Nitopi v Nitopi

headnote [This headnote is not to be read as part of the judgment] Ms Cristina Nitopi, the appellant, appealed from a decision of a judge of the Common Law Division to dismiss her statement of claim pursuant to r 12.7(1) of the Uniform Civil Procedure Rules 2005 (NSW) on the ground that she had not prosecuted her proceedings with due despatch. The appellant claimed restitution, damages for deceit and equitable compensation from her son, Mr Giuseppe Nitopi, the respondent, in the amount of $6.5 million plus interest. She alleged that in June 1999, and at subsequent times, she and the respondent agreed that the appellant would obtain bank loans secured over her property and that the respondent would apply the borrowed monies to his business interests and would make all necessary repayments and interest payments. The respondent denied that this agreement was made. The respondent instead alleges that he and the appellant agreed that he would assist the appellant to obtain bank loans secured over the property and would develop and manage the property for the benefit of the appellant. By cross-claim, the respondent claims damages from the appellant and second-cross-defendant. On 5 April 2018 the primary judge dismissed the appellant's statement of claim for want of due despatch. The issue on appeal was whether the primary judge's exercise of discretion to dismiss the proceedings miscarried. The Court (Macfarlan, Meagher and McCallum JJA) allowed the appeal, holding: (Per Macfarlan JA, Meagher and McCallum JJA agreeing): For the court's discretionary power to dismiss proceedings for want of due despatch to arise, the court must make a factual finding that the plaintiff has not prosecuted the proceedings "with due despatch". This is an evaluative finding about which minds may differ: [12]. The primary judge's exercise of discretion miscarried because (1) the appellant's breaches of court directions for the filing of her evidence were not as numerous or serious as his Honour was led to believe, (2) his Honour did not assess explanations proffered for the appellant's breaches of court directions, (3) his Honour did not take into account the close relationship between the statement of claim and cross-claim, and (4) his Honour proceeded on an erroneous basis concerning the appellant's ability to pursue replacement proceedings: [19], [23], [26]. Green v Healthscope Ltd (t/as Hills Private Hospital) [2015] NSWCA 325 referred to. Considerable caution is required before the serious step of dismissing proceedings is taken, especially where there are issues as to whether the existing proceedings, and any possible further proceedings, may be statute-barred: [29].

Judgment

1. MACFARLAN JA: Pursuant to leave granted on 10 October 2018, Ms Cristina Nitopi appeals against a decision dated 5 April 2018 of R A Hulme J sitting in the Common Law Division to dismiss her statement of claim pursuant to r 12.7(1) of the Uniform Civil Procedure Rules 2005 (NSW). That rule provides that "[i]f a plaintiff does not prosecute the proceedings with due despatch, the court may order that the proceedings be dismissed or make such other order as the court thinks fit".

The nature of the claims in the proceedings

1. By her Further Amended Statement of Claim the appellant claimed restitution, damages for deceit and equitable compensation from her son, Mr Giuseppe Nitopi, the respondent, in the amount of $6.5 million plus interest. She alleged that in June 1999, and at subsequent times, she and the respondent agreed that the appellant would obtain bank loans secured over her property at Riverstone and that the respondent would apply the borrowed monies to his business interests and would make all necessary repayments and payments of interest.
2. In his defence, the respondent denied that this agreement was made and, by his (further) Amended Statement of Cross-Claim, alleges, instead, that he and the appellant agreed that the respondent would assist the appellant to obtain bank loans secured over the property and would develop and manage the property for the benefit of the appellant. He alleges that they and the second cross-defendant, a sister of the respondent and daughter of the appellant, agreed that the developed property would ultimately be sold and the proceeds of sale divided between them in agreed proportions.
3. By the cross-claim, the respondent claims damages from the appellant including for interest he paid, repayments he made to the banks and the share of the proceeds of sale of the property that he would have received if the appellant had not defaulted on the bank loans and the property had not been sold by one of the banks. He also claims damages from the second-cross-defendant for her alleged wrongful conversion to her own use of rental monies in respect of the property.

