Plaintiffs v Defendants

1 The first to third defendants, Domenico Cappelleri (Domenico), Mario Cappelleri (Mario) and F & L Pty Ltd (F & L) (collectively the defendants[1]), seek the dismissal or stay of the proceeding, either in whole or in part, on two grounds. First, dismissal of the proceeding for want of prosecution and second, dismissal owing to breach of overarching obligations under the Civil Procedure Act 2010 (Vic) ('CPA').[2]

2 The plaintiffs are Leonie Cappelleri (Leonie), in her personal capacity and separately as executrix of the estate of Frank Cappelleri, and Vincenzo Cappelleri (Vincenzo) (plaintiffs). Frank Cappelleri (the deceased) died on 18 October 2014 and probate of his will was granted to Leonie on 18 December 2014. Vincenzo is the only child of the deceased and Leonie. Domenico and Mario are the deceased's brothers.

3 In an order made on 20 April 2020 I noted that this application was suited to and should be determined on the papers, given the current social distancing requirements and 'stay at home' directions given by the government owing to the COVID-19 pandemic.

4 My conclusions is that the plaintiffs proceeding should not be dismissed for want of prosecution pursuant to the inherent power of the Court nor is the conduct of the plaintiff such as to warrant dismissal by reason of breaches of the plaintiffs overarching obligations under the CPA.

5 The main proceeding was commenced by writ by the plaintiffs on 31 July 2017, and an amended statement of claim was filed on 5 February 2019. The essence of the dispute in the main proceeding is between Leonie and Vincenzo, on the one part, and Domenico and Mario, on the other. The claims concern the ownership of a number of properties and control over a family company, F & L, and how this effects the deceased's estate.

6 While Leonie and the deceased were married, there were a number of properties that were purchased by F & L, or a predecessor company, with finances advanced and procured by Leonie and the deceased, and in respect of which it is claimed F & L hold on resulting trusts for Leonie and the deceased's estate (75 and 97 Ballarat Road, Maidstone, and 15 Saltau Street, Keilor East, Victoria). In the case of 15 Saltau Street it is alleged in the alternative that it is held by F & L in trust for Leonie and the deceased estate as a result of a common intention constructive trust, the common intention being between the deceased and Leonie who were, at the relevant times, also the directors and shareholders of F & L.

7 From 1988, F &L was owned and controlled by Leonie and the deceased. Since 2010, however, the only two shares of the company are alleged to registered in the name of Domenico. That registration is sought to be rectified as there was no valid transfer of the shares to him. The rightful owners of the two shares in F & L are, it is alleged, Leonie and the deceased's estate. It is also alleged that the appointments of Domenico and Mario as directors of F & L, and the appointment of Domenico as secretary, are invalid.

8 The plaintiffs seek a wide range of remedies against the defendants. The first group relates to who controls F & L. The plaintiffs seek the removal of Domenico and Mario as directors and secretary of F & L, and a declaration that Leonie is the proper director and secretary of F & L. The plaintiffs also seek declarations that Leonie and the deceased's estate own the two shares issued of F & L. In addition, the plaintiffs seek a declaration that three properties currently in the name of F & L are held on trust for Leonie and the deceased. The plaintiffs seek orders that Domenico remove caveats from two of these properties, or that the Registrar of Titles do so.

9 In relation to F & L ,the defence of the defendants is (putting aside much of the detail) that:

(a) the company was always controlled by the deceased;

(b) Leonie only held her share in trust for the deceased and had no beneficial interest in the company;

(c) Leonie never acted in substance as a director of the company, although she was formally a director;

(d) That Leonie made no financial contribution to the acquisition of the properties by the company and a resulting or constructive trust in respect of them in her favour is not admitted;

(e) A large part of the funds used by the company to purchase the properties were provided by Mario and other family members and from inheritances received by the deceased;

(f) Leonie and the deceased separated in 2005, after which she treated the affairs of the company as purely the concern of the deceased and up to the time of his death made no claim to have any interest in the company;

(g) After their separation, the deceased made the changes in the shareholding and directorships and she is bound by his actions;

(h) Domenico holds his share in the company on trust for Mario and the estate of Anna Rosa Cappelleri, deceased;

(i) The plaintiffs are estopped from making the claims, the claims are statute barred by the operation of s 5(a) and/or 21 of the Limitation of Actions Act 1958 (Vic) and the plaintiffs are guilty of laches and are barred in equity from making the claims.

10 Further, the plaintiffs seek orders that mortgages in favour of F & L be removed from the Titles of three further properties owned by the deceased and Leonie, by Vincenzo and by Vincenzo and the deceased (46 and 48 Kellaway Street, Maribyrnong and 482 Barkly Street, Footscray), that the mortgages on two of these properties are void, there being no consideration for them and that they were procured by the deceased by fraud and that in one case the enforcement of the mortgage is statute barred. The mortgages were lodged in 1985 and 2013. There are claims for the removal of caveats from two of these properties. The plaintiffs also seek that until this matter is determined the defendants be prevented from taking steps to enforce the relevant mortgages, and from putting the three further properties on the market. Various defences are raised to the claims in respect of these properties.

11 Finally, Leonie in her capacity as executrix of the deceased's estate, seeks $210,000 from Mario as repayment of loans the deceased allegedly provided him, interest pursuant to statute and the respondent's costs. The defence is that the payments were gifts.

12 The focus of defendants' application is on the frequent changes in the plaintiffs legal representation and their lack of adherence to Court orders. I have organised the procedural history around the changes to the respondent's legal representation, as well as noting lack of adherence to orders.

13 From commencement on 31 January 2017 to April 2018, Frank Sagaria & Associates acted as solicitors to the plaintiffs. During this time, orders were made by consent requiring the plaintiffs to file and serve a reply to the defendants' defence by 18 May 2017, and for mutual discovery by 23 June 2017. The timeframe for compliance with these orders was extended by consent on 26 July 2017, to 18 August 2017. Leonie filed an affidavit of documents on 18 September 2017. There is no record of a reply being filed and served by the plaintiffs.

