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[2013] VSC 538
Supreme Court of Victoria
2013-10-11
DIGBY J
Original judgment source is linked above.
PRACTICE AND PROCEDURE - Application for dismissal of proceeding for want of prosecution - Relevant considerations - Conduct - Effluxion of time - Inexcusable and inordinate delay - Effect on a fair trial - Prejudice - Supplementary power under Civil Procedure Act 2010 - s 25 and s 29(1) Civil Procedure Act 2010.
1 This proceeding has been afoot for more than ten years. The Defendants now seek the dismissal of the Plaintiffs' claims on the basis that there has been a want of prosecution of those claims by the Plaintiffs.
2 The subject of this proceeding is a long running and bitter family dispute. The kernel of this dispute relates to the sum of $2,250,000 provided by the Second Plaintiff to the First and Second Defendants. The dispute also concerns the sum of $600,000 alleged to have been misappropriated from East World International (Australia) Pty Ltd by the First Defendant and disputes about the basis on which the Defendants were entitled to occupy a property at 178 Kooyong Road, Toorak.
3 In September 2003, proceedings were issued by the Plaintiffs against the Defendants, seeking the repayment of moneys said to have been misappropriated. In addition, the Plaintiffs sought the delivery up of certain chattels and documents of the Fourth Plaintiff. An order for possession of a property at 178 Kooyong Road, Toorak in Victoria ("the property") was also sought by the Plaintiffs.
4 The Plaintiffs' Amended Statement of Claim dated 15 March 2005, amongst other things, alleges that:
(i) The property was the registered office of the Third Plaintiff and that the First and Second Plaintiffs owned that property.
(ii) Between about October 2000 and February 2001 an agreement or arrangement was made between the First and Second Plaintiffs and the First Defendant pursuant to which the First and Second Plaintiffs sent money to the First Defendant for the initial capital contribution of the Third Plaintiff and to purchase the property, furniture and fittings. Under this arrangement or agreement the First and Second Plaintiffs sent $2.250M to the First Defendant between October 2000 and February 2001.
(iii) In 2001 the First and Second Plaintiffs told the First Defendant and his wife, the Second Defendant, that the Defendants could reside at the property rent free until the First and Second Plaintiffs desired to reside there.
(iv) The Defendants resided at the property from 2001 to 2003 as tenants at will of the First and Second Plaintiffs.
(v) The First and Second Plaintiffs had demanded that the Defendants deliver up possession of the property. However, the Defendants refused to do so or grant access to the property to the First and Second Plaintiffs. Further, some of the First and Second Plaintiffs' possessions, including financial records and business and internal documents of the Third Plaintiff, remain at the property.
(vi) The First and Second Plaintiffs have sought possession of the property and the chattels and documents remaining at the property. The Defendants refused to surrender up possession of the same. However, on 5 December 2003 an injunction was granted which compelled the Defendants to deliver up possession of the property to the First and Second Plaintiffs.
(vii) The First Defendant has failed to account to the Second and Third Plaintiffs for the sum of $840,000 and further the First Defendant has wrongfully used company funds and appropriated moneys from a cash trust account in the sum of $150,000.
(viii) Pursuant to a contract of employment he entered with the Third Plaintiff, the First Defendant was obliged to account to the Third Plaintiff for funds used and was obliged to use these funds for the purposes of promoting the company. In addition, he was required to allow the Plaintiffs access to the property and the company's documents.
(ix) In relation to the above issues, the Plaintiffs allege numerous oral agreements and arrangements made between about 2000 and the end of 2003.
(x) The First Defendant was in a fiduciary relationship with the First, Second and Third Plaintiffs and owed them duties to disclose, to not act in his own interest, and to account for and to use funds as agreed.
(xi) In failing to allow the Plaintiffs access to the Third Plaintiff's documents stored at the property the First Defendant breached the above terms and numerous provisions (as pleaded) of the Corporations Act 2001.
(xii) Further or alternatively, the sum of $840,000 transferred by the Second Plaintiff to the First Defendant constituted money "had and received" by the First Defendant to the use of the Second Plaintiff.
(xiii) Further or alternatively, by reason of the matters referred to, the Defendants have been unjustly enriched at the expense of the Second and Third Plaintiffs and are liable to make restitution.
(xvi) The Plaintiffs have suffered loss and damage and seek to restrain the First Defendant from disclosing of or dealing with the company documents referred to.
(xvii) The Plaintiffs also sought the taking of accounts in respect of the Defendants' dealings with the $2.250M provided by the First and Second Plaintiffs between about October 2000 and February 2001.
5 The above allegations, particularly those relating to alleged agreements and arrangements made between October 2000 and February 2001, and the allegations as to important events between the end of 2000 and about the end of 2003, appear to be based principally upon conversations at that time between the First and Second Plaintiffs and the First Defendant, and on occasions conversations between the First and Second Plaintiffs and the Defendants. The Plaintiffs' pleading reveals that very few documents are said to be relevant to the determination of the issues relating to the critical agreement and arrangements.
6 After numerous applications a trial of the above issues occurred in September and October 2005 before Gillard J. The trial occupied 12 sitting days. The trial judge did not accept the Defendants' case. Further, Gillard J concluded that each of the Defendants had misappropriated significant sums of money from the First, Second and Fourth Plaintiffs. Judgment was also given against the Defendants for conversion of certain chattels owned by the First and Second Plaintiffs.
7 Insofar as is material, Gillard J made orders on 16 November 2005 in the following terms:
1. The First and Second named Defendants pay to the First and Second Plaintiffs the sum of $11,950.00 together with damages in the nature of interest in the sum of $2,158.85 pursuant to the claim for convenience of chattels.
2. An account be taken of all moneys received and disbursed by the First named Defendant, or by any person on his behalf in respect of the sum of $2,250,000.00 transferred by the Second Plaintiff to the First named Defendant during the period 20 October 2000 to 15 February 2001 referred to in paragraph 15 of the amended Statement of Claim.
3. The Defendants pay to the First and Second Plaintiffs the sum that shall be found to be due from them upon the taking of such accounts.
