of each member of the Court, each concurring, as to the orders made
PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – TIME
– DELAY SINCE LAST PROCEEDING – where proceeding did not settle at
mediation in September
Source
Original judgment source is linked above.
Catchwords
PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND –PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – TIME– DELAY SINCE LAST PROCEEDING – where proceeding did not settle atmediation in September2008 – where Court intervened by way of case flowreview in June 2009 – where case flow review resulted in order thatparties complete disclosure and file request for trial date, in default of whichthe matter would be deemed resolved – whereno further step was taken andthe matter was deemed resolved in September 2009 – where appellantpurported to serve an unsignedfurther supplementary list of documents in May2011 – where appellant sought leave pursuant to r 389(2) to take a step intheproceeding – where at first instance the service of the furthersupplementary list of documents was declared to be ineffectual,theappellant’s application was dismissed and the proceeding was struck out– whether an order made by a Trial Division
judge on 19 June 2009,
prepared with the consent of the parties but initiated by a case flow management
intervention notice, was
a step in the proceeding for the purposes of r 389(2)
of the Uniform Civil Procedure Rules 1999 – whether the primary
judge erred in assessing the appellant's prospects of success as poor, such that
leave to proceed should
not have been refused
Uniform Civil Procedure Rules 1999 (Qld), r 5, r 389
Amadio Pty Ltd v Henderson (1998) 81 FCR 149
[1998] FCA 823,
cited
Brighton Marine Palace and Pier Ltd v Woodhouse [1893] 2 Ch
486, cited
Buckland v Mackesy (1968) 112 Sol Jo 841,
cited
Capebay Holdings Pty Ltd v Sands [2002] WASC 287,
applied
Carradine Properties Ltd v DJ Freeman & Co [1999]
Lloyd’s Rep PN 483
[1955-95] PNLR 219, cited
Citicorp Australia
Limited v Metropolitan Public Abattoir Board [1992] 1 Qd R 592,
cited
Commercial Bridging plc v Nelsons [1998] 2 CL 477,
cited
Concord Park Pty Ltd v Allied Organik Ltd & Anor [2003] QDC
Mundy v The Butterly Company Limited [1932] 2 Ch 227,
distinguished
National Australia Bank Ltd v Mitolo [2002] SASC 102,
cited
Onslow-Edwards v Cameron [1999] EWCA Civ 624,
cited
Paradise Grove Pty Ltd v Stubberfield [2000] QSC 214,
cited
Porzuczek v Toowoomba District Health Services [2007] QSC 177,
cited
Quinlan v Rothwell [2002] 1 Qd R 647
[2001] QCA
176, cited
Smiley v Watson [2002] 1 Qd R 560
[2001] QCA
269, cited
Spincer v Watts (1889) 23 QBD 350, cited
Tamlura
NV v CMS Cameron McKenna [2009] EWHC 538, cited
Tyler v Custom Credit
Corp Ltd & Ors [2000] QCA
178, applied
Vickers, Sons & Maxim Ltd v Coventry Ordnance Works
Ltd [1908] WN 12, cited
Wright v Ansett Transport Industries
Limited [1990] 1 Qd R 297, cited
Zalinoff v Hammond [1898] 2 Ch
92, cited
Judgment (160 paragraphs)
[1]
PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS - TIME - DELAY SINCE LAST PROCEEDING - where proceeding did not settle at mediation in September 2008 - where Court intervened by way of case flow review in June 2009 - where case flow review resulted in order that parties complete disclosure and file request for trial date, in default of which the matter would be deemed resolved - where no further step was taken and the matter was deemed resolved in September 2009 - where appellant purported to serve an unsigned further supplementary list of documents in May 2011 - where appellant sought leave pursuant to r 389(2) to take a step in the proceeding - where at first instance the service of the further supplementary list of documents was declared to be ineffectual, the appellant's application was dismissed and the proceeding was struck out - whether an order made by a Trial Division judge on 19 June 2009, prepared with the consent of the parties but initiated by a case flow management intervention notice, was a step in the proceeding for the purposes of r 389(2) of the Uniform Civil Procedure Rules1999 - whether the primary judge erred in assessing the appellant's prospects of success as poor, such that leave to proceed should not have been refused
[1] MARGARET McMURDO P: I agree with Peter Lyons J that this appeal should be allowed. His Honour has set out the relevant facts and issues so that my reasons can be briefly expressed.
[32]
[2] The first issue is whether an order made by a Trial Division judge on 19 June 2009, prepared with the consent of the parties but initiated by a case flow management intervention notice, is a step in the proceeding for the purposes of Uniform Civil Procedure Rules (UCPR) r 389. The order was that the respondent file any further amended defence by 10 July 2009; the appellant file any reply by 24 July 2009; and both parties complete any further disclosure by 7 August 2009, file any applications regarding disclosure or interrogatories and deliver any notices of non-party disclosure by 14 August 2009, and file a request for trial date by 25 September 2009, in default of which the matter would be resolved.
[33]
[3] The expression "step" is not defined in the UCPR. Its ordinary meaning in this context is: "a move or proceeding, as towards some end or in the general course of action: the first step towards peace".[1] Whether a step has been taken in a particular proceeding will turn on the pertinent circumstances in that case. It is clear from the authorities discussed by Peter Lyons J[2] that, to be a step under r 389 it must, consistent with that word's ordinary meaning, progress the action towards a conclusion. I agree with Peter Lyons J[3] that it is not necessary the step be something required by the UCPR. For example, the filing and service of a reply or a subsequent pleading would usually amount to a step in the action.
