Court of Appeal (WA)|2010-02-08|Before: Owen JA

SMITH -v- BANK OF WESTERN AUSTRALIA LIMITED [2010] WASCA 15 (8 February 2010)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : SMITH -v- BANK OF WESTERN AUSTRALIA LIMITED [2010] WASCA 15

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : SMITH -v- COMMISSIONERS OF THE RURAL AND INDUSTRIES BANK OF WESTERN AUSTRALIA [2009] WASC 100

Practice and procedure - Application by nonparty to be heard on appeal - Relevant principles - Appeal against decision striking out action for want of prosecution - More than 30 years since relevant events - Action on foot for 27 years - No substantive step in action for more than 20 years - No adequate explanation for delay - Presumptive prejudice from delay

Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256

Levy v The State of Victoria (1997) 189 CLR 579

Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273

Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) WAR 273

Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197

Smith v Commissioners of the Rural and Industries Bank of Western Australia [2009] WASC 100

Smith v McCusker (Unreported, WASC, Library No 970415, 5 September 1997)

Smith v McCusker QC [2000] WASCA 320

Smith v McCusker QC [2003] WASC 150

Smith v McCusker QC [2005] WASCA 226

The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398

1 OWEN JA: I have seen the reasons that Newnes JA proposes to publish. I agree with his Honour's conclusion that leave to appeal should be refused and the appeal should be dismissed. I also agree with Newnes JA's reasons for ruling against the appellants. Nonetheless, I should set out in very brief terms why I have come to the view that the appeal should be dismissed.

2 The appellants commenced this action in August 1982. In June 1985 they filed an amended statement of claim and that was the last substantive step they took in the action until 2008. The defendants filed an amended defence in February 1986. In May 1985 the appellants were granted legal aid to obtain an opinion on the merits of their claim. In August 1986 McCusker QC was briefed to provide that opinion. He delivered his opinion (which was adverse to the appellants) in March 1989. An extension of legal aid was granted in August 1991 but the grant was revoked in April 1994. In 1995 the appellants (acting in person) commenced a separate action against Gilmour QC and McCusker QC. I think it is fair to say that in the ensuing years the appellants' energies were directed at the 1995 action and nothing was done in relation to the 1982 proceedings until 2008.

3 In May 2008 the appellants applied to have the 1995 action consolidated with the 1982 action and this was the first substantive step they had taken in the latter proceedings since June 1985. On 1 August 2008 the respondent applied to strike out the 1982 action for (among other reasons) want of prosecution. That application was successful and the order consequently made is the one that is the subject of this appeal.

4 The principles on which the court proceeds when it is asked to dismiss an action for want of prosecution were discussed in The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398 [99] - [100]. The discretion is not fettered by any absolute or inflexible rules. There are, however, five matters to be considered which will usually be relevant to the court's decision to exercise the discretion:

(d) the prejudice to the defendant if the action is allowed to proceed notwithstanding the delay; and

(e) the conduct of the defendant in the litigation.

5 In this case the length of the delay is extraordinary and inordinate. Putting it in the best light for the appellants, if it is taken to run from the time the respondent filed its amended defence until the filing of application to consolidate the two actions, the delay is a little over 22 years. There is no satisfactory explanation for the delay. The situation is as follows:

(a) the only explanation for the delay from February 1986 until March 1989 is that the appellants were awaiting the opinion from McCusker QC;

(b) there is no explanation for the delay between March 1989 and the extension of legal aid in August 1991 or from that time until legal aid was revoked in April 1994;

(c) if, as I assume to be the case, April 1994 marks the time from which the appellants were effectively acting in person, the only explanation for the delay through to May 2008 is that '[the appellants] didn't do anything because [they] didn't know what to do' (appeal ts 6).

6 Putting at its highest for the appellants, the only part of that which could possibly be described as tenable is the period during which they were awaiting the opinion and then an extension of legal aid. Even that is problematic and would not normally be regarded as satisfactory but I am prepared, for the purposes of this appeal, to afford the appellants an indulgence in that respect. Otherwise, there is no satisfactory explanation for the delay over an extraordinarily long time; namely April 1991 until May 2008, a period of 17 years. The appellants submitted that 'it was the [respondent] initially who put us in that position where we needed to obtain legal aid and then we lost it and we needed to decide what to do' (appeal ts 6). But that does not assist the appellants because it says nothing about the reasons for the their lack of action in taking the necessary steps to advance the litigious process towards trial.

7 There is no doubting the prejudice that will accrue to the appellants if the trial judge's order stands: they will be statute barred and will have lost the right to advance the cause of action they contend they have against the

banks. But this is in large measure a problem of their own making and it has to be balanced against all other factors.

8 The respondent did not allege any indicative prejudice. But the presumptive prejudice flowing from a delay of more than 30 years since the occurrence of the events on which the cause of action is based and more than 22 years since the last substantive step was taken in the litigation simply goes without saying.

9 The only significant matter raised against the banks that could be described as errant conduct is the alleged failure to discover documents. In this respect, I agree with both the trial judge and Newnes JA that the documents referred to by the appellants were not discoverable. It is difficult to imagine how, had they been discovered earlier, they would have caused the appellants to pursue the action more expeditiously than they have done.

10 In my view no error has been demonstrated in the trial judge's reasoning or in his conclusion that the 1982 action should be dismissed for want of prosecution.

11 PULLIN JA: I agree with Newnes JA for the reasons he gives that the application for leave to appeal should be refused. The following additional observations primarily concern the decisions of The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398 and Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256.