4. The Defendants pay to the First and Second Plaintiffs interest on such sums as found due from them at the rate prescribed by the Penalty Interest Rates Act 1983.
5. An account be taken of all moneys received and disbursed by the Defendants, or by any person on their behalf in respect of the Third Plaintiff referred to in paragraph 35 of the amended Statement of Claim making due allowance for any sums owing to First and Second Defendants for wages, any moneys due in respect of the Coogee Knitwear transaction and any amounts paid for and on behalf of the Third Plaintiff.
6. The Defendants pay to the Third Plaintiff the amount which shall be found to be due from them upon the taking of such accounts.
7. The Defendants pay to the Third Plaintiff interest on such sums as found due from them at the rate prescribed by the Penalty Interest Rates Act 1983.
8. The proceeding be referred to a Master for the taking of accounts.
9. Until further order, the Defendants be restrained and an injunction be granted restraining them, whether by themselves, their servants or agents or otherwise howsoever, from transferring, dealing with, charging, diminishing, mortgaging, assigning or disposing of other than to the Plaintiffs any of their assets wherever situated, save in so far as the unemcumbered value of such assets exceed the sum of $800,000.00.
10. Notwithstanding the order contained in paragraph 9, and subject to the Defendants recording in a form to be made available to the Court on the request of the solicitors for the Plaintiffs, the source of the relevant funds, the Defendants be at liberty to expend a sum of $1,000.00 per week on their ordinary living expenses and the sum of $5,000.00 for legal expenses.
11. ...
12. ...
13. ...
14. The Counterclaim be dismissed.
15. The costs of the proceeding including the Counterclaim and the taking of accounts be reserved for determination by the Trial Judge after the taking of the accounts or further order.
16. The claims made by the Fourth Plaintiff be dismissed.
17. ...
18. ...
19. ...
(above underlining and emphasis added)
8 The Chens appealed. The appeal was heard in 2008 and the Court of Appeal's judgement was that the appeals by Renmin Lu Chen against the Chan claim and the East World International (Australia) Pty Ltd claim should be dismissed and the appeals by David Weiping Chen and Renmin Lu Chen against the findings of liability in respect of the Chan claims should also be dismissed.[1] The Third Defendant Lujia Chen's appeal was upheld.
9 The Court of Appeal confirmed aspects of the First and Second Defendants' liability to the First, Second and the Third Plaintiffs and also ordered that questions as to the quantum due to the Chans and to East World International (Australia) Pty Ltd from David Weiping Chen and Renmin Lu Chen should be determined by a further trial.[2]
10 The Court of Appeal also dismissed the appeals by David Wieping Chen and Renmin Lu Chen against the orders made by Kaye J in March 2006 in a separate trial concerning civil contempts by the First and Second Defendants of orders made in this proceeding. Justice Kaye had held that the Chens had committed acts of wilful contempt.
11 The precise orders made by the Court of Appeal on 19 December 2008 were as follows:
1. The appeals by the first, second and third appellant against Orders 2, 3, 4, 5, 6, 7, 8 and 15 of Gillard J made on 16 November 2005 are allowed.
2. The appeal by the third appellant against Orders 9 and 10 of Gillard J made on 16 November 2005 are allowed.
3. Orders 2, 3, 4, 5, 6, 7, 8 and 15 made by Gillard J on 16 November 2005 are set aside.
4. The injunction the subject of Orders 9 and 10 of Gillard J made 16 November 2005 shall continue against the third appellant until 30 January 2009 or further order.
5. The Orders otherwise made by Gillard J on 16 November 2005 are confirmed.
6. The appeals by the first appellant, second appellant and third appellant against the Orders made by Gillard J on 4 May 2007 are allowed.
7. Save for Order 5 of the Orders made by Gillard J on 4 May 2007, the Orders are otherwise set aside and in lieu therefore there be judgment for the third appellant.
8. In accordance with this court's reasons, a judge of the trial division of this court hear and determine the quantum of the first appellant and second appellant's liability to the first, second and third respondents.
9. The appeals by the first and second appellants against the Orders of Kaye J made 8 March 2007 be dismissed.
10. On or before 16 February 2009, the third appellant file and serve an outline of submission in relation to the costs of the appeal or any interlocutory proceeding relating to the appeal, the trial or the proceedings before Master Efthim as she shall be advised.
11. The respondents file and serve a submission in reply to the submissions of the third appellant on or before 2 March 2009.
12. On or before 16 February 2009 the respondents file and serve a submission in relation to the costs of the appeal in the interlocutory proceedings of the appeal, the trial or the proceedings before Master Efthim as they shall be advised.
13. On or before 2 March 2009, the first and second appellants file and serve any outline of submissions in reply in relation to the costs of the appeal, the interlocutory proceedings of the appeal, the trial or the proceedings before Master Efthim.
14. The costs of today's proceedings are reserved.
(emphasis added).
The Plaintiffs have taken no steps in the proceeding since December 2008
12 Since December 2008 the Plaintiffs have taken no step to progress or have their claims for outstanding amounts remitted and determined at trial. Nor have the Plaintiffs sought to recover any of their legal costs in relation to the matters heard and determined by the end of 2008.
Relief for the First and Second Defendants from the freezing Orders made by Gillard J in 2005
13 On 7 June 2013 the First and Second Defendants issued a summons and applied to be relieved from the requirements of orders 9 and 10 of the Orders made by Gillard J on 16 November 2005. They also sought such other orders as the court might deem fit to make.
14 The terms of Orders 9 and 10, made by Gillard J on 16 November 2005 were:
Order 9 Until further order the Defendants be restrained and an injunction be granted restraining them ... from transferring, dealing with, charging, diminishing, mortgaging, assigning or disclosing of other than to the Plaintiffs any of their assets wheresoever situated save insofar as the unemcumbered value of such assets exceeds the sum of $800K;
Order 10 Notwithstanding the order contained in paragraph 9, and subject to the Defendants recording in a form to be made available to the court on the request of the solicitors for the Plaintiffs, the source of the relevant funds, the Defendants be at liberty to expend the sum of $1,000 per week on their ordinary living expenses and the sum of $5,000 for legal expenses.
