Douglas & Anor v Madden & Ors

JUDGMENT 1 HER HONOUR: By motion filed in May 2010, the defendants sought orders pursuant to Rule 12.7 of the Uniform Civil Procedure Rules 2005, dismissing the proceedings for want of prosecution, together with an order for costs. 2 The proceedings concern alleged professional negligence. They have a protracted history. They were commenced in December 2005, but were the subject of ongoing delay by the plaintiffs, in breach of the Court's repeated orders. In February 2009, I made self executing orders requiring the plaintiffs to take certain outstanding steps, particularly the filing of certain expert evidence, on the basis that if they were not taken, the proceedings were dismissed with costs (see Douglas & Anor v Madden & Ors [2009] NSWSC 47). 3 The plaintiffs did not comply with those orders. In March 2009, I dismissed a motion brought by the plaintiffs, by which they sought to vary the orders by which the proceedings then stood dismissed (see Douglas & Anor v Madden & Ors (No 2) [2009] NSWSC 194). 4 In May 2009, I dealt with a further motion seeking variation of the February orders under which the proceedings stood dismissed, granting the relief then sought (see Douglas & Anor v Madden & Ors (No 3) [2009] NSWSC 412). The orders then made permitted the plaintiffs to rely on evidence which they had earlier filed in the proceedings, after their dismissal in February 2009. 5 Despite this hard won relief, there were further difficulties in the litigation, all of which it is not necessary to canvass. On 9 April 2010, Registrar Bradford ordered that the plaintiffs respond to the defendants' outstanding requests for the information sought in June 2009 and January 2010. That information related to the plaintiffs' instructions to an expert, as well as material provided to the expert, on which opinions had been provided. The material was required so that evidence in reply could be prepared. Further orders were made on 23 April 2010. 6 At the hearing on 28 July the defendants announced that they would not press for the principal relief sought, given recent service of outstanding material. A special costs order was however pressed, for costs on an indemnity basis payable forthwith. It was argued that there had been an inordinate delay in the supply of the information sought, despite the Registrar's orders. This was the continuation of an ongoing pattern of behaviour, resulting in unreasonable delay in the prosecution of the case, with the result that little happened, without the plaintiffs being met with an application with dire consequences. 7 The parties relied on affidavits to explain the history of the proceedings, to which was annexed various correspondence. It appears that a request for the provision of material was first made in June 2009. It was not provided. In September, settlement discussions were pursued unsuccessfully by the plaintiffs. In January 2010, a request for further material was made of the plaintiffs, but a response was again deferred so that a settlement could be pressed. In March there was a similar request and response, which made it clear that the defendants were not interested in the settlement being pursued. In April the matter came before the Registrar, who twice made orders as to the provision of the material sought. 8 A partial response was provided on 14 April, but the request which had been made in January was overlooked. In May the outstanding information was pursued by the defendants. Searches were then undertaken for that information. On 17 May the defendants were advised of those searches. There was further correspondence in June and in July, the defendants requested electronic copies of certain spreadsheets attached to an expert's report, which it seems the expert was unwilling to provide, until his fees were paid. The spreadsheet was provided on 24 July. 9 The hearing of the motion was adjourned on the plaintiffs' application, in order that they have an opportunity to put on an affidavit in support of a submission that there would be no order made, that costs be payable forthwith. 10 No such affidavit was filed, but further written submissions were advanced, in which it was argued that a departure from the usual costs order depended on the view being formed that the plaintiffs had acted unreasonably (see Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; (2002) 55 NSWLR 1 and Gattellari v Meagher [1999] NSWSC 1279). There had been no unreasonable delay. The delay which had occurred had not been wilful or intentional, the consequence of indifference, or of such a magnitude as to result in prejudice. The plaintiffs sought leave to rely on those submissions. I have taken them into account, but did not require any response from the defendants, being satisfied that the conclusions urged were not open. 11 The documents in issue went to the plaintiffs' expert's report on claimed losses. It was explained that they went to the essence of the plaintiffs' case. The plaintiffs lay and expert has been served and the defendants were preparing their evidence. What lies between the parties is whether the defendants' legal advice resulted in the losses which the plaintiffs claim resulted from the erroneous advice given by the defendants, which put them into an impoverished position, as the result of the closure of them business by ASIC. 12 It was argued in that context that an order that costs be payable forthwith was akin to an order that the plaintiffs give security for costs. The defendants have previously unsuccessfully sought an order for security (see Pestano & Anor v Madden & Ors [2007] NSWSC 545). 13 It was submitted that if the plaintiffs are unable to pay such costs, the defendants are likely to apply for an order that the proceedings be stayed. That would not result in the timely conduct of the proceedings, or a determination of the plaintiff's actions on the merits. 14 Nor was there any basis for ordering costs on an indemnity basis, which required evidence establishing an exception to the ordinary rule, such as misconduct (see Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [69]). While delay could be accepted as amounting to relevant misconduct, this was not such a case. In A & N Holdings NSW Pty Ltd v Andell Pty Ltd & Ors [2006] NSWSC 55, delay and breach of the Court's orders was found to have resulted in the other party incurring costs without a proper basis, with the result that an indemnity costs order was made. That decision was applicable to its own facts and involved the exercise of a judicial discretion, where an application to dismiss the proceedings was refused, but an indemnity costs order was made. This situation was distinguishable, the motion having been withdrawn in circumstances where there was no prospect of dismissal of the proceedings being ordered.