[34]
[4] Although the relevant order was initiated by a case flow management intervention notice occasioned by the parties' failure to progress the action after a failed mediation on 30 September 2008, it is true that it came about because of an arrangement between the parties with the purpose of advancing the case. As Peter Lyons J explains,[4] the order for disclosure was made only because the parties told the judge they wanted it. It was therefore analogous to an oral application for such disclosure with a view to advancing the litigation. But I am unable to accept that the resulting order, initiated by a case flow management intervention notice and then not met, can amount to a step in the proceeding under r 389. That is because in this case the order itself did not progress the action towards finalisation, even though subsequent compliance with the order would have progressed the action. This distinction appears consistent with Porzuczek v Toowoomba District Health Services.[5] In that case, the delivery of a medical report was held to be a step in the action, but an attempt to deliver a further medical report which was not received by the defendant because leave to proceed was required was not.[6] To reach the conclusion advanced by the appellant would be inconsistent with the emphasis on expeditious resolution and avoidance of delay in UCPR r 5. It would also be inconsistent with the very purpose of r 389 which is to ensure litigants prosecute their actions in a timely fashion. I am unpersuaded that either the terms or the spirit of r 389(3) supports the appellant's contention that the order of 19 June 2009 was a step in the proceeding.
[35]
[5] For these reasons I consider the primary judge was right to refuse to make the declaration sought in para 1 of the appellant's application filed on 5 September 2011.
[36]
[6] The second issue concerns the primary judge's order refusing the appellant's application for leave under r 389(2) to take a further step in the proceeding. This involved a discretionary exercise of judgment. One of the primary judge's reasons for refusing the application was that the appellant had poor prospects of success in the action.[7] For the reasons given by Peter Lyons J,[8] I consider the primary judge erred in assessing the appellant's prospects of success as poor. This error was a major consideration in his Honour's ultimate determination to refuse to grant leave to proceed. It follows that in determining this appeal it is necessary for me to consider afresh whether leave to proceed should be granted. I agree with Peter Lyons J's reasons for concluding that, after weighing up the competing considerations listed in Tyler v Custom Credit Corp Ltd & Ors,[9] an order should be made under r 389(2) permitting the appellant to proceed with the action.
[37]
[7] I would allow the appeal with costs and set aside the orders of the primary judge of 27 September 2011. Instead, I would order that the appellant be granted leave under r 389(2) to take a further step in the proceedings. The appellant's delay in prosecuting its action was the primary reason requiring its application under r 389(2). In those circumstances, it should pay the costs of and incidental to the proceeding at first instance.
[38]
3. Instead, order that the plaintiff be granted leave under r 389(2) Uniform Civil Procedure Rules 1999 (Qld) to take a further step in the proceeding.
[39]
4. The plaintiff pay the defendant's costs of the proceeding at first instance.
[40]
[8] FRASER JA: I have had the advantage of reading the reasons of Peter Lyons J and the reasons of the President. As to what constitutes a "step", the provision in r 389(3) that an application in which no order has been made is not taken to be a step does not imply that every application upon which an order is made, or every such order itself, is a step. I agree with the President's analysis upon that issue. As to the central question, whilst I do not agree that a step was taken in the proceeding on 19 June 2009, I otherwise agree with Peter Lyons J's reasons for concluding that, on balance, the plaintiff should be permitted to proceed with the action.
[41]
[9] I agree that the appeal should be allowed with costs and with the other orders proposed by the President.
[42]
[10] PETER LYONS J: The appellant applied unsuccessfully at first instance for a declaration that it had taken a step in the proceedings in the previous two years, and accordingly did not require leave pursuant to r 389(2) of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) to take a further step; or alternatively for leave to do so. The respondent applied for a declaration that service of a supplementary list of documents on about 2 August 2011 was ineffectual, and that the proceedings be stayed. The applications resulted in a declaration to the effect sought by the respondent, and an order striking out the proceedings. The appellant has appealed against the declaration and order, and seeks the relief it sought at first instance.
[43]
[11] The proceedings arise out of the retainer by the plaintiff of the defendant as its solicitor in relation to some property transactions. The transactions commenced with the purchase by the plaintiff of some land located at Broadbeach. On about 14 April 2003, the plaintiff entered into two contracts to purchase the land (purchase contracts). The lots being purchased were to be created by subdivision. In 2004, the plaintiff entered into contracts for the sale of much of the land (resale contracts), after the development of some of it.
[44]
[12] The plaintiff retained the defendant on 14 March 2003. The defendant has admitted that its retainer extended to advising the plaintiff about, and preparing, the purchase contracts.
[45]
[13] It might be observed that the purchase contracts were relatively brief documents, incorporating clauses ("mutatis mutandis") from another contract (Australand contract), to which neither the plaintiff nor its directors were parties.
[46]
[14] The purchase contracts were not conditional on the plaintiff obtaining finance. The purchase prices amounted in total to $5,900,000; and the plaintiff paid deposits under them, totalling $590,000. The purchase contracts were subject to the registration of a subdivision plan. As it happened, settlement was not required until June 2004, the settlement date being (after an agreed extension) 28 June 2004.
[47]
[15] The plaintiff did not then have the funds available to settle the purchase contracts. As a result, the purchase contracts were terminated on 29 June 2004, and the deposits were forfeited. The resale contracts were also terminated.
[48]
[16] The plaintiff commenced the present action on 22 June 2007. Pleadings progressed over the balance of that year, and into the following year, with the plaintiff filing its current statement of claim on 29 August 2008. The plaintiff alleged that it was an implied term of the defendant's retainer that the defendant explain to the plaintiff the principal rights and obligations under the purchase contracts; ensure that the purchase contracts contain adequate terms to meet reasonably foreseeable contingencies; ensure that the purchase contracts which the defendant prepared would protect the plaintiff from financial loss if the purchase contracts did not settle; and warn the plaintiff of any significant risks arising from the purchase contracts. It alleged that the defendant breached the retainer by failing to ensure that the purchase contracts were subject to finance; by failing to warn the plaintiff of the risk of financial loss because the purchase contracts were not subject to finance; and by failing to warn the plaintiff that time was of the essence of the purchase contracts (the clause to that effect being found in the Australand contract).