(emphasis added)
15 In relation to Gillard J's Order of 16 November 2005 I note again that on 19 December 2008 the Court of Appeal ordered that:
2. The appeal by the third appellant (Lujia Chen) against Orders 9 and 10 of Justice Gillard on 16 November 2005 are allowed.
4. The injunction the subject of Orders 9 and 10 of Gillard J made 16 November 2005 shall continue against the third appellant until 30 January 2009 or further order.
5. The Orders otherwise made by Gillard J on 16 November 2005 are confirmed.
(emphasis added)
The affidavit evidence filed by the Plaintiffs and the First and Second Defendants in 2013
16 The First and Second Defendants' abovementioned summons of 7 June 2013 is supported by an affidavit of the First Defendant of the same date which, insofar as is material, deposes that:
(i) Since the orders made by the Court of Appeal on 19 December 2008, the Plaintiffs in the proceeding have not taken any action to follow the orders to the date of that affidavit sworn 7 June 2013. That is, nearly five years have elapsed since the Court of Appeal's orders in the matter on 19 December 2008.
(ii) The First and Second Defendants have lived under the Mareva type order made on 16 November 2005 by Gillard J, confirmed by Order 5 of the orders of the Court of Appeal on 19 December 2008.
18 On 21 June 2013 the First and Second Defendants' summons dated 7 June 2013 came on before Almond J in the Practice Court. On that occasion the First Defendant appeared as a self-represented litigant. There was no appearance by or on behalf of the Plaintiffs. His Honour ordered that the First and Second Defendants' application by summons dated 7 June 2013 be adjourned to 28 June 2013. In "Other Matters" his Honour noted that "the adjournment was allowed so that the first and second Defendants could prove service of the summons and any affidavit in support".
19 On 25 June 2013 the First Defendant swore a further affidavit stating that on 21 June 2013 he posted the First and Second Defendants' summons and affidavit dated 7 June 2013 to "Chadwicks - the Law Firm", the firm of solicitors who had previously acted for the Plaintiffs.
20 The First Defendant also deposed to telephoning Chadwicks on 21 June 2013 after his hearing in the Practice Court. He spoke to "Jeremy" who informed him that Chadwicks had received the relevant documents but that they no longer acted for the Plaintiffs, and they had sent the documents back to the First Defendant.
21 The First Defendant's affidavit of 25 June 2013 also deposes to him attending the property at 178 Kooyong Road, Toorak on 25 June 2013. He said at this time there was apparently no one in attendance at that property. The First Defendant states that he placed the summons dated 7 June 2013 and his affidavit of the same date and an authenticated copy of the order of Almond J dated 21 June 2013, in the mail box at 178 Kooyong Road, Toorak.
Warning by Justice Kyrou in June 2013 to the Plaintiffs in relation to the extreme delay and their failures to prosecute the proceeding
22 On 28 June 2013 the Plaintiffs' summons of 7 June 2013 was returned before Kyrou J. On this occasion, Mr I Szmerling, solicitor, appeared for the Plaintiffs and the First Defendant again appeared on his own behalf and for the second Defendant. On that occasion, Kyrou J ordered that the further hearing of the summons of 7 June 2013 be adjourned to 10.30am, on 15 July 2013.
23 On 15 July 2013 Mr Szmerling again appeared for the Plaintiffs and the First Defendant appeared on his own behalf.
24 Mr Szmerling filed an affidavit sworn 15 July 2013 in relation to the hearing in the Practice Court on that date, inter alia, referring to events at the hearing before Kyrou J on 28 June 2013. In that affidavit he states that:
(i) At the hearing before Kyrou J on 28 June 2013 he advised the Court that he did not have instructions to act and he again sought leave to file and serve a Notice of Practitioner Ceasing to Act;
(ii) Kyrou J declined Mr Szmerling's application for leave to cease to act on behalf of the Plaintiffs and directed Mr Szmerling to make contact, or endeavour to make contact, with the Plaintiffs so that the Court could ascertain that they were aware of the application by the First and Second Defendants and had an opportunity to inform the Court of their attitude to the application;
(iii) Mr Szmerling deposed that on 28 June 2013 he forwarded letters by emails to the Plaintiffs to their last known email address and also to Juliette Zhao, who was the Plaintiffs' representative in Melbourne who had previously assisted both the Plaintiffs and Mr Szmerling and Counsel in the conduct of the proceedings;
(iv) Ms Zhao contacted Mr Szmerling on 8 July 2013 and Mr Szmerling took the opportunity to ask her to relay to the Plaintiffs what had occurred in Court on 28 June 2013 and asked them to contact him to provide him with instructions;
(v) On 8 July 2013 Mr Szmerling says he received a telephone call from Cynthia (Sing) Chan, the daughter of the Plaintiffs. Mr Szmerling stated in his affidavit that the email address he had been using during the past proceeding and following the hearing on 28 June 2013 was the email address for Sing Chan who speaks English and who had acted in the past as an interpreter for her parents in relation to discussions about the proceedings;
(vi) Mr Szmerling states that he spoke with Sing Chan at length about the application before the Court and the nature of the orders being sought and conveyed the concerns expressed by Kyrou J that no steps had been taken in the proceeding since the judgment delivered by the Court of Appeal in December 2008;
(vii) After his conversation with Sing Chan on 8 July 2013 Mr Szmerling says that he received an email from the Plaintiffs requesting him to represent them and also stating that:
The reason that my parents have not taken further action since 2009 is because of the secrecy surrounding where Mr and Mrs Chen live, and therefore led to my parents' inability to serve the Chens with documents and/or inquire as to what their Asset position is.