12 The primary judge concluded that Smith's action against the bank should be dismissed for want of prosecution and because the Smiths had elected, by their conduct in their pursuit of the 1995 proceedings against Mr McCusker, to discontinue the pursuit of their claim against the bank. He also concluded that there was no abuse of process 'based upon the principles enunciated in Batistatos'.

13 In The Hancock Family Memorial Foundation Ltd v Fieldhouse, the general principles applicable to dismissal of an action for want of prosecution were set out in [99] of the reasons of Steytler P and Owen JA. That paragraph reads:

The general principles identified in those cases include consideration of these points:

(a) whether any default has been intentional and contumelious, for example, disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or

(b) whether there has been inordinate and inexcusable delay on the part of the plaintiff or his or her lawyers, and, if so

(c) whether such delay:

(i) will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action; or

(ii) is such as is likely to cause or to have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party [99].

14 At [100] their Honours said that the general principles set out above should not, however, be elevated to the level of a test or a rule. The discretion to be exercised was said at [100] to involve usually, a consideration of the length of the delay, the explanation for the delay, the hardship to the plaintiff if the action is dismissed, the prejudice to the defendant if the action is allowed to proceed notwithstanding the delay and the conduct of the defendant in the litigation.

15 In Batistatos, the driver of a car alleged that he was severely injured as a result of an accident on the road said to have been caused by negligence on the part of the municipal council and road construction authority concerning the design and marking of the road. Although it was commenced 29 years after the accident, there was no limitation period applicable because the driver suffered from intellectual disabilities. Gleeson CJ, Gummow, Hayne and Crennan JJ at [70] approved of a statement by Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197, 247 that there was no:

[R]equirement that the continuance of the action would involve moral delinquency on the part of the plaintiff.

Their Honours said what was decisive was the objective effect of the continuation of the action.

The descriptions, rather than definitions, given in this Court and set out earlier in these reasons post-date Birkett v James and do not provide any ground for a requirement of oppressive conduct by the plaintiff. Rather, as in the circumstances of the present case, attention must be directed to the burdensome effect upon the defendants of the situation that has arisen by lapse of time. The Court of Appeal held that this was so serious that a fair trial was not possible. The result was that to permit the plaintiff's case to proceed would clearly inflict unnecessary injustice upon the defendants

17 Kirby J at [138] and [141] said that it was not necessary that misconduct of the plaintiff must be shown. His Honour then added:

To the extent that this requirement is suggested by any dicta of the House of Lords in Birkett v James, those dicta do not represent Australian law.

Only Callinan J [232] expressed a different view.

18 In Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273 [66] I said in referring to the Hancock and Batistatos cases, that it may be necessary to reconsider the principles set out in Hancock's case insofar as Steytler P and Owen JA said that it is relevant to take into account whether any default by a plaintiff has been 'intentional and contumelious'. I referred to Gleeson CJ, Gummow, Hayne and Crennan JJ's reasons at [70] and to those of Kirby J at [138] in Batistatos' case. In my view, Hancock's case and Batistatos' case can be reconciled in this way. The plaintiff's conduct, particularly if it has been of an intentional and contumelious kind, will be a relevant point for consideration, but Batistatos makes it clear that it is not a condition which must be shown before proceedings are struck out or stayed. Whether the plaintiff has been guilty of misconduct or not, the critical issue is whether to allow the plaintiff's case to proceed would inflict unnecessary injustice on the defendant. It is likely that in many cases that intentional or contumelious disobedience to orders of the court will inflict unnecessary injustice on the defendant.

19 The primary judge referred to the presumptive prejudice that applies in a case where there was to be a trial about what was said between parties at a meeting or meetings 32 years ago. It is a matter of commonsense that parties to such conversations are unlikely to accurately recall what was said 32 years ago. In this case, the Smiths having commenced proceedings, did nothing after 1986 until the end of 2008. Part of that time was taken up they say in having to deal with Legal Aid, but even if that period of time is disregarded, the delay is still from about 1990 through until about 2008. That delay of about 18 years, meant that if the proceedings continued and a trial took place, it would be a trial to examine the conversations of the parties that took place three decades ago. Very little would be necessary to convince the court that there was prejudice and therefore unnecessary injustice to the defendant and the

affidavits of the bank in support of the application to strike out, deposed to prejudice. It appears that the original relevant documents following the conversations between the Smiths and the bank have been lost, although photocopies remain.

20 The primary judge found that there was substantial prejudice to the bank [64] and [66]. There is no ground of appeal challenging this finding. Members of the court on the hearing of the appeal, pointed to the possible inconsistency between the finding that there was substantial prejudice and the statement by the primary judge when he considered Batistatos at [70] that it had not been established that there would be an unfair trial because the bank's manager was still alive and had a good recollection of the events at the time. Despite members of the court mentioning this possible inconsistency and pointing out to the appellant that there was no ground of appeal challenging the primary judge's finding that there was substantial prejudice, no attempt was made to amend the grounds of appeal to challenge the finding.

21 The task of this court is to adjudicate on grounds of appeal which raise issues about whether there is an error of fact or law. The court does not constitute itself as a roving commission to re-examine the reasons. If the party declines to challenge a finding then it is not open to the appeal court to examine the correctness of the finding.

22 The only points raised by the appellant were those summarised in Newnes JA's reasons under the heading 'Grounds of Appeal'. None of those grounds have been made out for the reasons given by his Honour.