[49]
[17] An unsuccessful mediation was conducted on 30 September 2008. On 4 December 2008 the solicitors for the defendant wrote to the solicitors for the plaintiff, contending that the commercial experience of the directors of the plaintiff was relevant to the defendant's obligation to provide advice about the fact that the purchase contracts were not conditional on obtaining finance. The letter pointed out that those directors were also directors of a number of other companies. It suggested that in lieu of non-party disclosure from each of those companies, and an application for leave to interrogate the plaintiff, it would be sensible for the plaintiff to obtain from them copies of contracts for the sale and purchase of land which had been executed by the directors of the plaintiff, or of which they had knowledge. Absent agreement to the proposal, the letter advised that the defendant would apply for leave to deliver interrogatories.
[50]
[18] On 12 June 2009, a case-flow management intervention notice issued to the parties. It gave notice that a review would take place on 19 June 2009, and that the Judge conducting the review would require a plan, in the form of a draft order, including directions for the taking of future steps, with a date specified for compliance with those directions.
[51]
[19] There was then correspondence between the solicitors about the directions to be made. On 19 June 2009, no doubt before the review, the solicitors for the defendant sent a letter proposing that an order be included that the defendant have leave to deliver interrogatories, as had been indicated in the letter of 4 December 2008. The orders made on 19 June 2009 did not provide for interrogatories, but instead included the following order:
[52]
"3. The parties complete any further disclosure by 7 August 2009."
[53]
[20] An affidavit from a solicitor acting for the defendant stated that that order was made, "following agreement by the plaintiff to disclose documents relating to the experience of the directors of the plaintiff company in entering into contracts to purchase land."
[54]
[21] The plaintiff did not make further disclosure by the date stated in the order, although on 29 July 2009 its solicitors wrote to the defendant's solicitor stating that the plaintiff would "be completing any further disclosure by 7 August 2009", in accordance with it.
[55]
[22] The orders of 19 June 2009 had also required the parties to file a Request for Trial Date by 25 September 2009, in default of which "the matter will be resolved". No request for trial date was filed by the time specified. On 25 September 2009, an order was made by the Deputy Registrar that the matter "be deemed resolved", which apparently issued on 6 October 2009.
[56]
[23] There was some subsequent activity by a director of the plaintiff, Mr White, to locate documents of the kind referred to in the letter from the defendant's solicitor of 4 December 2008. Mr White gave evidence that over a period between June 2010 and November 2011, he made numerous telephone inquiries of a receiver of one of the relevant companies. He reviewed the archives of a firm of solicitors who acted in relation to a trust which carried out one of the developments with which he had some association. He searched the archived records of the project manager for this project and of another company associated with the development. He gave evidence that his searching "took many weeks between August 2009 and December 2009"; and at the request of his solicitor he repeated the search in February 2010. He also made inquiry of the solicitors who acted in relation to the sales of units produced in an earlier development, attempting to obtain information on a number of occasions between January and November 2010. He also searched archived documents for a company associated with a development in Fortitude Valley, Brisbane. He has attempted to contact the solicitor who acted in the sales of units resulting from that development, without success. It might be added that his searches have been conducted in Brisbane and Sydney.
[57]
[24] The next dealing between the parties was a letter from the solicitors for the plaintiff to the solicitors for the defendant of 10 May 2011. That letter gave notice of an intention to apply to reinstate the proceedings, notwithstanding the order of 25 September 2009. It stated that the task of locating the documents previously referred to was difficult and time consuming. It included a further supplementary list of documents which was unsigned.
[58]
[25] The solicitors for the defendant responded by letter of 25 May 2011, stating the explanation for delay was inadequate. The letter asserted that the last step taken in the action was the mediation on 30 September 2008, and that the plaintiff required leave to proceed.
[59]
[26] On 17 June 2011, the plaintiff filed an application to reactivate the proceeding. That application came before the Court on 22 July 2011, resulting in orders that the proceeding be reactivated; that the plaintiff file and serve any application for an order pursuant to r 389 by 4 pm on 12 August 2011; and that the defendant file and serve any application in relation to the continuing conduct of the proceeding by 4 pm on 19 August 2011. The defendant's application was filed on 19 August 2011, and the plaintiff's application was filed on 6 September 2011, the day before the hearing.
[60]
[27] In the meantime, at some time prior to 15 August 2011, the plaintiff served a signed copy of the list of documents which accompanied the letter of 10 May 2011. By email of 15 August 2011, the solicitors for the defendant asserted that this was not effective service of the list, as leave was required to proceed in the action.
[61]
[28] The learned primary judge rejected submissions made on behalf of the plaintiff that the court's initiative in directing that a hearing be held on 19 June 2009, or the swearing of an affidavit by the defendant's solicitor for the purpose of that hearing (the affidavit not having been filed), or the delivery of the unsigned list of documents on 10 May 2011, was a step in the proceedings. His Honour also held that the filing of the application to reactivate the action, and the service of a signed list of documents in early August 2011, were irregular, no step having been taken in the previous two years. His Honour accordingly refused to make the declaration sought by the plaintiff.
