Spitfire Nominees Pty Ltd and Anor v Hall & Thompson

15. The parties differed as to the nature and extent of the retainer. The plaintiffs claimed that the first plaintiff was to purchase the business from Giardino Pizza Pty. Ltd. and the second plaintiff was to purchase the freehold of part of the premises upon which the restaurant was conducted, namely the property known as 345 Toorak Road from a company known as Eightieth Newcomer Pty. Ltd. The defendants on the other hand claimed that they were retained to arrange for the incorporation of the second plaintiff and for the second plaintiff to be substituted as purchaser of the property known as 345 Toorak Road, South Yarra. The plaintiffs alleged that the retainer was oral, entered into on behalf of the firm by one Stan Shneider, whereas the defendants alleged that the retainer was in writing. The plaintiffs pleaded a wide retainer, the defendants a more narrow retainer.

18. 5 On 6 May 1986 the Prahran City Council issued a permit pursuant to which the restaurant could seat 120 patrons. The plaintiffs contend that it was the defendants' responsibility to search the Council file before settlement and to advise the plaintiffs as to all matters relevant to the business they were purchasing, including the number of seats permitted by the permit and any other encumbrances or defects with respect to the restaurant, and indoor and outdoor seating, including any pending prosecution by local municipalities. On the other hand, the defendants denied that they were responsible to search Council file before settlement or to advise of the existence of any planning permit. The defendants relied alternatively on contributory negligence, claiming that Brott had visited the Prahran City Council, and that if he had searched the file he would have seen the permit and been apprised of its existence, but did not do so.

21. The plaintiffs further alleged that the defendants did not inform them that in order for the restaurant to comply with the permit, there would need to be eight car parking spaces and that a wood yard at the rear of the premises was not part of the demised premises and therefore could not be used for car parking. The defendants on the other hand claimed that the plaintiffs were aware of this problem and alleged that there were negotiations with the proprietor of the wood yard, Norman Herbert Johns, by which the plaintiffs sought to use the wood yard for car parking. The plaintiffs further alleged that they believed that the restaurant had a capacity, reflected by the number of seats, to accommodate 240 patrons, whereas the permit issued by the Council only allowed 120 seats. The plaintiffs' claim for loss and damage is now based on a comparative capitalised valuation, valuing the restaurant as it would be valued if it had a licence of 240 seats, as opposed to its lawful capacity of 120 seats.

24. In 1998 the defendants applied to strike out the plaintiffs' claim for want of prosecution. The application was dismissed by a master, but upheld on appeal before a judge. It is her Honour's decision which is the subject of this appeal. It is unnecessary to set out in the body of this judgment a recitation in detail of the parties' actions between 1991 and 1998. When this appeal came on for hearing, the parties put before the Court a chronology of events which had been agreed between them, and that chronology is attached as an appendix to this judgment.

28. The judge concluded that there were five distinct periods of delay, which her Honour held constituted inordinate and excusable delay. These periods were from -

(i) 11 November 1992 to June 1994;

(ii) 9 September 1994 to 25 July 1995;

(iii) 5 January 1996 to 30 September 1996;

(iv) 1 October 1996 to 25 August 1997;

(v) 1 October 1997 to 28 September 1998.

These five periods amount in total to more than 61 months. The judge determined that, but for those periods of delay, the matter would have proceeded to trial and been heard between 1992 and 1994, at which time the circumstances would have been entirely different. Her Honour concluded that there was a substantial risk that a fair trial could not be had as a result of the inordinate and excusable delay, in substance for four separate reasons. In the first place her Honour held that it was undesirable for the courts to be called upon to determine the facts based upon the recollection of witnesses of events and conversations which occurred long ago (in this case, 11 years beforehand). This was said to be particularly prejudicial for the defendants, whose key witnesses were solicitors who had dealt with many files since 1987. Secondly, the evidence of Johns was not satisfactory due to his ill health and the difficulties which counsel encountered in examining Johns because of his age and state of health. In particular, Johns' evidence of the plaintiffs' knowledge of the availability of the wood yard was critical. Thirdly, the defendants were prejudiced in that they might be unable to rebut or respond in any way or in only a limited way to the plaintiffs' evidence of misrepresentations by the vendors about the seating capacity of the restaurant, a problem aggravated by the change in the physical condition of the restaurant over the 11-year period. Fourthly, her Honour placed reliance on the fact that the defendant firm is a practising firm of solicitors and had been exposed to an allegation of negligence for a protracted period of time.

The grounds of appeal

34. The grounds of appeal relied on by the plaintiffs are as follows. First, it is claimed that the judge's order was unreasonable and unjust. Secondly, the plaintiffs claimed that any risk to a fair trial and any prejudice on the defendants occasioned by delays were occasioned substantially by the defendants themselves. Thirdly, the plaintiffs claimed that they had not been guilty of inordinate and inexcusable delay in the prosecution of the action sufficient to warrant dismissal of the proceeding. Fourthly, it is claimed that the defendants had not shown that they had suffered any prejudice sufficient to warrant dismissal of the proceeding for want of prosecution. Next, it is claimed that her Honour was wrong in finding that there was no evidence that the defendants had engaged in a pattern of blocking and diverting conduct or that they had set up obstacles deliberately in the path of the plaintiffs to frustrate their efforts to bring the matter on for trial. Next, it is claimed that her Honour's order was unjust because the plaintiffs had served certificates of readiness on three occasions and from late 1996 onwards the proceeding had been subject to case management in the Supreme Court. In particular the matter was to be fixed for hearing early in 1999 and the parties had been engaged in mediation during 1997 and 1998. Next, it is claimed that the judge was wrong to distinguish the judgment of this Court in Spitfire Nominees v. Ducco[1]. Finally, it is claimed that the justice of the occasion demanded that no order for dismissal should have been made.