23 NEWNES JA: This is an appeal against a decision of Martin CJ dismissing the appellants' claim against the respondent for want of prosecution: Smith v Commissioners of the Rural and Industries Bank of Western Australia [2009] WASC 100.

24 In the action (the 1982 action), the appellants (the Smiths) claimed damages from the respondent (the Bank) for breach of contract and negligence, arising out of events which are said to have occurred during 1977 and 1978. The action was commenced in 1982. The last substantive step in the action was taken in 1986.

25 There remains on foot a related action (the 1995 action) which was commenced by the Smiths in 1995 against their former legal advisor, Mr Malcolm McCusker QC, in which they allege that Mr McCusker was negligent in respect of advice he provided on their prospects of success in the 1982 action. The 1995 action is listed for trial in April 2010.

26 The history of the two actions is relevant to the present application and it is necessary to outline the history of both.

27 The 1982 action was commenced by a writ issued on 4 August 1982. The writ was generally endorsed and claimed damages for breach of contract and negligence. A statement of claim signed by Mr B W Rowland QC was filed on 6 August 1982. The Bank entered an appearance on 16 August 1982, and requested further and better particulars of the statement of claim on 27 August 1982.

28 On 2 September 1982, the Smiths requested discovery from the Bank. On 10 September 1982, the Bank served its defence. On 14 September 1982, the Smiths reiterated their request for discovery from the Bank. An affidavit of discovery sworn by an officer of the Bank was filed on 29 September 1982. On 13 October 1982, the Bank requested discovery from the Smiths.

29 On 11 November 1982, the Bank applied to strike out part of the Smiths' statement of claim. The fate of that application is unclear from the court file, but it seems likely that the application was adjourned sine die at the request of counsel for the Bank. An application in identical terms, filed on 4 February 1983, was adjourned sine die on 11 February 1983.

30 After that initial flurry of activity, the progress of the action slowed considerably, before finally coming to a complete halt.

31 On 20 December 1983, the Bank filed a substituted request for further and better particulars of a document described in the request as 'the amended statement of claim'. There is, however, no amended statement of claim on the court file as at that date.

32 On 26 April 1984, the Bank applied for an order that the Smiths provide discovery on affidavit. An order to that effect was made on 4 May 1984. An affidavit of discovery by the Smiths was filed on 24 September 1984.

33 On 17 May 1985, the Smiths sought leave to amend their statement of claim in terms of a minute filed with their application. An order to that effect was made by consent on 27 May 1985 and an amended statement of claim corresponding with the minute was filed on 6 June 1985. The amended statement of claim was prepared and signed by Mr J Gilmour (as his Honour then was), who was at that stage the solicitor representing the Smiths. The filing of the amended statement of claim was the last step taken by the Smiths in the 1982 action.

34 As mentioned above, the Smiths claim against the Bank was for breach of contract and negligence. In the statement of claim of 6 June 1985, the Smiths alleged that, in or about March 1977, they sought an advance from the Bank, through the manager of the Bank's Ongerup branch, Mr Danks, to assist them in purchasing a new tractor and an overdraft facility in order to enable them to expand their farming operations on land at Borden. The Smiths alleged that in the course of negotiations relating to the provision of finance by the Bank, Mr Danks and other officers of the Bank prepared and provided to the Smiths a cash flow budget which contained representations as to the income likely to be derived from their proposed farming operations. The Smiths further alleged that Mr Danks represented that the Bank would provide the advance they had requested and would also provide an overdraft facility to enable the Smiths to farm in accordance with the budget in that and subsequent years.

35 The Smiths alleged that they entered into the agreement for the provision of finance in reliance upon the representations made by the Bank, through Mr Danks. They also pleaded that the representations made by Mr Danks became terms of their agreement with the Bank. The Smiths further alleged that they expanded their farming operations in accordance with the terms envisaged in the budget prepared by the Bank.

36 The Smiths pleaded that, in breach of the agreement, the budget prepared by the Bank was 'completely unrealistic ... and was incapable of being implemented by the [Smiths]'. They also alleged that the Bank breached the terms of the agreement by failing to provide a sufficient overdraft facility to enable them to carry on the expanded farming operation in accordance with the budget. The Smiths further alleged that in making the representations constituted by the budget, upon which the Smiths relied, the Bank was negligent. They alleged that by reason of expanding their farming operations in the manner indicated in the budget, they had incurred debt and suffered loss of income. The Smiths claimed damages for negligence and breach of contract.

37 On 3 February 1986, the Bank applied for leave to file a substituted defence in terms of a minute filed with that application. An order to that effect was made on 14 February 1986, and the substituted defence was filed on 26 February 1986.

38 In its defence, the Bank admitted that it entered into a banking relationship with the Smiths on certain terms and further admitted the preparation of a cash flow budget, but pleaded that the budget was prepared on the basis of information supplied by the Smiths. The Bank further alleged that the Smiths did not comply with the budget or with subsequent budgets prepared by the Bank. The Bank alleged that the Smiths' failure to comply with the budgets came about because of the inaccuracy of the information supplied by the Smiths and used in the budgets, their poor and unskilful management and conduct of their farming activities, and because they incurred expenditure outside the terms of the budgets.

39 The filing of the defence by the Bank in February 1986 was the last substantive step taken by the Bank in the action until 22 July 2008, when it applied for the action to be dismissed.

40 The only documents filed between 1986 and the Bank's application to dismiss the action were a notice of change of solicitors filed on behalf of the Smiths in September 1991 and a notice of change of solicitors filed on behalf of the Bank in June 2008.

