HARTIGAN v INTERNATIONAL KRISHNA CONSCIOUSNESS [1999] NSWSC 57 | Case summary

1 HIS HONOUR : The plaintiff commenced these proceedings by Statement of Claim on 9 August 1994. They relate to transactions which she says happened about November 1988 in which she conveyed a rural property at Rosebery Creek in the Kyogle Shire to the defendant by deed of gift. The deed recited that she was desirous of promoting the objects of and of benefiting the defendant. The terms of the deed would establish that the conveyance was free from any resulting trust and that the property was to be dealt with as part of the general assets of the defendant. The deed bears date 13 April 1989 which was some months after the time when the plaintiff says she executed it. The gift was perfected by a transfer under the Torrens System executed by her and registered. She seeks to set the gift aside. The defendant alleges in its defence that it sold the property for $83,000.00 in August 1989 and later transferred it to the purchasers by a registered transfer. 2 Before the Master on 25 May 1998 plaintiff's counsel produced (Exhibit 1) a draft of a Second Amended Statement of Claim. This draft is defective because the particulars given in a series of letters through the earlier years were not incorporated in the Statement of Claim. It does not raise any new claim but greatly rationalises what the plaintiff puts forward by limiting the claim to undue influence. 3 The evidence now brought forward by the plaintiff relating to the circumstances of the gift shows a strong prima facie case that the gift was made at a time when the plaintiff stood in a relationship of influence with the organisational structure of the Hari Krishna movement of which the defendant was the property-holding representative. This was so because, as her evidence would show, she had in August 1987 with her husband become a life member of the International Society for Krishna Consciousness, was a non-initiated member, was expected to follow instructions and directions for initiated devotees, had from that time onwards regularly attended functions and meetings; that the property at Rosebery Creek was her home and her only asset, that she was assisted by the president of the Murwillumbah Temple in making arrangements for the gift and that the documents relating to the gift were prepared by solicitors who acted for the defendant and whose offices she attended for the purpose, and without her having any independent source of advice from a lawyer, or from any other person. In these circumstances the burden of showing that the gift was not affected by the relationship of influence would rest on the defendant. 4 The defendant applied by Notice of Motion filed on 23 April 1998 for an order pursuant to Part 33 rule 6 that the proceedings be dismissed for want of prosecution; the relevant ground in the rule is that the plaintiff does not prosecute the proceedings with due dispatch. After a hearing on 25 May 1998 Master Macready on 29 June 1998 for reasons then published ordered that the proceedings be dismissed and that the plaintiff pay the defendant's costs. The plaintiff appealed to a Judge by Notice of Appeal of 27 July 1998. The appeal is an appeal by way of re-hearing against the learned Master's decision and is not a hearing de novo of the application in the Notice of Motion. However there is evidence before me which was not before the Master. The Master observed on the fact that the plaintiff herself did not give evidence on the application and regarded that as important. For reasons which I stated during the hearing I gave leave under s 75A (7) of the Supreme Court Act 1970 for her counsel to read her affidavit of 31 July 1998, and she gave oral evidence including cross-examination. The matters on which the Master made findings and exercised discretion require to be reconsidered on the basis of a different body of evidence to that on which the Master acted. 5 Part 33 r 6 deals with want of prosecution. Sub-rules (1) and (2) are as follows: 6 (1) Where a plaintiff does not, within six weeks after the pleadings are closed, set the proceedings down for trial, the Court, on motion by any other party, may, on terms, dismiss the proceedings or make such other order as the Court thinks fit.