[62]
[29] The learned primary judge then considered the plaintiff's prospects of success in the action. His Honour noted the detailed submissions made on behalf of the defendant, in support of a more general submission that the plaintiff's prospects of success were poor. He also noted that the plaintiff's written and oral submissions did not engage with the specific contentions made on behalf of the defendant. On the hearing of this appeal, Counsel for the defendant informed the Court, without objection, that the defendant's specific contentions had been made in an outline of argument provided to the plaintiff at the hearing on 22 July 2011. His Honour noted the absence of evidence that it was sound practice for a solicitor acting for a company directed by experienced businessmen to advise of the risk associated with a contract which was not subject to finance, namely, that the purchaser would not be in a position to settle and that the deposit might be lost. His Honour doubted that evidence would be accepted from one of the directors that he did not appreciate this risk. He referred to the fact that the other director gave no evidence on this topic. He concluded that the plaintiff had poor prospects of success in the action.
[63]
[30] The learned primary judge then discussed in detail the history of proceedings, much of which has been summarised earlier in these reasons. His Honour referred to the evidence of Mr White about searches for documents, over a period which his Honour described as "the last year or two". He noted the absence of an adequate explanation for not starting or completing the searches earlier. He considered that the delay was not attributable to any conduct on the part of the defendant.
[64]
[31] His Honour concluded that the matter could be ready for trial "in a matter of months". He stated that there was no suggestion that delay was attributable to the plaintiff's lawyers, or that any delay on the part of the plaintiff's lawyers should not be attributed to the plaintiff itself. He considered that there had been no satisfactory explanation for the delay in relation to disclosure, and in particular for the period of delay between 19 June 2009 and the provision of the unsigned list of documents in May 2011. His Honour concluded that there had not been prejudice to the defendant, of a kind which would lead to an inability to ensure a fair trial. He also noted that an order permitting the action to proceed would result in strain and disappointment for the solicitor who had the conduct of the transaction.
[65]
[32] His Honour made reference to r 5 of the UCPR, giving express recognition to the importance of the expeditious resolution of issues in proceedings, and the fact that courts are now less tolerant of delay than they had been in the past.[10] It is clear that his Honour also placed some weight on his assessment of the prospects of the plaintiff's claim.
[66]
[33] For the plaintiff in support of its appeal it was submitted that a step was taken in the action at about the time of the review on 19 June 2009. Specific reliance was placed on the appellant's appearance by Counsel at the review, and the making of orders at the review, including the preparation by the appellant of the form of orders made at the review, and the subsequent filing by it of the orders made on that date. It was said that these things advanced the matter towards judgment, and had the requisite degree of formality. Reliance was also placed on the serving by the respondent of an affidavit which explained the basis for the order for disclosure by the plaintiff made on 19 June 2009.
[67]
[34] The plaintiff also submitted that the learned primary judge erred in holding that it was in breach of the disclosure order made on that date, it having previously made disclosure, and there being no evidence that the documents referred to in the 2011 lists of documents were in its possession prior to 7 August 2009. It submitted that the learned primary judge erred in finding the appellant undertook to complete disclosure by 7 August 2011, when the appellant had simply indicated it would endeavour to obtain documents within a specified period. It submitted that the learned primary judge failed properly to take into account the explanation given for the time taken to produce the list of documents, and to give credit for the fact that this saved the respondent from taking other action to obtain the documents. It also submitted that the learned primary judge erred in forming an adverse view of the plaintiff's prospects of success in the action, without the benefit of evidence of all of the relevant circumstances which would be available at trial.
[68]
[35] For the respondent it was submitted that no step had been taken in the action in connexion with the hearing on 19 June 2009; and that it could not be said that a step was then taken unless orders were complied with. It was submitted that in any event, if a step was then taken, that was of no benefit to the plaintiff, no step having been taken in the subsequent period of two years. Relying on Citicorp Australia Ltd v Metropolitan Public Abattoir Board,[11] it was submitted that a step in the action is something which moves the matter towards a judgment, and which has some degree of formality. It was submitted that the learned primary judge was correct in finding that the plaintiff was in breach of the order requiring disclosure, made on 19 June 2009. It was submitted that the plaintiff had not demonstrated that the learned primary judge had erred in finding that the plaintiff had not explained its delay in proceeding with the action. The respondents' submissions also supported the view expressed by his Honour about the plaintiff's prospects of success in the action; and supported generally the findings made at first instance.
[69]
[36] It is convenient to deal first with the plaintiff's submission that the learned primary judge erred in holding that it was in breach of the order for disclosure of documents made on 19 June 2009. The appellant's submission depends upon a strict and narrow reading of that order. The circumstances in which it was made demonstrate that it was intended to encompass the obtaining and subsequent disclosure of documents from other companies of which the appellant's directors were also directors, as discussed in the letter of 4 December 2008. Moreover, the affidavits of both of the appellant's directors demonstrate that they understood that to be the effect of the order. So much was accepted by the appellant's counsel at first instance.
[70]
[37] The general tenor of the evidence of Mr White is that the documents mentioned in the supplementary list of documents provided in 2011 came into the possession of the plaintiff subsequent to searches first commenced in about August 2009, and carried on from time to time till about the beginning of March 2011. On that basis, and on a literal reading of the order of 19 June 2009, the plaintiff was not in breach of it when it did not provide further disclosure by 7 August 2009. However, in the context of a consideration of delay, and whether (if necessary) an order should be made permitting a party to take a further step in an action under r 389, it can hardly be of great moment that, on a strict reading of the order, the plaintiff was not in breach of it. That would simply demonstrate that the order did not mean what the parties intended and understood it to mean. The plaintiff agreed to obtain the documents in time to make further disclosure by 7 August 2009. There is no evidence to show that, by that date, it had done anything to carry out the agreement. The order was of no practical effect, because of the plaintiff's failure to do what it had agreed to do. It seems to me that this does not provide reason to take a more favourable view of the plaintiff's conduct. If the finding of breach of the order be technically in error, it seems to me that the error is not material to the exercise of the discretion.
