Scholz v Shire of Healesville [1998] VSC 62

11. It is necessary therefore to consider the nature of the plaintiffs' cause of action and the history of the proceeding.

14. The plaintiffs are land developers. For many years they have been the owners of a number of undeveloped allotments of land at Healesville on three estates known as the Romeo Road Estate, the Eagles Domain Estate and the St. Johns Road Estate.

17. Between 1975 and 1979 negotiations took place between the plaintiffs and the Shire of Healesville with regard to the future development of the allotments.

20. On 5 July 1979 the Shire wrote the following letter to the plaintiffs' consulting engineer:

"Mr. N. Hewson Consulting Civil Engineer 111B Main Street LILYDALE VIC. 3140. Dear Sir,

Re: Cellante & Scholz

I refer to your letter of 30th April 1979, submitting proposals for development of a number of outlying subdivisions on behalf of Messrs. Cellante and Scholz. The proposals were considered by Council at its meeting on 26th June 1979 and I have to advise as follows:- 1. Eagles Domain Estate Council would not issue development permits for the restructure now submitted but would agree to a restructure generally conforming to the agreement reached in 1976 with Messrs. Hewson and Prattley and subject to the provision of sealed roads, appropriate drainage and services (i.e. lots 51-73 and 92-94 to be restructured into 13 lots and the balance to be consolidated into one allotment). 2. Ainsworth Avenue Council is not prepared to permit further subdivision, it being contrary to the existing and proposed Interim Development Orders and in conflict with Statement of Planning Policy No. 3 (as revised). Permits for existing lots would be issued subject to the provision of reticulated electricity. 3. Mt. Lebanon Estate Permits would be issued to erect dwellings on each of lots 10 to 14 and 16 to 30 and also on a consolidation of lots 1, 2, 3, 4, 5 and 15 and a consolidation of lots 6, 7, 8 and 9, subject to provision of sealed access road appropriate drainage and services. 4. St. Johns Road Estate Permits would be issued on all lots of one acre or more, and on the following consolidated allotments: Lots 4 and 5, 6 and 7,12 and 13, 14 and 15, 20 and 21. 5. Romeo Road Estate Permits would be issued subject to the conditions previously advised, but with the substitution of formed and gravelled all weather access roads in lieu of sealed roads. Yours faithfully R.E. HARDISTY SHIRE SECRETARY."

24. The plaintiffs allege that in reliance on those resolutions and other resolutions dealing with the land, they elected to retain ownership of most of the allotments until the market demand for the allotments was sufficient to justify the cost of compliance with the Shire's conditions.

27. The plaintiffs allege that over the ensuing years and in particular in 1982, the Shire resiled from its 1979 decision and is no longer prepared to issue the same or similar permits in respect of the land.

30. On 7 October 1988 the plaintiffs filed their writ in the Court. By the proceeding the plaintiffs seek (inter alia) a declaration that the letter of 5 July 1979 from the Shire Secretary to the plaintiffs' consultant constituted a valid and enforceable planning permit to develop and use each allotment for the purposes of a detached house, and damages. I should add that I have not detailed the negotiations which took place between the parties between July 1979 and October 1988 nor have I detailed the changes which took place over that period of time concerning the planning provisions affecting the land. Whilst such matters would be of relevance at the trial of the proceeding I do not consider that they have sufficient importance in relation to this application to justify including them in my reasons for judgment.

33. On 17 October 1988 the defendant filed its appearance in the Court. Thereafter no step was taken in the proceeding until the plaintiffs filed a notice for discovery on 14 March 1991.

36. On 5 July 1991 the plaintiffs filed a notice of their intention to proceed.

39. On 17 September 1991 the plaintiffs filed a summons in the Court whereby they sought directions and a speedy trial of the proceeding. The summons was supported by an affidavit sworn 17 September 1991 by the first named plaintiff on his own behalf and on behalf of the second and third named plaintiffs. Paragraphs 3 to 9 of the affidavit reads:

