Bazley v State of Queensland [2001] QSC 476

[1]

[1] MULLINS J: There are four applications to be determined in this proceeding. The plaintiffs filed an application on 12 October 2001 seeking leave to proceed pursuant to r 389 of the UCPR.

[2]

[2] On 23 November 2001 the fifth defendant filed an application seeking an order that the proceeding insofar as it relates to the fifth defendant be dismissed pursuant to either rr 280(2) or 171(2) of the UCPR or on the ground that the plaintiffs have been guilty of inordinate and inexcusable delay in the proceeding to the prejudice of the fifth defendant.

[3]

[3] On 30 November 2001 each of the first and fourth defendants also applied for orders that the proceeding against each of them be dismissed for want of prosecution or that there be summary judgment for each of them pursuant to r 293 of the UCPR.

[4]

[4] It was common ground that the entity shown in the proceeding as the second defendant was incorrectly named. The entity with whom the plaintiffs dealt was The Egg Marketing Board (South Queensland) ("the Board"), the successor to which is Sunny Queen Limited ("SQL"). The plaintiffs did not oppose Mr Doyle SC and Mr Pomerenke of Counsel appearing on behalf of SQL to oppose the application for leave to proceed. It was foreshadowed on behalf of the plaintiffs that if leave to proceed were given, that consideration would be given to applying to substitute SQL for the second defendant. Leave was therefore given to SQL to be heard on that application.

[5]

[5] The writ in the action was filed on 1 August 1993. There were two other defendants in the proceeding as originally constituted. On 10 November 1995 the plaintiffs discontinued the action against the sixth named defendant. On 7 September 2000 the action against the third named defendant was dismissed by Ambrose J for want of prosecution with effect on and from 6 October 2000, unless the plaintiffs showed cause prior to that date why the order should then not become operative (which the plaintiffs did not do).

[6]

[6] On 24 June 1991 the plaintiffs carried on business under the name "The Good Egg Farm" at Samford and submitted an offer to the first defendant for Tender No C310 for the supply of eggs in south east Queensland. The tender showed the place of manufacture of the eggs to be Samford. That offer was accepted by the first defendant by letter dated 15 August 1991. It appears that the contract was for the supply of eggs to Government institutions and hospitals in the Brisbane region (including Ipswich, Redcliffe and Wacol) for the period of 12 months commencing about 1 September 1991.

[7]

[7] The Board was constituted under the Primary Producers' Organisation and Marketing Act 1926 in respect of the commodity of eggs. Section 15(1) of that Act required all the commodity to be delivered by the growers to the Board. Section 15(3) of that Act prohibited any person from selling any of the commodity to or buying any of the commodity from any person other than the Board. The Board could grant exemptions from compliance with s 15 of the Act in the circumstances provided for in s 15(4) of the Act which included sales of the commodity direct to local consumers or to retail vendors or such other sales and purchasers or receipts of the commodity as may be prescribed or approved by the Minister. At the time the plaintiffs entered into the contract with the first defendant, the certificate of exemption which they held from the Board was in relation to sales of eggs direct to local and/or retail vendors on behalf of Sunny Queen Egg Farms as per an attached list (which apparently did not extend to the government institutions and hospitals which were to be supplied under the contract with the first defendant) and sales of eggs other than first quality in pursuance of specified regulations as per an attached list (which does not appear to be an exemption relevant to this proceeding).

[8]

[8] The fifth defendant was appointed by the plaintiff's mortgagee Australia and New Zealand Banking Group Limited as the receiver and manager of the business of "The Good Egg Farm" and the assets of the plaintiffs in that business on or about 22 July 1991.

[9]

[9] On 26 August 1991 the Board sent a letter to the first defendant raising the issue that the plaintiffs were not in a position to have tendered for the subject contract on the basis that they did not have a certificate of exemption under the regulatory system then in place for the supply of eggs which would permit the supply of eggs to the locations covered by the contract with the first defendant.

[10]

[10] The Board had formed the view that the eggs required to be supplied under the contract between the plaintiffs and the first defendant could not be lawfully supplied by the plaintiffs. The Board wrote another letter to the first defendant on 2 October 1991 which referred to the Board's view that the plaintiff was acting in breach of the relevant laws and regulations.

