Sailorchard Pty Ltd (Administrators Appointed) v Thrifty(Australia) Pty Ltd [2003] QSC 41

Poulos Lawyers as town agents for Boulton Cleary & Kern for the plaintiffs

Barry & Nilsson as town agents for PW Turk for the first defendant

Deacons as town agents for Suthers Taylor for the second and third defendants

[1] MULLINS J: This proceeding was commenced by writ of summons filed on 29 June 1999. That writ was renewed for 12 months on 19 June 2000, 21 June 2001 and 29 June 2002. By application filed on 23 October 2002 the second and third defendants seek orders that each renewal of the writ of summons be set aside and that the proceeding be dismissed for want of prosecution. That application was supported by the first defendant which appeared primarily to ensure that no orders were made against the interests of the first defendant.

[2] The plaintiff (in its own capacity and as trustee) purchased the business conducted under the name "Thrifty Car Rental Mackay" ("the business") under a contract of sale dated 16 May 1996 from the second defendant and entered into a franchise agreement with the first defendant dated 1 May 1996 as the station operator of the business. It appears that the purchase of the business was completed on 2 July 1996. Mr Graeme Davis and Mr David Berry who were directors of the plaintiff provided guarantees in respect of the plaintiff's obligations under the franchise agreement in favour of the first defendant. Mr Davis, Mr Berry and Mrs Georgina Davis also provided guarantees in respect to certain obligations of the plaintiff owed to the second defendant under the contract and to National Australia Bank Limited in respect of various loan facilities granted by that bank to the plaintiff.

[3] The plaintiff alleges that, during negotiations which commenced in early February 1996 by Mr Davis and Mr Berry on behalf of the plaintiff and Mr Brian Linnane and the third defendants on behalf of the second defendant, certain representations were made to Mr Davis and Mr Berry to the following effect:

(a) that the business would grow at the same rate for the ensuing 2 years as in the previous 3 years (cl 4.1 statement of claim);

(b) that the plaintiff could easily borrow sufficient moneys for the purchase of the business together with working capital and afford to repay those loans from the income of the business including all leasing and interest payments together with the principal amount borrowed (cl 4.2 statement of claim);

(c) that the motor vehicle fleet was well maintained, in excellent working order and the kilometres were as set out in motor vehicle schedules provided to the plaintiff during the negotiations (cl 4.3 statement of claim).

[4] Apart from these express representations, the plaintiff alleges that all defendants actively concealed and failed to disclose that:

(a) the second defendant's franchise agreement with the first defendant had been terminated or would not be renewed after the expiry date of either 30 April or 1 May 1996 (cl 5.1 statement of claim);

(b) the second defendant had wound back the odometers on certain of the motor vehicles (cl 5.2 statement of claim).

[5] The plaintiff alleges that by the active concealment of the defendants or failure to disclose this information, the defendants represented to the plaintiff that:

(a) the second defendant had a valid and extant franchise agreement with the first defendant (cl 6.1 statement of claim);

(b) there was no fact or circumstance which would in any way adversely effect the second defendant's right or entitlement to carry on the business pursuant to the franchise agreement (cl 6.2 statement of claim);

(c) the mileage of the motor vehicle fleet as represented by the second defendant was accurate (cl 6.3 statement of claim).

[6] The plaintiff also relies on express warranties contained in the contract which it alleges were false. The plaintiff also alleges that each of the express representations and representations by silence set out in paras 4 and 6 of the statement of claim were false. It is alleged by the plaintiff that, but for the representations and contractual warranties, the plaintiff would not have entered into the contract or the franchise agreement and nor would Mr and Mrs Davis and Mr Berry have entered into the guarantees that were granted by them.