14 In the same orders made on 26 July 2017, the matter was set down for mediation on 8 September 2017. On 21 September 2017, this date was changed by consent to 23 October 2017. The matter did not settle on this day.

15 Mr Kuek, the solicitor for the defendants, deposed that the defendants made an affidavit of discovery of 27 July 2017.[4] This is not on the Court file. This affidavit contained a Family Court File in a proceeding between Leonie and the deceased from 2010.[5] The Family Court File included an affidavit sworn by Leonie on 8 July 2010.[6] Mr Kuek deposed this file was not disclosed by Leonie in her first affidavit of documents nor in a supplementary affidavit of documents Leonie filed on 3 October 2017.[7] Mr Kuek also deposed Leonie made an affidavit of discovery sworn 13 September 2017,[8] however this is in error as her affidavit filed and re-sworn on 18 September 2017 was also sworn earlier on 13 September 2017.

16 On 27 March 2018, the McMillan J's Associate emailed the parties, noting the plaintiffs had contacted the Court but failed to copy in all relevant parties to that correspondence.[9] This email contained a forwarded email from the plaintiffs to the Court, in which the plaintiffs wrote they were providing information to the Court regarding issues with their representation in the proceeding ('Information').[10] A minute after receiving this email from McMillan J's Associate, Mr Kuek wrote to the Court requesting this Information.[11] The plaintiffs responded to the Court and Mr Kuek quickly, noting that the information referred to in their email was privileged.[12] Mr Kuek then wrote to the Court, stating that it was 'problematic the Court has information that the defendants are not allowed to have.'[13]

17 The Associate to J Forrest J sent an email to the parties in the afternoon of 27 March 2018. His Honour noted that an application would need to be made to the Court by the defendants to receive the Information and referred the parties to the decision of the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited.[14] The lawyer for the plaintiffs contacted the Court on the same afternoon in response to His Honour's email. This lawyer noted Counsel had ceased to act for the plaintiffs, that he was not aware of the contents of the Information and claimed privilege over them subject to Court order.[15]

18 On 10 April 2018, the plaintiffs' solicitors (Frank Sagaria & Associates) filed a Notice of Ceasing to Act. On 12 April Mr Kuek sent a further email requesting the Information from the plaintiffs, which the plaintiffs refused to provide, describing Mr Kuek's correspondence as 'vexatious insistence.'[16] There is no evidence before me that any application was made to the Court to access the Information.

19 Mr Kuek deposed that the defendants made an application to the Family Court on 1 May 2018 so they could access and rely on the Family Court Files in this proceeding.[17] Mr Kuek did not reveal the outcome of this application, but his affidavit of 17 January 2019 sworn in opposition to the plaintiffs' application to amend their statement of claim exhibits documents that appear to have been derived from Family Court proceedings.

20 From 10 April 2018 to 15 June 2018 the plaintiffs had no legal representation, so far as the Court file reveals. From 15 June 2018 to 3 September 2019 Millens Lawyers acted for the plaintiffs. The defendants does not make submissions about any conduct of the plaintiffs during this period.

21 However, it is of note that on 4 February 2019 Associate Justice Mukhtar granted an application by the plaintiffs to amend their statement of claim. In doing so, His Honour rejected the defendants' contentions that to do so would be an abuse of process, and that the amendments were doomed to fail and otherwise were oppressive. The application was referred to Mukhtar AsJ by order of McMillan J made on 2 November 2018 and that order was followed by submissions and an affidavit with extensive exhibits made by Mr Kuek.

22 On 23 July 2019, orders were made by McMillan J setting down the matter for trial for seven days starting 18 February 2020. In 'other matters' in that order, her Honour noted the Court was concerned the parties, without distinction between them, were not complying with their obligations under s 24 of the CPA that the costs incurred in the proceeding were proportionate and reasonable to the issues in dispute.

23 On 6 August 2019, Millens filed an application for leave to cease to act for the plaintiffs. The application by Millens was granted on 3 September 2019 by the Court.

24 The plaintiffs were self-represented between 3 September and 6 December 2019. On 5 September, Mr Kuek emailed the plaintiffs personally noting that they had not complied with the Court's orders regarding filing and serving witness statements as ordered, and querying whether the proceeding would be continued.[18] Mr Kuek sent a follow up email on 12 September.[19] On 16 September the plaintiffs informed Mr Kuek they were waiting for access to their file, and would inform him once they had this.[20] On the same day, Mr Kuek contacted the Court requesting the matter be set down for mention.[21]

25 Following a request from the defendants' solicitor, on 17 September 2019 the Court listed the matter for a further directions hearing on 18 October 2019, on its own motion.[22] The night before the directions hearing, the plaintiffs notified the Court by email that they could not attend.[23] Reasons for this were provided to the Court in a document attached to that email. These reasons included that Vincenzo was the primary carer for his mother, who was wheelchair bound, and making arrangements at short notice to attend the Court would therefore be difficult.[24] In the document, Mr Kuek was described as having delayed the proceedings with 'vexatious requests', and he noted the Court had been regularly informed of the plaintiffs' circumstances.[25] Vincenzo commented that a chronology provided to the Court by the defendants' solicitors was 'diluted and self-serving' and did not contain '25+ applications' for extensions of time made by the defendants in this proceeding.[26] I note these applications do not appear in the Court record. In addition, the plaintiffs described a member of the Self-Represented Litigant Co-ordinator's Office at the Court as 'abusive'.[27] The plaintiffs did not appear at the directions hearing.