9 Submissions before me on behalf of the plaintiff proceeded on the view that the decision of the Court of Appeal in Cohen v McWilliam and Another (1995) 38 NSWLR 476 is relevant and establishes a relative primacy of the claim to have litigation disposed of on a determination of the merits over other considerations. That decision dealt with another subject, the amendment of pleadings, and in other circumstances, an amendment presented for the first time and without notice when the case is called on for hearing at a time previously appointed and after its state of readiness had been reviewed at several directions hearings. The plaintiff was confronted with the defendant's application without any opportunity to consider its position or adduce evidence of prejudice. No rule of Court similar to Pt. 33 r. 6 was under consideration. In my view the majority judgments in Cohen v McWilliam provide no guidance for the exercise of the discretion now before me. The majority judgments did not address problems arising from delay or further delay by a plaintiff in the conduct of the proceedings, and the case was not one where any close address to the effect of delay by a plaintiff could be expected. 10 The judgment of Priestley JA does not mention the opportunities which the defendant had had during the interlocutory period to raise her defence by pleading, or to indicate at pre-trial directions hearings that she did or might wish to do so. It must be understood that those opportunities were not regarded as having any significance, nor was their not being taken regarded as having any significance. Nor was there any mention of the expectations and position of the plaintiff in the litigation, or of any significance which should be attributed to time and endeavour used by the plaintiff in preparing for trial, to expectations that a due course of procedure would be followed or to expectations that the ground on which the claim was resisted should be made known to the plaintiff. No indication was given in the majority judgments that any significance at all attached to the plaintiff's readiness, after years of preparation, to go to trial on known issues, or that there was anything to be lost or any significance at all to be attached to the jettison of the plaintiff's readiness, trouble and expense without notice for the benefit of an opponent who had not got her case ready over some years. Indeed the plaintiff was not mentioned at any point in Priestley JA's judgment, and no interest of the plaintiff fell for consideration. Sheller JA did give some consideration to the position of the plaintiff and, although there was no exposition of the value attributed to that position, it is evident that the plaintiff's position was treated as of slight importance. The reason for exclusive concentration on the position of the applicant was, it might be thought, worthy of some articulation, but received none. 11 The public interest in Court efficiency was referred to by Priestley JA with a tepid observation at 478B to the effect that nothing particularly wrong was seen in the Court taking it into account, and the observation at 482A-B to the effect that the idea that both sides should be heard before a dispute is decided is usually regarded as more basic than the need for Court efficiency. "Court efficiency" is a terse mnemonic indeed for the public and private interests involved in conducting Court business according to a known and predictable course, on which expensive preparations can reasonably be based, and with due use of publicly-owned resources, paid for by taxation levied under stern laws and for the most part out of the proceeds of personal exertion of persons who make no use of the Court. A lengthy exposition could be made of what is involved in Court efficiency, with an examination of the adverse impact on the private interests of other litigants in the instant proceedings, of other litigants who are claiming the Court's attention, and in the public interest in maintaining the Court's authority by observance of arrangements with which the Court has directed litigants to comply. There is a public interest in the Court's requiring litigants to respect the due exercise of its compulsory powers over litigants, and in itself acting in the same way, and in maintenance of faith with persons who have expended time and energy to conform with the Court's directions. It is injurious to the respect which the Court and others should maintain for the Court's authority if arrangements made with care are set aside for the benefit of persons who have not complied with the rules of Court. 12 It is I conclude to be understood that a claim to bring a defence forward for decision exists irrespective of neglect, however long extended, of earlier opportunities to bring the defence forward, irrespective of the impact of so doing on other parties, and with little weight to be attributed to the interests of other litigants. A wholehearted non-conformity attracts sedulous protection not extended to the compliant. In my view the breadth of the relevant discretionary conditions established in Stollznow v Calvert for cases where there has been a want of prosecution is not restricted by anything to be gleaned from Cohen v McWilliam. 13 The Limitation Act 1969 does not apply to the plaintiff's claim, which is wholly equitable, and that Act would be applied, if at all, only by analogy. The plaintiff's claim presents very distant analogies, perhaps no useful analogies to a common law claim; it is to the effect that the gift should be set aside because it was obtained by undue influence, to be proved by showing a relationship of influence. She alleges that the defendant bears the onus of showing, and cannot show that the gift was not produced by undue influence. If a case of this kind is made out, equitable remedies are available, as appropriate to the facts, on the footing that the plaintiff remained the equitable owner. While this is a matter for further consideration, it is difficult to suppose that the plaintiff would succeed in obtaining equitable compensation on the basis that the defendant sold the property in 1989 without lawful authorisation or trust power and is now accountable for its present value; it seems more likely that an appropriate remedy would involve holding the plaintiff to the sale and awarding equitable compensation by reference to the proceeds of the sale. I see at the best a strained analogy with claims which the Limitation Act would bar, whether the plaintiff's claim is in concept a claim to receive the property back or in concept a claim for an amount of money. If the plaintiff's claim were to be thought of as a claim to have the proceeds of completion of the sale in October 1989 paid to her, the time to bring proceedings expired in October 1995. 