The course of the proceedings

1. The following is a brief overview of what occurred in the proceedings following their commencement on 30 March 2015. 1. After the respondent's defence was filed on 15 May 2015, there were at least six directions hearings during 2015, ultimately resulting in the appellant filing on 11 December 2015 the affidavit (of herself) that she intended to rely upon in the proceedings. 2. On 5 February 2016 the respondent filed a notice of motion seeking an order that the appellant provide security for his costs of the proceedings. On 1 April 2016 that motion was dismissed, with costs. 3. At a directions hearing on 15 April 2016 the appellant advised the Court that she wished to amend her statement of claim. As the amendment was opposed, she was directed to file a notice of motion. On 28 June 2016, she was granted leave to amend, with each party to pay their own costs of the motion. 4. On 9 September 2016 the respondent filed a cross-claim, having first been given leave to do so on 20 August 2015. As it did not include an affidavit verifying the pleading (in accordance with r 14.23 of the UCPR), the Court directed him to file a compliant cross-claim, which he did on 21 October 2016. 5. After the appellant filed her defence to that cross-claim, the Court directed, on 7 November 2016, that the appellant and respondent file the affidavits on which they relied, the appellant by 16 January 2017 and the respondent by 13 February 2017. The appellant had already filed her affidavit (see [5(1)] above) on 11 December 2015 but seems to have decided to file further evidence. Despite a subsequent extension by consent to mid-February 2017, the parties did not comply with these orders and the respondent has still not filed his affidavits. The appellant filed her further affidavit on 29 March 2019 (see [5(11)] below). 6. On 13 March 2017 the appellant and respondent informed the Court that they wished to amend the statement of claim and cross-claim respectively. The Court directed that the parties do so by 3 April 2017. As a result of directions made by consent on 3 April, 8 May and 5 June 2017, this date was extended to 12 June 2017. On 9 June 2017 the appellant filed her amended statement of claim. On 14 June 2017 the defendant filed his further amended cross-claim, two days late. 7. At a directions hearing on 24 July 2017 the parties were directed to file and serve defences by 11 September 2017. The appellant filed her defence to the amended cross-claim on time. On 12 September 2017 the respondent filed his defence, one day late. 8. On 15 September 2017 the Court ordered that the appellant file any further evidence on which she intended to rely by 30 October 2017 but she did not comply with that direction. Nor did the respondent comply with the direction made on that day that he file any evidence on which he relied in respect of the statement of claim and cross-claim by 27 November 2017. He still has not done this. 9. On 7 December 2017 the respondent filed a notice of motion seeking dismissal of the appellant's proceedings for want of prosecution. The motion was dismissed on 13 February 2018 although the appellant was ordered to pay the respondent's costs of the motion. 10. On 5 February 2018 the appellant was given until 26 March 2018 to file her further evidence. When she did not do this by 26 March 2018 the respondent filed the notice of motion seeking dismissal of the appellant's statement of claim which has given rise to the present appeal. He did this on the day following the appellant's default. 11. On 29 March 2018 the appellant filed the affidavit contemplated by the 5 February 2018 direction, although the annexures were not provided until 4 April 2018. 12. On 5 April 2018 the respondent had his notice of motion for dismissal referred to the duty judge, R A Hulme J, for hearing the same day.
2. At the hearing of the motion, the primary judge having made clear at the outset that he had not read the "rather thick file", counsel for the respondent's submissions included the following statements: 1. he was confident that the matter would only take about 15 minutes and that it would fall within a "very narrow compass"; 2. the procedural chronology which he handed up would save his Honour "having to trawl through the file"; 3. when an earlier motion "for strikeout for want of prosecution" had come before the Court earlier in the year, "the Court gave the plaintiff an opportunity - its one final opportunity … "; 4. there had been "21 directions hearings in this matter" and the appellant had been ordered to serve the affidavits on which she relied "on 8 October 2015, and it was ordered every time we had the matter come back", and she had not complied with any of the orders; 5. the appellant's affidavit was not just three days late it was "three years and three days late"; and 6. "[t]he affidavit of Mr Parisi [filed by the respondent] doesn't need to be gone through in any meaningful way, your Honour. It is merely an evidentiary basis for the chronology, which is the aide-mémoire, and the documents that are appended thereto as evidence of the correspondence between the parties and various other matters".

