Closer Settlement Board v Thomas [1982] Tas R 179, applied.

Witten v Lombard Australia Ltd (1968) WN (Pt1) NSW 405; Stollznow v Calvert [1980] 2 NSWLR 149, followed.

Judgment ID Number: [1999] TASSC 2

1 By a writ filed on 19 January 1988, the plaintiff, who is the respondent to this application, instituted proceedings against the defendant insurance company to recover $10,522.87. The statement of claim alleges that this sum was the cost of repairing damage done to the plaintiff's Porsche motor vehicle during the currency of a policy of insurance entered into between the parties on 5 March 1987.

2 By its defence dated 18 February 1988, the defendant sought to avoid liability on a number of bases including:

* the making of a false statement in the proposal for the insurance;

* the failure to comply with the duty to make full disclosure of matters relevant to the acceptance of the risk;

* some of the damage to the vehicle was intentionally caused by the plaintiff.

3 By an application filed on 9 November 1998, more than a decade after the commencement of the proceedings, the defendant seeks an order that the writ and statement of claim be struck out for want of prosecution.

4 The conduct of the litigation got off to a brisk start, but this soon degenerated to a pace that can at best be called leisurely. Towards the end of 1988, there were some unproductive interlocutory skirmishes over the production of documents. A hearing to resolve this issue was listed for 19 September 1988 but it was adjourned sine die because the plaintiff's solicitor, who had sought the hearing, failed to appear. According to that solicitor's affidavit, his failure to appear was the result of an agreement made between solicitors that the hearing be adjourned sine die to give the plaintiff's solicitor time to consider an argument that the defendant's solicitor wished to put forward. According to the plaintiff's solicitor's affidavit, that argument was that production of certain documents should not be ordered, not on the ground originally taken of legal professional privilege, but on the ground that it was not in the interests of justice to do so. The plaintiff's solicitor must have found the proposed argument more than a little persuasive, as a year and two days elapsed between the adjournment of the hearing and the next communication between solicitors. On 21 September 1989, the plaintiff's solicitor advised the defendant's solicitor that he did not wish to pursue the matter further.

5 It appears that during that period of twelve months, the plaintiff's solicitor was in contact with Tasmania Police, the upshot of which was an agreement by the police to disclose to the plaintiff's solicitor the CIB file compiled with respect to a police investigation into the plaintiff's insurance claim that is the subject of this litigation. The affidavit setting out the steps taken in this respect disclose that this issue was not pursed with either speed or diligence.

6 According to the affidavit of the defendant's present solicitor, apart from a request for further and better particulars of the defence (promptly answered), nothing was heard from the plaintiff's solicitors from 6 November 1989 until 6 June 1990 when the plaintiff's solicitor telephoned the defendant's solicitor requesting an inspection of a motor vehicle panel damaged in the claimed accident and then in the possession of the defendant. This assertion is at odds with the plaintiff's solicitor's affidavit, pars8 and 9. In these paragraphs, the plaintiff's solicitor asserts that on 19 October 1989, he spoke to the defendant's solicitor and asked where the damaged panel was kept so it could be inspected. I am unable to resolve this conflict between the affidavits as neither deponent was called for cross-examination.

7 At all events, it appears to be common ground that after June 1990 there followed an exchange of correspondence between solicitors. Whether this advanced a resolution of the dispute between the parties does not appear from the affidavit material, but in the light of subsequent events, seems to be unlikely.

8 According to the affidavit of the defendant's solicitor, pars11 and 12, the exchange of correspondence came to an end about 14 September 1990 and nothing was done until 13 March 1991 (a period of six months), when the plaintiff's solicitor requested proofs of any expert opinion evidence that was to be called. According to this affidavit, the request provoked an exchange of correspondence, but after that, apart from one telephone conversation, there was no contact between solicitors from 17 May 1991 until 25 June 1992 (a period of one year and one month).

9 The affidavit sworn by the solicitor for the plaintiff does not dispute the substance of those assertions, but discloses that between June 1990 and September 1990, in addition to the exchange of correspondence, there was an interlocutory hearing with respect to the delivery of particulars upon the application of the plaintiff. The plaintiff succeeded on this application. The plaintiff's solicitor filed another interlocutory application. This time it concerned discovery. However, a hearing was avoided by the defendant's solicitor promising to produce certain documents. However, this outburst of activity ceased, as is common ground, on 14 September 1990 with the defendant's solicitor's promise to produce another affidavit of documents and to draft and administer interrogatories for the plaintiff.

10 Those interrogatories were not prepared and in March 1991 the plaintiff's solicitor telephoned the defendant's solicitor inquiring as to their whereabouts. He also requested delivery of proofs of any expert opinion evidence to be adduced on behalf of the defendant. Over the next two months, the plaintiff's solicitor pressed the defendant's solicitor with respect to these matters on several occasions by telephone and by letter to no avail. Between the middle of May 1991 and about the middle of June 1992 (a period of one year and one month), neither solicitor did anything to prosecute his client's case. The defendant's solicitor's affidavit offers no explanation for this period of inactivity. The plaintiff's solicitor deposed to his assumption that the file escaped his "resubmission system".