On top of this, we should let the judge know that it is not true that the Chens "have been continually deprived [their] rights to live a normal life" as claimed by David Chen in his Affidavit dated 7 2013. As per Judge Gillard's judgment [No. 7448 of 2003], Clause 10, The Chens are entitled to "expend a sum of $1,000.00 per week on their ordinary living expenses". Further, accordingly to Clause 11, the Chens ("the Defendants") were required to "within 28 days make, file and serve on the Plaintiffs an Affidavit disclosing the full value and location of their Assets, wherever situated, identifying with full particulars the nature and whereabouts of such Assets, including, without limiting the generality of the foregoing, every Bank Account, and stating whether the same is held in their name or jointly by one or more of the Defendants and/or their nominees or otherwise held on their behalf and exhibiting or disclosing all relevant documents in their possession, power, custody or control concerning such Assets". However, the Chens Have Never Complied With The Orders And They Have Never Disclosed Any Details In Relation To Their Assets And Bank Account Details [Emphasis added by Sing Chan]. In conclusion, the current Judge ought to given a second thought to the current Affidavit filed by David Chen, further the credibility of David Chen ought to be questioned.
(viii) Mr Szmerling stated that he no longer intended to seek leave to cease to act;
(ix) Mr Szmerling refers to Gillard J's orders of 16 November 2005 and echoes Sing Chan's observations about the amount of withdrawal and expenditure permitted to the First and Second Defendants. In essence, the Plaintiffs deny any hardship as a result of the Mareva orders made by Gillard J on 16 November 2005. Mr Szmerling also echoes Ms Sing Chan's email as to why the Plaintiffs had not taken any further action following judgment by the Court of Appeal in December 2008, namely that the First and Second Plaintiffs have been unable to serve the Defendants with documents and/or make inquiries to what their asset position is;
(x) Mr Szmerling also refers to Kaye J's determination of an application by the Plaintiffs for the committal of the Defendants for contempt of court as a result of alleged breaches of paragraph 11 of Gillard J's orders of 16 November 2005. Mr Szmerling extracts parts of Kaye J's judgment dated 8 March 2007 in which his Honour finds instances of wilful contempt established beyond a reasonable doubt against the First and Second Defendants**.** His Honour imposed fines on the First and Second Defendants and an order for costs in the sum of $52,000 which, Mr Szmerling says, remains unpaid to the Plaintiffs;
(xi) Mr Szmerling submits in his affidavit that it would not be appropriate, in light of the matters he deposes to, referred to above, for this Court to grant the orders sought by the First and Second Defendants, effectively disposing of the proceedings;
(xii) Mr Szmerling submits in his affidavit that it would be more appropriate for the Court to make orders including that the First and Second Defendants disclose their residential address and file affidavits disclosing the full value and location of their assets and past disposals of their assets and asks finally that the court substitute of its own judgment in lieu of the judgment of Kaye J, namely that the First and Second Defendants pay the Plaintiffs the sum of $52,000, by way of costs together with interest;
(xiii) Mr Szmerling also states that he has received instructions on behalf of the Plaintiffs to re-issue Bankruptcy proceedings against the First and Second Defendants seeking an order "... making or renewing the Order for payment of costs, as ordered by the Honourable Justice Kaye to enable the Plaintiffs to issue fresh Bankruptcy proceedings against the First and Second Defendants that comply with s 41 of the Bankruptcy Act 1996". Section 41 of the Bankruptcy Act 1996 provides that a bankruptcy notice cannot be issued in respect of a judgment which is more than six years old.
In July 2013 Justice Kyrou highlights delay by the Plaintiffs and warns that the Plaintiffs' case is at risk of being dismissed for want of prosecution
25 At the conclusion of the hearing on 15 July 2013 Kyrou J ordered (Order 1) that the First and Second Defendants' summons dated 7 June 2013 be amended to include an application that the proceeding be dismissed for want of prosecution. This order was made on the Court's own motion pursuant to s 47 of the Civil Procedure Act 2010.
26 On 15 July 2013 Kyrou J also ordered that the Plaintiffs have leave to file and serve any summons by 6 August 2013 seeking any relief in the proceeding and any affidavits in support of such summons, and in opposition to the First and Second Defendants' summons now amended to seek an order dismissing the Plaintiffs' proceeding for want of prosecution. His Honour also specified an email address and a South Yarra Post Office Box address for service of any document on the Defendants. Otherwise the First and Second Plaintiffs' amended summons dated 7 June 2013 was adjourned to be heard in the Practice Court on 9 September 2013.
27 By affidavit of 18 July 2013 the Second Defendant deposed, insofar as is material, that:
(i) Since Gillard J's order of 16 November 2005 their family had been harassed including nuisance phone calls to their private number causing them to change their private number on several occasions, but to no avail;
(ii) On the basis of the Second Defendant's health condition and her need to be protected from harassment and disturbance, and to ensure the safety of her family, Gillard J had permitted the First and Second Defendants' postal address to be used for service, which the Second Defendant says was also a position accepted by Kaye J and the Court of Appeal;
(iii) She is suspicious that her mail had been removed and that couriers from the Plaintiffs' law firm had persistently sought to provide her with material and that the landlord of the home in which she and her family lived had apparently been informed that the First and Second Defendants were embroiled in a legal dispute and for that reason wanted them to leave their rented premises. Ultimately, after some considerable upset and trauma, the First and Second Defendants left their then premises and have since lived elsewhere at an address which they have not disclosed. The Second Defendant states that since moving to their new address they have not encountered any nuisance phone calls or other difficulty associated with their privacy, and are therefore determined not to provide their current living address to anyone before the termination of their legal disputes.
28 On 18 July 2013 the First Defendant and Second Defendant each swore and filed a further affidavit urging the Court to consider their safety and the gravity of their situation over the past years, and allow their postal address to be used as the address for service.
The Plaintiffs do nothing to progress the proceeding
29 The Plaintiffs' solicitor, Mr Szmerling, informed the Plaintiffs as to what they should do as a matter of urgency to progress their proceeding and address the First and Second Defendants' application to dismiss their proceeding for want of prosecution. Mr Szmerling filed a further affidavit sworn 28 August 2013 which, insofar as material, deposes to the following:
(i) After the hearing before Justice Kyrou on 15 July 2013 he needed to contact his clients for further instructions. Mr Szmerling exhibits letters to Cynthia (Sing) Chan dated 22 July 2013, 31 July 2013 and 7 August 2013 and deposes to not receiving any response from those three emails.