[11]

[11] The first defendant by letter dated 9 October 1991 to The Good Egg Farm referred to its consideration of advice obtained from the Crown Solicitor and stated that the contract had been cancelled as from 13 October 1991. The plaintiffs allege that that was a wrongful termination of the contract, but accepted that act as bringing the contract to an end. The first defendant claims that it lawfully terminated the contract by that letter.

[12]

[12] The plaintiff's claim against the first defendant is for damages for breach of the contact. The plaintiff's claim against the second defendant is for damages for inducing a breach of contract as a result of sending the letters dated 26 August and 2 October 1991. The plaintiffs also claim that to the extent that those letters represented that the plaintiffs could not supply eggs pursuant to the contract without an exemption pursuant to the Primary Producers' Organisation and Marketing Act 1926 and that the plaintiffs' performance of the agreement was in breach of that Act, those representations were wrong and the second defendant was liable for deceptive or misleading conduct within the meaning of s 52 of the Trade Practices Act 1974 (Cth) ("TPA") for which the plaintiffs also seek damages.

[13]

[13] The plaintiffs also claim that the letters of 26 August and 2 October 1991, a letter from the second defendant to the Honourable Mr Ron McLean, Minister for Administrative Services, dated 24 December 1991 and a letter from the second defendant to the editor of "Business Queensland" dated 8 February 1993 were defamatory of the plaintiffs. The plaintiffs therefore also claim against the second defendant for damages for defamation including aggravated and exemplary damages.

[14]

[14] The plaintiffs' claims against the fourth defendant arose out of a letter which the plaintiffs claim the fourth defendant as Minister for Primary Industries sent to Mr McLean on 3 September 1991. The plaintiffs rely on that letter to claim against the fourth defendant for damages for inducing breach of contact and defamation.

[15]

[15] The claim against the fifth defendant is based on a letter dated 23 September 1991 from the fifth defendant to the first defendant. Because of the statements made in that letter by the fifth defendant, the plaintiffs claim against the fifth defendant for damages for inducing breach of contact, pursuant to s 82 of the TPA, for negligence and for defamation.

[16]

[16] The writ was served on most of the defendants on 26 August 1993 together with the statement of claim.

[17]

[17] Defences of the first and fourth defendants were delivered on 7 December 1993. On 5 October 1993 the second defendant had sought particulars of the statement of claim. As those particulars were not provided, the second defendant made an application on 15 March 1995 seeking an order for the requested particulars. That application was disposed of by consent, the particulars provided on 5 April 1995 and the defence on behalf of the second defendant was delivered on 19 April 1995. Particulars of the plaintiffs' statement of claim were also requested by the fifth defendant in October 1993. Ultimately, an amended statement of claim was delivered on behalf of the plaintiffs on 10 November 1995 and the defence of the fifth defendant was filed on 13 December 1995.

[18]

[18] Around the end of 1995 or early in 1996 lists of documents were exchanged between the plaintiffs and each of the first, second, fourth and fifth defendants. It appears that mutual inspection involving the plaintiffs and the first, second and fourth defendants also took place. It does not appear that mutual inspection involving the plaintiffs and the fifth defendant has been completed.

[19]

[19] It is conceded by the plaintiffs that their lists of documents do not refer to any financial documents relating to the plaintiffs' business.

[20]

[20] On 1 May 1996 the fifth defendant's solicitors sent the plaintiffs' solicitors a request for further and better particulars of the plaintiffs' loss and damage. No response was received by the fifth defendant's solicitors to that letter and nor were the requested particulars provided.

[21]

[21] On this application for leave to proceed, the plaintiffs must show that there is good reason for excepting the proceedings from the general prohibition, contained in r 389(2) of the UCPR, on the taking of a fresh step where more than 2 years has elapsed since the last step was taken: William Crosby & Co Pty Ltd v The Commonwealth of Australia [1963] HCA 6; (1963) 109 CLR 490, 496; Tyler v Custom Credit Corporation Limited [2000] QCA 178 at para [5].

[22]

[22] The process for the court is to identify the factors relevant to whether there is good reason for excepting the proceeding from the prohibition, assess the weight to be given to each of the factors in the circumstances of the case and then to determine whether, on balance, there is good reason for making the order: Dempsey v Dorber [1990] 1 QdR 418, 420.

