Davis Samuel Pty Ltd v Commonwealth of Australia [2016] ACTCA 22

Davis Samuel Pty Ltd v Commonwealth of Australia [2016] ACTCA 22 - ACTCA 2016 case summary — Zoe

[138]

In seeking an order of dismissal for want of prosecution or want of due despatch, ASIC relies directly on r 12.7(1) of the Uniform Civil Procedure Rules. There is authority for the proposition that, when there has been no hearing on the merits, a court should be reluctant to make such an order unless there has been intentional and contumelious default on the part of the moving party or inordinate or inexcusable delay giving rise to a substantial risk that a fair trial would not be possible: Birkett v James [1978] AC 297 at 318. But, as Basten JA pointed out in State of New South Wales v Plaintiff A [2012] NSWCA 248 at [17], the stringency of that principle has been diminished by the enactment of ss 56 to 60 of the Civil Procedure Act 2005. It is therefore necessary to have regard to the "overriding purpose" referred to in s 56, being "to facilitate the just, quick and cheap resolution of the real issues in the proceedings." The need to pay particular attention to that overriding purpose is pronounced in a case such as the present where the essence of the application before the court is delay as such.

In this case, there has been clear and substantial delay by Mr Hobbs. In addition, he has shown himself to be unable to come sufficiently to grips with the issues and requirements at hand to enable him to formulate expeditiously - or at all - three essential elements: a coherent statement of the basis on which he contends that the first instance decision is erroneous; detailed propositions of fact and law by which he seeks to make good each aspect of that contention; and documents in conformity with the rules of court by which all necessary material will be put before this Court. Furthermore, the evidence put before the court by ASIC clearly warrants inferences, first, that Mr Hobbs will be quite unable to assemble and produce such documents without the assistance of lawyers and, second, that he will not be retaining the services of any lawyers able to undertake the task.

As a result, the conclusion must be that the delay will be ongoing and indefinite and that there can be no expectation that Mr Hobbs will ever prosecute an appeal in the required manner. In addition, I am satisfied, on the material before me, that ASIC has suffered prejudice by reason of the need to contend with Mr Hobbs' ongoing and ineffectual attempts to prosecute proceedings in this Court and that it will continue to be so prejudiced if Mr Hobbs continues on the path upon which he has embarked being, in my assessment, a path that will never lead to the orderly and coherent presentation of an appeal in accordance with the applicable rules and procedures.

[147]

The parties agreed that the matters to be considered in deciding whether to exercise the power to strike out for want of prosecution were as set out in Weston v Publishing and Broadcasting Ltd (2011) 83 ACSR 206; [2011] NSWSC 433 (13 May 2011) by Ward J, who noted first at [498] that:

It has been held that the principles the court applies are the same whether it acts under the rules or the inherent jurisdiction. (citations omitted)

Her Honour went on:

499. The power to dismiss an action for want of prosecution is not confined by rigid guidelines. Although delay is the threshold circumstance that potentially enlivens the discretion to dismiss an action, delay is a relative concept and the significance of any delay must depend on the particular circumstances of the case involved.

500. The proposition that the power to dismiss an action for want of prosecution should be exercised only where the plaintiff's default has been intentional and contumelious or where there has been inordinate and inexcusable delay giving rise either to a substantial risk that a fair trial would not be possible, or to a risk of serious prejudice to the defendant has been rejected as unduly restrictive of the true scope of the power.

501. The ultimate question (keeping in mind the overriding purposes mandated by ss 56-59 of the Civil Procedure Act) is whether, balancing the prejudice to the respective parties by making or not making an order dismissing the proceedings, justice demands that the action be dismissed. (citations omitted)

Sections 56-59 of the Civil Procedure Act 2005 (NSW) cover similar ground to r 21 of the Court Procedures Rules 2006 (ACT), although the NSW provisions are more detailed and appear to impose more specific obligations on parties.