41 The 1995 action was commenced by the Smiths by a writ filed on 13 March 1995. The defendants named in that writ were Mr McCusker QC and Mr Gilmour. The writ was not served on Mr McCusker QC until 29 January 1996. The Smiths have at all times represented themselves in the course of the 1995 proceedings.

42 The first statement of claim was filed by the Smiths on 22 February 1996. That statement of claim was subsequently struck out by order of the Acting Master, with leave to serve a substituted statement of claim. Following a number of extensions of time, the Smiths served a minute of their proposed substituted statement of claim on 31 January 1997. Following further revisions to the proposed pleading, on 15 April 1997 the Smiths applied for leave to amend the writ and to file and serve an amended statement of claim asserting causes of action in defamation, fraud, fraudulent misrepresentation, breach of fiduciary duty and negligence.

43 On 5 September 1997, the Master refused the Smiths' application: Smith v McCusker (Unreported, WASC, Library No 970415, 5 September 1997). The Master indicated that he was considering entering judgment against the Smiths, and he provided them with an opportunity to provide submissions and materials in support of the proposition that their claims were arguable. The Smiths subsequently provided a substantial quantity of material. The Master concluded, however, that the action was unlikely to succeed and entered judgment for the defendants.

44 An appeal by the Smiths against that decision was upheld by the Full Court insofar as it related to their claim against Mr McCusker QC, but was dismissed insofar as it related to their claim against Mr Gilmour: Smith v McCusker [2000] WASCA 320. The Full Court considered, however, that the pleading of the claim was defective. In his reasons for judgment Templeman J set out what he understood to be the real substance of the Smiths' claim.

45 Following the decision of the Full Court, an amended statement of claim was filed by the Smiths on 24 February 2003. An application by Mr McCusker QC for summary judgment was granted by the Master on 14 August 2003: Smith v McCusker QC [2003] WASC 150. The Smiths appealed against that decision and the appeal was upheld by the Court of Appeal: Smith v McCusker QC [2005] WASCA 226.

46 Following the decision of the Court of Appeal, a further version of the statement of claim was filed by the Smiths on 15 August 2006. That version of the statement of claim appeared to follow the formulation of the Smiths' claim as set out in the reasons of Templeman J in the Full Court in the 2000 appeal.

47 In the statement of claim, the Smiths alleged that they approached the Bank to obtain finance and advice for a development programme for their farm, including the purchase of a heavy duty tractor. They alleged that they informed the Bank they required long term financial assistance similar to a development loan but did not know how to obtain it or what it would involve; that they did not have the expertise to draw up a suitable budget; and that they did not know how to get finance for a new tractor. The Smiths alleged that the Bank, by Mr Danks, agreed to provide finance for their reasonable farming requirements for the current year and in the future, to advise them as to other suitable finance for their needs, and to draw up a suitable budget for the development of the farm. They alleged that the budget subsequently prepared by the Bank was unsuitable and deficient, and that Mr Danks was negligent in the advice he provided to them. They also alleged that subsequently, in breach of the agreement, the Bank withdrew its finance facilities.

48 The pleading went on to allege that the Smiths received a grant of legal aid to obtain an opinion on the merits of a claim against the Bank and that Mr McCusker QC was retained to provide that opinion. The opinion was provided on 23 March 1989. The Smiths pleaded that in providing his advice Mr McCusker QC was negligent, as a result of which the Legal Aid Commission formed wrong views about the basis of their claim against the Bank.

49 The Smiths pleaded that, on 5 August 1991, they received an extension of legal aid to proceed to trial. They pleaded that in 1994 it was the policy of the Legal Aid Commission to extend aid for each step of the litigation and to review the prospects of success at each step.

On 9 April, 1994, following review of the Smiths' case in accordance with its said policy, in reliance on the errors in the opinion and in view of the projected costs and the diminishing availability of legal aid money the Legal Aid Commission terminated the [Smiths'] grant of legal aid, so that the [Smiths'] lost the opportunity of having a trial of their action against the bank, and consequently they lost the damages and interest they might have recovered in that action. The termination was confirmed on 13 August 1994 following review of the files.

51 The Smiths alleged that if Mr McCusker QC had not been negligent and the opinion had been more favourable, legal aid would not have been terminated.

The [Smiths] have lost their opportunity to have a trial of their action against the bank, have lost the opportunity to have such a trial in a reasonable time and have lost their opportunity to have Senior Counsel represent them at such a trial, and as a consequence the plaintiffs have lost the damages they might have recovered in the R & I matter and have lost interest on the said damages and have suffered other losses and ought to recover those damages and other damages.

53 The Smiths filed a further amended statement of claim on 8 May 2007. It is the current version of the statement of claim. It follows the same general format as its predecessor, although it places greater emphasis on the Smiths' reliance upon the Bank's branch manager for advice with respect to their conduct of farming operations. However, the formulation of the claim against Mr McCusker QC is not materially different to the formulation in the August 2006 pleading.

54 On 4 September 2006, Mr McCusker QC filed a third party notice joining the Bank as a third party to the 1995 action on the ground that, if he was found liable to the Smiths, he was entitled to an indemnity, or alternatively, a contribution from the Bank. The claim was based upon the proposition that if the Bank is found to have been liable for breach of contract, or breach of a duty of care, it caused the loss and damage suffered by the Smiths for which he was also liable.