(ii) Mr Szmerling also states that during the time that he was originally acting for the Plaintiffs they had a contact in Melbourne, Ms Juliette Zhao, and accordingly in addition to endeavouring to contact his clients directly he spoke to Juliette Zhao on 31 July 2013 and 6 August 2013. In the 31 July 2013 conversation Ms Zhao told Mr Szmerling that she had spoken to the Second Plaintiff and that the Second Plaintiff had told her that the Plaintiffs were waiting to receive Mr Smerzling's advice concerning the orders made on 15 July 2013;
(iii) After his telephone conversation with Ms Juliette Zhao, Mr Szmerling forwarded his letter of 31 July 2013 to the Plaintiffs. However, when he spoke to Juliette Zhao on 6 August 2013, she informed Mr Szmerling that she had not had any contact with the Plaintiffs since he had spoken to her last, even though she had tried to contact them;
(iv) Mr Szmerling then states in his affidavit that in the circumstances he no longer holds instructions on behalf of the Plaintiffs and accordingly again seeks leave to cease to act on behalf of the Plaintiffs in the proceeding. Mr Szmerling's letter of 22 July 2013, extensively outlines the current circumstances of the proceeding including his communications to his clients that:
... the Court has resolved that one of the issues to be determined is whether or not the proceeding should be entirely dismissed for what is called 'want of prosecution'. In this regard his Honour remains concerned by the fact that there have been no steps taken by either party in the proceeding for some four years.[3]
(v) Mr Szmerling's letter to the Plaintiffs of 22 July 2013 also informs them that they are required by 6 August 2013 to file and serve a summons setting out the orders that they seek together with any affidavits in support. The letter stated these affidavits will need to deal, at least in the first instance, with issues that the judge has raised concerning the fact that no steps have been taken in the proceeding for in excess of four years.
The other matter to note is that the further hearing of the Applications by the Chens for the Mareva Injunction to be removed, and now for the "Proceeding to be dismissed for want of prosecution, will take place on 9 September 2013. In view of the Orders made by the Court, and the comments made by the Judge at the Hearing on 15 July 2013, you must now carefully consider the extent to which you want to continue to take part in the Proceeding.
31 Mr Szmerling also sets out in detail the steps which he advises the Plaintiffs should take if they are to continue in the matter. Mr Szmerling asks the Plaintiffs to confirm their instructions for him to proceed (with the steps he outlines as necessary and appropriate) and in that regard to arrange a deposit on account of fees in the Chadwicks Trust Account.
32 In Mr Szmerling's follow up letter dated 31 July 2013[4] he emphasises that he urgently needs his clients' instructions in connection with the matters raised in his letter of 22 July 2013 and in his further letter of 7 August 2013.[5] He notes that he has still not received any response or further instructions in the matter and that the date has now passed by which the Plaintiffs would be required to issue an application for any orders they wish to be made in the proceedings.
33 The First Defendant filed and served a further affidavit sworn 28 August 2013 responding to Mr Szmerling's affidavit of 28 August 2013. I do not consider that the contents of the First Defendant's affidavit of 28 August 2013 are sufficiently material to my consideration of the Defendants' amended application of 7 June 2013 to warrant being summarised.
Practice Court hearing of the first and the second Defendant's applications on 9 September 2013
34 The First and Second Defendants' summons dated 7 June 2013 came on for hearing in the Practice Court on 9 September 2013. The Plaintiffs did not appear.
35 I am satisfied that the Plaintiffs were aware that the First and Second Defendants' applications by amended summons of 7 June 2013 was to be heard in the Practice Court on 9 September 2013. I am so satisfied because their solicitor Mr Szmerling was in Court on 15 July 2013 when Kyrou J amended the Defendants' summons to add an application for dismissal for want of prosecution, and made orders in relation to further filing of materials by the Plaintiffs (and the First and Second Defendants) and also specified that the First and Second Defendants' applications, by amended summons dated 7 June 2013, were to be heard in the Practice Court at 10.30 am on 9 September 2013.
36 I am also satisfied that the Plaintiffs were notified of the hearing on 9 September 2013 and what would be sought at that hearing. I make this finding on the basis of the several communications which Mr Szmerling deposes to having sent to the Plaintiffs[6] which render it very likely that the Plaintiffs were aware of the applications, the orders made on 15 July 2013, and the issues which were to be dealt with in Court on 9 September 2013.
37 Further, the Plaintiffs' solicitors remain on the Court record. No notices under Order 20.01 or Order 20.03 of the Rules of the Court have been filed and Mr Szmerling has sought the Court's leave to cease to act for the Plaintiffs in this proceeding,[7] however no such leave has yet been granted.
Application for dismissal for want of prosecution - applicable rules of court and principles
38 On 9 September 2013, Counsel for the First and Second Defendants sought the setting aside of the Mareva orders,[8] the setting aside of all past interlocutory orders, and sought the dismissal of the Plaintiffs' proceedings on the basis of a want of prosecution of those proceedings by the Plaintiffs. The First and Second Defendants also sought an order for the costs of the proceedings.
39 Order 24 of the Supreme Court (General Civil Procedure) Rules 2005 provides for the Court to dismiss proceedings for want of prosecution in the specific circumstances defined in Order 24.01. However, the power of the Court to dismiss for want of prosecution is not confined to those specific defaults of the Plaintiffs referred to in Order 24.01. The Court has inherent jurisdiction to make any order or to give any direction to ensure the just adjudication of litigation in the Court and that inherent jurisdiction supports the Court's exercise of power to dismiss a proceeding for want of prosecution. In Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells ('Bishopsgate')[9] broad powers of this type were recognised. This inherent power is a component of the inherent power referred to in s 8(1)(a) of the Civil Procedure Act 2010.