Ward J went on to identify the specific matters to be considered in deciding whether justice demands that an action be dismissed:

502. Simpson J in [Hoser v Hatcher [1999] NSWSC 527] at [21]-[30], with whose analysis Levine J agreed in Gill v Eatts [1999] NSWSC 1056 at [61] said this of the balancing exercise to be undertaken on such an application:

(2.) the discretion should be exercised only in a clear case where it is manifestly warranted; per Kirby P; as is generally the case with discretionary decisions, each case depends upon its own facts. Rigid formulae should not be applied to the exercise of the discretion; (citations omitted)

(3.) any explanation offered by the plaintiff for the delay in proceeding must be considered; (citations omitted)

(4.) personal blamelessness on the part of a plaintiff (as distinct from any tardiness or other fault on the part of his/her/its legal representative) is relevant. (citations omitted)

(5.) a defendant who takes no steps to secure progress in the proceedings, or to activate an apparently inactive plaintiff or who stands by in the hope that the passage of time will ensure the quiet death of the proceedings or that the longer delay will strengthen the case for striking out, runs the risk that that very behaviour will operate to his/her/its disadvantage. A defendant has two choices: to attempt to prod the plaintiff into action, or to stand by, doing nothing, trusting that time will bring about the slow death of the action. Either choice represents something of a gamble, dependent upon future events that the defendant is unable with any degree of confidence to predict. If the defendant opts for the former course, of prodding the plaintiff into action, it may succeed in doing so, precluding an application to strike out. On the other hand, if the plaintiff remains inert, the defendant's case for striking out strengthens with passing time. If the defendant chooses the latter option and takes no action, the plaintiff may take no further steps, or may take no further steps until such irremediable prejudice is caused to the defendant that the application to strike out will succeed; if, however, some other event galvanises the plaintiff into action the defendant, having done nothing to progress the matter, can hardly be heard to complain of the plaintiff's earlier inactivity; (citations omitted)

(6.) delay between the date the cause of action arose and the commencement of the proceedings may be a relevant factor. But in my view, this circumstance must be treated with some caution. The weight that can be accorded to that delay is limited. Where an action is commenced within the period provided for by an applicable statute of limitations, it would not ordinarily be appropriate to take that period into account. However, if a plaintiff has delayed significantly in the commencement of the proceedings, and that delay is followed by further lethargy in the advancement of the proceedings, the effect of the initial (but permissible) delay is compounded. The real question is not the length of the delay, but the impact that delay has upon the defendant's capacity properly to defend the plaintiff's claim. That will be a question of fact in each case. While there may be some prejudice presumed by reason of the passage of time, much will depend upon the nature of the proceedings, and the identification of the issues involved in the litigation. Where, for example, at the close of pleadings it can be seen that there are disputed questions of fact dependent upon the oral evidence of witnesses, or their recollections, the prejudice will plainly be greater than in cases that depend essentially upon the application of legal principle to largely undisputed facts, or upon disputed questions of fact that will be resolved by reference to documentary or other objective evidence not likely to be affected by the effluxion of time; (citations omitted)

(7) the onus lies on the defendant to establish any prejudice upon which reliance is placed. The disappearance or death of witnesses, the fading of their recollections, or the destruction of records, are some obvious examples of the kind of prejudice that might arise;

(8) prejudice to a defendant caused by delay has to be balanced against prejudice to a plaintiff deprived of an otherwise valid claim; delay in the commencement of proceedings by a plaintiff is sometimes taken as evidence contra-indicating prejudice to the plaintiff in the sense that he/she/it has evinced no interest in his/her/its own case. Such an inference may be contra indicated by explanatory evidence; in this regard the plaintiff's personal responsibility for the delay is an important factor as is any explanation provided for the delay; (citations omitted)

(9) what the defendant has (or has not) done by way of preparation for trial may be a factor. This is a distinct question from that concerning any steps taken (or not taken) by the defendant in prompting the plaintiff to action. A defendant who has not interviewed witnesses, taken statements or collected documents, after being served with the claim, has a less meritorious complaint about the effect of prejudice caused or presumed by reason of delay; (citations omitted)

(10) the plaintiff's prospects of success is a relevant factor. If it appears that the prospects are minimal, the discretion is more likely to be exercised in favour of the defendant. Conversely, where the plaintiff's case is strong (absent the kind of prejudice to the defendant to which I have referred) it is less likely that justice will be done by striking the action out; (citations omitted)

(11) the exercise of the discretion to strike out should not incorporate any element of punishing a tardy plaintiff, or of excluding one who may appear to have some unworthy characteristics. The ultimate aim of a court is the attainment of justice. To adapt the words of the High Court in [Queensland v J L Holdings Pty Ltd [1997] HCA 1 ; (1997) 189 CLR 146], discretions such as that presently invoked ought not to be used to supplant the overall aim of the attainment of justice. (other citations omitted)

503. Applying those principles to the case at hand, I accept that rigid formulae should not be applied and the discretion should be exercised only in a clear case (a conclusion that can only be reached having regard to the other factors to which reference is there made). (emphasis in original)

The summary quoted by Ward J identifies both factual issues that may be relevant, and principles to be applied, in exercising the strike-out power.