55 Mr McCusker QC subsequently conceded that his claim for contribution and indemnity from the Bank had no basis, because the damage suffered by the Smiths as a consequence of his alleged breach of retainer and/or a duty of care, is both conceptually and practically different to that suffered by the Smiths as a consequence of any breach of contract or duty of care by the Bank.

Mr McCusker QC's application to be heard in the proceedings

56 The primary judge gave Mr McCusker QC leave to be heard in opposition to the Bank's application to dismiss the 1982 action. His Honour concluded that, in the unusual circumstances of the relationship between the 1982 action and the 1995 action, it was in the interests of the efficient disposition of the issues raised by both actions for all parties concerned to be heard in relation to the application because of the substantial practical connection between the actions. The primary judge also concluded that the indirect effect of the determination of the application upon Mr McCusker QC's rights and interests was significant.

57 The primary judge concluded that the overwhelming factor in relation to the application to dismiss the 1982 action for want of prosecution was the extraordinary and inordinate delay. He observed that the Smiths' claim depended upon events which were alleged to have occurred in 1977 and 1978. The action was not commenced until 1982 and although 'not prosecuted with great alacrity' had reached the point where the action could have been entered for trial by 1986. Nothing was done after that point to advance the action. While there was some explanation for the delay up to 1989, there was no explanation for the delay between that time and the termination of Legal Aid in 1994, or for the inactivity over the subsequent 15 years.

58 The primary judge inferred that at some time after the withdrawal of Legal Aid in 1994 and the commencement of the 1995 action, the Smiths decided to put all their energy and resources into the latter claim.

59 His Honour noted that it had been clear since the decision of the Full Court in 2000 in the 1995 action that the statement of claim in the 1982 action did not accurately reflect the case which the Smiths wished to run against the Bank. His Honour mentioned that the Smiths had foreshadowed an application to amend the statement of claim in the 1982 action to bring it into line with the claim in the 1995 action. He went on, however, to observe that there must be a question as to whether such an application to amend would be statute barred.

60 The primary judge rejected a contention by the Smiths that the failure to prosecute the action was due at least in part to the Bank's failure to give proper discovery. In support of that contention Mrs Smith annexed to her affidavit in opposition to the Bank's application a large volume of documents which she had obtained in 2008 and which it was alleged showed that the Bank's discovery was inadequate. The Smiths contended that if the Bank had given proper discovery in 1982 they would have been able to pursue the claim against the Bank with appropriate expedition.

61 His Honour found that none of the documents was discoverable by the Bank. The documents did not refer to the Smiths or to their dealings with the Bank, and in only three documents was any reference made to the Ongerup branch manager, Mr Danks, or the Ongerup branch. Almost all of the documents were concerned with general systems and procedures utilised by the Bank from time to time and policies of the Bank with respect to attracting new business. His Honour referred specifically to four documents by way of example. He concluded that the Smiths had not established that the discovery given by the Bank in the 1982 action was inadequate.

62 The primary judge noted that the Bank did not rely upon any specific prejudice from the lapse of time, such as the availability of witnesses or the lack of recall of a particular witness. However, his Honour concluded that the presumptive prejudice suffered by the Bank if called upon to litigate events which occurred 32 years ago was obvious and substantial. The allegations of negligence gave rise to detailed factual issues concerning the cost of farming and the revenues likely to be derived from farming 30 years ago. It was inevitable that access to information on those issues would be substantially diminished by the lapse of such a lengthy period of time.

63 His Honour concluded that in circumstances where there had been an extraordinary delay, a substantial period of which was unexplained and for which an even greater period was explicable only by a forensic strategy deliberately adopted by the Smiths, the action should be dismissed. His Honour observed that the hardship suffered by the Smiths was to a significant extent the consequence of that forensic strategy. The presumptive prejudice to the Bank by reason of the extraordinary delay was substantial and could not be in any way attributed to the conduct of the Bank.

64 An alternative application by the Bank for a permanent stay, based on the principles in Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256, was refused by the primary judge. It is relevant for the present appeal to refer to some of the reasoning of his Honour in respect of that ground. His Honour noted that the basis for the application in Batistatos was that by reason of the effluxion of time a fair trial was not possible. He continued:

These were powerful considerations supporting the conclusion that a fair trial of the [Smiths'] claim would not have been possible as a consequence of the lapse of time. They go well beyond the presumptive prejudice arising from significant delay and to which I have referred in this case. As I have observed, in this case the Bank does not support its application by pointing to specific prejudice of any particular kind. To the contrary, counsel for the Bank advised the court that the Bank manager, Mr Danks, continues to be available to give evidence and has a good recollection of the events in question (ts 218, 26 August 2008). Accordingly, in this case, while it is undoubtedly the case that the Bank would suffer significant prejudice by reason of the delay in prosecution of these proceedings, it could not be concluded, on the limited materials put before me, that a fair trial of the Smiths' claim against the Bank is impossible because of the lapse of time. It follows that these proceedings cannot be characterised as an abuse of process simply because of the delay in their prosecution, and the Bank's argument for a permanent stay, based upon the principles enunciated in Batistatos should be rejected [70].

65 However, the primary judge found that the Smiths' claim should be dismissed on the further ground that the rights asserted by the Smiths in the 1995 proceedings were inconsistent with the rights asserted against the Bank in the 1982 action and that the Smiths' conduct in pursuing the 1995 action constituted an election by them to discontinue their pursuit of the claim against the Bank. In the 1982 action, the Smiths asserted that they had a good cause of action against the Bank. In the 1995 action they assert that, by reason of the negligence of Mr McCusker QC, they have lost the opportunity to pursue the claim against the Bank. To the extent the rights asserted by the Smiths in the 1995 action are dependent upon the loss of their cause of action against the Bank, the assertion of those rights is inconsistent with the continued existence of the cause of action against the Bank in the 1982 action.