The first instance judgment

1. At the hearing of the motion, counsel then appearing for the appellant said "I did not expect this matter to be referred today, so I am in an invidious position as to providing evidence with respect to the delay".
2. The primary judge delivered a brief ex tempore judgment. As he explained in a subsequent costs judgment, "[b]revity was necessary at that time due to the exigent circumstances of sitting as duty judge at Darlinghurst whilst having a jury in a complex murder trial deliberating" (Nitopi v Nitopi [2018] NSWSC 609 at [9]).
3. Having referred to the procedural chronology provided to him by counsel for the respondent, his Honour said in his 5 April judgment: "It is unnecessary to recite the various events in that history, but it is one that has the features of significant delays in the filing of evidence by the plaintiff, despite quite a number of orders requiring that evidence be filed and served by specified dates. There have been constant breaches of such orders, with lack of appropriate explanation for such failures. Another feature of the history that is significant is the frequent changes of solicitors and counsel acting for the plaintiff in the three-year history. She now has a fourth set of solicitors acting for her who were engaged in mid-December last year and, apparently, her present counsel is the fifth to be engaged in the matter."
4. His Honour added that the respondent "is rightly aggrieved by the cost and the drawn-out nature of these proceedings which, I am given to understand, are not complex. There is no attribution of fault to the defendant himself". He continued: "There is no bar, I am told, to the plaintiff reinstituting proceedings if she should choose to do so, but I note the provision of r 12.10 of the Uniform Civil Procedure Rules 2005 (NSW)".
5. His Honour then concluded that justice required that the appellant's proceedings be dismissed for want of due despatch and that the appellant pay the respondent's costs.