An earlier consolidation of relevant matters was referred to in the ACT case of Caterina Raso v Mark Ronald Bayliss [2005] ACTSC 94 (Raso), in which Gray J, considering a case in which the plaintiffs had taken no steps for 14 years after bringing their action, said at [18]:

In Tyler v Custom Credit Corp Ltd [2000] QCA 178, before the Full Court of Queensland, Atkinson J (with whom McMurdo P and McPherson JA agreed) set out a helpful list of matters to be considered (at [2]). These include:

(1) How long ago the events alleged in the statement of claim occurred and what delay there was before the litigation was commenced;

(2) How long ago the litigation was commenced or causes of action were added;

(3) What prospects the plaintiff has of success in the action;

(4) Whether or not there has been disobedience of Court orders or directions;

(5) Whether or not the litigation has been characterised by periods of delay;

(6) Whether the delay is attributable to the plaintiff, the defendant or both the plaintiff and the defendant;

(7) Whether or not the impecuniosity of the plaintiff has been responsible for the pace of the litigation and whether the defendant is responsible for the plaintiff's impecuniosity;

(8) Whether the litigation between the parties would be concluded by striking out [in this case, dismissing] of the plaintiff's claim;

(9) How far the litigation has progressed;

(10) Whether or not the delay has been caused by the plaintiff's lawyers being dilatory ...;

(11) Whether there is a satisfactory explanation for the delay; and

(12) Whether or not the delay has resulted in prejudice to the defendant leading to an inability to ensure a fair trial. [Footnotes omitted]

These matters show the wide ambit of matters that the court is to consider in the exercise of its discretion.

[210]

Section C: The Commonwealth received payment in full of the judgment debt and post-judgment interest owed by the Twenty-Seventh Defendant, TNG Ltd and subsequently entered into a settlement agreement with TNG Ltd resolving TNG's appeal (No ACTCA 65 of 2014) and the costs orders made against TNG in these proceedings.

Each of Davis Samuel Pty Ltd, CTC Resources NL, Bisoya Pty Ltd and Tresmonay Pty Ltd were ordered to be wound up on application by the Commonwealth, relying on failures of each company to pay the debts ordered against them at Section C.

No moneys (in addition to moneys paid out of court or from the sale of assets the subject of the orders of 21 November 2014 have been recovered from the individual defendants in respect of the judgment debts.

Section D - Having Hill: The Commonwealth made application to correct the amounts of the charges stated in Sections D and K of the Final Orders. Amended Orders were issued on 27 May 2015. Since that date, the Commonwealth has taken an assignment of the charge in favour of the Twenty-Seventh Defendant, TNG Ltd, orders at D.3(ii) and maintained the caveats over that property lodged by itself and TNG Ltd. In order to enforce the charges, it will be necessary to obtain Orders appointing a Trustee for Sale and requiring Allan Paul Endresz and Joy Beverley Endresz to vacate the property to permit sale.

Section E - Stamp Collection: The stamp collection was sold at auction on 2 May 2015 for $8,690.

Section F - Toyota Sedan: The Toyota Sedan was sold at auction on 18 March 2015 for $300.

Section G - John Court Property: The Commonwealth has taken steps to register its ownership of the John Court Property. That registration has been delayed pending correction (under the slip rule) of the real property description of John Court as it appears in the Final Orders. The Commonwealth made an application for that correction on 2 December 2015 and awaits his Honour's further decision.

Section H - Standley Street Property: The Commonwealth has registered its title to the Stanley Street Property. The Commonwealth has engaged a real estate agent to sell the property, after undertaking cleaning and rubbish removal. The property will be advertised for sale later this week.

Section I - Moneys paid to the Court: The Commonwealth received the moneys paid into Court.

Section J - The Pinnacles Project: The Commonwealth has received no benefit from the Orders at Section J.