The orders sought must be made 15 As I observed in the February 2009 judgment, multiple failures to comply with the Court's directions and orders can properly result in the exercise of the discretion to dismiss (see Micallef v ICI Australia Operations Pty Ltd & Anor [2001] NSWCA 274). They can also be considered in the context of a costs application, when another dismissal application is responded to with belated compliance with orders made. Given the history of the plaintiffs' conduct of this litigation, had there not been such compliance, the plaintiffs were plainly at serious risk of having the proceedings dismissed. 16 The Civil Procedure Act 2005 provides in s 56 that the Act has as its overriding purpose the 'just, quick and cheap resolution of the real issues in the proceedings' and requires that parties assist the Court to further that purpose. Section 57 requires that the Court manage the proceedings by paying regard to how the parties have fulfilled their obligations in the proceedings, including in relation to any lack of expedition and the timely disposal of the proceedings, and all other proceedings in the Court, at a cost affordable by the respective parties. Section 58 requires that the Court act in accordance with the dictates of justice, and that consideration be given to the degree of expedition with which the respective parties have approached the proceedings, and the degree to which they have been timely in their interlocutory activities and the degree of injustice that would be suffered by the respective parties, as a consequence of any order or direction made. Section 61 requires the Court to implement its practices, with the object of resolving the issues between the parties in such a way that costs are proportionate to the importance and complexity of the subject-matter in dispute. 17 The Uniform Civil Procedure Rules provide in Part 47 that the usual order as to costs is that they follow the event and that they do not become payable until the conclusion of the proceedings. The Court has a discretion to depart from the usual rule, in an appropriate case. Such a discretion will be exercised if misconduct is shown, as discussed in Oshlack v Richmond River Council. 18 In this case the plaintiffs repeated failures to adhere to the Court's directions and orders and its delays in pursuing its case, may not be overlooked in a resolution of what here now lies between the parties as to costs. Consideration must also, of course, be given to the explanation advanced for the plaintiffs' further defaults. 19 In the circumstances in which the plaintiffs succeeded in obtaining orders in May 2009, which permitted them to prosecute their case, I do not accept that a delay from June 2009 and January 2010, in the provision of material underpinning the plaintiffs' expert's reports, because of a desire to pursue settlement negotiations which the defendants were not attracted to, may be accepted as an approach to the conduct of this litigation, which adheres to the duties imposed upon the plaintiffs by the Civil Procedure Act. The failure to comply with the orders made by the Registrar in April, puts that conclusion beyond question. 20 While there may have been a misunderstanding as to a part of the request, a further delay in the provision of all of the outstanding material from April until shortly before the hearing of the motion at the end of July, may not be justly regarded in the way pressed for the plaintiffs. Relevant misconduct has been established. I am satisfied in the circumstances that justice demands that an order be made in favour of the defendants in respect of the motion, on an indemnity basis and that the costs be payable forthwith. 21 The plaintiffs have been given every reasonable opportunity to advance their case, in accordance with the Court's orders and directions. Their continuing failure to prosecute their case in a timely fashion and to comply with the orders which the Court makes, preclude the approach urged on their behalf, consistently with the dictates of justice and the requirements of the Civil Procedure Act. 22 I cannot accept that an order that the costs of the motion be payable forthwith amounts to an order that the plaintiffs provide security for costs. Despite the adjournment, no evidence was advanced to support the view that the plaintiffs could not meet such an order. In my view, it is an order which justly reflects what the parties' respective conduct now demands, given the stage which the proceedings have reached and the course which the plaintiffs have pursued, notwithstanding what the Court has required of them by its repeated orders. At one point it was suggested that part of the delay lay at the feet of the defendants, who could have taken earlier steps to have the matter brought before the Registrar. That submission can hardly be accepted. Provision of the material sought ought to have required no order of the Court and even when the Registrar made orders, there was no compliance by the plaintiffs. 23 This situation, like that dealt with in A & N Holdings NSW Pty Ltd, is one where the order sought by the defendants may not be justly refused. The material which the plaintiffs have delayed in providing goes, as they explained, to the heart of the case which they wish to advance. It was information with which their expert was provided or dealt with and ought to have been provided promptly, when sought, so that the defendants could put on their evidence. There is no adequate explanation for the failure to do so, or for the failure to comply with the Registrar's orders, until shortly before the hearing of the motion. A preference for a settlement over pursuit of the case may not be accepted as providing a proper basis to further delay proceedings which have already been delayed too long by these plaintiffs. Had the orders made in April been complied with, the motion would have been entirely unnecessary. The plaintiffs certainly did not seek to be relieved of those orders, because of any difficulty in compliance, even when the motion was served. 24 The circumstances are such that consistently with the requirements of the Civil Procedure Act, these defendants may not be justly required to bear the costs which they have unnecessarily incurred, or to await their payment, for however long it might take these plaintiffs to finally prosecute their case.

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