14 It is important that although the times which it might be understood from the terms of the Rules of Court were contemplated as being available for a number of steps were greatly exceeded, there was never any order or direction by the Court to the plaintiff to proceed with despatch. She has not disregarded any direction by the Court: she has not acted with contumacy and was never given any warning by the Court that her opportunity to have her case heard was likely to be terminated. The evidence first speaks of any endeavour to produce action in a letter of 26 August 1997 from the defendant's solicitors to her then solicitors, giving a reasoned and detailed account of difficulties which had arisen from delay and in terms threatening to apply for dismissal on the ground of want of prosecution unless steps were taken to either resolve or prosecute the proceedings. Nothing effectual seems to have happened by 23 April 1998, but the plaintiff became relatively active thereafter when she produced a list of documents dated 7 May 1998 and made inspection available. 15 The Master gave a chronology of the proceedings at page 3 of his judgment. The significant periods of delay appear to be these: There was sufficient discontent with the transaction for the plaintiff's husband (and not the plaintiff herself) to apply for legal aid on 26 June 1990 for the purpose of challenging the transaction in some way. On 9 August 1994 the Statement of Claim was filed. On 24 February 1995 an Amended Statement of Claim was filed. On 20 October 1995 the defendant applied by Notice of Motion for further and better particulars. On 16 November 1995 an Order for further and better particulars was made. Particulars were supplied in a series of letters from 13 November 1995 to 6 February 1996. On 22 February 1996 Defence to the Amended Statement of Claim was filed. 16 The initial period of about 18 months after commencement of the proceedings achieved a result which could have been achieved in a few weeks if the proceedings had had close attention on each side. In a case where the parties were not seized with urgency it would not be surprising if it took six months to obtain particulars and file a Defence. In my view the plaintiff should be regarded as responsible for about a year of the delay until February 1996, mainly attributable to amending the Statement of Claim and giving particulars. 17 On 2 August 1996 the defendant gave Notice for Discovery. This delay of over five months should be attributed to the defendant. 18 On 7 May 1998 discovery was given. Over one year and seven months passed at the stage of discovery. Without unusually close attention discovery can be expected to take about three months. However it is to be observed that the defendant did not give discovery until 27 January 1998 and this seems to set a standard, in a way, for the plaintiff's conduct. The plaintiff took three months longer than the defendant did. 19 Overall I attribute about one year and three months of the delay between commencement of the proceedings and the plaintiff's giving discovery, which was approximately at the time of the Notice of Motion, to delay by the plaintiff. The plaintiff shares, at least equally with the defendant, in responsibility for the other delays. Everything that happened in the proceedings should have been achieved in six months or well under a year. 20 It appears from exhibit A that by 26 June 1990 the plaintiff's husband was discontented with some aspect of his dealings with the defendant because on that date he applied for legal aid to bring civil proceedings which he described as "fraud dispute". When giving details of the case which he wished to bring he appears to have spoken of the transaction in which the plaintiff's property was given to the defendant; he spoke of donating his own property and of its later being sold for $85,000, and said that he gave it on the understanding that he could live there rent free. The plaintiff witnessed this application for legal aid. However it was not her application. 21 According to the plaintiff's evidence after she made the gift she with her family moved to the defendant's farm at Murwillumbah and they lived there until they were asked to leave in early 1991. She says that at that time she decided to seek legal advice in relation to her gift, and her husband wrote a letter requesting compensation to which there was no reply. She consulted a solicitor in Murwillumbah in early 1991 to discuss the possibility of recovering the property. In about February 1991 she moved with her family to Tasmania. They lived in that State, with a number of moves and in very poor financial circumstances; she says they moved at least 8 times, for several reasons including financial difficulties. She has lived on social benefits, as did her husband. The plaintiff and her husband separated in November 1997. 22 The plaintiff gives an account of her communications with her solicitors, which involved first an application for legal aid, which was not successful as she was informed in March 1993. She then attempted to obtain a litigation loan. She began to make payments on account of costs to her solicitor. A draft statement of claim was prepared by June 1994 and filed on 9 August 1994. 