[7] According to the affidavits of Mr Davis and Mr Berry filed by leave on 3 December 2002, in February 1996 they were provided with the second defendant's cash flow projections for the business for the 12 months from December 1995. Each has stated that on the basis of the cash flow projections, he formed the opinion that the business had excellent returns. Mr Davis and Mr Berry were also provided with the second defendant's trading, profit and loss statements for the year ended 30 June 1994 and the period ended 31 December 1995. In March 1996 they were also provided with fleet edit reports by the second defendant. The fleet edit reports were exhibited to the affidavits and were described as identifying the make, model, registration number and odometer reading of each of the second defendant's vehicles which would pass with the sale of the business. Mr Davis and Mr Berry stated that they used the fleet edit reports to assess the age, mileage and condition of the motor vehicles and to assist in determining the price that they would be willing to pay for the purchase or lease of each motor vehicle. They used the fleet edit reports to check against the actual vehicle registrations and odometer readings and Mr Davis, as a mechanic, inspected some of the vehicles listed on the fleet edit reports. Mr Davis and Mr Berry also were aware that under the first defendant's franchise agreement, the franchisor placed a kilometre cap on all sedans of 50,000 kms and a franchisee who allowed a sedan to exceed 50,000 kms was required to pay substantial penalties to the franchisor, so that it was necessary to ensure that the sedans purchased or leased with the business had travelled low kilometres. Mr Davis has stated that in ascertaining the price to pay for the business the costs of maintenance and repairs of motor vehicles were considered by him to be highly relevant as a substantial contributing factor to the overall operating costs of the business.

[8] Both Mr Davis and Mr Berry have stated that the condition, age and odometer readings of the vehicles were critical in deciding whether to purchase the business.

[9] The plaintiff alleges that by the time it discovered the true facts and the falsity of the representations made by the defendants, it had been forced to discontinue trading, as it had become insolvent.

[10] The plaintiff claims to have lost the sum of $650,000 being the purchase price of the business, the expenses involved in acquiring the business and negotiating the contract of $68,945.38, trading losses of $194,881 from 1 May 1996 until 24 March 1999 and the costs of the administration of the plaintiff of $122,219, making a total of $1,036,045.30.

[11] The plaintiff's claims against the defendants are made in fraudulent misrepresentation and under the Trade Practices Act 1974 (Cth) ("TPA") and against the second and third defendants for breach of contract.

[12] The plaintiff entered into administration under Pt 5.3A of the Corporations Law on 24 March 1999. After that, but by 10 April 1999, the directors of the plaintiff had been informed by Mr Peter Carroll (who had been a former fleet mechanic of the business) that, prior to the business being purchased by the plaintiff, Mr Carroll had been instructed by the male third defendant to rewind the odometers of a number of the vehicles of the business. Mr Carroll has sworn an affidavit to support the plaintiff on these applications in which he has claimed that he undertook the winding back of odometers on the second defendant's vehicles at the male third defendant's request.

[13] The solicitors retained by the directors of the plaintiff sent a letter dated 23 April 1999 to the second and third defendants advising that information had been received about the interference with the odometers, that investigations were being carried out and putting the second and third defendants on notice that those solicitors would be instituting proceedings on behalf of the plaintiff, Mr and Mrs Davis and Mr Berry for breach of the TPA.

[14] Mr Berry informed the administrator about this claim by Mr Carroll. On 23 April 1999 the solicitors for the administrator notified the second defendant that the solicitors retained by the directors of the plaintiff did not have any instructions to act on behalf of the plaintiff or the administrator.

[15] The administrator prepared a statement dated 13 May 1999 that was circulated to the creditors of the plaintiff. As the male third defendant attended the ensuing creditors' meeting of the plaintiff on behalf of the second defendant, it can be inferred that the second defendant and the male third defendant received the administrator's statement. That statement referred to the directors of the plaintiff having made "unsubstantiated allegations that at the time the company purchased the business from Vyntone Pty Ltd, the Vendor had wound back some of the odometers in some of the vehicles" and also referred to the allegation that the first defendant may have had some knowledge of that conduct. The administrator's statement also referred to the fact that the directors had not provided copies of their statements to him and he was unable to comment or investigate the allegations.