"3. In 1978 and 1979 the defendant through its officers at the time, was concerned by the prospect that detached houses might be developed on each of the said lots, and for various reasons relating to the preservation of existing conditions and the absence of any serious prospect of making sufficient or adequate provision for essential services to lots in the areas concerned, the defendant entered into negotiations with the plaintiffs, with the object of limiting the number of detached houses which could be built on such lots. 4. As alleged in the Statement of Claim and admitted in the Defence, the defendant resolved to issue planning permits for a number of the said lots on various conditions. The plaintiffs allege that at the very least it was always understood by the parties that the purposes of the resolution was to resolve in advance the conditions under which actual permits would be issued, whilst recognising that those conditions, for example, that sealed roads, underground drainage, and the provision of a reticulated water supply, would take time to provide, and would require the plaintiffs to await the decisions and actions of the defendant, and other statutory authorities, which could be expected to be taken in the fullness of time as deemed to be appropriate by such authorities, having regard to demand for development. 5. The plaintiffs allege in the Statement of Claim that once the defendant had indicated its position as aforesaid, they were content to incur holding charges on the lots in anticipation of the profit ultimately to be made on the sale of the lots. 6. Since 1982 however, as alleged in the Statement of Claim, the defendant has reneged on the said resolution, by amending its planning controls in such a way as to prohibit the grant of the permits it resolved to grant under the said resolution, and by collaborating with the Minister for Planning and Environment, and the Upper Yarra Valley and Dandenong Ranges Authority in various amendments to the planning controls with the same result, notwithstanding the attempts by and on behalf of the plaintiffs to dissuade it. 7. Since the commencement of the above proceeding, the parties by their officers and solicitors have engaged unsuccessfully in numerous discussions relating to the future of the said lots and in particular the number of detached houses which will be permitted, with the object of reaching some sort of arrangement which would inter alia resolve the need for the proceedings. 8. I am now 77 years of age, and in only passable health. In recent times my general health has deteriorated markedly, and my eyesight, always poor, has become very poor indeed. I am gravely concerned that if the proceedings are not brought on promptly, my memory of the various discussions and negotiations of relevance will begin to fade, and my eye sight will fail even further, making the conduct of the proceeding for the plaintiff impracticable. 9. By reason of the matters referred to herein, I respectfully request that directions be given as to the completion of any interlocutory matters with expedition, and for a speedy trial of the proceeding."

43. On 29 September 1991 Master Gawne gave directions in the proceeding but adjourned the plaintiffs' application for a speedy trial to 13 December 1991 to enable the first named plaintiff to produce medical evidence as to his state of health.

46. The matter came back before Master Gawne on 13 December 1991 and although he gave further directions in the proceeding the plaintiffs did not proceed with their application for a speedy trial and no such order was made. The two sets of directions given by Master Gawne were designed to ensure that all interlocutory steps were completed by 28 February 1992.

49. On 28 February 1992 the defendant filed an amended defence and on 5 March 1992 filed a request for further and better particulars.

52. Thereafter no step was taken in the proceeding until the plaintiffs filed a further notice of their intention to proceed on 2 July 1996.

55. Despite the filing of the notice of their intention to proceed the plaintiffs took no further step in the proceeding.

58. In June 1997 the proceeding was caught up in the net trawled through the registry by the Litigation Support Group.

61. On 18 June 1997 Teague, J. made certain orders on the papers pursuant to Practice Note No. 1 of 1996. They are not relevant for present purposes. On 30 September 1997 his Honour made further orders in the matter including an order that all further interlocutory steps in the proceeding be completed by 27 March 1998 and that a mediation be held no later than 24 April 1998 failing which the proceeding should stand dismissed.

64. Despite the fact that Teague, J. ordered that interlocutory steps were to be completed by 27 March 1998, as they had in the past, the plaintiffs ignored the order and did not file their further and better particulars of their amended statement of claim pursuant to the request of the defendant dated 5 March 1992 until 17 April 1998. In any event no mediation was held as directed and the proceeding now stands dismissed.

67. The first aspect of the matter I propose to consider is the delay which occurred before the plaintiffs chose to file their writ in the Court.

70. In his affidavit of 17 September 1991 filed in support of the plaintiffs' application for a speedy trial, Scholz has sworn that since 1982 the defendant has reneged on the resolution spelled out in the letter of 5 July 1979 by amending its planning controls in such a way as to prohibit the grant of the permits if resolved to grant under the resolution. If that is correct, it is arguable that the plaintiffs' cause of action arose in 1982. Yet the plaintiffs chose not to file their writ in the proceeding until 7 October 1988. The view a court is entitled to take of pre-issue delay was considered by this Court in Bishopsgate Insurance Australia Ltd. (In Liquidation) v. Deloitte Haskins & Sells (unreported, 9 September 1994). In their joint judgment Tadgell and Ormiston, JJ. (as their Honours then were) said at p.22:

"On the other hand it is clear from the reasoning in Birkett v. James and in subsequent cases that plaintiffs are obliged to move with greater speed if they have left the issue of proceedings until very late in the limitation period. Thus Lord Diplock expressed the correct approach to such delay in the ordinary case in these words (at p.323 of Birkett v. James):

'To justify dismissal of an action for want of prosecution some prejudice to the defendant additional to that inevitably flowing from the plaintiff's tardiness in issuing his writ must be shown to have resulted from his subsequent delay (beyond the period allowed by Rules of Court) in proceeding promptly with the successive steps in the action. The additional prejudice need not be great compared with that which may have been already caused by the time elapsed before the writ was issued; but it must be more than minimal ..."