23 Thereafter the plaintiff gives an account of the time spent in preparation, and in substance she explains the delay by reference to difficulties in communication through her absence in Tasmania and many changes of address, and the need to raise money out of very small incomes to make payments to the solicitor on account. Payments were made until about June 1996 when the financial burden was too much. She continued to communicate with her solicitor but was unable to make an arrangement satisfactory to him about costs, and had no satisfactory arrangements for legal representation until about January 1998, when arrangements began for her to receive legal representation on a pro bono basis through The Law Society of New South Wales. 24 The plaintiff's explanation for the delay is an explanation in terms of her being impeded by circumstances and lack of funds from pressing on with the proceedings. I am satisfied that there has not been any delay arising out of any lack of wish to carry on with the claim or lack of sincerity in its presentation. There have been long delays and extensive periods of inattention, but these have resulted from her lack of opportunities and resources to give effectual attention to the matter, not from abandonment of her claim. 25 The Master was of the view that the plaintiff had taken an inordinate time to progress the claim to the point which it reached in 1998. In my view this is correct. However regard must be had to the plaintiff's circumstances, which operated so that she did not have freedom of action or any true opportunity to conduct the litigation as a reasonable litigant equipped with funds would have done. The Master was of the view that the delay was also inexcusable and had not been properly explained. I now have the benefit of the plaintiff's explanation. While I could not express any approval of the plaintiff's conduct in waiting until August 1994 to commence the proceedings, and then delaying extensively at interlocutory steps thereafter, I do not when I look at the circumstances regard the delay as inexcusable to a degree or in a sense which would justify its being treated as a ground on which consideration of the merits should be refused, or as an overwhelmingly important discretionary consideration favouring doing so. 26 In relation to the delay it is I think relevant to bring under consideration the time which the defendant has taken to attend to interlocutory steps, including most significantly the production of a discovery list; and also to have regard to the fact that the defendant could have taken steps to bring the proceedings on for a hearing by itself setting the proceedings down for hearing after issue had been joined with the filing of its Defence and the expiry of time for a reply; that is to say, in March 1996. If the defendant had done so the proceedings would have come on for hearing by now. The defendant's not doing so is probably referable to the defendant's wish to have discovery, if not exclusively then as the most prominent consideration; and the defendant itself has taken an inordinately long time to deal with discovery. 27 The Master reviewed the evidence before him about the endeavours on behalf of the defendant and its solicitor to locate witnesses or prospective witnesses, obtain statements from them and generally ascertain what the defendant can do to present a case and discharge the burden of proof which it appears will fall upon it. The defendant's solicitor's account of the difficulties she has encountered in locating persons who had contact with the plaintiff at or about the time of the gift and while she lived in the community, and of their difficulties in recollecting events, formed the basis of the Master's finding (at page 12) to the effect that it was obvious that prejudice has occurred in the time since proceedings commenced. The further evidence which was admitted at the hearing before me does not significantly affect these findings, which should be adhered to. 28 I address the discretionary questions anew because the basis on which the discretion is to be exercised is different to the basis under consideration by the Master. The evidence relating to excuse for delay is quite different. The delay was inordinate, far out of the usual order for effective conduct of legal business, but the defendant has also, to a less extent, been involved in delay. In my opinion it should not be said that the delay has been inexcusable; the plaintiff has offered explanations for her delays in terms which rebut a conclusion that she abandoned the proceedings, and there is interaction between the influence on her delay of her lack of resources and the nature of her case, which if accepted would show that she made an improvident gift of all her significant resources. 29 It is clear, as it was before the Master, that the defendant has incurred prejudice as a result of delay and would have been in a better position to ascertain whether it has and can present a good defence if the proceedings had been brought on for trial some years earlier. However it remains the case that the leading figures in the transaction are available: they are the defendant's then solicitor and Mr David Evans who at the relevant time was the President of the Murwillumbah Temple and who principally dealt with the plaintiff in relation to the gift. Overall, while the effect of delay has been to diminish the lines of inquiry open to the defendant, the leading figures in the transaction continue to be available. The nature of the transaction was such that, having regard to the positions of the leading figures, they could well, acting reasonably, have adverted to the possibility of challenge at all times from the beginning. 30 My view overall is that, in the exercise of my discretion, I should not order that the proceedings be dismissed. 31 My orders are:-

The appeal is allowed and the order of Master Macready of 29 June 1998 is set aside.
The defendant's Notice of Motion of 23 April 1998 is dismissed.
I order that the plaintiff pay the defendant's costs of the Notice of Motion up to and including 29 June 1998.
I order that the defendant pay the plaintiff's costs of the appeal. I hereby certify that paragraphs 1-31 are the reasons for judgment of the Honourable Justice John Bryson.

HARTIGAN v INTERNATIONAL KRISHNA CONSCIOUSNESS

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