[16] The administrator did not give consent to solicitors retained by Mr Berry and Mr Davis to issue a writ against the defendants until 18 June 1999. The writ in this proceeding was then filed on 29 June 1999 by the solicitors retained at that stage by the directors of the plaintiff.

[17] The business was sold by the administrator pursuant to a deed of company arrangement dated 18 June 1999 for the sum of $140,000.

[18] Mr Davis has stated that, prior to the appointment of the administrator, he and his wife had exhausted their personal assets in attempting to keep the business operational and therefore were unable to provide any substantial funding to progress the proceeding, apart from the filing of the writ, at the time the proceeding commenced.

[19] On 9 August 1999 Mr Davis and Mr Berry retained solicitors S R Wallace & Wallace to give a second opinion about the prospects of success of the proceeding. The file was not obtained from the previous solicitors and delivered to that firm until 4 October 1999.

[20] Mr R J Clark, a solicitor employed by S R Wallace & Wallace filed an affidavit in the court on 19 June 2000 in which he explained that delay had been experienced in obtaining the administrator's consent to the litigation continuing and an agreement in relation to the distribution of any proceeds recovered from the litigation and that delay also arose, because the party which purchased the business from the administrator obtained rights in respect of the issued capital of the plaintiff. Mr Clark deposed to being put to extensive gatherings of proofs of evidence for various witnesses to support the claim, in order to satisfy the requirements of the various parties and that final advices on the merits of litigation had just been delivered. Mr Clark stated that he had advised that the litigation prospects were sound and envisaged receiving instructions to serve the writ and a statement of claim in the next 90 days. On the basis of this affidavit the writ was renewed for 1 year from 19 June 2000 by a registrar of the court.

[21] Mr Davis has stated that he had regular contact, both by telephone and at meetings, with the solicitor from S R Wallace & Wallace, but the progress of the matter appeared to slow down after about 6 months.

[22] It appears that Mr Clark left the employ of S R Wallace & Wallace in November 2000. A personal conflict arose between Mr Davis and the solicitor who was then handling the file at S R Wallace & Wallace. Another firm of solicitors, Bill Cooper & Associates, was retained to act on behalf of the plaintiff on 8 June 2001.

[23] Mr Cooper filed an affidavit on 20 June 2001 in support of a further renewal of the writ. He deposed to his opinion that further inquiries needed to be made and evidence obtained to ensure that all defendants had been included in the action and to consider whether any of the existing defendants should be released from the action. Mr Cooper considered that the writ and a statement of claim would be able to be served within 180 days. A registrar of the court renewed the writ for 12 months from 19 June 2001.

[24] Mr Davis instructed Mr Cooper to prepare a brief to Counsel to prepare a statement of claim. Mr Davis has stated that the conduct of the matter slowed again, even though Mr Davis contacted the solicitors regularly to ascertain the progress of the matter. As a result of advice given by Counsel, Mr Davis removed the file from Bill Cooper & Associates on 14 November 2001 and retained his current solicitors on 5 December 2001. Mr Davis was unable to provide those solicitors with all relevant documents until mid February 2002.

[25] The plaintiff's current solicitors retained Hall Chadwick Accountants on 8 January 2002 in order to prepare a forensic accounting report. Between 10 January and May 2002 the plaintiff's solicitors engaged in substantial correspondence with Hall Chadwick for the purpose of providing them with all the documents and information that were required for the purposes of quantifying the trading profit and losses of the plaintiff and obtaining an overview of the plaintiff's claim for loss and damage.

[26] On 7 February 2002 the administrator advertised that the deed dated 18 June 1999 had been wholly effectuated and terminated on 6 February 2002.

[27] In April 2002 the plaintiff's solicitors briefed Counsel to settle the draft statement of claim taking into account the figures provided by Hall Chadwick in the report dated April 2002.