11 In the middle of June 1992, the plaintiff telephoned his solicitor and this prompted the latter to get the file out of the system and resume the pressure on the defendant's solicitor to comply with the requests he had made more than twelve months ago. Again this pressure was to no avail. Apart from a letter or two, the litigation lapsed into the doldrums again. Neither side took any step in the action between 7 July 1992 and 2 March 1994 (a period of one year and eight months). As before, the defendant's solicitor proffered no explanation for this inactivity and the plaintiff's solicitor assumed that the file had escaped his resubmission system once again.

12 By this time, the indolence that permeated the conduct of this litigation reached such a state that the plaintiff's solicitor failed even to bank a cheque for $650 that had been sent them by the defendant's solicitors in payment of costs for an interlocutory hearing. The cheque went stale and had to be replaced.

13 On 2 March 1994, the plaintiff's solicitor issued a notice of intention to proceed. Thereafter, correspondence was exchanged between solicitors with respect to the delivery of expert opinion evidence and an inspection of the damaged panel from the plaintiff's Porsche. By this time, nearly seven years had elapsed since the occurrence of the accident which gave rise to this relatively small claim. Although resolution of the dispute appeared to be no closer, it would not surprise me if the costs of this litigation so far had already exceeded the amount of the claim.

14 During the eight months between March 1994 and November 1994, the plaintiff's solicitor made repeated requests for proofs of any expert opinion evidence to be called on behalf of the defendant and also for delivery of the promised interrogatories. These interrogatories were not provided until 1 November 1994 and a proof was not sent until 17 November 1994.

15 However, on the other side of the coin, the plaintiff did not provide answers to the interrogatories until 28 April 1995, five months after their receipt and then only after an application for an order for answers had been filed. After the interrogatories had been answered, there followed a period during which correspondence between solicitors was exchanged. This period concluded about July 1995 with the defendant's solicitor due to respond to a request made of him by the plaintiff's solicitor.

16 The response was not forthcoming. The plaintiff's solicitor did not press for a response. Neither solicitor did anything with respect to the action between 28 July 1995 and 26 July 1996 (a period of twelve months). There is no explanation from either solicitor for this state of affairs.

17 On 26 July 1996, the plaintiff's solicitor took the initiative and filed another interlocutory application. This resulted in an order being made with respect to delivery of proofs of expert opinion evidence, documents and the like. The order was made on 12 August 1996, but the plaintiff's solicitor did nothing to enforce compliance until 2 December 1996. There followed a period of what might be called desultory activity which came to end about the middle of 1997.

18 Between July 1997 and February 1998 (a period of seven months) there was no activity from either side. On 27 February 1998, the plaintiff's solicitor appointed 18 March 1998 as the date for the holding of a compulsory conference.

19 At this time, conduct of the defendant's file was transferred from one practitioner to another in the office of the defendant's solicitors. There is no doubt in my mind that until this time, the dilatory manner in which this litigation had been conducted arose from the joint attitude and approach of both solicitors. The delays were due, as Mr Tree, counsel for the plaintiff submitted, to the action proceeding at a pace determined by the two solicitors together.

20 The response of the defendant's solicitor to the notice of appointment for the holding of a compulsory conference did nothing to hasten the conclusion of this sorry litigation. He took the stance that the notice was ineffective because no notice of intention to proceed had been served. At the same time, he "foreshadowed" to the plaintiff's solicitor that a strike out application would be made. Instead of sensibly issuing a notice of intention to proceed, the plaintiff's solicitor took the stance that such a notice was not necessary and that the notice of appointment of a compulsory conference was validly given. He invited the defendant's solicitor to file his strike out application should he wish to do so. However, despite this posturing from either side, nothing significant occurred for about six months. According to his affidavit, par27, on 28 August 1998, the defendant's solicitor, "once again advised the plaintiff's solicitor that an application to strike out the plaintiff's claim for delay would be made."

21 On 13 October 1998, the plaintiff's solicitor made an application for directions pursuant to the Rules of Court, O32A. In the proper conduct of this litigation, such an application should have been made a decade ago by either the plaintiff or the defendant. Upon this application, the Master ordered the defendant's solicitor to attend a compulsory conference and, on 27 October 1998, the plaintiff's solicitor nominated 5 November 1998 as the date for doing so. However, according to the plaintiff's solicitor's affidavit, the day before that letter was sent, this application was "issued". The court record shows that it was filed on 9 November 1998 and an appointment was given for 23 November 1998. I can see no explanation for this difference but it is immaterial in all the circumstances. For some reason, the appointment on 23 November 1998 could not be kept and the matter was heard by me two weeks later.

22 During the course of his submissions, Mr Tree described the conduct of this litigation as "lamentable". He said, "it does not reflect well on either side" and that it provides "telling reason for judicial supervision" of the pre-trial conduct of litigation. I completely agree with all those observations. Notwithstanding this, the question still is whether the plaintiff's solicitor's conduct of his client's case has been such that the proper exercise of the discretion requires the making of an order that the writ and statement of claim be struck out.