[23]

[23] There was no dispute among the parties as to what were the relevant factors in this case. They include the explanation for delays in the proceeding; whether the delay is attributable to the plaintiffs, their solicitor or both or contributed to by any of the defendants; the plaintiffs' prospects of success; whether the proceeding is ready for trial; whether any of the defendants is likely to suffer prejudice as a result of the delay; and whether the dismissal of the plaintiffs' proceeding would permanently deny them the opportunity of pursuing their claims. Except in respect of the proceeding against the fourth defendant, there were differences between the approach of the plaintiffs and that of the defendants as to the relevance and significance of those factors in this case.

[24]

[24] The plaintiffs' position in relation to continuing the proceeding against the fourth defendant is clear. That is because the material which has been filed on behalf of the fourth defendant for the purpose of the hearing of the relevant applications shows that it is likely that the letter dated 3 September 1991 which is the subject of the claims against the fourth defendant was not, in fact, sent. That is the conclusion that can be drawn from the affidavits of Mr AB Turner, Mr PL Twyford-Jones, Mr J Scrivens and Ms TL Jackson (which relates to the existence of this letter) all filed on 30 November 2001 and the affidavit of the fourth defendant filed by leave on 3 December 2001. The alleged recipient of the letter died on 13 February 1999. In addition, the fourth defendant's affidavit shows that, unsurprisingly, his memory of the relevant events after the passage of time is not good.

[25]

[25] The fourth defendant submits that the claims against the fourth defendant must necessarily fail, in the absence of proof that the alleged letter of 3 September 1991 was sent, but that, in any case, the fourth defendant would be severely prejudiced, because of the effect of the passage of time on Mr Casey's memory and the death of Mr McLean.

[26]

[26] Mr Favell of Counsel on behalf of the plaintiffs properly conceded that in these circumstances there was a difficulty for the plaintiff in proceeding against the fourth defendant.

[27]

[27] Because the plaintiffs' claim against the fourth defendant is unlikely to succeed and the identifiable prejudice to the fourth defendant, if the proceeding were permitted to go to trial, the proceeding against the fourth defendant must be dismissed for want of prosecution.

[28]

[28] The plaintiffs retained Mr Peter Cannon as their solicitor in October 1991 in relation to the termination of their contract with the first defendant. Subsequently in 1992 he commenced to practice on his own account and continued to act for the plaintiffs. It appears that Mr Cannon involved the Criminal Justice Commission in inquiries and investigations about the termination and that Mr Cannon was undertaking investigations which the plaintiffs' current solicitor, Mr Knapp, describes as pursuit of "conspiracy theories".

[29]

[29] There is no explanation offered by the plaintiffs for the delay of 18 months in the provision of particulars in response of the request made by the second and third defendants on 5 October 1993, other than that it took Mr Cannon that length of time to comply with the request on their behalf.

[30]

"48. It has always been of great concern to us that no real progress was being made on the matter by Peter Cannon.:- I recall having several telephone conversations with Peter Cannon since about 1995 to the effect, `Peter - we have got to bring this to a head - I can't go on forever like this - surely we have got enough information in there - can't we just set it down for trial and get it on? How long will it take us to get it to trial?'

[31]

49. Invariably, he said words to the effect `probably about 12 months'

[32]

50. He always had an excuse for delays. When ever we complained, he would say things like:-

[33]

(a) `I am just waiting for another advice to come in from Counsel - I should have had it 3 or 4 months ago - I will chase it up.'

[34]

(b) `we will join a particular public servant'; or

[35]

(c) `I am waiting on the Criminal Justice Commission to investigate a particular matter'."

[36]

[31] The last period of any constructive activity in prosecuting the action on behalf of the plaintiffs undertaken by Mr Cannon was in about late 1995 or early 1996. The plaintiffs became aware on 1 September 2000 of the application to be made by the third named defendant to have the action struck out against him for want of prosecution, when they were informed of that by solicitors in Dalby who were acting as town agents of the solicitors for the third defendant. Mr Bazley stated that he managed to contact Mr Cannon about the application and that Mr Cannon said to him "leave it with me and I will address it straight away".