[28] Ms Gina Turner of the plaintiff's solicitors filed her affidavit on 17 June 2002 in support of a further renewal of the writ. That affidavit deposed to the steps which had been taken by those solicitors since receiving the instructions from the plaintiff. Ms Turner deposed to the administrator not formally removing himself as controller of the company until March 2002 and stated "whereupon Graeme Davis as Director of the company was free to provide instructions to this firm to proceed". Ms Turner also deposed to the fact that the financial information necessary to reconstruct the accounts was not fully available until the removal of the administrator. The writ was renewed for a further 12 months from 29 June 2002.

[29] Mr Davis has sworn that he and Mrs Davis are now able to fund the proceeding.

[30] The statement of claim was filed on 17 June 2002. On 14 August 2002 the writ and the statement of claim were forwarded by pre-paid post to the respective registered offices of the first and second defendants. On 17 August 2002 the writ and the statement of claim were served personally upon the third defendants.

[31] A notice of intention to defend and defence of the first defendant was filed on 23 September 2002. The second and third defendants filed a conditional notice of intention to defend on 10 October 2002. The jurisdiction of this Court was disputed by the second and third defendants on the basis that the writ had been irregularly and/or improperly renewed on one or more of the three occasions on which it was renewed.

[32] The jurisdiction which was exercised by the registrar in respect of each renewal was that conferred by r 24(2) of the UCPR which provides:

"(2) If the claim has not been served on a defendant and the registrar is satisfied that reasonable efforts have been made to serve the defendant or that there is another good reason to renew the claim, the registrar may renew the claim for further periods, of not more than 1 year at a time, starting on the day after the claim would otherwise end."

[33] It was not in issue that the court has jurisdiction to discharge an order made by a registrar on an ex parte application. It was also not in issue that the question of whether the writ should have been renewed must be reconsidered on the basis of all the material which is now before the court. See Major v Australian Sports Commission [2001] QSC 320 ("Major") at para [58]. In respect of any of the renewals, the court is now not limited to the affidavit that was relied on by the plaintiff in support of that renewal at the time the renewal was sought.

[34] As this is not a matter where the delay in serving the defendants was due to difficulties in serving the defendants, the ground relevant to whether or not the writ was renewed was whether there was other good reason to renew the claim. As I observed in Major, this ground for renewing a claim is similar to that which applied under O 9 r 1 of the Rules of the Supreme Court, but the authorities on O 9 r 1 must be considered in the light of the underlying philosophy of the UCPR found in r 5, particularly that the purpose of the UCPR is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. The Court of Appeal has indicated, however, in Muirhead v The Uniting Church in Australia Property Trust [1999] QCA 513 ("Muirhead") and MacDonnell v Rolley [2001] QCA 32 that the views of Stephen J in Van Leer Australia Pty Ltd v Palace Shipping KK [1981] HCA 11; (1981) 180 CLR 337, 343-346 remain relevant to dealing with an application for renewal of a claim under r 24(2) of the UCPR. Those views were summarised by Pincus JA in Muirhead at para [4] as follows:

"1. There is a tendency to relax rigid time limits where that is legally possible and where it can be done without prejudice or injustice to other parties.

2. The discretion may be exercised although the statutory limitation period has expired.

3. Matters to be considered include the length of delay, the reasons for it, the conduct of the parties and the hardship or prejudice caused to the plaintiff by refusing renewal or to the defendant by granting it.

4. There is a wide and unfettered discretion and there is `no better reason for granting relief than to see that justice is done'."

[35] It is therefore necessary in respect of each renewal to identify all the factors relevant to the exercise of the discretion as to whether or not the originating process should have been renewed, assess the weight to be given to them in the circumstances and then determine whether, on balance, there was good reason to renew.

[36] The plaintiff claims that there is a strong prima facie case of fraud or deceit and misleading and deceptive conduct on the part of the second and/or third defendants and that the delay in commencing the proceeding was as a result of the fraudulent concealment of the relevant facts by the second and third defendants which was uncovered only by the revelation of Mr Carroll in April 1999.