26 On 18 October 2019 the Court made orders setting down the trial for 28 July 2020. Ten days later, the trial date in February was vacated by the Court. The correspondence leading up to this one directions hearing occupies nearly 12 pages of the Kuek affidavit, in minute detail. It seems that whilst the plaintiffs were self-represented Vincenzo, for himself and Leonie, complained vociferously about the conduct of the defendants' solicitor through emails to the judges associate. In the course of this correspondence, the judge's associate had to note, as sometimes happens, that the parties should limit their correspondence with the Court to uncontroversial matters.[28]

27 From 6 December 2019 to February 2020 the firm Marshalls + Dent + Wilmot ('Marshalls') represented the plaintiffs.

28 On 11 February 2020, Mr Kuek emailed Marshalls noting the plaintiffs had not filed a Reply (due on 29 November 2019) nor Witness Statements (due 7 February 2020), [29] in accordance with the dates contained in McMillan J's order of 18 October 2019. The next day, Marshalls informed Mr Kuek they intended to cease to act for the plaintiffs.[30] Marshalls filed a Summons on 14 February 2020 containing an application for leave to file a Notice of Solicitor Ceasing to Act.

29 On 26 February, the Court removed Marshalls from the record as Mercantile Legal represented the plaintiffs at the hearing on that day.[31] It appears from correspondence with the Court that Mercantile Legal were instructed to ceased acting before they filed any notice that they acted for the plaintiffs .[32] The plaintiffs did not engage further legal representation until April 2020.

30 On 11 March 2020, the Chambers of McMillan J notified the parties that the matter had been set down for trial on 28 July 2020.[33] After receiving this email, Mr Kuek forwarded it to the plaintiffs personally and requested the proceeding come to an end to prevent further costs.[34] The correspondence between the parties over the course of this day and the next is extremely antagonistic and I will not detail it here.

31 On 12 March Mr Kuek notified the Court his clients sought to make an application for the proceeding to be dismissed and struck out.[35] In consequence this application was filed on 30 March 2020.

32 On 9 April, I made orders that this application be heard on the papers and set out a timetable for filing of submissions. On 14 April, Bleyer Lawyers filed a notice that they acted for the plaintiffs. On 20 April 2020, orders were made by consent to extend by one week the time for the plaintiffs to file written submissions and affidavits in response to the defendants application. On 5 May 2020, Madgwicks Lawyers filed a notice that they had commenced to act for the plaintiffs. On 11 May one Bo Zhou, a solicitor employed by Madgwicks, filed an affidavit made that day explaining that they had only recently obtained a copy of the Court file and sought an extension of the time for filing submissions and any affidavit in response to the defendants' application, from 11 May to 18 May 2020. The extension was not opposed and was granted.

33 Madgwicks, as the plaintiffs new solicitors filed an affidavit of Catherine Anne Ballantyne, a solicitor and special counsel at that firm, on 18 May 2020. In that affidavit Ms Ballantyne revealed a number of relevant matters:

(a) Ms Ballantyne had attempted to obtain the file (including discovered documents and correspondence between the parties' solicitors) from the plaintiffs' previous solicitors, however had not yet received these documents.

(b) She caused an ASIC search of F & L and a search of those properties mentioned in the Amended Statement of Claim. It appeared from those searches that much of the relief sought by the plaintiffs appear on the searches to already have occurred and consequently the issues in dispute have been narrowed significantly. She summarised the status of the plaintiffs' claims in a table. The searches showed that Domenico and Mario had ceased to be directors and shareholders of F & L and Leonie had taken their places. Some caveats had been removed and because the plaintiffs control F & L the mortgages over properties owned by the plaintiffs are no longer an issue.

(a) Vincenzo informs her, and she believes, that the delay in complying with the Court orders is as a result of Leonie's medical condition and mental health which has been an issue for over 6 months and that Leonie had also been admitted in hospital in January 2020, February 2020 and April 2020.

(b) Vincenzo and Leonie have also informed Ms Ballantyne, and she believes, that Leonie was admitted to the Royal Melbourne hospital on 8 May 2020 and is still currently in hospital.

(c) She has been instructed by both Vincenzo that Leonie also uses her maiden name, being Tenace, and she has been admitted under this name in hospital. Ms Ballantyne has been provided with a copy of Leonie's birth certificate, marriage certificate and bills addressed to her at 15 Saltau Street, Keilor East (one of the properties the subject of these proceedings), which she produces.

(d) On 21 February 2020 Dr Stacey Turner wrote that Leonie '.. .had been admitted to hospital following a similar presentation in January 2020' and she produces a copy of the letter.

(e) On 5 May 2020 the Royal Melbourne Hospital discharge summary states, amongst other matters regarding Leonie, that she has a major depressive disorder, reported dissociative episodes and was admitted to Western Health in April 2020 for catatonic-like events. She produces redacted Healthscope Notes dated 9 April 2020 and a redacted Royal Melbourne Hospital discharge summary dated 11 May 2020.

(f) On 15 May 2020 Ms Ballantyne received an email from Dr Tan, Leonie's treating Doctor at the Royal Melbourne Hospital, which stated amongst other matters, that she was currently an inpatient at the Royal Park Campus, Royal Melbourne Hospital. She was admitted to hospital since 8 May 2020 and at the Royal Park Campus since 11 May 2020 after a fall and back pain. She had a history of depression and that there was insufficient evidence to state that she does not have capacity and therefore he believes she does currently have capacity to make decisions with regards to her legal proceedings. Ms Ballantyne produces a copy of that email.

35 Ms Ballantyne notes that the orders of McMillan J made on 18 October 2019 required that (amongst other orders) the plaintiffs file and serve their witness statements on or before 7 February 2020 and serve a draft index of the Court Book on the Defendants on 20 March 2020. She says that she has completed a draft court book index based on the documents she has and has provided that to the solicitors for the defendants and she believes a witness statement for Vincenzo can be completed within 7 days, but due to Leonie's medical condition a witness statement will be only be able to be completed once she is discharged from hospital.