23 The discretion that has to be exercised is not expressly fettered, but must be exercised in accordance with principles that have been developed by the common law. See Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513. In Tasmania, those principles are authoritatively set out in the Closer Settlement Board v Thomas [1982] Tas R 179. In that case, Neasey J referred with approval at 185 to Witten v Lombard Australia Ltd (1968) WN (Pt1) NSW 405 and Stollznow v Calvert [1980] 2 NSWLR 149 and said at 186:

"The exercise of discretion in a summons of this kind is to be determined according to the overall justice of the matter, which depends upon all its facts and circumstances. The exercise of the court's discretion is not to be confined by fixed rules. The nature of this exercise of discretion does, however, require close consideration to be given to some of the same factors which are of importance in an application to extend time after the expiration of a statutory limitation period; namely the extent and quality of delay, whether primary responsibility for it lies with the party or his legal advisers, and the extent and nature of prejudice to one party or the other. In particular, as it is relevant in this case, I agree with Moffitt P that according to circumstances, although consideration of the plaintiff's delay and the reasons for it are by the nature of the case of primary importance, inaction or delay on the part of the defendant may be relevant."

24 At 194, Cosgrove J also referred with approval to Stollznow v Calvert and said at 195:

"...a litigant who applies for the dismissal for want of prosecution of his opponent's action (or counter-claim) should be able to assert and establish at least -

(a) that his opponent has delayed for a significantly long time;

(b) that, viewed against the background of the whole matter, including the conduct of both the applicant and his opponent, that delay is inexcusable; and

(c) that in all the circumstances it would be unjust to the applicant to allow the action (or counter-claim) to proceed and that the justice of the case requires that the action (or counter-claim) be dismissed."

25 The above principles have since been applied at first instance on many occasions. See, eg, W Coogan & Co (Hobart) Pty Ltd v Reid, Lawless, Thompson and Yapp 48/1992; Gutteridge Haskins & Davey Pty Ltd v Seaview Properties Pty Ltd & Ors B31/1990; Barrow & Anor v Kearney B5/1995; Wing v Stewart B11/1995.

26 The same broad approach has been taken in all other States. See Masel v Transport Industries Insurance Co Ltd & Others [1995] VicRp 59; [1995] 2 VR 328, a recent case in which the exercise of the discretion in other States is surveyed.

27 In considering the justice of the case, regard must now also be had to the provisions of the Rules of Court, O32A. Neasey J referred to the provisions of this Order as then enacted in the Closer Settlement Board v Thomas (supra) and said, at 188 - 189:

"In deciding such an application, however, the nature and content of our pre-trial rules is certainly a relevant consideration. The indicated remedy for a defendant where the plaintiff delays in setting down is not a summons to dismiss; rather it is that he should take the next step himself, which he has as much opportunity as the plaintiff to do. A defendant's right to 'let the sleeping dog lie', to which many of the cases elsewhere refer, still exists here, but where the defendant seeks to avail himself of it and to have an action dismissed for want of prosecution by the plaintiff, the defendant's own conduct in relation to the trial rules will in my view be under review as well as the plaintiff's."

28 Almost two decades have passed since those words were written and in that period of time the concept of court management of the pre-trial conduct of proceedings has become entrenched in the philosophy and practice of litigation in all Australian jurisdictions. The principal aims of case management are the reduction of delay and expense in the achievement of a resolution of litigation. At any stage of the proceedings, a party thereto is entitled to come to the court with a complaint of delay and, if appropriate, the court will step in and make pre-trial orders to manage the conduct of those proceedings to eliminate that delay. The sanction for failure to comply with such orders is the striking out of the pleadings of the defaulting party. In my view, an applicant who complains of delay and asks for a strike out order but has not sought pre-trial orders pursuant to O32A, needs to explain why he or she did not have recourse to the case management offered by O32A in an attempt to eliminate that delay at an early stage. Unexplained failure to invoke case management to eliminate delay may, as it does in this case, lead to the inference that no objection was taken to the delay. Although an applicant is entitled to "let sleeping dogs lie", the case for resultant prejudice is much harder to make out when such prejudice could have been avoided by a simple application for directions.

29 In this case, the defendant claims it has suffered prejudice by reason of the inordinate delay. There is no doubt that after this lapse of time both parties will have suffered prejudice. The defendant's solicitor deposed that three months before the application was filed, a loss assessor, who inspected the plaintiff's vehicle, died. In a written report, this assessor opined that the position of certain scratches on the damaged panel of the Porsche indicate that they were inflicted after impact. Although this witness is no longer available, the damaged panel has been in the possession of the plaintiff's solicitor for the past four years and is available for inspection by another loss assessor. Further, the statement by the deceased witness may still be admissible in evidence, in any event.

30 Having regard to the manner in which both solicitors conducted this litigation, at least up until March 1998, I am not persuaded that the justice of the case requires an order that the plaintiff's claim be struck out for want of prosecution. The application is dismissed.