Consideration of the appeal

1. The respondent's application for dismissal was made pursuant to r 12.7(1) of the UCPR, which is quoted at [1] above. It is apparent from its terms that, for the court's discretionary power to dismiss proceedings to arise, it is necessary for the court to make a factual finding that the plaintiff has not prosecuted the proceedings "with due despatch", albeit that it will be an evaluative finding about which minds may well differ.
2. As to the exercise of the court's discretion to dismiss proceedings, Gleeson JA explained in Green v Healthscope Ltd (t/as Hills Private Hospital) [2015] NSWCA 325 at [26]: "It has been said that, when there has been no hearing on the merits, a court should be reluctant to make an order dismissing proceedings for want of prosecution or want of due despatch, unless there has been an intentional and contumelious default on the part of the plaintiff, or inordinate or inexcusable delay giving rise to a substantial risk that a fair trial would not be possible: Birkett v James [1978] AC 297 at 318. Nonetheless, it has been observed that the stringency of that principle has been diminished by the enactment of ss 56-60 of the Civil Procedure Act 2005 (NSW): see State of New South Wales v Plaintiff A [2012] NSWCA 248 at [17] (Basten JA). Accordingly, it is now necessary to have regard to the "overriding purpose" referred to in s 56, being to "facilitate the just, quick and cheap resolution of the real issues in the proceedings": Hobbs v Australian Securities and Investments Commission [2013] NSWCA 432 at [52] (Barrett JA).
3. For the following reasons, I consider that the appeal should be allowed.
4. First, the primary judge's implicit factual finding that the appellant did not prosecute the proceedings with due despatch was founded in part upon her "delays in the filing of evidence … despite quite a number of orders requiring that evidence be filed and served by specified dates". His Honour did not identify the number of breaches involved, but the respondent's counsel implied that there had been 21, or at least close to 21, breaches of that nature (see [6(4)] above). In fact, there appear only to have been about seven, although it is difficult to be certain on the basis of the limited material available to this Court. Four of these were in 2015. These were rectified by the appellant filing her affidavit in December 2015 (see [5(1)] above). The fifth resulted from the appellant's non-compliance with a direction made on 7 November 2016, but the respondent also breached a direction made at the same time that he file affidavits in support of his cross-claim (see [5(5)] above). The sixth breach resulted from a direction made on 15 September 2017, but again, the respondent breached a corresponding direction made on the same date (see [5(8)] above).
5. The seventh breach arose out of the direction of 5 February 2018 that the appellant file and serve her evidence by 26 March 2018. As indicated at [5(10)] and [5(11)] above, her affidavit was filed three days late (although the annexures to it were not provided for another six days). Nevertheless the breach was rectified before the hearing of the motion on 5 April 2018.
6. Whilst it must be concluded that the appellant did not act with "due despatch", so that there was no error in the primary judge's implicit finding to that effect, the appellant's defaults concerning the filing of her evidence do not appear to have been as numerous or serious as the primary judge was led to believe. Those in 2015 were rectified by the end of that year, well over two years before the motion for dismissal was filed. The later breaches were limited and were rectified by the date of hearing of the motion.
7. Secondly, his Honour's exercise of discretion miscarried because he proceeded on the basis that there was a "lack of appropriate explanation" for the appellant's breaches of directions. In fact, there were explanations, albeit far from complete, in Mr Parisi's affidavit. The respondent's counsel's submissions to the primary judge (see [6(6)] above) were liable to, and seemingly did, deter his Honour from examining the affidavit.
8. In particular, correspondence from the appellant's solicitors annexed to Mr Parisi's affidavit from time to time proffered excuses for delays on the part of the appellant. For example, a letter of 11 January 2017 explained that the appellant had been delayed in her return to Sydney from Queensland by issues relating to the sale of a property at Main Beach. Counsel for the appellant identified to this Court other instances of explanations being given on behalf of the appellant in the correspondence.
9. As well, Mr Parisi's affidavit annexed an affidavit of 2 February 2018 sworn by Mr Daniel Riedstra, a solicitor employed by the appellant's then solicitors. This affidavit described the difficulties Mr Riedstra's firm was having in advancing the appellant's case, particularly due to the withholding of documents from them by the appellant's previous solicitors who claimed a lien over them.
10. In addition, at the hearing before the primary judge, the appellant's counsel identified circumstances that had been impeding preparation of the appellant's evidence, namely, that "there has been a lien that has been exercised over files."
11. In these circumstances, it was, with respect, erroneous for the primary judge to proceed on the basis that there was a "lack of appropriate explanation" from the appellant without examining and assessing the material to which I have referred.
12. Thirdly, his Honour's exercise of discretion miscarried because his Honour did not take into account the existence of the respondent's cross-claim and its intimate connection with the statement of claim. Although, as pointed out by the respondent's counsel, the causes of action asserted by the appellant in the statement of claim and the respondent in the cross-claim are different, their respective claims arise out of substantially the same dealings between them. They give diametrically opposed versions of the agreement between the parties that led to the appellant making substantial borrowings from the various banks involved.
13. In these circumstances, it is essential for the "just, quick and cheap resolution of the real issues" in the statement of claim and cross-claim proceedings that they be heard together (s 56(1) of the Civil Procedure Act 2005 (NSW)). Separate hearings would give rise to the possibility of contradictory outcomes and the incurring of unnecessary costs. Before this Court, the respondent's counsel accepted that, if the claims made by the statement of claim are to proceed, they should be heard with the same time as the cross-claim. His submission before the primary judge had been that, whilst the statement of claim should be dismissed, it was open to the appellant to recommence her proceedings. Presumably he would accept that those recommenced proceedings would, in the interests of justice and the parties, have to be heard with the cross-claim. On this basis, there would be little point in the dismissal of the statement of claim.
14. The primary judge's attention was not, but should have been, drawn to the overlapping issues arising on the statement of claim and cross-claim. A proper exercise of the primary judge's discretion to dismiss the proceedings required them to be taken into account.
15. Fourthly, his Honour's exercise of discretion miscarried because, again as a result of a lack of the assistance from counsel to which his Honour was entitled, his Honour proceeded on an erroneous basis concerning the appellant's ability to pursue the same relief in fresh proceedings. As noted above, his Honour was told that there was no bar to the appellant reinstituting proceedings. His Honour observed that, as a result of r 12.10 of the UCPR, the appellant may have to pay the respondent's costs of the dismissed proceedings before doing so.
16. His Honour's attention was however not drawn to paragraph [15] of the respondent's amended defence which contended, in answer to the whole of the appellant's claim, that her alleged causes of action were barred by s 14 of the Limitation Act 1969 (NSW) which imposes a six year limitation period in respect of claims founded on contract and other stated bases. Bearing in mind that the first and second of the loans in question were obtained in June 1999 and April 2006 respectively, the possible success of that defence could not be ignored. Again, it was a matter that was required to be taken into account for the discretion to have been properly exercised.