[37] There are two aspects on which the second and third defendants attack the plaintiff's claim to good causes of action. First, it is argued that if representations were made, the plaintiff was aware of them and there could be no reliance on those representations. This argument is based on para 10 of Mr Davis' affidavit sworn on 11 November 2002 and filed by leave on 3 December 2002:

"From the commencement of operating the business on 1 May 1996 I became aware that the cost of maintenance of the vehicles was in excess of the projected figures provided to us by the Second and Third Defendants. Further, the income and profit of the business was well below those set out in the profit and loss statements of the Second Defendant. The profit and loss statements were provided to us as representations of the potential profits available in the operation of the business. ..."

[38] It appears that the plaintiff obtained some knowledge from operating the business from 1 May 1996 before entering into the contract on 16 May 1996 and before the contract was completed on 2 July 1996. At its simplest level, the second and third defendants argue that if the plaintiff had become aware that the cost of maintenance of the vehicles was in excess of the projected figure from the time of commencement of operating the business on 1 May 1996, there was no reliance. At another level, it is argued that this knowledge about actual costs of maintenance of the vehicles is relevant to the issue of whether the plaintiff had a claim against the second and third defendants that was discoverable at an earlier time than when Mr Carroll provided information to the plaintiff in April 1999.

[39] These arguments overlook the fact that the reliance alleged by the plaintiff on the odometer readings was not only relevant to the plaintiff's acceptance of the second defendant's cost of maintenance estimates, but also to the value which the plaintiff placed on the business and was reflected in the price the plaintiff was prepared to pay. In any case, the extent of reliance is a matter of fact which cannot be resolved on an application of this type. In addition, being provided with positive information about rewinding of odometers may have given a completely different perspective to the plaintiff in respect of the significance of the increased costs of maintenance experienced by the plaintiff.

[40] Second, it is argued by the second and third defendants that even if the plaintiff has causes of action, the limitation periods expired on 15 May 1998, two years after entering into the contract to purchase the business, as cl 22.3 of the contract provided:

"No action arising out of this Agreement may be brought by a party more than two years after the cause of action has arisen except in the case of non-payment where the appropriate statutory limitation to an action for recovery of a simple contractual debt will apply."

[41] The second and third defendants rely on the principle that parties are free to contract for a shorter limitation period, than that which would otherwise apply by virtue of statute: Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd [1980] UKPCHCA 1; (1980) 144 CLR 300, 307. It is a matter of construction of the relevant clause within the contract, as to whether that clause applies to the cause of action relied on by the plaintiff. Each of the causes of action relied on by the plaintiff needs to be considered separately.

[42] In relation to the claim based on s 52 of the TPA, it is arguable that the claim does not arise out of the contract, but out of the conduct of the second and third defendants which it is alleged was misleading and deceptive and induced the contract. On the basis that the limitation period for the claim under the TPA was three years after the date on which the cause of action arose (relying on s 82(2) of the TPA), it is not able to be determined conclusively at this stage that the period of three years had expired before the proceeding was commenced on 29 June 1996. Mr Quirk of counsel on behalf of the second and third defendants submitted that as the alleged misleading and deceptive conduct resulted in the purchase of the business, the loss or damage was suffered when the contract was entered into and therefore the three years had expired before 29 June 1996. That contract was subject to a number of conditions precedent and it is not apparent that those conditions had been satisfied by the date of the contract. It may be that the date of completion of the purchase of the business was the date when the loss was suffered: cf Karedis Enterprises Pty Ltd v Antoniou [1995] FCA 1356; (1995) 59 FCR 35, 40. If cl 22.3 of the contract does not apply to the cause of action for misleading and deceptive conduct, the date for the accrual of that cause of action cannot be determined on an application of this nature: Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 533.