66 The primary judge said that he would also have found that by reason of that fundamental inconsistency the continuation of the 1982 proceedings was an abuse of process.

67 A decision to strike out an action for want of prosecution is an interlocutory decision: Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273 [2]. Accordingly, the Smiths require leave to appeal. The question of leave was heard together with the appeal.

68 The grounds of appeal relied upon by the Smiths are lengthy and it is unnecessary to set them out. Their substance can sufficiently be summarised as follows:

The primary judge should have found that the delay in prosecuting the action was caused by the Bank's failure to discover in the action documents which were relevant and discoverable;
The primary judge should have found that:

(a) the failure of the Bank to discover the documents was deliberate; and

(b) if the documents had been discovered they would have lead the Smiths to further lines of inquiry and enabled them to prosecute the action without delay;

The primary judge failed to give proper reasons for finding that the documents were irrelevant to the issues in the action;
The primary judge erred in finding that by instituting and prosecuting the 1995 action the Smiths had elected not to pursue the 1982 action; and
The primary judge erred in ordering the Smiths to pay the respondent's costs.

The application by Mr McCusker QC to be heard on the appeal

69 Mr McCusker applied for leave to be heard on the appeal. That application was heard together with the appeal.

70 In support of the application, it was submitted that Mr McCusker QC had a direct legal interest in the outcome of the appeal, or at least an indirect but substantial legal interest, or an indirect legal interest in circumstances where the Smiths may not fully present the relevant submissions. Counsel argued that Mr McCusker had a legal interest in the outcome because if the decision of the primary judge were overturned, and the Smiths were permitted to pursue the 1982 action against the Bank and succeeded, a substantial portion of their claim against Mr McCusker would, or may, fall away; namely, the claim that by reason of his negligence the Smiths had lost their opportunity to pursue the claim against the Bank. And, certainly, to the extent the Smiths succeeded against the Bank in the 1982 action, the contingent liability of Mr McCusker in the 1995 action would be commensurately diminished.

71 Counsel for Mr McCusker referred to an agreement between the Bank and Mr McCusker that if the 1982 action proceeded the Bank would consent to an order that it be heard with the 1995 action and that the evidence in one action stand as evidence in the other. That agreement was consistent with an order previously made by the primary judge. Counsel submitted that it reflected the fact that, whatever the formal state of the respective pleadings, there were substantial common questions as to what had occurred between Mr Danks and the Smiths and what reliance was placed by the Smiths on what was said and done by the Bank.

72 The Bank opposed the application. It submitted, in substance, that Mr McCusker had no legal interest, direct or indirect, in the outcome of the appeal. As the respective cases are pleaded, there were no issues in the two actions which were substantially the same. It was submitted that Mr McCusker's only interest was a possible forensic advantage to him that would exist if the 1982 action were allowed to proceed. Counsel for the Bank also argued that if Mr McCusker had any interest it was an indirect interest and he would be confined to the issues arising on the grounds of appeal. His written submissions, however, were directed to different grounds and leave to intervene should therefore be refused.

73 The jurisdiction of this court to permit a non-party to be heard on an appeal is an incident of the court's power to hear and determine matters within its jurisdiction. It is of the nature of the jurisdiction of the court that it should be exercised in accordance with the rules of natural justice: see Levy v The State of Victoria (1997) 189 CLR 579, 601. The exercise of that jurisdiction should not, therefore, affect the legal interests of persons who have not had an opportunity to be heard. Accordingly, a person whose interests would be directly affected by a decision in the proceeding - that is, they would be bound by the decision although not a party - must be entitled to intervene to protect their interests: Levy (601).

74 But, as Brennan CJ pointed out in Levy, an indirect or contingent effect on a non-party's interests will generally be insufficient to justify intervention (602). It is only where a substantial affection of a person's legal interests is likely that a pre-condition for the grant of leave to intervene is satisfied. But that does not enliven an absolute right to intervene. It is to be assumed that the court will determine the appeal correctly, so that no undue prejudice will be affected by a person whose interest are affected by the decision. But where a person having the necessary legal interest can show that the parties to the proceeding may not present fully the relevant submissions on a particular issue the court may exercise its discretion to grant leave (603). Such a grant of leave may be limited, if appropriate, to particular issues and subject to such conditions as will do justice between all parties.

75 I respectfully agree with the view of the primary judge that the discretion to grant leave is to exercised having regard to the considerations set out in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA). That is, so as to promote the just and timely determination of litigation at a cost affordable by the parties and to dispose efficiently of the business of the court.

76 I do not consider that the legal interests of Mr McCusker will be directly affected by the outcome of the appeal. The only interests directly affected will be those of the Bank and the Smiths. But in the somewhat unusual circumstances of this case, I am satisfied that Mr McCusker's legal interests are likely to be indirectly but substantially affected by the outcome of the appeal. As the primary judge pointed out [40], if the Smiths are permitted to pursue their claim against the Bank, and succeed in that claim, then the Smiths' claim against Mr McCusker, insofar as it alleges that by reason of his negligence they lost their opportunity to pursue their claim against the Bank, falls away. And as the appellants are not legally represented, there is, with due respect to the Smiths, reason to believe that despite their best endeavours the Smiths may not fully present the relevant submissions on the appeal.

