BETWEEN : HIGHWAY CONSTRUCTION PTY LTD (ACN 009 160 007)

Practice and procedure - Application for leave to commence proceedings - Whether grant of leave "just" - Utility of examination of merits of action - Principle to be applied

Freedom of Information Act

Limitation Act, s 47A

1 MASTER SANDERSON: This is the plaintiff's application for leave to commence proceedings against the defendant. The application is brought under the provisions of s 47A of the Limitation Act. That section reads:

"(1) Notwithstanding the foregoing provisions of this Act but subject to the provisions of subsections (2) and (3) of this section, no action shall be brought against any person (excluding the Crown) for any act done in pursuance or execution or intended execution of any Act, or of any public duty or authority, or in respect of any neglect or default in the execution of the Act, duty or authority, unless --

(a) the prospective plaintiff gives to the prospective defendant, as soon as practicable after the cause of action accrues, notice in writing giving reasonable information of the circumstances upon which the proposed action will be based and his name and address and that of his solicitor or agent, if any; and

(b) the action is commenced before the expiration of one year from the date on which the cause of action accrued,

and for the purposes of this section, where the act, neglect, or default is a continuing one, no cause of action in respect of the act, neglect, or default accrues until the act, neglect or default ceases but the notice required by paragraph (a) of this subsection may be given and an action may thereafter be brought while the act, neglect or default continues.

(2) A person may consent in writing to the bringing of an action against him at any time before the expiration of six years from the date on which the cause of action accrued whether or not the notice as required by subsection (1) of this section has been given.

(3)

(a) Notwithstanding the foregoing provisions of this section application may be made to the Court which would but for the provisions of this section have jurisdiction to hear the action, for leave to bring an action at any time before the expiration of six years from the date on which the cause of action accrued, whether or not notice as required by subsection (1) of this section has been given to the prospective defendant.

(b) Where the Court considers that the failure to give the required notice or the delay in bringing the action as the case may be, was occasioned by mistake or by any other reasonable cause or that the prospective defendant is not materially prejudiced in his defence or otherwise by the failure or delay, the Court may if it thinks it is just to do so, grant leave to bring the action, subject to such conditions as it thinks it is just to impose.

(c) Before an application is made under the provisions of paragraph (a) of this subsection, the party intending to make the application shall give notice in writing of the proposed application and the grounds on which it is to be made to the prospective defendant, at least fourteen days before the application is made."

2 The circumstances that the plaintiff says give rise to its cause of action against the defendant can be shortly stated. They are set out in the affidavit of Peter Coleman sworn 25 October 2000 and filed in support of this application. The plaintiff is a corporation which inter alia undertakes the construction of roadways and associated works. In or about May of 1998, the defendant invited the plaintiff to tender for the construction of road and bridge works at Loftus Street, Mount Lawley. The plaintiff submitted its tender on 24 July 1998. On 31 August 1998, the plaintiff was advised by the defendant that although its tender price was the lowest, it would not be awarded the tender. The plaintiff reacted immediately. On 2 September 1998, its solicitors wrote to the defendant claiming that pursuant to the conditions of tender and the surrounding circumstances the plaintiff should have been awarded the tender. It was alleged in the letter that the defendant had breached "its obligations" and as a consequence the plaintiff would suffer loss and damage (annexure "A").

3 This letter did not provoke an immediate and direct response. It was not until 12 January 1999 that the defendant formally wrote to the plaintiff advising that its tender was not accepted. However, it would appear that throughout the last quarter of 1998 there were discussions and correspondence between the parties - much, if not all, of which was on a without prejudice basis. Furthermore, the plaintiff attempted to obtain information in relation to the tender, pursuant to the Freedom of Information Act. Initially, the plaintiff's request for information was declined and it was necessary to appeal to the Information Commissioner. It was not until late May and early June of this year that the plaintiff received information from the Department of Contract and Management Services and the State Supply Commission, pursuant to its freedom of information applications. On 31 July 2000, the plaintiff issued a writ of summons (CIV 2020/00). The writ had been prepared as early as June 1999, but had not been issued pending the release of documents sought under the Freedom of Information Act.