[43] The claim for damages for fraudulent misrepresentation or deceit is also arguably not a claim arising under the contract, but a claim arising in respect of conduct which is alleged to have induced the contract and therefore not caught by the terms of cl 22.3 of the contract. It was common ground that the limitation period for bringing the claim for fraudulent misrepresentation or deceit had not expired, if cl 22.3 of the contract were inapplicable. In contrast, it is difficult to see how the claim for breach of contract would fall outside the terms of cl 22.3 of the contract.

[44] Contrary to what was submitted on behalf of the second and third defendants, at least in relation to the claims under s 52 of the TPA and fraudulent misrepresentation (which comprise the greater part of the claims), it is not possible to conclude that those claims would be defeated by a limitation defence. That is a matter which can properly be determined only after all relevant facts have been revealed, presumably at a trial.

[45] As the claims made in the statement of claim are based on fraud, they are serious allegations. That is not altered by the possibility that ultimately the second and third defendants may be successful in pursuing a limitation defence in respect of one or more of the claims. Significant weight should therefore be given to the nature of the claims which are supported by the affidavit of Mr Carroll filed by leave on 3 December 2002: cf Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541, 555 per McHugh J on the relevance of fraud, deception or concealment in considering whether a limitation period should be extended.

[46] The plaintiff also relies on its impecuniosity and that of Mr and Mrs Davis as a significant factor in the delay in prosecuting the proceeding for which it alleges the defendants are responsible and, in addition, on the delays by the first two firms of solicitors which were retained by Mr Davis and Mr Berry before their current solicitors. The second and third defendants were critical of the conduct of these first two firms of solicitors. What is more relevant is the conduct of Mr and Mrs Davis and Mr Berry. Mr Davis appears to have been the main protagonist on behalf of the plaintiff in pursuing the proceeding. Weight must be given to the explanations offered by Mr Davis of the delays due to impecuniosity and conduct of the first two firms of solicitors, even though on any view they could not be considered entirely satisfactory.

[47] There appears to have been confusion on the part of the plaintiff and those advising it at various times as to the authority of Mr Davis and Mr Berry to give instructions to pursue the proceeding, while the deed of company arrangement remained extant. Mr Gynther of Counsel who appeared for the plaintiff properly conceded that on a proper construction of the deed of company arrangement, the right to manage, operate and control the business of the plaintiff reverted to the directors on the date of commencement of the deed of company arrangement on 18 June 1999. Legally that deed was not an impediment to the prosecution of the proceeding. It can be inferred that there were some practical difficulties in obtaining access to all documents held by the administrator, before the administration was formally brought to an end in March 2002.

[48] It is not determinative, but then it is clearly not irrelevant either, that if the claim were not renewed, the plaintiff's action under the TPA would be clearly lost: cf Muirhead at para [13].

[49] According to the affidavit of the male third defendant, the third defendants have resided at the same address in Queensland since 14 March 1996 and have been listed in the telephone book at that address. Although the male third defendant concedes receiving the facsimile from solicitors purporting to act on behalf of the plaintiff, Mr and Mrs Davis and Mr Berry on 23 April 1999, he also deposes to receiving the facsimile on the same date from the solicitors who were acting for the administrator. The effect of that correspondence was to inform the second and third defendants of the potential claim by the plaintiff, Mr and Mrs Davis and Mr Berry, but to inform them that the solicitors which had sent the letter making the claim did so without any instructions from the plaintiff or the administrator. Apart from the reference to the claim in the administrator's statement dated 13 May 1999, the second and third defendants had no further notice that the plaintiff and/or Mr and Mrs Davis and Mr Berry were pursuing the allegations or any other claims in respect of the purchase of the business by the plaintiff from the second defendant, until service of the writ and statement of claim was effected on 17 August 2002. It was therefore not unreasonable for the second and third defendants to act as if the claim which had been foreshadowed would not be pursued by the plaintiff, Mr and Mrs Davis and Mr Berry.

[50] The male third defendant has deposed to causing documentation relating to the business to be destroyed by Mackay Security Shredding on or about 28 March 2002 in the normal course of the second and third defendants' document retention and destruction program. The male third defendant describes that program as one to destroy documentation after 5 financial years, unless there is any obvious need to retain such documentation.