Section K: The Pine Avenue Property: The Commonwealth has taken an assignment of the charge in favour of the Twenty-Seventh Defendant, TNG Ltd, ordered at K.3(ii) and maintained the caveats over that property lodged by itself and TNG Ltd. The liquidator of the registered proprietor, the seventeenth defendant Quancorp Pty Ltd has notified the Commonwealth that he will be making an application for judicial directions in respect of the sale of the Pine Avenue Property, in which resides the former wife of Peter Michael Cain (Anne Christine Cain).

[244]

(a) none of the companies filed an application to set aside the statutory demand;

(b) on 13 February 2015, the Commonwealth filed applications to wind-up each of the companies;

(c) on 25 February 2015, each of the companies filed a notice of grounds of opposition referring to the existence of the present appeal;

(d) on 25 February 2015, the companies filed evidence by Mr Cain of the decision of the Full Federal Court in Endresz v Australian Securities and Investment Commission (No. 2) [2015] FCAFC 33; (2015) 228 FCR 334;

(e) on 19 March 2015, the companies filed short affidavits by Mr Cain and the director of Bisoya, Mr Erdeljac;

(f) at a hearing on 27 March 2015, the Registrar ordered that each of the companies be wound up and that liquidators be appointed;

(g) on 17 April 2015, Mr Cain filed interlocutory applications in the Federal Court for review of the decisions of the Registrar. The applications were supported by affidavits sworn by Mr Cain. Excluding, for present purposes, the exhibits to those affidavits, his first affidavit (sworn 16 April 2015) runs to eight pages, comprising 52 paragraphs. His second affidavit (sworn 16 April 2015) consists of one page, correcting an error in the earlier affidavit;

(h) on 1 May 2015, those applications were listed for hearing on 22 May 2015;

(i) on 22 May 2015, the application of Bisoya was dismissed; Jagot J raised the problem of approval under s 471A of the Corporations Act 2001(Cth), and the issue for costs protection of the companies and the funding available to protect the companies and the Commonwealth from an adverse costs order. Her Honour listed oral applications under s 471A and the interlocutory applications for further directions on 27 July 2015 and gave Mr Cain, as director of Tresmonay and Davis Samuel, until 27 July 2015 to obtain funding;

(j) on 22 July 2015, Mr Cain filed an affidavit deposing to having raised $4,000 for security for costs of the application;

(k) on 27 July 2015, Jagot J ordered Mr Cain on the basis of certain undertakings by him to the Court, to pay into court the sum of $4,000 by way of security for the Commonwealth;

(l) on 8 September 2015, Mr Cain served an affidavit in the proceeding. Excluding exhibits, the affidavit is four pages in length;

(m) on 14 October 2015, Farrall J heard the applications for review. The companies were represented by counsel. The Court was informed of the Commonwealth's contention of delay in the present appeal. Farrell J reserved her decision but requested further submissions from the parties. On 23 October 2015, the companies filed further submissions and on 28 October 2015 the Commonwealth also filed submissions;

(n) on 2 February 2016, her Honour refused an application for an adjournment; and

(o) on 4 March 2016, the parties agreed to orders for the discontinuance of the applications by the companies, with an order that the companies pay the costs of the Commonwealth, with the monies paid into court as security for costs to be paid out to the Commonwealth.

[251]

HER HONOUR: But the difficulty that struck me as I was reading the transcript of the proceedings in - was it May before Jagot J was Mr Cain was finding it difficult to fund this application or security for this application and, yet, as I read the judgment that Burns J put forward, one of the matters on which evidence was given was that [Mr] Cain was going to fund the appeal - the preparation for the appeal. If he is scrambling around for - to find four or 5000 dollars for this hearing, the costs of that - funding the preparation for that appeal, given how extensive the judgment is and the range and difficulty of issues that [are] in it, how long do we have to wait for that appeal to be got up to a point where it can be heard?

MR KUKLIK: Mr Cain gives a little evidence of that in his affidavits here in that he is seeking that funding through other parties and - - -

HER HONOUR: But there's no evidence of the capacity of those other parties to provide that money.

MR KUKLIK: Well, the evidence, I guess, has been that, as these issues or applications have arisen, they've managed to put together sufficient funding to deal with them. Obviously the appeal, as your Honour has adverted to is the bigger and most expensive application of them all. Mr Cain's evidence and my instructions are that they are diligently seeking to obtain funding to review the notice and then prepare the appeal and then hopefully conduct it.