Inherent Power of the Court to Dismiss Proceedings

36 The Court's inherent power to dismiss a proceeding for want of prosecution is relied on in this case. The inherent power is recognised by r 24.05 of the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules').[36] That rule provides that nothing in Order 24 affects the inherent power of the Court -

(a) to dismiss any proceeding for want of prosecution; or

(b) to order that upon the failure of a party to do any act or take any step which under these Rules the party is required to do or take or to comply with an order that the party do any such act or take any such step the proceeding shall be dismissed or the defence struck out and that judgment may be entered of that there be judgment accordingly.

37 The Court of Appeal noted in Knorr v Commonwealth Scientific and Industrial Research Organisation ('Knorr v CSIRO'):

The power of the Court to dismiss a proceeding for want of prosecution is (as in the case of dismissal for other forms of abuse of process) incidental to the jurisdiction of the Court to hear and determine the proceeding.[37] Rule 24.05 preserves the Court's inherent power to dismiss a proceeding for want of prosecution.[38]

38 In Bishopsgate Insurance[39], the Court of Appeal, after careful consideration of the authorities relating to the dismissal of proceedings for want of prosecution, adopted the statement of principles given by Lord Griffiths in Department of Transport v Chris Smaller (Transport) Ltd[40] as follows:

The power should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious, e.g. disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or (2)(a) that there has been an inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (b) that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants, either as between themselves and the plaintiffs, or between each other, or between them and a third party.

39 The Court in Bishopsgate Insurance also considered three aspects of those principles that were raised in the course of the argument in that Court:

(a) the extent to which the Court should take into account the effects on the Court's lists and resources likely to have been caused by the plaintiffs' delay;

(b) whether the Court should only have regard to the time which has expired since the plaintiff chose to issue its writ because it was entitled to wait until almost the expiry of the limitation period before issuing it; and

(c) the absence of evidence as to prejudice making it impossible for the Court to infer prejudice either as to the risk of not having a fair trial whenever that may occur or as to the burden which the defendant must be under by being kept at risk in relation to a claim of the kind advanced.[41]

40 In relation to the first matter, the Court considered that in an application for dismissal for want of prosecution, as distinct from applications made relating to the fixing, adjourning or hearing of a trial or an appeal, and the effect thereon of the granting or refusing of orders to amend, to adjourn or to call additional evidence, the orderly management of the Court's business is not ordinarily relevant to any decision whether a proceeding should be dismissed for want of prosecution upon the basis of delay.[42]

41 In relation to the second matter, after a review of the authorities, the Court adopted Lord Griffiths' remarks in Chris Smaller (Transport):[43]

...that long delay before the issue of the writ will have the effect of any post-writ delay being looked at critically by the court and more readily being regarded as inordinate and inexcusable than would be the case if the action had been commenced soon after the accrual of the cause of the action. And that if the defendant has suffered prejudice as a result of such delay before the issue of the writ, he will only have to show something more than minimal additional prejudice as a result of the post writ delay to justify striking out the action.

42 The third matter raised was the manner in which and the extent to which prejudice must be directly proved. The Court in Bishopsgate Insurance concluded that although there are many cases in which the necessity to establish prejudice has been stated as a condition precedent to the exercise of the power to dismiss for want of prosecution on the basis of delay, it is not correct to say that the defendant is obliged to allege that prejudice upon affidavit as opposed to asking the court to infer from all the circumstances of the case that prejudice has been or will be likely to be suffered. This is not to deny that prejudice, actual and potential, must be established: it is merely a reminder that proof of any issue can be established by circumstantial evidence and of the necessary process of inference from such evidence. The defendant is entitled to point to undisputed facts and ask the court to draw necessary logical inferences from them for this purpose.[44]

43 The Court in Bishopsgate Insurance added that the analysis of prejudice involved the prejudice that has been and will be likely to be suffered by the defendant because of the delay and any prejudice it might have suffered in any event. So far as likely prejudice of the conduct of a fair trial is concerned, the critical time is the time at which the action is likely to be heard.[45]

44 It is now authoritatively accepted that the question of whether a Court should take the exceptional step of dismissing a proceeding for want of prosecution does not necessarily depend upon how long has passed since the commencement of the proceeding. Nor is it necessarily dependent upon there being a lengthy period of inaction on the part of the relevant party. One can have a case where, although the proceeding has only been on foot for under a year, when one looks at what has happened at that time one can see that the proceeding has not moved to first base, let alone beyond it.[46]

45 Hardship to the plaintiff if the proceeding were dismissed, leaving the plaintiff's cause of action barred by the statute of limitations, is a factor relevant to the exercise of the discretion to dismiss a proceeding for want of prosecution.[47] Conversely, the fact that time has yet to expire under the relevant limitation period is a good reason for not dismissing a proceeding for want of prosecution. The reason is that dismissal would not bar the plaintiff from commencing a fresh proceeding on the same cause of action, save in the exceptional case that the bringing of another proceeding would constitute an abuse of process.[48]

46 It is also clear, at least since the introduction of the CPA and the decision of the High Court in Aon Risk Services Ltd v Australian National University[49] that case management considerations and questions of the proper use of court resources are matters that can be taken into account in determining applications for adjournment, the amendment of pleadings and the dismissal of proceedings in circumstances like the present. The achievement of a just but timely and cost-effective resolution of a dispute has an effect upon the Court as well as upon other litigants.[50] Although the inevitable focus of the paramount purpose prescribed by the CPA may still be the 'just' resolution of the real issues in dispute, the other matters identified, the efficient, timely and cost-effective resolution, reflect the fact that speed and efficiency, in the sense of minimum delay and expense, are also essential to the just resolution of proceedings. As the plurality said in Aon Risk Services:

...what is a 'just resolution' is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re‑pleading, when delay and cost are taken into account ... the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution.[51]

47 In addition to, and overlapping with, the matters identified by Lord Griffiths in Chris Smaller (Transport) (referred to above at [38]), there are five matters which the court will usually consider in the exercise of its discretion whether to dismiss a proceeding for want of prosecution, (1) the length of the delay, (2) the explanation for the delay, (3) the hardship to the plaintiffs if the action is dismissed and the cause of the action left statute barred, (4) the prejudice to the defendants if the action is allowed to proceed notwithstanding the delay, and (5) the conduct of the defendant in the[52]itigation.52

48 Athough it is convenient to have guidelines or rules for the exercise of a judicial discretion, it is obvious and has often been pointed out that when a general discretion is conferred upon a court its exercise cannot be fettered by such formulations. The court, upon an application for dismissal for want of prosecution, has a general discretion to be exercised upon a consideration of the relevant circumstances of the particular case; and the order for dismissal is to be made if, but only if, the court is satisfied that the justice of the occasion so demands it.[53]

49 In the decision of the Court of Appeal in Knorr, it was made clear that the dismissal of a proceeding is entirely consistent with, and indeed mandated by, the provisions of the CPA.[54] So far as presently relevant, the overarching purpose, and the overarching obligations relevant to an application of this kind are as follows:

(a) The overarching purpose in relation to the conduct of civil proceedings is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute (s 1(1)(c)).

(b) The paramount duty of the parties to the Court to further the administration of justice (s 16).

(c) The overarching obligations to narrow the issues in dispute (s 23), to ensure costs are reasonable and proportionate (s 24) and to minimise delay (s 25).

(d) The overarching obligation not to make any claim that does not have a proper basis (s 18).

50 The powers of the Court in Part 2.4 of Chapter 2 of the CPA, in particular s 29(1)(f), are of particular relevance to the application in this case. By that provision the Court can make any order it considers appropriate in the interests of justice including, but not limited to, 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.

51 Under s 28(1) of the CPA, the Court may take into account any contravention of the overarching obligations when exercising any power in relation to a civil proceeding. This means contravention of the overarching obligations can be taken into consideration when exercising the inherent jurisdiction of the Court to dismiss proceedings for want of prosecution. Further, as the Court of Appeal noted in Knorr v CSIRO, provisions of the CPA can mandate the dismissal of a proceeding in appropriate circumstances.[55]

52 Under s 29 of the CPA, the Court has the discretion to make a range of orders if it is satisfied that a person has contravened an overarching obligation. The orders that will be made depend on the circumstances of the particular case,[56] and include orders: with respect to costs,[57] that require a person take steps to remedy a contravention,[58] that a person is not permitted to take certain steps in a civil proceeding,[59] and, as I have said, any other order in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations.[60] Any party to a civil proceeding can make an application that the Court make one of the orders contemplated above or another order within the meaning of s 29(1).[61] Subsection 29(3) notes that s 29 does not limit the Court's jurisdiction to make orders.

53 Section 30 requires orders under s 29 to be made in the Court in which the proceeding was or is being heard, and s 31 allows parties to apply for an extension of time to bring an application under s 29 in circumstances where the proceeding has been finalised.

54 The defendants directed the Court to Knorr v CSIRO[62] as an example of an authority where the Court of Appeal made an order under s 29(1)(f) to dismiss a proceeding. In that case, their Honours note that while there is no specific power to dismiss a proceeding under the CPA, the power given to a Court under s 29(1)(f) is sufficiently broad to permit making an order dismissing a proceeding.[63] I made similar comments in my decision in Lu v Yu,[64] where I noted that s 29(1)(f) was particularly relevant to cases where defendants sought to have a proceeding dismissed for want to prosecution.[65]

55 However, an order dismissing a proceeding should not be taken to indicate that a party has breached their overarching obligations under the CPA, as the Victorian Court of Appeal noted in Melbourne Linh Son Buddhist Society Inc v Gippsreal Ltd (No 2):[66]

We would add, by way of obvious general observation, that the mere fact that a court dismisses a party's claim or defence does not, in and of itself, indicate that the party breached its overarching obligation to have a proper basis for the claim or defence. The issuing of a summons seeking relief under s 29 of the CPA is a serious matter and should not be undertaken lightly.

56 The defendants commenced their written submissions with a detailed outline of the procedural history of this proceeding, which I have noted above. The defendants submitted that in dismissing their solicitors more than twice and having failed to comply with Court timetabling, the plaintiffs had shown a lack of regard for their obligations under the CPA, as well as a lack of regard for their obligations to comply with Court orders. The defendants also directed the Court's attention to the fact that between 9 April 2018 and 22 October 2018, as well as since 23 July 2019 the plaintiffs did not participate in the proceeding. For these reasons, the defendants' contend the proceeding should be dismissed.

Submissions regarding inherent power of the Court

57 The defendants submitted that prior to AON Risk Services Australia Ltd v Australian National University ('AON'), [67] there were two main reasons for which the inherent power of the Court to dismiss a proceeding for want of prosecution should have been exercised. These were when the behaviour of a party was contumelious non-compliance or when appropriate orders could not remedy the prejudice suffered by a party as a result of the other's conduct.

58 The defendants submitted the case law indicates that what is in the interests of justice will determine whether an order for dismissal should be made. This is determined in part by the circumstances of the case.[68] The defendants also submitted that the public interest in 'orderly management of the court's business' is not usually a consideration that is taken into account.