4 It was only after the issue of the writ that the plaintiff's solicitors became aware that they had overlooked s 47A of the Limitation Act. The plaintiff's solicitors then wrote to the defendant's solicitors, referring to s 47A and seeking agreement in relation to the issue of proceedings. No agreement could be reached and this application was brought.

5 At the hearing of the application, it was conceded by counsel for the defendant that the delay in bringing the action was occasioned by mistake and that the prospective defendant was not materially prejudiced in its defence by the delay. It was the defendant's position that this was a case where it was not just to grant leave to bring the action. Rather, it was said that the plaintiff's cause of action was without merit, could not possibly succeed and no useful purpose would be served by the grant of leave.

6 It is important to note at the outset that the limitation provided by s 47A is substantive and not merely procedural. The importance of this distinction was referred to by all members of the High Court in Jackamarra v Krakouer [1998] HCA 27. The issue in the Jackamarra case was whether the merits of an appeal should be considered when the question before the court was whether the time for entering the appeal for hearing should be extended. All members of the court made the point that the requirement that an appeal be entered for hearing within a specified period is a procedural requirement to be found in the Rules of the Supreme Court. That contrasts with an application for an extension of time within which to appeal. The limitation then is substantive. All members of the court were of the view that any more than a cursory examination of the merits of an appeal was not justified when the limitation under consideration was procedural. However, the court did approve the consideration of the merits of the action when a substantive limitation was under consideration. The court referred with approval to the decision of the Court of Appeal in Palata Investments Ltd v Burt & Sinfield Ltd [1985] 1 WLR 942. Lord Justice Ackner cited with approval the earlier decision of Griffiths LJ in CM Van Stillevoldt BV v EL Carriers Inc [1983] 1 WLR 207. In this earlier case, Griffiths LJ cited with approval the approach taken at first instance by the Registrar who said:

"In my judgment, all relevant factors must be taken into account in deciding how to exercise the discretion to extend time. Those factors include the length of the delay, the reasons for the delay, whether there is an arguable case on appeal, and the degree of prejudice to the defendant if time is extended."

7 However, in the Palata Investments case itself the court doubted the utility of an examination of the merits in every case. Lord Justice Ackner put the position as follows (at 948):

"There is (in this case) no question of any prejudice arising to the plaintiffs in the circumstances which I have described, and in that situation there was in my judgment absolutely no need to go into the complex and time consuming question whether or not there was a good arguable case on appeal. There is no invariable rule which requires that consideration and it would obviously involve the very reverse of what the new procedure is designed to achieve if on every application to extend time for leave to appeal there was a pre-appeal hearing in order to consider what were the prospects of success."

8 In support of his submission that an examination should be made of the merits of the case, counsel for the defendant relied upon the Full Court decision is Esther Investments Pty Ltd v Markalinga Pty Ltd [1989] 2 WAR 196. This was a case which concerned the extension of time within which to enter an appeal for hearing. In other words, the case was concerned with a procedural limitation rather than a substantive limitation. Furthermore, all members of the court in Jackamarra appeared to cast doubt on whether or not the proper test was applied by the court in the Esther Investments decision. In my view, this decision is of little assistance to the defendant. Furthermore, I do not see that case management principles in any way impact upon the decision whether or not to grant leave. Subsection 3(b) requires a consideration as to whether or not failure to bring proceedings within the time limited has prejudiced the defendant in its defence as a consequence of the delay. Having conceded that no prejudice flows to the defendant from the delay, it seems to me that case management principles can have no application.

9 The test to be applied in determining whether or not it is just to grant leave was set out by Burt CJ in The Minister for Community Welfare v Bennett, unreported; SCt of WA; Library No 5060; 2 September 1983. His Honour said (at 3):

"It has been held by the Full Court of the Supreme Court of Victoria in Victorian Railways Commissioner v Casaccio [1961] VicRp 24; [1961] VR 157, that a finding that it is 'just' to make an order granting leave is not conditioned by the applicant for leave satisfying the Court that he has 'a prima facie case of liability'. Leave will be refused if the Court is of the positive opinion that the applicant has no case or, as is put in the Victorian decision to which I have referred, that the Court is of the opinion that it is a 'try on', but subject to that, once the application is brought within sub-s (3)(b) 'it may be quite enough if it appears that the claim is not mala fides or merely speculative or absurd'."