[37]

[32] The application was heard on 7 September 2000 and the order that was made became effective on 6 October 2000. The order was served on the plaintiffs personally mid-September 2000. When Mr Bazley read that the order was to become operative on 6 October 2000, unless he and his wife showed cause why that should not happen, he immediately contacted Mr Cannon by telephone to inquire what was happening and was again told by Mr Cannon that he would address it. There was no further contact between Mr Cannon and the plaintiffs prior to 6 October 2000.

[38]

[33] Mr Cannon attended before Ambrose J on 6 October 2000, after the order became effective, in order to extend the time for the plaintiffs to show cause. No order was made on that application.

[39]

[34] The plaintiffs learned that the order made on 7 September 2000 had become operative, when they were notified by the solicitors for the third defendant seeking payment of costs. Mr Bazley then telephoned Mr Cannon who advised the plaintiffs to work out what they could afford to pay to the third defendants so that an offer could be made. Instead, the plaintiffs contacted the Queensland Law Society and ultimately were referred to their current solicitor, Mr Knapp, in April 2001. It appears that Mr Cannon was suspended from practice on 1 February 2001.

[40]

[35] The only contact that the plaintiffs have deposed to having with Mr Cannon between 1995 and 1 September 2000 was "several telephone conversations". There is no attempt by the plaintiffs to identify the specific circumstances of or when each of these conversations occurred.

[41]

[36] There is no suggestion in the material filed on behalf of the plaintiffs that during that period of almost 5 years that any correspondence passed between Mr Cannon and themselves or that Mr Cannon gave them anything other than a cursory reference to what would next occur in the proceeding. The plaintiffs attribute the delay in that period solely to Mr Cannon. It is submitted on their behalf that there has been gross negligence on behalf of Mr Cannon.

[42]

[37] There is no doubt whatsoever that the delays can be attributed to Mr Cannon. Mr Knapp has reviewed Mr Cannon's file and concluded that there was much attention devoted by Mr Cannon to "misguided pursuit of matters ancillary or unrelated to the principal issues" in the action and that Mr Cannon handled the file in an incompetent manner. The chronology of the steps undertaken in the proceeding speaks for itself. Mr Cannon's approach to the litigation is exemplified by his failure to protect the plaintiffs' interests when informed of the application due to be heard on 7 September 2000 and then informed about the need to show cause before 6 October 2000.

[43]

[38] The question, however, is whether the delay is also attributable to the plaintiffs' own conduct. Mr Bazley deposes to the plaintiffs' returning to Dalby in early 1992 after their farm had been sold and that they "were under the impression that we would probably only be here for a period of 2 years before the case would be finalised". Mr Bazley does not state the source or basis of that impression, but it was not unrealistic. Mr Bazley is employed as a truck driver and Mrs Bazley works as a shop assistant. It appears that they believed what they were told by Mr Cannon about the proceeding from time to time until late in 2000.

[44]

[39] The difficulty for the plaintiffs is that they did not seem to follow up on what they were told by Mr Cannon in the "several telephone conversations" from 1995 onwards. In each successive telephone call, they do not seem to have questioned Mr Cannon about what he advised them in the preceding telephone call. Even allowing for the trust which the plaintiffs apparently placed in Mr Cannon to look after their interests, it is not consistent with concern on the plaintiffs' part that each time they were told after 1995 that the matter would come on for trial in 12 months, a further 12 months would go by with no trial and it appears the plaintiffs did nothing but make another telephone call. Merely having "several telephone conversations" over a period of about 5 years from the end of 1995, when the plaintiff's claim arose in October 1991 and they were not receiving any reports subsequent to 1995 on the progress of their proceeding means that the plaintiffs have offered a less than satisfactory explanation for their role in the delays during that period.

[45]

[40] I have therefore concluded that the delays in the proceeding are primarily the fault of the plaintiffs' former solicitor Mr Cannon, but that the plaintiffs have some responsibility for failing to pursue Mr Cannon more vigorously from the end of 1995 until 1 September 2000. There is no suggestion in the material that the delay in the proceeding subsequent to 1995 is attributable to the conduct of any of the defendants.

[46]

[41] It is asserted on behalf of the plaintiffs that they have reasonable prospects of success against each of the first and fifth defendants and SQL. That is disputed by each of those parties.

[47]

[42] What will be critical in general terms to the plaintiffs' prospects of success is whether or not the plaintiffs required an exemption under the Primary Producers' Organisation and Marketing Act 1926 to supply the eggs under the contract with the first defendant.