40 The Civil Procedure Act 2010 provides broad supplemental power and discretions to the Court including, in an appropriate case, to dismiss a proceeding for want of prosecution pursuant to ss 29(1) and 29(1)(f) of the Act. I shall return to the significance of the Civil Procedure Act 2010.
41 I recognise and bear in mind that in an application such as this, the onus is on the Defendants to show that a proceeding should be dismissed.
42 It has long been recognised that where questions of fact cannot be tried fairly as a result of the lapse of time, including as a result of the loss or destruction of documentary evidence or other pertinent material and the disappearance, death or degraded memory of witnesses, it is likely that a fair trial of the proceedings cannot occur. If a Plaintiff is responsible for inordinate and inexcusable delay, which can be seen as likely to bring about such a situation at trial, justice may require that the proceeding be dismissed.
43 The approach to applications for dismissal of proceeding for want of prosecution in England is apparent from the decisions in Allen v Sir Alfred McAlpine & Sons Ltd[10] and Birkett v James ('Birkett')[11]. These cases establish that it may be appropriate to dismiss a proceeding for want of prosecution where the Court is satisfied either that:
(i) The default of the Plaintiff has been intentional and contumelious, for example, disobedient to a pre-emptory order of the Court or conduct amounting to an abuse of the process of the Court; or
(ii) That there has been inordinate and inexcusable delay on the part of the Plaintiff or his or her lawyer, and that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the questions in the proceeding or is such as likely to cause, or to have caused, serious prejudice to the Defendant as between himself or herself and the Plaintiff or as between himself or herself and a third party.
(iii) whether the Defendant has demonstrated prejudice arising, or likely to arise from such delay.
45 The critical consideration is whether the Plaintiffs' conduct has caused, or is likely to cause, injustice to the Defendants. This will occur when there is a substantial risk that it will not be possible to have a fair trial of the proceeding because of inordinate and inexcusable delay: Spitfire Nominees Pty Ltd v Ducco[14].
46 However, the Court's decision on applications of this kind is in the nature of an exercise of discretion. As such, this exercise should not be constrained by any inflexible formulation as to the circumstance or circumstances in which that discretion should be exercised. Ultimately, an order for dismissal is appropriate only when the justice of the occasion demands it: Alginates (Aust) Pty Ltd v Thomson & Carroll Pty Ltd.[15]
The effect of the factual and circumstantial situation
47 The First and Second Defendants submitted that in the circumstances, as established by the affidavit material and the court file, there had been inordinate and inexcusable delay by the Plaintiffs in prosecuting and advancing their case. The First and Second Defendants submitted that the period of inordinate and inexcusable delay was from December 2008 to the date of the hearing of their dismissal application on 9 September 2013. They submitted that such delay has given rise to a substantial risk that it is now not possible to have a fair trial of the issues in the proceeding. That risk, it was submitted, presently exists because of the prejudicial effect that the effluxion of the additional time, in excess of four years, and the effect of that delay on the Defendants' ability to recall the now distant conversations and actions bearing on the matters in issue. Furthermore, they submit that this alleged prejudice will only increase to the date of the trial in this proceeding. I infer from the circumstances of the matter and the interlocutory state of the matter at this time and the likelihood that a trial of this proceeding will occur, at best, in 2014.
48 The First and Second Defendants also submitted that the delay which has occurred has caused, and is likely to continue to cause, serious prejudice to the Defendants. In this regard the First and Second Defendants emphasise that the matters of fact in contention relate to events largely in the period between 2000 and 2003. They submitted that the issues centred on disputed arrangements and agreements which were alleged to be mostly oral, including in relation to payments by the Plaintiffs and the application of payments in connection with the purchase of the property. The First and Second Defendants also emphasise that the case is one which appears to rely very little on potential documentary evidence.
49 It is quite apparent that the core of the Plaintiffs' case and the Defendants' responses centre around many disputed oral arrangements and instances of disputed conduct. The Defendants submit, and I accept, that given the nature of the claims made in these proceedings, and the factual matrix within which those claims are made,[16] to a very significant extent the outcome of the dispute depends upon the credibility of a number of witnesses.
50 The time that has elapsed is substantial. Over twelve years has now elapsed since the earlier of the important events which are in issue in this proceeding. Over ten years has elapsed in respect of all of the key events in issue. Similarly, over four and a half years has now elapsed since the Court of Appeal's decision in relation to the twelve day trial before Gillard J in 2005. Nothing substantial has been done or progressed by the Plaintiffs in this proceeding for over four and a half years since December 2008.
51 The situation described above has been aggravated by the Plaintiffs' failure to respond to the application, initiated by the Court, that the Plaintiffs' proceeding be dismissed for want of prosecution. The Plaintiffs had an opportunity, created by Kyrou J on 15 July 2013, to bring applications to pursue the relief they sought in the proceeding and also to defend against their proceeding being dismissed for want of prosecution. The Plaintiffs have, however, eschewed this opportunity and even in the face of the First and Second Defendants' applications and the matters raised by the Court on 28 June 2013 and 15 July 2013, have chosen to take no step in the proceeding.
52 Furthermore, I consider that the Plaintiffs received two judicial warnings, both communicated by Justice Kyrou, on 28 June 2013 and the next on 15 July 2013. The Plaintiffs were thereafter, in my view, under an obligation to move with special urgency to prosecute their case.
53 Accordingly, I consider the First and Second Defendants' applications in the above context and on the facts and circumstances as outlined.
54 In this matter, the relevant length of delay on the part of the Plaintiffs is over four and a half years between December 2008 and September 2013. This is the period during which the Plaintiffs have failed to prosecute the proceeding. It will hereafter take some considerable additional time for a trial to be scheduled and heard. This would include the necessary interlocutory steps that would have to be taken before this proceeding would be ready to be set down for trial.