77 In the circumstances, I would grant leave to Mr McCusker to be heard on the appeal in respect of the Smiths' grounds of appeal.

78 The principles applicable to an application to dismiss an action for want of prosecution were set out in The Hancock Family Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398 [99] - [100] as follows:

The general principles ... include consideration of these points:

(a) whether any default has been intentional and contumelious, for example, disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or

(b) whether there has been inordinate and inexcusable delay on the part of the plaintiff or his or her lawyers, and, if so

(c) whether such delay:

(i) will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action; or

(ii) is such as is likely to cause or to have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party.

But as with so many areas in the law, it is one thing to identify general principles and another properly to apply them. It should always be borne in mind that the power to dismiss for want of prosecution calls for the exercise of discretion. It is a discretion that must be exercised judicially but is otherwise open. It exists to serve the ends of justice. Caution should therefore be employed so that these general principles are ... not elevated to the level of a 'test' or a 'rule'. They are more appropriately to be seen as guidelines indicating some of the matters to which the court should have regard in exercising the discretion. The court's discretion to dismiss an action for want of prosecution is not fettered by any absolute or inflexible rules. There are however five matters to be considered which will usually be relevant to the court's decision to exercise the discretion:

the length of the delay;
the explanation for the delay;
the hardship to the plaintiff if the action is dismissed and the cause of the action left statute-barred;
the prejudice to the defendant if the action is allowed to proceed notwithstanding the delay; and
the conduct of the defendant in the litigation.

Ulowski v Miller [1968] SASR 277, 280; Dzienciol v Logie Brae Pty Ltd, unreported, FCt SCt of WA, Library No 980078, 25 February 1998.

79 To describe the delay in the present case as inordinate is something of an understatement. The primary judge described it as 'unprecedented'. At the least, it is astonishing. The relevant events occurred some 32 years ago. The action was commenced approximately five years after those events. It is well-established that it is particularly incumbent upon a party who makes a late start in commencing proceedings to pursue those proceedings with diligence. It hardly needs to be said that that did not occur in this case. The action has now been on foot for some 27 years. The action turns to a substantial degree on things that the Smiths claim were said and done at meetings with Mr Danks, and apparently other bank officers, in 1977 and 1978. There is no satisfactory explanation for the delay. The inference that, at least after 1995, the Smiths put the action to one side to focus on the 1995 action is inescapable, although that does not explain the delay between 1989 and 1995. Nor is it a satisfactory explanation for the delay after 1995.

80 I do not consider there is any substance in the Smiths' contention that the unearthing of the documents which are annexed to Mrs Smith's affidavit provides an explanation for the delay. In circumstances where the Smiths were unaware of these documents until 2008, the absence of the documents could hardly provide an explanation for their failure to pursue the action before that date. Nor can it be said that any of the documents, or the documents taken as a whole, substantially strengthen the Smiths' claim against the Bank so that, had they been provided earlier, it would have caused the Smiths to pursue the claim against the Bank more vigorously. Having reviewed the documents, I am unable to see anything in them which might have assisted the Smiths' case against the Bank. I respectfully agree with the primary judge's description of their tenor and effect and consider that his Honour was correct in finding that none of the documents was discoverable by the Bank.

81 There is therefore no merit in the Smiths' claim that their delay in prosecuting the action is attributable to the failure of the Bank to discover the documents.

82 I also do not consider there is any substance in the Smiths' contention that the primary judge failed to give adequate reasons for finding that the documents were irrelevant to the action. The giving of reasons is a normal (albeit not universal) incident of the judicial process, as fairness requires that the parties know why they have won or lost. The giving of reasons also furthers judicial accountability. See Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 [36]. It is clear, however, that there can be no hard and fast rules as to what is necessary by way of the provision of reasons. That must always depend upon the nature of the case. As the court observed in Mt Lawley [28], reasons need not be lengthy and elaborate, and nor do they need to refer to all the evidence led in the proceedings although relevant evidence should be referred to (albeit not necessarily in detail). What is necessary is that the basis of the decision sufficiently emerges from the reasons.

83 In the present case, the primary judge described the general import of the documents concerned and set out his reasons for concluding that they were not relevant, referring specifically to four of the documents by way of example. Nothing more was required. In the circumstances, no useful purpose would have been served by referring in detail to each of the remaining documents. The basis upon which his Honour found that the documents were irrelevant plainly emerges from his reasons.

84 The primary judge found that although the Bank did not rely upon any specific prejudice from the lapse of time, the presumptive prejudice suffered by the Bank was obvious and substantial. That finding is not challenged on the appeal. It was, however, submitted by counsel for Mr McCusker QC that his Honour's finding in relation to the abuse of process ground established that it was still possible to have a fair trial. In concluding that the action should be dismissed for want of prosecution, his Honour had erred in failing to take that into account.

85 It is apparent, however, that that submission has no foothold in the grounds of appeal. In any event, I do not accept it.

86 On the abuse of process ground, his Honour found that the Bank had not made out its case that a fair trial of the Smiths' claim was impossible. In that connection, his Honour noted a comment by senior counsel for the Bank that Mr Danks continued to be available to give evidence and has 'a good recollection of the events in question'. I should note, however, with respect, that his Honour appears to have overstated counsel's comment as to Mr Danks' recollection. It appears from the transcript that senior counsel in fact said:

MARTIN, MR: I want to be perfectly frank, particularly with a litigant in person. The bank manager in question is still alive, he is still in good health and he has still got a memory of his dealings, although he is 31 years older_._ (ts 218, 26 August 2008).