[71]
[38] Before dealing with the plaintiff's submissions that it took a step in the action in June 2009, it is convenient to refer to r 389, which provides as follows:
[72]
(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."
[73]
[39] There is, in my view, substantial force in the submission that a step occurred in the action on about 19 June 2009. Whether a step was then taken was a matter of substantial controversy at first instance.
[74]
[40] In coming to a contrary view, the learned primary judge adopted a passage from Kaats v Caelers,[12] (Kaats) said to define the term "step" in the following terms:
[75]
"... something in the nature of a formal step, at least a step taken by the litigant in the prosecution of the action, being a step required by the rules."
[76]
[41] In doing so, his Honour emphasised the reference to the taking of a step by a litigant or party, not by the Court. He thus held that neither the hearing, nor the orders made, were a step.
[77]
[42] It seems to me that it is erroneous to treat the passage from Kaats, although frequently cited, as a definition of the term "step". The passage is itself based on a statement in similar terms from Mundy v The Butterly Company Limited,[13] (Mundy) decided by Maugham J. The words relied upon were followed immediately by a qualification made by his Lordship (expressly referred to in Kaats):
[78]
"... I am not attempting a complete definition but merely a kind of approximation to the sort of proceeding which is probably pointed to by the terms of the rule."
[79]
[43] Neither Kaats nor Mundy was concerned with the question whether an action taken by the court, as distinct from by a litigant, might constitute a step or a proceeding. Mundy dealt with the question whether a plaintiff lost the right to discontinue an action under O 26 r 1 of the rules then in force in England, a right which a plaintiff might exercise "at any time before the receipt of the defendant's defence, or after the receipt thereof before taking any other proceeding in the action (save any interlocutory application) ... "; or otherwise with leave. The "approximation" of Maugham J simply reflects the rule, which plainly refers to the taking of a proceeding by the plaintiff.
[80]
[44] The exception found in r 389(3) implies that the combination of an application and an order of the court will often be a step in the proceedings. Moreover, with the advent of court management of litigation, there may be reason to think that an action taken by the court, such as the making of an order not sought by any of the parties, which is intended to advance the litigation, might of itself amount to a step in the proceedings.
[81]
[45] The expression, a step in the proceedings, has been equated to the expression, a proceeding in an action.[14] Neither expression is to be given an unduly narrow meaning, though much that is done by the parties in the course of litigation will not amount to a step in the action.
[82]
[46] In Ives & Barker v Willans,[15] (Ives & Barker) Lindley LJ considered that "... a step in the proceedings means something in the nature of an application to the Court ...". However, the court held that a letter requesting delivery of a statement of claim was not a step in the proceedings. In Spincer v Watts,[16] the court considered that a proceeding in the action was a proceeding taken with the view of continuing the litigation; but not an action (such as the payment of money into court; nor the acceptance of money paid into court) taken with the intention of bringing the litigation to an end. In Brighton Marine Palace and Pier Ltd v Woodhouse,[17] (Brighton Marine Palace and Pier Ltd) it was held that an agreement to extend the time for delivering a defence was not a step in the action; though an application to the court for an extension of time to do so would have been a step.[18]
[83]
[47] In Zalinoff v Hammond, the filing of affidavits in opposition to an application for the appointment of a receiver, in an action for the dissolution of a partnership, was held not to be a step in the proceedings.[19] In Vickers, Sons & Maxim Ltd v Coventry Ordnance Works Ltd, an amendment to a statement of claim was held to be a proceeding in the action.[20] In Mundy, a letter calling for compliance with an order for delivery of an affidavit of documents was held not to be a proceeding in the action. In Kanyilmaz v Nominal Defendant (Queensland),[21] it was accepted that the provision of a supplementary affidavit of documents was a step in the proceedings.[22] In Porzuczek v Toowoomba District Health Services,[23] it was held that the delivery of a medical report was a step in the action; but the later delivery of a further report, not accepted because it was said that leave was required under r 389, was not. In Wright v Ansett Transport Industries Limited,[24] it was held that the provision of copies of disclosed documents was a step in the action; although in Citicorp Australia Limited v Metropolitan Public Abattoir Board,[25] (Citicorp Australia) it was held that the inspection of copies of documents, produced earlier, by the solicitor in the solicitor's office, was not itself a step in the action (it was accepted that the decision in Wright was correct).[26] In Smiley v Watson,[27] it was held that obtaining a document by way of proceedings for non-party disclosure was not a step in the proceeding, by analogy with the taking of a statement of evidence from a non-party.
[84]
[48] The reference to "a step required by the rules" in statements identifying a step in the action may be traced back to the statement of Maugham J in Mundy. I have already pointed out that the statement was not intended as a definition. Although this description has been used to determine whether a particular action was a proceeding in the action, it seems to me that under r 389, an event may be a step in the action, notwithstanding that it is not required by the rules. For example, the filing and service of a reply (or, for that matter, a subsequent pleading) is not required by the rules; but it seems to me that this would amount to a step in the action. Moreover, r 389(3) shows that an application on which an order is made is a step in the proceeding. This provision may reflect an awareness of what was said in Ives & Barker, and Brighton Marine Palace and Pier Ltd, referred to earlier.