55 No satisfactory explanation for that period of delay has been put forward by the Plaintiffs, save for the indirect statements attributed to the Plaintiffs and relayed by Cynthia Sing Chan, daughter of the First and Second Plaintiffs, reported in the affidavit of Mr Szmerling[17], namely that the First and Second Plaintiffs have not taken further action since 2009 because they have not been able to serve the Defendants with any documents or inquire as to their asset position . I do not accept this as a reasonable or a plausible explanation for the Plaintiffs' inactivity in the proceeding for over four years, including their failure to undertake any steps to prosecute the hearing of the Plaintiffs' potential entitlements in accordance with Order 8 of the Orders of the Court of Appeal made on 19 December 2008.
56 Similarly, the Plaintiffs have failed to undertake any step in relation to order [12] of the Orders of 19 December 2008 or in connection with the Plaintiffs' likely entitlement to costs of the appeal, nor have they taken any other steps in the proceeding to this time.
57 I do not consider the Plaintiffs' instructions to Mr Szmerling[18] to be of assistance to the Plaintiffs. The request on behalf of the Plaintiffs to renew an order of Kaye J, made on 8 March 2007, so as to enable fresh Bankruptcy proceedings to be issued by the Plaintiffs against the First and Second Defendants, is ancillary to the Plaintiffs' proceeding. This is not a relevant proposed step in the proceeding which is sought to be dismissed.
58 The Plaintiffs cannot in my view suggest that their inactivity, in these circumstances, was justified because they did not have an address for service on the Defendants. I do not accept, on the balance of probabilities, that it is likely that the Plaintiffs took no step in their own proceeding for over four years for this suggested reason. That would be most unlikely given that they could, at any time, have approached the Court to obtain orders to overcome what they perceived to be a difficulty serving the Defendants with documents. Further, such a suggested reason for inaction by the Plaintiffs is also unlikely given that they were aware of the South Yarra Victoria Post Office Box address referred to in affidavits filed by the First and Second Defendants in the proceedings.
59 Further, I note that at all material times, in particular after August 2010 when the Civil Procedure Act 2010 came into effect, the Plaintiffs were under an overarching obligation to act promptly in the conduct of this proceedings and to minimise delay in this proceeding.
60 I am cognisant of the hardship to the Plaintiffs if the proceeding were dismissed and their causes of action were thereby exposed to being statute barred, which is a likelihood in the circumstances. Paradoxically, the fact that time is yet to expire under the relevant limitation period usually militates against a proceeding being dismissed for want of prosecution because such a dismissal would not, in such circumstances, usually be any bar to the Plaintiffs commencing fresh proceedings on the same cause of action. However, in my view any such prejudice to the Plaintiffs has been caused by their own inaction and is here outweighed by the prejudice to the First and Second Defendants.
61 I consider that the First and Second Defendants will suffer prejudice if the very stale issues in the proceeding were to proceed to trial, at best some time next year , some 14 years after the earlier of the disputed arrangements and agreement are said to have been made and acted upon. In my view, there has been inordinate and inexcusable delay by the Plaintiffs since 19 December 2008 in prosecuting their case in this proceeding. I consider that there is clear prejudice to the Defendants if the proceeding is allowed to continue to trial notwithstanding the inordinate and inexcusable delay caused by the Plaintiffs' inactivity. Prejudice is readily inferred from the long period of time which has elapsed since December 2008. The Court is entitled to infer the establishment of the necessary level of prejudice from all the circumstances of the case, including as having occurred or presently affecting the Defendants or likely to be suffered in the future. I observe in this regard that it is not necessary for the Defendants to allege the potential bases of prejudice by way of affidavit: Bishopsgate.[19]
62 However, on the evidence filed by way of affidavit and on the Defendants' submissions and the history of the matter revealed by the court file, including the earlier judgments and orders made in the matter, I am satisfied that prejudice to the First and Second Defendants can be readily inferred at this point in the proceedings. This is because the Defendants' witnesses will now have great difficulty recalling critical conversations and events.
63 Further, it is also very likely that the prejudice to which I refer will be exacerbated by the further effluxion of time between now and the earliest likely trial of this matter, some time in 2014. It is very probable as a result of the delay of over four years since 2008, particularly given that nothing has been done since 2008 and that it will take some considerable time for the proceeding to be ready for trial and for the trial to be scheduled and heard, that it is now not possible to have a fair trial of the issues in this proceeding. This is because of the effect, in the circumstances, of the critical period of delay referred to and the Defendants' recollection of the conversations and events in issue in the period 2000 to 2003.
64 Further, in my view, the likely prejudice caused by the Plaintiffs' failure to proceed since 2008 has been exacerbated by the circumstance, of which the Plaintiffs were well aware, namely that by 2008, the agreements and arrangements in issue were already up to eight years distant.
65 In my view, for the above reasons there is an unacceptable degree of risk that a fair trial of the questions in the proceeding will not be possible in the circumstances.
66 I am satisfied by reason of the likely prejudice to the First and Second Defendants as a result of delay, as identified above, there is a very substantial risk that a fair trial of the questions in dispute will not be possible because of the inordinate and inexcusable delay for which the Plaintiffs are responsible since December 2008. I am also satisfied that by reason of the likely prejudice, the First and Second Defendants will be seriously prejudiced were they required to meet the Plaintiffs' case at trial in 2014, or thereafter.
67 I am also of the view that because of the same inordinate and inexcusable delay by the Plaintiffs the First and Second Defendants have suffered unfair and unacceptable prejudice by being kept at risk in respect of the subject matter of litigation for at least four years beyond the likely time it should have taken for this litigation to be finalised after December 2008 if the Plaintiffs had met their obligations to act promptly in the proceedings and also to minimise delay.
68 I consider that, for the above reasons, the critical delay caused by the Plaintiffs since December 2008 in all likelihood has caused, and will at trial cause, real prejudice and injustice to the First and Second Defendants if this proceeding is allowed to remain on foot and proceed to trial.
69 The Defendants also calls in aid of their application s 7 of the Civil Procedure Act 2010 which provides:
7(1) The overarching purpose of this Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute.