87 His Honour concluded in respect of the abuse of process ground that:

[W]hile it is undoubtedly the case that the Bank would suffer significant prejudice by reason of the delay in prosecution of these proceedings, it could not be concluded, on the limited materials put before me, that a fair trial of the Smiths' claim against the Bank is impossible because of the lapse of time [70].

88 On an application to strike out a claim for want of prosecution it is not, of course, necessary for the defendant to prove that a fair trial of the action is impossible. The discretion to strike out an action for want of prosecution is a wide discretion. In the exercise of that discretion it is a relevant factor that the delay gives rise to a substantial risk that a fair trial is not possible or that it is likely to result in serious prejudice to the defendant.

89 In the present case, his Honour found that the extraordinary delay would result in substantial prejudice to the Bank if the action were to proceed. As I have said, that finding was not challenged. Once that point was reached it was sufficient for his Honour's conclusion that the action should be dismissed for want of prosecution. It was not to the point that in relation to the abuse of process ground the Bank had not discharged its onus of establishing that a fair trial was impossible.

90 It was also submitted by counsel for Mr McCusker that his Honour erred in failing to take into account, or to give sufficient weight to, the effect of a dismissal of the 1982 action on Mr McCusker's interests. It was argued that if the 1982 action were dismissed the substantive issues in the 1982 action would nevertheless have to be canvassed in the determination of the 1995 action. That would be to the prejudice of Mr McCusker because what is in effect the Bank's case on those issues would have to be presented by Mr McCusker rather than by the Bank itself. It was also submitted that in circumstances where the same issues will arise in the 1995 action, there was little practical utility in dismissing the 1982 action.

91 Once again, that submission has no foundation in the grounds of appeal. I would add, however, that I do not consider there is any substance in it. In claims for negligence against lawyers it is by no means unusual for a defendant to find themselves in such a position. While it might well be to Mr McCusker's forensic advantage for the 1982 action to proceed, that is not a basis upon which the Bank should have to continue to bear the burden of that litigation or to remain exposed to the claim against it.

92 In my opinion, the Bank's case that the action should be struck out for want of prosecution was overwhelming. It is not easy to think of circumstances which would be capable of providing a reasonable explanation for delay of the magnitude that has occurred in this case. Nothing that has been put forward by the Smiths goes anywhere near doing so. That the Bank would suffer substantial prejudice by reason of the delay if the action were to proceed was not contested on the appeal and is self-evident. Indeed, in circumstances where the determination of the 1982 action would require findings of fact to be made, among other things, as to what was said and done at meetings between the Smiths and officers of the Bank in 1977 and 1978 regarding the provision of finance to the Smiths, it might reasonably be thought that there would be something of an air of unreality about a trial of the action more than 30 years later.

93 No error has been shown in the decision of the primary judge to strike out the action.

94 I am also unable to see any error in his Honour's decision to order that the Smiths pay the Bank's costs of the application. That order gave effect to the usual rule that costs follow the event. There is nothing in the circumstances of this case which should have led to a different result.

95 In light of the conclusion I have reached, I do not think it is necessary to consider the question of election or abuse of process.

96 I would refuse leave to appeal and dismiss the appeal.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : SMITH -v- BANK OF WESTERN AUSTRALIA LIMITED [2010] WASCA 15 (S)

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : SMITH -v- COMMISSIONERS OF THE RURAL AND INDUSTRIES BANK OF WESTERN AUSTRALIA [2009] WASC 100

Costs - Appellant unsuccessful on appeal - Whether costs should follow the event - Discretion as to costs - Turns on own facts

Appellant to pay the respondent's costs of the appeal

1 OWEN JA: When the reasons for decision were handed down on 8 February 2010 an order was made that the appeal be dismissed but the question of costs be stood over and that is the matter that has been raised this morning.

2 The general rule is that costs follow the event. But there is a broad discretion as to costs and that discretion can be exercised in a proper case to depart from the general rule. But in my view nothing has been demonstrated in either the written submissions which the appellants have filed or in the oral submissions that Mrs Smith has made this morning which would justify a departure from the general rule insofar as concerns costs as between the appellants and the respondent bank.

3 For example, pars 3 and 4 of the appellant's written submissions relate to the question of the documents which was aired and ruled on in the substance of the appeal. Paragraph 9 is to similar effect. In par 4 through to par 8, the appellants raise issues (raised again this morning in oral submissions) as to the impact of actions taken by the intervener. But it seems to me that they are properly within the discrete action which is CIV 1230 of 1995.

4 For those reasons I can see no reason which would justify the court departing from the general rule. I would propose and order that as between the appellant and the respondent bank, that the appellant pay the respondent bank's costs of the appeal to be taxed if not agreed. As between the intervener and the respondent bank, no costs orders are sought. As between the appellants and the intervener, an oral application has been made that the intervener pay the appellants' costs. I can see no reason that would justify such an order being made in this appeal, that is, in the appeal from the decision in CIV 2130 of 1982.

5 So the orders that I would propose are simply that the appellants pay the respondent's costs of the appeal to be taxed if not agreed and, secondly, that there be no order as to costs as between the intervener and the respondent bank.

6 PULLIN JA: I agree with all that Owen JA has said and the orders that he proposes.

Batistatos v Roads and Traffic Authority of New South Wales

At a glance

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Judgment (154 paragraphs)

SMITH -v- BANK OF WESTERN AUSTRALIA LIMITED [2010] WASCA 15 (8 February 2010)

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Cases Cited (5)