[85]
[49] The order made on 19 June 2009 was the consequence of an arrangement made between the parties about a method of advancing the progress of the case. Their intention was to substitute a requirement that the plaintiff make further disclosure of documents which the plaintiff would attempt to obtain, for action the defendant would otherwise have taken by way of non-party disclosure and interrogatories. It seems inevitable that the order for disclosure was only made because the parties informed the Judge of their agreement. That seems to me to amount to the making of an oral application, envisaged by the rules[28]; or at the very least, to be strongly analogous to it. It was plainly done with a view to advancing the litigation[29]. The making of that agreement, and the formalisation of it by a court order, it seems to me, constitutes a step in the proceeding. I would therefore accept that a step was taken in the proceeding on 19 June 2009.
[86]
[50] The defendant has submitted that no step was taken on 19 June 2009, because the plaintiff did not comply with the order. However, that submission should be rejected. It is inconsistent with r 389(3), in a case where, as here, the order is made to advance the litigation. It is quite different in character to an order for the transfer of an action from one court to another, held in Smiley v Watson[30] not to be a step in the action, on the ground that such an order simply determines where the action is to proceed, but does not advance it in any way.
[87]
[51] Although a step was then taken in the action in June 2009, no subsequent step was taken within the following two years. No notice of the kind required by r 389(1) was given in that period.
[88]
[52] At first instance, the appellant did not contend that the delivery of the list of documents in May 2011 was a step in the action;[31] and the appellant did not challenge the submission made on behalf of the respondent that no step was taken within two years after 19 June 2009. By the time the present applications were made, the appellant could not, by virtue of r 389(2), proceed without the benefit of an order permitting it to do so. That required an exercise of the Court's discretion in its favour.
[89]
[53] Mr Flaherty gave evidence that he was the director of the plaintiff who dealt with the defendant, and gave the defendant instructions in respect of the contracts which give rise to the present proceedings. He swore that he did not understand the risk that, in the absence of a "subject to finance" condition, the purchase contracts which the plaintiff had entered into on about 14 April 2003 might be terminated by the vendors, and the deposits forfeited. He deposed that had he understood this risk he would not have signed these contracts unless they contained such a clause.
[90]
[54] In a separate affidavit, Mr Flaherty deposed to his experience as a company director. Most of the companies of which he had been a director were involved in the automotive parts procurement and distribution business. He gave evidence that none of these companies was a party to any contract involving real property, save for the leasing of business premises from which the businesses of the companies were conducted. He was also a director of three companies involved in the sports management businesses, but gave evidence that none of these companies was a party to any contract involving real property; nor did any of them hold an interest in real property. He was also a director of a company set up by his accountant, which had not traded and had not been a party to any contract involving real property nor had it any interest in real property. He was also a director of a company which advertised the benefits of cosmetic surgery. This company leased its premises; but otherwise had not entered into contracts involving real property, nor had it held an interest in real property. Mr Flaherty also gave evidence that he was a director of Angus Water Development Pty Ltd. Prior to his becoming involved in this company, it had purchased land at Angus Water. It developed some 36 units, about half of which had been sold prior to Mr Flaherty's involvement. Sales of units occurred after he became involved in this company, but his evidence was that he did not review or sign the sales contracts, there being five other directors, and his role being as a non-executive director.
[91]
[55] Mr Paul White is also a director of the plaintiff. He has more extensive experience than Mr Flaherty as a company director. Much of his experience is in the construction industry. However, he became a director of a company that owned the Pier Hotel and Marketplace in Cairns. That company set up companies operating businesses in leased premises in that development. He gave evidence that he did not recall signing leases; and that he did not play an active role in the management of the company's operating businesses in the development. He became a director in Angus Water Development Pty Ltd at about the same time as Mr Flaherty. He was a director of a company (TFL Robertson Pty Ltd) and signed the purchase contract for a property at Robertson Street, Fortitude Valley, Brisbane, purchased for development. He also signed some of the on-sale contracts. He was also a director of companies associated with a development at The Entrance, in New South Wales. He signed some of the contracts for the sale of apartments produced in the development of this land. He gave evidence that he was a director of other companies which had not held real property.
[92]
[56] Both Mr Flaherty and Mr White gave evidence of becoming directors of other companies, subsequent to the events which give rise to the present proceedings.
[93]
[57] The only evidence of Mr White's involvement in the events which give rise to the present proceedings is that he signed the purchase contracts on about 14 April 2003. The solicitor who conducted the matter on behalf of the defendant gave evidence of dealings with Mr Flaherty, but did not refer to any dealing with Mr White.
[94]
[58] A general starting point for identifying the obligation of a solicitor may be identified from the following passage from a leading text:[32]
[95]
"One of the principal areas in which the client looks to his solicitor for guidance is in the explanation of legal documents. Normally the client either signs such documents or permits them to be sent on his behalf in reliance upon the solicitor's advice. The solicitor owes a general duty to explain such documents to the client, or at least to ensure that he understands the material parts." (references omitted)
[96]
[59] In Fox v Everingham,[33] (Fox) a married couple had sued the solicitors whom they had retained to act for them in relation to a purchase of property. The Full Court of the Federal Court identified the obligation of the solicitors as follows:[34]
[97]
"The retainer given by the Foxes to the respondents obliged the respondents to act generally in the Foxes' interests in and about their entering into the contract and their taking of title to the property pursuant thereto. At the least that obligation required the respondents, either themselves or by an employee qualified to do so, to go through the contract with the Foxes and explain the salient points of it to them. In this way their principal rights and obligations under it would be explained as would the general course the matter might be expected to take. The respondents were also under an obligation to explain to the Foxes provisions of the contract which were in an unusual form ... ."