Re-determination of the first instance motion

1. In light of the above circumstances, it is necessary for this Court to consider for itself what orders should be made in respect of the respondent's motion to dismiss the appellant's statement of claim for want of due despatch on her part. For the following reasons, I consider that that motion should be dismissed with costs.
2. Although the appellant's conduct reached the threshold of a failure to prosecute her proceedings with due despatch, I do not consider that the Court should exercise its discretion to dismiss her proceedings. The factors to which I have referred above in [18] to [27] (that is, some explanations for delay being available, the existence of the cross-claim and the existence of the limitation defence) lead me to that conclusion. Certainly, the appellant could have done much better and her breaches of court directions are wholly unacceptable, but considerable caution is required before the serious step of dismissing proceedings is taken, especially where there are issues as to whether the existing proceedings, and any possible further proceedings, may be statute-barred.
3. In addition to the above-mentioned factors, I take into account the respondent's own default in the conduct of his defence and cross-claim. In this respect, the appellant, by reference to the procedural chronology that was before the primary judge, identified to this Court some 14 breaches by the respondent of court directions, commencing with a direction made on 20 August 2015. Principally, the directions were for the respondent to file his evidence, which he still has not done. Those breaches, unlike those of the appellant concerning the filing of her evidence, remain unrectified.

Conclusion and orders

1. Before concluding, I note first that the appellant informed the Court that she does not intend to seek leave to further amend her statement of claim.
2. Secondly, in light of my conclusion that the appeal should be allowed and the respondent's notice of motion filed in the Common Law Division dismissed, I note that it is unnecessary to deal with the appellant's application to this Court for leave to file fresh evidence. That application should be dismissed without any penalty for the appellant as to costs. These should form part of the general costs of the appeal.
3. Thirdly, I note my view that the proceedings would benefit from close supervision by a first instance court. The parties should consider seeking to have the proceedings entered into the Equity Division Commercial List to facilitate this occurring.
4. For the above reasons, I propose the following orders: 1. Allow the appeal. 2. Dismiss the appellant's motion for leave to adduce fresh evidence. 3. Set aside the orders made at first instance on 5 April 2018 ordering the dismissal of the statement of claim and ordering the appellant to pay the respondent's costs of the proceedings. 4. Dismiss the respondent's motion filed in the Common Law Division on 27 March 2018. 5. Order the respondent to pay the appellant's costs of that motion and of the appeal, including the application for leave to appeal.
5. MEAGHER JA: I agree with Macfarlan JA.
6. McCALLUM JA: I agree with Macfarlan JA.

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