HER HONOUR: That's very aspirational.

MR KUKLIK: It is, your Honour, and I can't say - I can't guarantee that those funds are or will be available.

HER HONOUR: So, if I were to grant an adjournment, I've got no sense of how long that would be for.

MR KUKLIK: Well, the appeal will run no matter what one - - -

HER HONOUR: How? As I understand it, you're still at the point of a draft index.

MR KUKLIK: Yes, your Honour. So - - -

HER HONOUR: 11 months in or however - when was the - - -

MR KUKLIK: December.

HER HONOUR: Yes.

MR KUKLIK: Yes, your Honour, and we're up to the second draft index, I believe, and, yes, it could have gone faster certainly, but - - -

HER HONOUR: Well, how long do you think it's going to take?

MR KUKLIK: Well, I anticipate - well, I can't be certain, but I would anticipate that the draft index will be finalised certainly before the end of the year and then, therefore, the consequent directions will be made about the remaining conduct - the preparation of the books and the setting of a date. Whether that happens - how far into next year that happens, I cannot say. Part of that will be .....court timetable, part will be what further steps the defendants need to take, but I would say this. That the index will be settled ideally with some funding so that it could be settled by counsel or someone to refine it further as has been recognised and, if not, then as is and then the proceedings will have to go forward one way or another.

Certainly the Court of Appeal won't continue allowing it to languish, I anticipate. Ideally, the process could be expedited by the review of the notice and the preparation of the material and then a hearing date could be achieved shortly. Certainly, if finances and assistance for a - for that kind of preparation is unavailable, then certainly the Court of Appeal will seek to have the index settled and the books prepared and the matter set down anyway. It's a matter of the quality of the presentation rather than - - -

[259]

60.1. Each document in the proceeding bore a unique identifying number applied by the Commonwealth. The Court Book (18 Volumes including indexing) and Tender Bundle (ultimately comprising some 27 volumes including indexing) were indexed by volume, by document number and by date and delivered in both soft and hard copies. Subsequent additions to the Court Book and Tender Bundles were compiled by the Commonwealth, indexed comprehensively and delivered in soft and hard copies.

60.2. In addition to the Court Book and Tender Bundles, the Commonwealth compiled various summaries and analyses to assist the understanding of the case including for example flow charts, separate bundles of annotated bank statements showing the flow of funds, a volume of corporate records, a summary of remaining assets traceable to the April and September Funds transactions.

60.3. Comprehensive Opening and Closing submissions were delivered to the defendants that identified, by document number and Court Book or Tender Bundle number, the evidence relied upon by the Commonwealth. By way of example, at Tabs 26, 27 and 28 respectively are copies of the Commonwealth's Opening submissions on the activities of CTC and Davis Samuel and closing submissions in respect of Mr Allan Endresz and Mr Cain. The Commonwealth's opening submissions comprised some 450 pages and closing and reply submissions, more than 200 pages.

60.4. The Commonwealth received more than 5,000 pages of documents produced by Allan Endresz on the 2nd day of the hearing, and electronically processed those documents, applying indentifying numbering, naming the documents and indexing them and returning them to Mr Endresz and the Court during the first weeks of the hearing. Further documents produced by the defendants were also uplifted by the Commonwealth and processed similarly.

60.5. During the hearing at first instance and on 8 September 2008, Mr Allan Endresz indicated he held some of the transcript of the hearing and sought a copy of the transcript from 26 August 2008 (T2418, 2419 Tab 29). Pursuant to his Honour's direction, the Commonwealth subsequently delivered the electronic transcript of the proceedings from 26 August 2008, to the defendants after purchase by the Commonwealth and TNG Ltd, and at no cost to the defendants.

60.6. To facilitate the defendants' cross-examination of witness Gary Smith, giving evidence by telephone from Kosovo, the Commonwealth arranged an electronic bundle of documents identified by the defendants as those they wished to cross-examine him on, to be delivered to Mr Smith and the defendants[.]

60.7. His Honour's Associate made available to the parties, before the conclusion of the hearing, her records of the exhibits and materials marked for identification for cross-checking as to accuracy.

At a glance

Court

Decision date

Before

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Source

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Judgment (299 paragraphs)

Davis Samuel Pty Ltd v Commonwealth of Australia [2016] ACTCA 22 (30 June 2016)

Parties

Legislation Cited (7)

Cases Cited (5)