[51] In para 13 of the male third defendant's affidavit filed on 12 November 2002 the documentation relating to the business that was destroyed is described as including but not limited to the following classes of documentation:

"13.1 Accounting Records of the Second and Third Defendants;

[52] There is a lack of detail from the third defendants about the documents relating to the business that were destroyed and the relevance of these documents to the plaintiff's claims. The male third defendant has asserted in his affidavit that prejudice has been caused to the second and third defendants due to the destruction of the documents, as those documents would be required to enable the second and third defendants to assess and defend the plaintiff's claims and assist the second defendant's potential witnesses and the third defendants in recalling the facts in relation to the claims. It is apparent from the affidavits filed on behalf of the plaintiff that the plaintiff retains the copies of the documents given to it prior to its purchase including the fleet edit reports, the second defendant's trading, profit and loss statements for the year ended 30 June 1994 and the period ended 31 December 1995, and the second defendant's cash flow projections for the 12 months from December 1995. Under the contract the second defendant was obliged to hand over on completion of the purchase to the plaintiff all the records of the business, subject to the second defendant being able to deliver copies of any records which it was otherwise required to retain by law. There is no suggestion in the material that the second defendant did not hand over the records of the business to the plaintiff. Ms Turner has deposed that she has prepared a draft list of documents on behalf of the plaintiff being 25 pages long incorporating 400 documents and associated bundles.

[53] Despite the assertion of prejudice by the second and third defendants, as a result of the destruction of documents relating to the business, the lack of detail as to those documents and the possession of relevant documents by the plaintiff diminishes the significance of this assertion.

[54] Apart from actual prejudice arising from the destruction of documents, it is always a consideration that there may be prejudice from the effluxion of time which is not appreciated at the time such an application as this is made: Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541, 556. In considering the weight to attach to that unknown prejudice, it is again relevant to consider the nature of the claims made by the plaintiff against the defendants in this matter based on fraud, that most of the representations are alleged to have been made by reference to documents which remain in existence and that the delay of just over 6 years between the events giving rise to the claim and the service of the proceeding is not grossly inordinate.

[55] Taking all the relevant factors into account, on the basis of all the material that was placed before me on the hearing of this application, I am satisfied that on balance there was good reason on each occasion for renewing the claim. Those factors which support the renewal of the writ on each occasion clearly outweigh those that are in favour of setting aside each renewal. The prejudice to the second and third defendants as a result of the delay in the prosecution of this proceeding is displaced by the reasons for giving the plaintiff an opportunity to pursue its claims, despite the delay.

[56] The second and third defendants claimed alternative relief of dismissal of the proceeding for want of prosecution, even if the renewals were not set aside. In the circumstances of this matter, the reasons why the renewals should not be set aside also preclude the proceeding from being dismissed for want of prosecution.

[57] Neither commencing a proceeding or renewing the claim is a step in the proceeding and the effect of renewing the claim is that it is then valid for a period of 12 months to serve: Rideout v Glaxo Group Limited [1996] 1 Qd R 200, 206-7. It is therefore not necessary for the plaintiff to obtain leave to proceed under r 389(2) of the UCPR in order to give effect to the filing and serving of the statement of claim. It follows that the application for leave to proceed which it was submitted was filed by the plaintiff out of an abundance of caution should be dismissed.

1. Application filed on 23 October 2002 be dismissed.

2. Application filed on 12 November 2002 be dismissed.

[59] As the first defendant appeared on these applications only to protect its own interests, it should follow that the first defendant bears its own costs of these applications. I would propose that the second and third defendants pay the plaintiff's costs of the application filed on 23 October 2002. As the application filed by the plaintiff does not appear to have added much, if any, length to the hearing and was filed as a result of the plaintiff's caution, it seems appropriate that there should be no order as to costs in respect of that application. Before making orders for costs, however, I will hear submissions on the question of costs.