59 The defendants refer to the obligation contained within s 25 of the CPA, which requires parties to minimise delay and act promptly. The defendants conceded that there are no specific powers to dismiss a proceeding for contraventions of overarching obligations, such as that in s 25, under Part 2.4 of the CPA. However, the defendants noted the decision of Neave and Osborne JJA in Knorr v CSIRO, and their comments on the breadth of s 29(1)(f) of the CPA, which I have outlined above_._[69]

60 The defendants noted that the Courts are not inclined to dismiss proceedings where there is the capacity for a viable case to be put. However, they submitted that there is a balancing exercise the Courts undertake between this inclination, and speed and efficiency. They also noted the comments of French CJ, Kiefel, Bell, Gageler and Keane JJ in Expense Reduction Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd[70] regarding the Civil Procedure Act 2005 (NSW):

The focus is upon facilitating a just, quick and cheap resolution of the real issues in the proceedings, although not at all costs. The terms of the CPA assume that its purpose, to a large extent, will coincide with the dictates of justice.

61 The defendants submitted the respondent's conduct has been contemptuous of their obligations under the CPA, to the Court and to the other parties in the proceeding. In the circumstances, it is in the interests of justice that the proceeding should be dismissed.

62 At the end of their written submissions, the defendants made an additional short submission that as far as the proceeding relates to any behaviour by the deceased, these claims are statute barred by s 5(a) and/or s 21 of the Limitation of Actions Act 1958 (Vic).

63 On 18 May 2020, the plaintiff filed their submissions in opposition to the application to dismiss the proceeding. After some background, and reference to the steps taken to ensure that Leonie has the capacity to give instructions, the burden of the submissions is that;

(a) The delay in complying with the Court's orders for the draft Court Book index and filing of witness statements, particularly when Leonie was self-represented, is that she has suffered psychiatric illness requiring hospitalisation.

(b) It is hoped that Leonie will be out of hospital in the next fortnight and a witness statement can be prepared at that time.

(c) Madgwicks has prepared for the defence of this application (including instructing Counsel), attended to the preparation of a draft Court Book index and commenced preparation of a witness statement for Vincenzo.

(d) Other than the filing and service of witness statements, there are no other outstanding matters.

(e) There is no suggestion that the defendants having suffered any prejudice as a result of the witness statements being overdue (or the change of legal practitioners) or that the trial may not be ready to proceed on 29 July 2020.

(f) The law, much of which is referred to above, does not support the dismissal of this proceeding. In particular, that striking out the proceedings for want of prosecution when a fair trial remains possible and the defendant is not otherwise prejudiced would not be an appropriate sanction, even for inordinate delay, in the conduct of litigation.[71]

(g) There is no reason to infer prejudice in this case.

64 In relation to the length of the delay, the plaintiffs witness statements were due on 7 February 2020 and this application was brought on 30 March 2020. In her affidavit, Ms Ballantyne has deposed her belief that the Vincenzo's witness statements can be finalised within a week. A draft Court Book index has recently been given to the Defendants. The plaintiffs and Madgwicks acknowledge that this is not satisfactory, but it needs to be recognised that the trial is not for another two months (28 July) and no prejudice has been caused to the defendants.

65 With respect to the causes of the delay, there are basically two factors, being the lack of legal representation for significant periods and the psychiatric and physical health of Leonie which has resulted in hospitalisation on at least three occasions this year.

66 Further dismissal would cause hardship to the plaintiffs, in that if the proceeding is dismissed, the plaintiffs would be denied their ability to pursue their legal rights against the defendants. There is no evidence of any prejudice to be suffered by the defendants if this application is denied.

67 The delay in attending to the Court Book and witness statements was neither intentional nor contumelious. The failure to prepare the witness statements and draft Court Book index in accordance with the timeline ordered by the Court was compounded by the Leonie's poor mental and physical health and being self‑represented. There is no history of repeated breaches by the plaintiffs of Court orders.

68 The plaintiffs are now legally represented and have briefed experienced Counsel to advise and appear at trial, including Mr David Galbally AM QC. Since receiving instructions to act, Madgwicks has promptly attended to the draft Court Index and preparation of witness statements. This is not a case where there is a substantive risk that a fair trial cannot be had because of inordinate and inexcusable delay. That is the critical question.[72] Further, the issues in proceeding have been narrowed, as deposed to by Ms Ballantyne.

69 Finally, the plaintiffs submitted that the holding of another mediation should be ordered. The mediation in this matter was held 2-3 years ago in 2017.

70 The Ballantyne affidavit and the plaintiffs contention that the issues had narrowed came as a surprise to the defendants, or so it seems. Despite there being no provision for a reply submission by the defendants, after some insistence I allowed one. In addition to addressing the plaintiffs' delays and failures to comply with Court orders, and their explanations for them, the defendants observed that:

To date there has been no progress in the settlement of the matter. No meaningful discussions have taken place since the mediation occurred in 2017. There has been no resolution of the directorships of F & L Pty Ltd nor of its shareholding, and no change in either has been authorised by the first or second defendants or their lawyers.

71 The changes to the shareholding and directors of F & L revealed by Madgwicks are, say the defendants, a product of unauthorised filings with ASIC purportedly by Michael Cappelleri on the night of 18/19 October 2019. Michael Cappelleri is said to have sworn an affidavit that neither he nor Mario knew of or authorised the changes to the ASIC register. As a consequence of these developments the issues have been enlarged and, should the plaintiffs succeed in maintaining the proceeding, the defendants will have to seek leave to file a Counterclaim, seek interlocutory relief and further discovery.

72 The default alleged against the plaintiffs primarily concerns delays occasioned by the difficulties they have had with their legal representation, and the periods during which the plaintiffs have been unrepresented and as a result inactive. At various times the defendants' solicitor has, in correspondence, proffered explanations for those difficulties, but there is little evidence that bears upon the reasons other than the ill-health of Leonie and the dissatisfaction of the plaintiffs with their lawyers. It is idle to speculate that there were any other reasons.