Similar views were expressed by Lords Salmon and Edmund-Davies. In an unreported decision of the Full Court in Australia and New Zealand Banking Group Ltd. v. Donovan (19th December 1986) it was said (at p.9) that it was not 'settled law' that a party who permits the limitation period almost to expire is then 'obliged to process those proceedings with expedition': see also the Jack Brabham Holdings Case at p.649. The House of Lords returned to this issue in the Chris Smaller (Transport) Case and confirmed the approach expressed in Birkett v. James. After a re-consideration of the significance of the limitation periods set by Parliament, Lord Griffiths (with whom Lords Keith, Roskill, Oliver and Goff concurred) stated (at pp.1207-1208):

'I have not been persuaded that the case has been made out to abandon the need to show that the post writ delay will make a fair trial impossible or prejudice the defendant. Furthermore, it should not be forgotten that long delay before 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 action. And that if the defendant has suffered prejudice as a result of such delay before issue of the writ he would only have to show something more than minimal additional prejudice as a result of the post writ delay to justify striking out the action.'

Those observations appear to have direct relevance to the present appeal."

81. Having served their writ on the defendant the plaintiffs then took no step in the proceeding for over two and a half years. They then filed the first of their two notices of intention to proceed, and on 17 September 1991 filed their summons in the Court seeking a speedy trial. One of the significant factors about that application is the sworn statement of the first named plaintiff to the effect that he was gravely concerned that if the proceedings were not brought on promptly, his memory of the various discussions and negotiations of relevance would begin to fade and his eyesight would fail even further, making the conduct of the proceeding for the plaintiffs impracticable. At that time the first named plaintiff was aged 77.

84. Yet here we are almost seven years down the road and the proceeding is still not ready for trial.

87. Having regard to the state of the Court lists and the length of time a trial of the proceeding would be likely to take, it is unlikely that any trial of the proceeding could be held before the latter half of 1999, that is, some 17 years after the plaintiffs' cause of action first arose.

90. Although Master Gawne dismissed the plaintiffs' application for a speedy trial he made orders, the effect of which were to ensure that all interlocutory steps in the proceeding were completed by the end of February 1992. As occurred in the case of the order of Teague, J. of 30 September 1997, the plaintiffs chose to disregard Master Gawne's order. The Master ordered that the plaintiffs file and serve any amended statement of claim on or before 27 September 1991. The plaintiffs filed it on 31 January 1992. The Master ordered that the parties file and serve affidavits of documents on or before 27 September 1991. The plaintiffs filed their affidavit of documents on 31 January 1992. The Master ordered that the parties file and serve interrogatories on or before 11 November 1991 and file and serve answers to the interrogatories on or before 11 December 1991. No interrogatories or answers have ever been filed. The Master ordered that the parties file and serve any notice to admit on or before 3 February 1992. No notice to admit has ever been filed.

93. The Master ordered that the plaintiff file and serve particulars of loss and damage on or before 11 December 1991. Save for the particulars in its amended statement of claim filed 31 January 1992, the plaintiff has not separately filed any such particulars. In the further particulars of their amended statement of claim filed in the Court on 17 April 1998 the plaintiffs state that full particulars of damages, updated, will be provided. As yet no such particulars have been filed in the Court.

96. I have little doubt that had the plaintiffs complied with the orders of Master Gawne this proceeding would probably have been fixed for trial in 1992, at the latest 1993. However, having received the defendant's request for further and better particulars of their amended statement of claim in March 1992, the plaintiffs allowed the proceeding to lie dormant for the next four and a quarter years. Somewhat surprisingly they then filed a notice of intention to proceed but took no further step in the proceeding until the proceeding came into the hands of the Litigation Support Group almost one year later.

99. The parties were then obliged to have further orders made in the proceeding, such orders were made, and yet again the plaintiffs failed to comply with them.

102. On any view of the matter, the delay in this proceeding has been inordinate. Is such delay excusable?

105. The case for the plaintiffs in the latter regard is that the delay is excusable because throughout the whole of the time in question there have been ongoing discussions between the parties designed to achieve a settlement of their dispute concerning the allotments.

108. There is a conflict in the evidence concerning that aspect of the matter. For example, in his affidavit of 29 May 1998 the plaintiffs' solicitor Malcolm John Hastings has sworn:

"15. From March 1992 until 2 July 1996 none of the parties took any steps in the proceedings. The first Plaintiff and the Defendant's officers engaged in settlement discussions. The Plaintiff, as he has informed me, was optimistic that settlement would be achieved. 16. Until about mid 1996 I was instructed to take no further steps to move the matter to trial, when a settlement had not been achieved, I received fresh instructions from the Plaintiff to re-open negotiations with the solicitors for the Defendant. 17. After discussions with the solicitors for the Defendant a meeting was arranged between the parties and their solicitors on 30 September 1996 at Council Chambers, Healesville, in an endeavour to resolve the dispute between the parties by way of amendment to the Planning Scheme to allow for the use or development of the land in a way acceptable to the Plaintiffs (the planning solution)."