[48]

[43] The particulars given by the plaintiffs to the second defendant as to why the representations of the second defendant in its letters of 26 August and 2 October 1991 were wrong give an indication of the plaintiffs' case on this issue. Paragraph 12 of those particulars relevantly states:

[49]

"(b) the representations were wrong in fact and in law because the only exemptions required were for prescribed commodities;

[50]

(c) the commodities the Plaintiffs were supplying and going to supply were not prescribed as all the eggs supplied were and would be from areas other than prescribed localities with respect to the Egg Marketing Board as constituted pursuant to that Act."

[51]

[44] The plaintiffs' proposal in September 1991 which appears to be different from their case particularised in the preceding paragraph was that the eggs for the contract with the first defendant would be supplied from the plaintiffs' Samford farm and that the other customers which the plaintiffs were permitted to supply directly from that farm under the existing certificate of exemption would be supplied with eggs from New South Wales.

[52]

[45] Although some submissions at the hearing of these applications were directed by the plaintiffs and the defendants as to whether or not:

[53]

(a) it was a condition of the plaintiffs' contract with the first defendant that the eggs had to be supplied from those produced at their Samford farm; and

[54]

(b) whether the plaintiffs required a certificate of exemption from the Board in order to supply their existing customers with eggs from New South Wales;

[55]

(c) whether the plaintiffs required a certificate of exemption from the Board in order to make the supplies under the contract with the first defendant;

[56]

the submissions were not exhaustive, as all relevant factual material was not available on the hearing of the applications.

[57]

[46] What can be concluded on this threshold issue for the purpose of these applications is that the respective cases of the plaintiffs and the defendants are arguable.

[58]

[47] As the letter from the fifth defendant to the first defendant dated 23 September 1991 expressed the view that because the plaintiffs may be in breach of the conditions of the contract with the first defendant and that it may be in the interests of all concerned if that contract were cancelled by the first defendant, the first defendant argues that the contract was determined by the first defendant at the request of the fifth defendant as the agent of the plaintiffs. It follows from that argument there was no repudiation of the contract.

[59]

[48] Although it appears that the letter dated 23 September 1991 was written by the fifth defendant after consultation with representatives of the first and second defendants, that is not pleaded by the plaintiffs as a material fact. That means that there is some substance in the first defendant's submission that, based on the existing amended statement of claim, the claim for repudiation against the first defendant is likely to fail.

[60]

[49] It is also argued on behalf of SQL that if it were found that the first defendant terminated the contract at the fifth defendant's request on behalf of the plaintiffs, there would be no breach which SQL could have been said to have induced.

[61]

[50] Additionally, SQL relies on the fact that it would not be actionable for SQL to advise the first defendant of reasons which existed to enable the contract between the first defendant and the plaintiffs to be lawfully terminated by the first defendant. SQL also asserts that there is an issue about causation, when the first defendant took into account the advice from the Crown Solicitor relevant to whether the contract with the plaintiffs could be lawfully terminated.

[62]

[51] The existing defence of the second defendant also raises claims of qualified privilege in respect of each publication of defamation alleged against it.

[63]

[52] The liability of the fifth defendant also depends on the resolution of the critical issue as to whether the termination of the contract was lawful. In addition, the fifth defendant defends the publication of the letter of 23 September 1991, if it were defamatory, on the basis that the publication was made in good faith for protection of the interests of the fifth defendant and/or the plaintiffs or the publication was made in good faith for the purpose of giving information to the first defendant with respect to a subject which the first defendant was believed by the fifth defendant on reasonable grounds to have an interest in knowing the truth about the subject matter of the letter.

[64]

[53] The liability of SQL and the fifth defendant is therefore seriously in issue.

[65]

[54] Even if the plaintiffs were able to establish liability of one or more of the defendants in relation to the termination of the contract, the alleged misleading and deceptive conduct or defamation, the extent of any loss or damages sustained by the plaintiffs is in issue.

[66]

[55] As the plaintiffs have not disclosed the documents on which they intend to rely relevant to their loss and damages, it is impossible for any view to be expressed on the likelihood of the plaintiffs' being able to establish the loss and damages which they have pleaded in general terms against the defendants.