73 Delay alone is not ground for dismissal, unless the failure of the plaintiff to act has been intentional and contumelious. In one sense, the default by the plaintiffs in complying with the orders of McMillan J on two occasions in 2019 was intentional. That is, the default in complying with the Court's orders made on 23 July 2019 for the filing of witness statements by 30 August 2019 was a product partly of the intentional act of no longer retaining Millens as their solicitors in August 2019.[73] At least, there is no other explanation apart from Leonie's ongoing ill-health. I note that the defendants also did not comply with the order for the filing of their witness statements which were due on 14 September 2019, no doubt because the order required a sequential filing of statements.

74 Similarly, when on 18 October the Court varied the directions and re-fixed the trial for 28 July 2020, the failure to file witness statements on 7 February 2020 is more clearly a product of both changing legal representation and Leonie's ill-health. There was, of course, no peremptory order for the filing of a Reply. The order, like its predecessor made on 23 July, left the plaintiff with the option of not doing so. But neither event is adequately described as contumelious or contumacious. That requires more than mere failure to comply with an order of the Court. It involves a stubborn or obstinate resistance, a wilful refusal to obey an order of the Court. That is not this case.

75 The next issue is whether there has been an inordinate and inexcusable delay on the part of the plaintiff or his lawyers? In my view there has been such delay on the part of the plaintiffs, principally but not only when they had no solicitor on the Court record. The plaintiffs had no solicitor on the Court record for a total period of about 7 months, the several periods being about:

(a) 2 months from 10 April 2018 to 15 June 2018;

(b) 3 months from 3 September to 6 December 2019;

(c) 2 months from 26 February to 14 April 2020.

76 Whilst the plaintiff did have a solicitor on the record, steps were taken - albeit without apparent haste. I have not set them all out as it is clear from my perusal of the Court file that the parties engaged in the not uncommon disputes over the discovery of document and the seeking and giving of particulars of pleadings, the issuing of subpoenas and, as I have said, the amendment of pleadings. This is often, and in this case was, wasteful of time and no doubt resources, but if there is fault in any of these steps it falls on both sides of the ledger.

77 As the plaintiffs submit, however, the delays experienced are not revealed to give rise to any risk (let alone a substantial risk) or that it is not possible to have a fair trial of the issues in the proceeding, nor are they alleged to be likely to cause or to have caused serious prejudice to the defendants. It is not correct, as I have pointed out above([41]), to say that the defendants are obliged to establish prejudice by affidavit as opposed to asking the court to infer from all the circumstances of the case that prejudice has been or will be likely to be suffered. In this case there is no suggestion of actual or inferred prejudice arising from the delays, nor is it submitted that for some reason it is not possible to have a fair trial.

78 My review of the issues set out above does not fully reveal the time scale over which the impugned actions of the defendants and the deceased occurred, and in some respects the pleadings also are deficient in this respect. But it is clear that the deceased and Leonie separated in 2005, changes to the shareholding and directors of F & L occurred in 2005 (and that is unlikely to be a mere coincidence), 2010, 2013 and 2014. The acquisition of the properties by F & L occurred between 1984 and 1996, the grant of mortgages in favour of F & L over properties owned by the deceased and Leonie, by Vincenzo, and by Vincenzo and the deceased occurred in 1985 and 2013 and the impugned caveats were all lodged in 2006. The pleaded defence by the defendants that the Statute of Limitations has run is confined to the a certain transfer of the shares in F & L from Vincenzo to Domenico. The estoppel and laches defences apply across the board, so to speak.

79 If there is anything in the defences based on the Statute of Limitations, estoppel and laches, and this is not the occasion to canvass those issues in detail, then whether or not the proceeding is dismissed the defences pleaded are as good in any fresh proceeding as they are now. That is, there is no prejudice to either the plaintiffs or the defendants if the proceeding is or is not dismissed arising out of limitation, estoppel or laches defences. The position is therefore neutral as a factor in the exercise of the discretion whether to dismiss the proceeding.

80 In this case I can discern no prejudice, actual and potential, by any evidence, direct or circumstantial, nor any prejudice by inference from the circumstances. The defendants have not pointed to undisputed facts and asked the court to draw necessary logical inferences from them for this purpose.

81 There is no doubt that the fixing of the proceeding for trial on two occasions has impacted the Court's case management and the Court's resources. As I have said (above at [46]), these are matters that can be taken into account in determining applications the dismissal of proceedings in circumstances like the present. The achievement of a just but timely and cost-effective resolution of a dispute has an effect upon the Court as well as upon othe[74]litigants.74 But the fact that the efficient, timely and cost-effective resolution of the proceeding may be taken into account does not reduce the inevitable focus of the paramount purpose prescribed by the CPA, that is, the 'just' resolution of the real issues in dispute. In my judgment, in this essentially family dispute, the 'just' resolution of the disputes is more important than the speed and efficiency of their resolution. This is because, a dismissal for want of prosecution will not bring with it any resolution of the claims and defences on their merits, and that is vital in these kinds of disputes. Further, so far as case management and Court resources issues are concerned, these need to be balanced against the damage to the administration of justice that may arise if there is no resolution of the disputes on the merits. The just resolution of the disputes on the merits in a case of this kind is of greater weight than the Court's efficient conduct of its work.

82 The critical question is whether in the circumstances there is a substantial risk that a fair trial cannot be had because of the 'inordinate and inexcusable' delay.[75] There is no reason disclosed in the facts why that is not as available now as it was in 2017 when the proceeding was commenced.

83 So far as the submission that the delay discloses a breach of the plaintiffs' overarching obligations under s 25 of the CPA, which requires parties to minimise delay and act promptly, it is clear that they have breached those obligations. The Court is not, however, inclined to dismiss proceedings where there is the capacity for a viable case to be put. As the defendants pointed out, there is a balancing exercise involved between the just determination of viable claims and the speed and efficiency, and cost effectiveness, with which they are determined.