[98]
[60] In relation to giving advice to parties giving a mortgage and guarantee, Doyle CJ in National Australia Bank Ltd v Mitolo,[35] said that the solicitor's obligation was:
[99]
"... to take reasonable care to ensure that [the clients] understood in a practical way the effect of the guarantee and mortgage, and to satisfy himself that [the clients] appeared to understand the effect and potential consequences (from a legal point of view) of the guarantee and mortgage."
[100]
[61] In Fox, the court said of the obligation of the solicitors:[36]
[101]
"The respondents were also under an obligation which required them to give attention, before the contract was signed by the Foxes, to the question of whether it, from their point of view, contained adequate provisions to protect them against a variety of contingencies which might reasonably have been foreseen as likely to arise if things did not go as expected. ... The Foxes were entitled to rely on the respondents to see to it that the contract was adequate to protect their interests."
[102]
[62] An Australian text identifies one of the obligations of a solicitor advising a client in a property transaction in the following terms[37]:
[103]
"A solicitor has a duty to warn of the risks inherent in the transaction unless the client is already aware of the risks."
[104]
[63] That statement draws attention to the knowledge (and experience) of the client. In Carradine Properties Ltd v DJ Freeman & Co,[38] in a frequently cited passage, Donaldson LJ said:
[105]
"An inexperienced client will need and will be entitled to expect the solicitor to take a much broader view of the scope of his retainer and of his duties than will be the case with an experienced client."[39]
[106]
[64] Thus it has been held that there is no duty to explain a final share purchase agreement line by line to clients where instructions had originally been given by experienced commercial clients, drafts were sent to them from time to time, and there was need for speed in the transaction.[40] Similarly, it has been held that it was unnecessary for a solicitor to explain to the client the effect of a priority limit in a short deed of priority, in circumstances where the client specialised in providing bridging finance for commercial and residential purchasers.[41] However, it would appear that it is more accurate to say that a solicitor's specific obligation to advise varies with the solicitor's knowledge[42] or reasonable belief (particularly if induced by the client's own representations)[43] as to the client's expertise and knowledge relevant to the transaction.
[107]
[65] There has been some discussion about the obligations of a solicitor acting for a purchaser, where their client requires funds to complete the contract. As will be apparent, the specific obligations of the solicitor vary with the express terms of the retainer; and are affected by the sophistication of the client. One Australian author has written (with respect to the need to discuss arrangements for finance with a purchaser-client):[44]
[108]
"Subject to the express terms of the contract between them, it is no part of the duty of a solicitor for a purchaser to ensure that the client has obtained a mortgage before contracts are exchanged. Solicitors fulfil their duty if they warn clients of the risk which the clients will incur if the mortgage is not negotiated prior to settlement."
[109]
[66] On the other-hand, in Onslow-Edwards v Cameron,[45] solicitors were not found to have acted negligently in failing to have advised "experienced property dealers" of the risks inherent in entering into a contract without having adequate finance arrangements in place.
[110]
[67] It would appear that in England, however, the prima facie position is different. In Jackson & Powell, the following appears:[46]
[111]
"When acting for a purchaser of property, the solicitors should enquire whether the client has made proper financial arrangements."
[112]
[68] It seems to me that, subject to the express terms of the retainer, the underlying principle relating to the obligation of a solicitor acting for a purchaser is, adapting the words of Doyle CJ, to take reasonable care to ensure that the client understands in a practical way the proposed contract, including its effect and potential consequences. Because the obligation is to take reasonable care, the specific advice required and the terms in which it is to be expressed will vary depending upon what the solicitor knows, or reasonably believes, of the client's relevant knowledge and experience. The obligation will often extend to drawing attention to risks inherent in the transaction; and to inquiring about the client's access to the funds necessary to complete the transaction. In general, a solicitor should advise the client about ways by which the client might be protected from significant risks inherent in the transaction.
[113]
[69] Before discussing the application of these principles to the present case, it is necessary to say something about the evidence of Mr Flaherty. Mention has been made of his sworn evidence that he did not know of the significance and risks to the plaintiff of signing these contracts, which were not conditional upon obtaining satisfactory finance; and in particular the risk of the deposit being forfeited. In my view, it is of some significance that Mr Flaherty was not cross-examined. He described his experience as a businessman in some detail. It does not suggest any particular familiarity with contracts for the purchase of real property, at least by the time when the plaintiff entered into the purchase contracts. He could not be described as "an experienced property dealer". Some doubt was apparently cast on his evidence by reference to a diary note made by the solicitor of a conversation with Mr Flaherty in which an offer for finance was discussed. It is difficult to see that that has much bearing on Mr Flaherty's knowledge of the risk that the deposit would be forfeited; and in any event, the discussion occurred 12 months after the contracts were signed. However, the conclusion reached by the learned primary judge did not depend upon his view that it was unlikely that Mr Flaherty's evidence would be accepted.
[114]
[70] It seems to me that reliance on Mr White's previous experience to show that the respondent did not breach its retainer is, on the evidence adduced by the parties in this case, not well founded. Although the solicitor provided an affidavit, he did not suggest Mr White had any involvement prior to the signing of the contracts on about 14 April 2003. There is no suggestion that the solicitor knew anything of Mr White's commercial experience. Moreover, the solicitor has exhibited copies of the purchase contracts, as signed. They do not include the terms incorporated from the Australand contract; nor do the documents signed by Mr White and Mr Flaherty indicate that copies of the incorporated terms were attached. Absent any suggestion from the solicitor that he informed Mr White about the terms which were incorporated from the contract between other parties, there was a very real prospect that Mr White had no opportunity to consider whether time was of the essence; or whether the contracts were subject to finance. That is consistent with Mr Flaherty's evidence that he was the director of the plaintiff who dealt with the defendant. In those circumstances, I do not consider that Mr White's experience could be relied upon as determining the defendant's obligations prior to the execution of the contracts.