70 The following sections of the Civil Procedure Act 2010, are also relevant to this application to dismiss for want of prosecution:
(1) A court must seek to give effect to the overarching purpose in the exercise of any of its powers, or in the interpretation of those powers, whether those powers -
(a) in the case of the Supreme Court, are part of the Court's inherent jurisdiction, implied jurisdiction or statutory jurisdiction; or
(b) in the case of a court other than the Supreme Court are part of the court's implied jurisdiction or statutory jurisdiction; or
(c) arise from or are derived from the common law or any procedural rules or practices of the court.
(1) In making any order or giving any direction in a civil proceeding, a court shall further the overarching purpose by having regard to the following objects -
(a) the just determination of the civil proceeding;
(2) For the purposes of subsection (1), the court may have regard to the following matters -
(c) the degree of promptness with which the parties have conducted the proceeding, including the degree to which each party has been timely in undertaking interlocutory steps in relation to the proceeding;
(d) the degree to which any lack of promptness by a party in undertaking the proceeding has arisen from circumstances beyond the control of that party;
(e) the degree to which each person to whom the overarching obligations apply has complied with the overarching obligations in relation to the proceeding;
(f) any prejudice that may be suffered by a party as a consequence of any order proposed to be made or direction proposed to be given by the court;
The overarching obligations apply in respect of the conduct of any aspect of a civil proceeding in a court, including, but not limited to -
(a) any interlocutory application or interlocutory proceeding;
(b) any appeal from an order or a judgment in a civil proceeding;
(c) any appropriate dispute resolution undertaken in relation to a civil proceeding.
For the purpose of ensuring the prompt conduct of a civil proceeding, a person to whom the overarching obligations apply must use reasonable endeavours in connection with the civil proceeding to -
(1) If a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice including, but not limited to -
(f) any other order that the court considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations.
47 Judicial powers of case management - overarching purpose and active case management
(1) Without limiting any other power of a court, for the purposes of ensuring that a civil proceeding is managed and conducted in accordance with the overarching purpose, the court may give any direction or make any order it considers appropriate, including any directions given or orders made -
71 In my view the conduct of the Plaintiffs, in the circumstances of this matter, also amply warrants the Plaintiffs' proceeding being struck out pursuant to ss 29 (1) and 29(1)(f) of the Civil Procedure Act 2010, so as to alleviate the above described prejudice to the First and Second Defendants, caused by the Plaintiffs' contravention of its obligations under the Act, and in particular s 25 of the Act.
72 On the above bases the Plaintiffs' proceeding is dismissed for want of prosecution.
73 The First and Second Defendants seek the costs of the proceeding, if successful in having the Plaintiffs' proceeding dismissed for want of prosecution.
74 However, in my view it is not just and appropriate for the First and Second Defendants to recover the costs of these proceedings because:
(i) The First and Second Plaintiffs were successful before Gillard J in establishing an order for the payment of a sum of money by the First and Second Defendants, albeit that the sum involved was relatively small.
(ii) The First and Second Plaintiffs were successful in establishing liability against First and Second Defendants with quantum to be assessed.
Although I do not take this fact into account, because of the Court of Appeal's finding that approaches by the Court in the taking of accounts was in error and the finding arising from the taking of accounts, have been set aside, I note that the Judgment of the Court of Appeal of 19 December 2008 records in paragraph [17] that the assessment of sums owing by a Master of this Court on a taking of accounts, was in the order of $1M due from the First and Second Defendants to the First and Second Plaintiffs.
(iii) The First and Second Defendants have been largely unsuccessful in the Judgment of the Court of Appeal handed down on 19 December 2008.[20]
(iv) The First and Second Defendants have also been found by Kaye J to have been guilty of wilful contempt in connection with orders made in this proceeding and while the proceeding subsisted.
75 By reason of these matters I do not consider that it is appropriate to award the First and Second Defendants the costs of the proceeding. I do however consider that the costs of the First and Second Defendants amended application dated 7 June 2013 should follow the event of the First and Second Defendants' being successful in that application to dismiss the Plaintiffs' claims for want of prosecution.
76 Accordingly, I award the First and Second Defendants the costs of and associated with their amended summons dated 7 June 2013, on the standard basis and order that those costs be paid by the Plaintiffs.
77 I vacate Orders [9] and [10] made by Gillard J on 16 November 2005. I do so pursuant to his Honour's qualification in Order [9], that those Orders could be the subject of further order and pursuant to the Court of Appeal's further like qualification in Order [4] made on 19 December 2008.
78 Otherwise I make no orders in relation to the earlier interlocutory Orders in the proceeding.
[1] Chen & Ors v Chan & Ors [2008] VSCA 280, [18(a), (d)], [52], [58], [74], [98] and Summary of Conclusions [99(a), (b), (e) & (f)].
[3] Exhibit IS-1 of Affidavit of Mr I Szmerling (sworn 15 July 2013).
[4] Exhibit IS-2 of Affidavit of Mr I Szmerling (sworn 15 July 2013).
[5] Exhibit IS-3 of Affidavit of Mr I Szmerling (sworn 15 July 2013).
[6] See Affidavit of Mr I Szmerling, sworn 28 August 2013.
[7] Affidavit of Mr I Szmerling, sworn 28 August 2013, [8].
[8] Orders 9 and 10 made by Gillard J on 16 November 2005, referred to above.
[12] [2013] VSCA 283, [36].
[13] (1999) 3 VR 863, 880 [44].
[14] [1998] 1 VR 242, 248.
[15] [1970] VicRp 74; [1970] VR 570, 574. This case was approved in Bishopsgate (1999) 3 VR 863, 873 [28].
[16] These facts were outlined in the judgment of the Court of Appeal in this matter on 19 December 2008.
[17] Affidavit of Mr I Szmerling (sworn 15 July 2013) [10].
[18] Referred to in Affidavit of Mr I Szmerling (sworn 15 July 2013) [21] - [23].
[19] (1999) 3 VR 863, 875.
[20] Chen & Ors v Chan & Ors [2008] VSCA 280. See references in footnote 1.
Chan & Ors
Chen & Ors [2013] VSC 538
(1999) 3 VR 863