112. In his affidavit of 2 June 1998 the defendant's solicitor Terrie Hamilton-Smith has sworn:

"42. In response to paragraph 15 of the Hastings Affidavit, I say as follows: 42.1 During the period March 1992 to 2 July 1996, the Plaintiffs' response to the Defendant's Request for Further and Better Particulars of the Amended Statement of Claim dated 5 March 1992 was outstanding; 42.2 I am informed by Ian Gibb of the Defendant and verily believe that he has searched the Defendant's files in relation to this matter and the Scholz land generally, and has been unable to locate any record of settlement discussions between the Plaintiffs and the Defendant between March 1992 and July 1996 other than the following: 42.2.1 Without prejudice discussions between Mr. Gerard Browne, the First Plaintiff and Mr. Ian Gibb and Mr. Graham Witt of the Defendant on 25 October 1995; 42.2.2 A letter received from the Plaintiffs' solicitors dated 15 March 1996 which ultimately led to their being without prejudice discussions between the Plaintiffs, the Defendant and their representatives on 30 September 1996. Now produced and shown to me and marked 'THS20' is a copy of the Plaintiffs' solicitors' letter to the Defendant dated 15 March 1996. 42.3 I have today conducted a search of our file in relation to this proceeding and have been unable to locate any record of settlement discussions between March 1992 and 2 July 1996. However, without prejudice correspondence passing between the Plaintiffs' solicitors and my office dated between 30 March 1996 and 24 September 1996 led to a without prejudice meeting between the parties and their respective representatives on 30 September 1996. Now produced and shown to me and marked 'THS21' is a copy of the Plaintiffs' solicitors' letter to my office dated 13 March 1996 which is the first letter in this chain of correspondence."

116. It is not possible for me to resolve that dispute. But let me assume that settlement discussions did take place between the parties throughout the period from 1988 to 24 April 1998, that being the date upon which the proceeding is deemed to have been dismissed, do those discussions excuse the plaintiffs' failure to comply with the orders of Master Gawne and Teague, J. and more importantly excuse their failure to bring the proceeding to trial? In my opinion they do not. Whilst that may provide an explanation for the plaintiffs' failure to bring the proceeding to trial in my view it cannot excuse it.

119. When a person chooses to launch legal proceedings against another there is an obligation on that person to "reasonably prosecute" those proceedings - see Duncan v. Lowenthal [1969] VicRp 21; [1969] V.R. 180. In the present case almost 10 years had elapsed since the writ was filed in the Court, approximately 16 years has elapsed since the plaintiffs' alleged cause of action first arose, and the trial of the proceeding may well require the investigation of events which occurred almost 20 years ago. In my opinion delays of that magnitude are simply inexcusable.

122. It was argued on behalf of the plaintiffs that even if that be so, there is no evidence that the delay has caused prejudice to the defendant and that in that situation the plaintiffs should be entitled to have the proceeding reinstated. A similar argument was advanced in Bishopsgate. At p.24 their Honours said:

"The plaintiff argued that there was no allegation and thus no evidence of prejudice of any relevant kind in the present case. So it was asserted that it was for the defendant to prove by evidence each matter of prejudice and that prejudice could not be inferred in the absence of such evidence. However, this would appear to overstate the obligation of a defendant on an application of this kind. 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, in our opinion, 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. Nor are we suggesting, for it would be contrary to authority, that it is for the plaintiff to disprove prejudice; but the defendant is entitled to point to undisputed facts and ask the Court to draw necessary logical inferences from them for this purpose. It is not necessary to examine the authorities further because they each insist upon the establishment of prejudice and there is no binding authority to our knowledge which would insist upon some direct allegation thereof upon affidavit."

126. In my opinion it can be said in the present case that the interval of time between the events alleged to constitute the plaintiffs' causes of action and the trial of the action will be so prolonged that there is a substantial risk that a fair trial of the action is no longer possible - see Allan v. Sir Alfred McAlpine & Sons Ltd. (1968) 2 W.L.R. 366 per Diplock, L.J. at p.379 and Duncan v. Lowenthal at p.187. In that situation I consider the defendant has been prejudiced by the inordinate and inexcusable delay. In my opinion an end should now be put to the litigation. The application will be dismissed. I order that the plaintiffs pay the defendant's costs of the proceeding including reserved costs.