[67]

[56] It is apparent from the submissions made on the hearing of these applications that the capacity of the plaintiffs to perform the contract with the first defendant (if it had not been terminated) is in issue. It is submitted, not unreasonably, that the plaintiffs' business was placed in receivership prior to the contract being entered into for reasons unrelated to that contract and that would be likely to affect the calculation of any alleged losses of profit.

[68]

[57] The application for leave to proceed therefore cannot be considered in the context of the plaintiffs' having any more than an arguable case for a quantum of damages which is indeterminate at this stage.

[69]

[58] Another factor which is relevant is how close the proceeding is ready for trial: Quinlan v Rothwell [2001] QCA 176 at paras [9] and [35].

[70]

[59] It is conceded on behalf of the plaintiffs that it is necessary for the plaintiffs to file and serve a reply to the defences, as it is likely that the plaintiffs will wish to consider pleading matters that may be relevant to proving absence of good faith on the part of SQL and the fifth defendant in connection with the allegations of defamation. Further disclosure is required of the plaintiffs relating to relevant financial documents and experts' reports would have to be obtained by the plaintiffs and the defendants relative to the issue of losses alleged to have been sustained by the plaintiffs. Mr Knapp also anticipates that an expert witness or expert witnesses will be required to deal with licences and permits to supply eggs in 1991.

[71]

[60] Mr Knapp estimates that the steps required to be undertaken by the plaintiffs to be in a position for trial would take 3 months. This estimate is based on an assumption that all documents relevant to calculation of the plaintiffs' loss and damages will be obtainable from the fifth defendant. That is not readily apparent from the documents described as those of the plaintiffs in the list of documents dated 28 March 1996 of the fifth defendant.

[72]

[61] The provision by the plaintiffs of particulars of their loss and damages will be essential to the determination of the scope of the trial preparation required of the other parties.

[73]

[62] I do not accept that it is possible at this stage to be precise about how long it would take to have the proceeding ready for trial. What is apparent is that significant work has yet to be undertaken by all parties to have the matter in a state ready for trial.

[74]

[63] In evaluating prejudice, it is relevant that, if this proceeding were to continue, liability would be in issue and it would be "an ordinary witness action": cf Dempsey v Dorber at 421. The question of prejudice has to be considered in the light of the evaluation of the prospects of success of the plaintiffs' claims at this stage of the proceeding.

[75]

[64] It is submitted on behalf of the plaintiffs that the presumption that prejudice exists because of delay where witnesses will have to give oral evidence at a trial (Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541, 556) is negated to some extent by the fact that this is a proceeding which depends primarily on documents. That is challenged by the defendants.

[76]

[65] The first defendant submits that it is prejudiced to the extent that the plaintiffs' case would require a consideration of the availability of eggs in New South Wales in 1991, both in terms of their quantity and purchase price, on the basis that the lapse of 10 years makes an attempt at procuring such evidence extremely difficult. The first defendant also considers that the passage of time may make it difficult to evaluate the capacity of the plaintiffs in 1991 to supply eggs to meet the contract with the first defendant, if the plaintiffs' claim for damages involves a consideration of that issue.

[77]

[66] I accept that these are matters which affect the ability of the first defendant to prepare properly for trial which arise outside the documents which are directly relevant to the issues.

[78]

[67] In the context of the defamation claims against the second defendant, the plaintiffs allege that the second defendant was motivated by dishonesty, malice, absence of proper inquiries and a purpose of financial gain. That will depend upon a consideration of the state of mind of various officers within the Board.

[79]

[68] Pursuant to the Egg Industry Act 1993 the assets and liabilities of former egg marketing authorities in Queensland, of which the Board was one, were transferred to SQL as from 1 January 1994. The Board was dissolved on 12 July 1996. No current officer or employee of SQL has had any involvement in the proceeding or in the events to which they relate. Mr LWM Clark who is the company secretary and financial controller of SQL anticipates that, given the dramatic way in which the egg industry was restructured and the significant passage of time since anything happened in relation to the proceeding, it will be difficult to locate former officers or employees of the Board. Even if those officers and employers are located, it is reasonable to infer that the passing of at least six years since they will have been asked to recall relevant events will have affected their recollections. It is conceded by SQL, however, that Mr Sheather who was the third named defendant in the proceeding and the signatory of the Board's letters dated 26 August and 2 October 1991 and 8 February 1993 has been located and will obviously be a potential witness for SQL.