[115]
[71] On the present (limited) state of the evidence, it seems to me that the plaintiff has reasonable prospects of success in establishing that the defendant was negligent in not drawing the plaintiff's attention to the fact that the effect of the contract which the plaintiff was entering into was that if it did not have finance available when the contract became due for completion, then it might forfeit the deposits.
[116]
[72] In any event, the plaintiff's claim is based, in part, on the proposition that the defendant was negligent in failing to recommend the inclusion of a clause making the contract subject to finance. The solicitor who gave evidence did not suggest that he made such a recommendation, and it seems reasonable to assume for present purposes that he did not do so. The purchase contracts plainly had complexities because of the incorporation of terms from the Australand contract. They involved the payment of substantial purchase monies, at some indefinite time in the future. The solicitor was retained a month before the contracts were entered into; and was responsible for their preparation. It seems to me difficult to conclude that the solicitor had no duty in those circumstances to draw the client's attention to the fact that the contracts were not subject to finance; to identify the reasons why it was in the client's interest to include a clause making the contracts subject to finance; and to seek the client's specific instructions on that point. It seems to me that, on the basis of authorities previously discussed, the plaintiff may well have good prospects of establishing that the defendant owed it a duty to recommend the inclusion of a clause making the obligation to complete conditional on obtaining satisfactory finance.
[117]
[73] I am conscious that there is no evidence at present that the vendors would have agreed to such a clause. It may well be that the plaintiff's case becomes one of the loss of a chance to protect itself against the events which ultimately happened. That does not mean, in my view, that its prospects of success are poor.
[118]
[74] I note that the learned primary judge relied, on the application made under r 389, on the fact that no expert evidence was provided about the practice of solicitors. There are a number of authorities for the proposition that where negligence is alleged against a solicitor in conveyancing matters, such evidence is not necessary.[47] It is therefore somewhat difficult to place much reliance on this consideration in an application under r 389.
[119]
[75] On the basis that a step was taken in the proceedings in June 2009, and that the plaintiff's prospects of success in the action were reasonable, it is necessary to consider afresh whether leave should be granted under r 389. A number of relevant factors are identified in Tyler v Custom Credit Corp Ltd[48] and were considered by the learned primary judge.
[120]
[76] There has been serious delay by the plaintiff in the prosecution of this action, particularly from about June 2009 until early 2011. The significance of that delay is aggravated by the plaintiff's poor cooperation with the case flow management regime. The only ameliorating factors are that the plaintiff agreed to attempt to locate documents of other companies which were sought by the defendant, thereby saving the need for the defendant to seek non-party disclosure; and the actions taken to locate the documents (although performed in a very tardy fashion). There were also attempts to provide lists of the documents, though these were not effective under the UCPR. It might also be observed that, had the appellant's solicitors acted promptly when the list was completed in early May 2011, the application for leave under r 389 may have been unnecessary.
[121]
[77] It seems to me to be a very strong thing to deny a plaintiff a trial, in a case where it appears to have reasonable prospects of success, preparation of the matter is well advanced, and the delay does not mean that a fair trial cannot be ensured. It seems to me that any strain or disappointment experienced by the solicitor who had the conduct of the transaction for the defendant is not of sufficient significance to warrant refusal of an order under r 389, permitting the plaintiff to proceed.
[122]
[78] I consider that, on balance, an order should be made permitting the plaintiff to proceed with the action.
[123]
[79] I would allow the appeal. I agree with the orders proposed by the President.
[22] See also Paradise Grove Pty Ltd v Stubberfield[2000] QSC 214, where it was held that the delivery of a supplementary affidavit of documents was a step in the action (though not the filing of the affidavit, without delivery); and Concord Park Pty Ltd v Allied Organik Ltd & Anor[2003] QDC 420.
[35][2002] SASC 102 at [72]. See also Macindoe v Parbery (1994) Aust Torts Reports 81-290, where Kirby P rejected the argument that a solicitor's obligation "extended no further than to prepare the documents for the sale of the business and to explain to the clients the legal effect of the various clauses of the documents"; and held that the solicitor's duty "goes beyond the obligation to explain the usual perils".
[150]
[37] Christensen & Duncan, Professional Liability and Property Transactions (Federation Press 2004), p 189, citing Capebay Holdings Pty Ltd v Sands[2002] WASC 287 (Capebay), at [92].
[39]Carradine Properties Ltd v DJ Freeman & Co[1955-95] PNLR 219 at [12-13]; discussed in Ray Hodgin (ed), Professional Liability: Law and Insurance (LLP, 2nd ed), 531.
[153]
[40]Tamlura NV v CMS Cameron McKenna[2009] EWHC 538 (Ch); cited in John L Powell and Roger Stewart (eds), Jackson & Powell on Professional Liability (Sweet & Maxwell Thomson Reuters, 7th ed) at 11-174 n 824.
[154]
[41]Commercial Bridging plc v Nelsons [1998] 2 CL 477, discussed in S Walmsley, A Abadee, and B Zipser Professional Liability in Australia (Thomson Lawbook Co, 2nd ed), pages 457-458.
[44] GR Masel, Professional Negligence of Lawyers, Accountants, Bankers and Brokers (CCH, 2nd ed), 153, citing Buckland v Mackesy (1968) 112 SJ 841, also cited in Jackson & Powell at 11-214 n 1011 and 1012.
[157]
[45][1999] EWCA Civ 624; discussed in Ray Hodgin (ed), Professional Liability: Law and Insurance (LLP, 2nd ed), 533.
[158]
[46] At [11]-[214]; citing the Law Society's Conveyancing Handbook. However, the obligation does not extend to commercial matters.