84 For the same reasons I have given in relation to the application to dismiss for want of prosecution, the 'just' resolution of the disputes in this case is more important than the speed and efficiency of their resolution.

85 The defendants also submitted the respondent's conduct has been contemptuous of their obligations under the CPA, to the Court and to the other parties in the proceeding. In my view, it is not a case of contempt at all. There has been no obstinate refusal to comply with the orders of the Court, or conduct of that kind. It is a case of difficulties in the relationship between client and solicitor (and perhaps counsel) in the conduct of the case and other factors not disclosed in the evidence, no doubt for good reason as disclosure may result in a waiver of client legal privilege. These matters might, in other circumstances, warrant the dismissal of the proceeding, but not in this case where the just resolution of the family disputes outweighs breaches of the obligation to minimise delay and act promptly.

86 For these reasons the application by the defendants to dismiss the proceeding will be dismissed with costs. It seems that a mediation is desirable and I will order that to take place promptly. Whether the defendants should now be allowed to file a counterclaim because of the alleged unauthorised changes to the shareholding and directorships of the company F & L will need to be the subject of application to be made promptly. I will make orders consistent with these reasons.

LEONIE CAPPELLERI (as the Executrix of the Estate of FRANK CAPPELLERI, deceased)

[1] The fourth and fifth defendants are ASIC and the Registrar of Titles and they have not participated in the proceeding.

[2] The application was made by summons filed on 30 March 2020. The summons also seeks the striking out of the amended statement of claim, but no submission was directed to that relief.

[3] The material in this section is drawn from the pleadings, the affidavit in support of the application made by Gabriel Kuek on 25 March 2020 ('Kuek affidavit'), the affidavit of Catherine Anne Ballantyne made on 18 May 2020 ('Ballantyne affidavit') and the Court file.

[14] [2013] HCA 46 at [6], [7], [45]-[50], and [64]-[67]; Kuek affidavit, [31].

[22] The order states the hearing was by reason of the Court's own motion.

[28] Email dated 16 October 2019, Kuek affidavit [73].

[36] Knorr v Commonwealth Scientific and Industrial Research Organisation [2014] VSCA 84 [53] ('Knorr v CSIRO').

[37] Duncan v Lowenthal [1969] VicRp 21; [1969] VR 180, 182; Exell v Exell [1984] VicRp 1; [1984] VR 1, 7-8; Muto v Faul [1980] VicRp 3; [1980] VR 26; Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863 (Bishopsgate Insurance).

[38] [2014] VSCA 84 [53].

[39] [1999] 3 VR 863.

[40] [1989] AC 1197, 1203 (Chris Smaller (Transport)).

[41] Bishopsgate Insurance [1999] 3 VR 863, 873 [29].

[42] Bishopsgate Insurance [1999] 3 VR 863, 874 [30].

[43] [1989] AC 1197, 1207-8; Bishopsgate Insurance [1999] 3 VR 863, 875 [32].

[44] Bishopsgate Insurance [1999] 3 VR 863, 875 [33].

[45] Bishopsgate Insurance [1999] 3 VR 863, 875 [34].

[46] Per Johnson J in Udowenko & Ors v Chief Executive Officer of the Board of Directors of St George Bank - A Division of Westpac Banking Corporation (No 2) [2011] NSWSC 1122, [117]; Knorr v Commonwealth Scientific and Industrial Research Organisation (CSIRO) [2012] VSC 529, [26]; Knorr [2014] VSCA 84, [49].

[47] Shepperdson v Lewis [1966] VicRp 59; [1966] VR 418, 419.

[48] Civil Procedure Victoria, Bailey and Arthur, LexisNexis Butterworths, [I24.01.60].

[49] (2009) 239 CLR 175 (Aon Risk Services).

[50] Aon Risk Services (2009) 239 CLR 175, [93].

[51] Aon Risk Services (2009) 239 CLR 175, [98].

[52] Jones & Harvey Industries Group Pty Ltd [2019] WADC 214, [32].

[53] Shepperdson v Lewis [1966] VicRp 59; [1966] VR 418 at 423; Alginates (Aust) Pty Ltd v Thomson & Carroll Pty Ltd [1970] VicRp 74; [1970] VR 570 at 574.

[54] [2014] VSCA 84, [63].

[55] [2014] VSCA 84 [63].

[56] Gippsreal Ltd v Kenny (2016) 52 VR 149, 168-9 [60].

[57] CPA s 29(1)(a)-(b).

[58] CPA s 29(1)(d).

[59] CPA s 29(1)(e).

[60] CPA s 29(1)(f).

[61] CPA s 29(2).

[62] [2014] VSCA 84.

[63] [2014] VSCA 84 [67].

[64] [2019] VSC 576.

[65] [2019] VSC 576 [53].

[66] [2017] VSCA 198, [39].

[68] Bishopsgate Insurance Australia (Ltd) (In liq) v Deloitte Haskins and Sells [1999] 3 VR 863, [28] commenting on Department of Transport v Chris Smaller (Transport) Ltd [1989] 1 ACL 1197, 1203.

[69] [2014] VSCA 84 [67] cited in Submissions of the defendants, 16 April 2020, 9 [39].

[70] [2013] HCA 46 [57].

[71] Weston v Publishing & Broadcasting Ltd [2011] NSWSC 433, 510.

[72] Spitfire Nominees Pty Ltd v Ducco [1998] 1 VR 242 at 248 ('Spitfire Nominees'); Shellard v Orianski [2001] VSCA 147 at [30].

[73] I note that the order of 23 July 2019 was made by consent and also required the defendants to file an amended defence by 2 August 2019, which was done. But that was an additional step the explanation for which is the desire of the defendants to add defences to the previously filed amended defence filed on 14 May 2019.

[74] Aon Risk Services (2009) 239 CLR 175, [93].