[80]

[69] Ms JM Hagenson in her affidavit filed on 29 November 2001 on behalf of the fifth defendant, identifies the likely witnesses for the fifth defendant and expresses the opinion that the fifth defendant would be prejudiced because no attempts have been made to locate witnesses for the past 5 years due to the inaction in the proceeding, and the effect of the passage of time on the recollection of witnesses in relation to events that took place over 10 years ago. Although the allegation of the plaintiffs against the fifth defendant is based on the contents of the letter of the fifth defendant dated 23 September 1991, it is apparent from the material filed on behalf of the fifth defendant that many discussions by Mr Khatri of the fifth defendant's office with officers of the first defendant, the Board and the Australia and New Zealand Banking Group Limited (the appointor of the fifth defendant) preceded the sending of that letter.

[81]

[70] The fifth defendant has informed Ms Hagenson that he has no independent recollection of the events the subject of the proceeding. Mr Khatri has informed Ms Hagenson that he has only "a vague recollection of the events".

[82]

[71] The material filed on behalf of SQL and the defendants in connection with these applications does indicate that some significant prejudice is likely to accrue to the defendants, because of the effect of the passage of time on the memories of relevant witnesses. The issues are not confined to the contemporaneous documents.

[83]

[72] With respect to the various defamation claims, SQL relies on the additional difficulty of attempting to ascertain the impact on the plaintiffs' reputation of each of the various defamations which are alleged to have occurred and the extent to which the damage to the plaintiffs' reputation is attributable to the allegedly defamatory conduct of the Board or the fifth defendant.

[84]

[73] SQL relies on an additional matter by way of prejudice. SQL has never made any provision in its financial accounts for any potential liability arising out of the proceeding. On 13 September 2001 this Court approved a scheme of arrangement in relation to SQL. The valuation of SQL shares undertaken for the purposes of the scheme of arrangement did not take into account any potential liability arising out of the proceeding. It is submitted that depending upon the extent of any potential liability, if the proceeding were to proceed, the valuation of SQL shares could be adversely affected by this proceeding, such that those who elected to take shares rather than cash under the scheme would be adversely affected.

[85]

[74] This is one aspect of the factor "that ordinary members of the community are entitled to get on with their lives and plan their affairs without having the continuing threat of litigation and its consequences hanging over them": Cooper v Hopgood & Ganim [1998] QCA 114; [1999] 2 QdR 113, 124. It is of much less significance than the prejudice that affects whether there can be a fair trial of the matters in issue.

[86]

Substantive effect of not giving leave to proceed

[87]

[75] If the plaintiffs are unsuccessful in obtaining leave to proceed and in resisting the strike out applications, the result will be to permanently deny to them the opportunity to pursue their claims against the remaining defendants and SQL. This is on the basis that the plaintiffs' claims are now statute-barred. This is a relevant consideration which favours the plaintiffs: Cummings v Davis [2001] QCA 293 at para [20].

[88]

[76] Significant weight must attach to the prejudice which I have found is shown on the material to be likely to prevent a fair trial of the issues of liability and quantum for the first and fifth defendants and SQL. When that is taken into account with some degree of fault on the plaintiffs' part in allowing a delay of 5 years in the proceeding, before endeavouring to reactivate the proceeding, I am not satisfied that the factors which favour the plaintiffs (that their predicament is largely the fault of an incompetent solicitor and their being permanently denied the opportunities to pursue their claims) outweigh the factors against the plaintiffs.

[89]

[77] Taking into account all the relevant circumstances pertaining to the current state of the plaintiffs' proceeding and the likely course that it would take if it were permitted to proceed, I am not satisfied that, on balance, there is good reason for excepting this proceeding from the general prohibition on continuing with a proceeding after there has been a delay for more than 2 years.

[90]

[78] To the extent that the first and fifth defendants' applications seek to have the proceeding struck out against each of them respectively for want of prosecution, I am satisfied that each of those defendants has shown that it is appropriate for those orders to be made.

[91]

1. The application filed on 12 October 2001 is dismissed.

[92]

2. The proceeding against the first, fourth and fifth defendants is dismissed.

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Judgment (92 paragraphs)

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Cases Cited (2)