10 It is worthy of note that in Bennett the Full Court required the applicant for leave, subsequent to the hearing of the appeal, but before the decision, to file a statement of claim setting out the nature of the cause of action. Based upon that statement of claim, Burt CJ determined that it was just to grant leave. Rowland J agreed. Wallace J, who dissented, determined that the case was not arguable and leave to proceed should be refused. While neither of the members of the court undertook a detailed analysis of the statement of claim, it is apparent from the decisions that both determined the question of whether leave should be granted by reference to the way in which the claim was pleaded in the statement of claim. Consistent with that conclusion, the grant of leave was in limited terms so that it was with respect to only one aspect of the claim as pleaded that leave was given.

11 At the commencement of his submissions, counsel for the defendant conceded that, given the relationship between the plaintiff and the defendant and the fact that the plaintiff had been invited by the defendant to tender for the works, there was the possibility of a so-called "tender process contract": see Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990] 3 All ER 25; Hughes Aircraft Systems International v Air Services Australia [1997] FCA 558; (1997) 146 ALR 1. Counsel then went on to undertake a detailed analysis of the statement of claim in CIV 2020/00, with the stated aim of establishing that that statement of claim did not show a cause of action.

12 There is no doubt that had this been a pleading summons, the point at issue being whether or not that statement of claim could stand, the defendant would have succeeded and the statement of claim would have been struck out. But there is also no doubt that the plaintiff would have been given leave to replead. Once the concession was made that the facts could, (but, it must be emphasised, not necessarily did) give rise to a tender process contract, it would be entirely inappropriate to shut out the plaintiff if the first version of the statement of claim was unsatisfactory. Because there is a prospect of a claim based on a tender process contract, it can hardly be said that the claim is brought mala fides, is absurd, or is "a try on". In the circumstances, then, I am of the view that leave to bring the action ought be granted.

13 I am bound to say that I have some doubts as to the utility of undertaking a detailed analysis of the plaintiff's claim when determining whether or not it is just to grant leave to proceed. I fully appreciate that this appears to have been the approach adopted by the Full Court in Bennett's case. But a reading of that decision reveals that the court did not undertake an exhaustive analysis of the pleading and the law relating to the proposed cause of action. It is extremely difficult at such an early stage of proceedings to form a definite view as to whether or not any proposed cause of action will succeed. It is, perhaps, worthy of note that although Wallace J would have refused a grant of leave to proceed in Bennett, leave was granted by a majority and, eventually, the plaintiff was successful: see Bennett v Minister of Community Welfare [1992] HCA 27; (1992) 176 CLR 408. Furthermore, if the proper approach is that adopted by the Court of Appeal in Palata Investments (supra), as seems to be implied by the High Court in Jackamarra v Krakouer, then there must be some doubt as to whether any consideration of the merits is appropriate. The grant of leave does not, of course, preclude the defendant once proceedings are issued from applying to strike out any statement of claim or from seeking summary judgment under O 16. Either or both of these courses of action may be a better alternative than opposing the grant of leave on the basis that such a grant would be just.

14 There remains the question of whether or not the leave to proceed ought be general or whether it should be confined to a cause of action based upon a tender process contract. The statement of claim in CIV 2020/00 pleads causes of action for breach of fiduciary duty, in estoppel and for misleading and deceptive conduct. Based upon the statement of claim, I have some doubt as to whether any or all of these causes of action are open to the plaintiff. I am also mindful that in Bennett the Full Court gave leave to proceed, but only on a limited basis. However, in my view, there is nothing to be lost in granting leave generally in a case such as this. The facts giving rise to the various causes of action are, in large measure, the same. That is to say, it is difficult to see that it will be necessary for the plaintiff to plead any further material facts to establish a cause of action for breach of fiduciary duty or estoppel or under the Trade Practices Act beyond the facts to be pleaded to support the claim for breach of any tender process contract. In those circumstances, I think it is appropriate simply to give leave to the plaintiff to bring proceedings against the defendant in relation to the tender.

15 I will hear the parties as to the precise form of order and as to costs.