38. There was comparatively little dispute between the parties as to the legal principles applicable in the case of an application to dismiss an action for want of prosecution. Both parties accepted the statement of Lord Griffiths in Department of Transport v. Chris Smaller (Transport) Ltd.[2] that -

"The principles upon which the jurisdiction to strike out for want of prosecution is exercised were settled by the Court of Appeal in Allen v. Sir Alfred McAlpine & Sons Ltd.[3] and approved by the decision of the House of Lords in Birkett v. James[4]. 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 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 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."

The judge took the view that the plaintiffs had failed to explain satisfactorily the various periods of delay that had occurred. In doing so her Honour relied on what was said in Shepperdson v. Lewis[5]. In the same case O'Bryan, J. said[6] -

"The guiding principle for the exercise of such a discretion may be stated broadly in terms that an order for dismissal will be made if the justice of the occasion demands it; on the other hand, if the default can be met by a less drastic order including maybe an appropriate order for costs the action will not be dismissed. On such an application a number of considerations would appear to be relevant, e.g. the length of delay, whether a credible and excusable explanation has been given for the delay, what prejudice to the defendants, if any, has arisen or may arise as a result thereof, and this would include a consideration of the nature of the action and the issues which are likely to arise at the trial."

Two questions of law, to which I shall turn briefly later, remained in dispute between the parties, first, whether the defendants were under any duty to stir up the inactive plaintiffs, and secondly, whether the judge was correct in finding additional prejudice in the fact that the defendant firm was a practising firm of solicitors which had been exposed to an allegation of negligence for a protracted period.

46. Before considering the individual periods of delay identified by the judge, it is convenient to turn to the principal case made for the plaintiffs. Counsel for the plaintiffs submitted that this was basically a simple action, in which it was prima facie unlikely that the passage of time would have caused any prejudice. There was a dispute between the parties as to the retainer, but there was evidence before the Court in an affidavit made by Issac Brott, that he gave initial instructions on behalf of the plaintiffs to Stan Shneider, and that he had been in contact with Shneider on a number of occasions during the last six years. He said that Shneider had told him that he had a good recollection of what took place at and shortly after the time at which Brott had given him initial instructions to act on behalf of the plaintiffs in relation to these transactions. Her Honour, it was argued, appeared to have disregarded or placed no reliance on this evidence and had not been justified in doing so. Since the case for the defendants was that the retainer was in writing, the passage of time ought not therefore to result in prejudice to any party. In so far as breach of the retainer was concerned, the principal allegation was that the requisite searches had not been made. As to this, both sides were agreed that no searches had been made. In relation to damage, the principal allegation was that the value of the business had been reduced. There again, it was argued, it was unlikely that the passage of time would make any real difference to the trial. Accordingly it was submitted that it was surprising to find that the action had been struck out. Furthermore the plaintiffs had twice served certificates of readiness for trial which the defendants had declined to sign, and, for that matter, a third in October 1998 after the proceedings to strike out had been commenced. The plaintiffs' counsel then submitted that in the consideration of delay, it was clear on principle that delay must be looked at in the context and in the overall pattern of the litigation, whereas the judge had treated sole responsibility as lying with the plaintiffs. Counsel submitted that the defendants plainly bore part of the responsibility for the matter not coming on for trial at various times. In particular, from the beginning of 1997 the action had become subject to case management by the Court. Thereafter the parties had attended a number of directions hearings, and mediation had been attempted between the parties but was unsuccessful. When all the facts said to amount to delay had been examined, it was submitted that it was not open to the judge to find that all delay had been caused by the plaintiffs, and furthermore, when the defendants' co-operation in the management of the litigation was examined, it was also inappropriate to find that the delay in bringing on the action was inordinate and inexcusable. Against this background, I now turn to the five individual periods of delay.

50. The judge said that in this period there had been total inactivity on the part of the plaintiffs. In fact no action appears to have been taken by the plaintiffs in this period of 19 months, leave then being sought and obtained to amend the statement of claim in August 1994. The plaintiffs' counsel complained in this Court that the defendants also had delayed substantially in serving an affidavit of documents. But I do not think that the plaintiffs seriously contested that the delay in this period had been substantial and largely of their own making.

54. On 8 August 1994 the plaintiffs served an amended statement of claim pursuant to leave granted. The second period of delay found by the judge commenced immediately after the defendants filed a defence to the amended statement of claim. The plaintiffs then on 23 November 1994 served a certificate of readiness on the defendants. The defendants' solicitor responded by letter on 2 December that the defendants were happy to sign this certificate but wished to interrogate first and said he would sign the certificate as soon as answers to interrogatories had been given. The defendants' interrogatories were served on 27 February 1995, but not answered until 24 July 1995.

57. The judge said of this period that it was one of complete inactivity on the part of the plaintiffs save for serving the certificate of readiness. Her Honour said of the plaintiffs' conduct that the plaintiffs had taken none of the steps open to them to have the case set down for trial in the absence of a certificate, and that rather than avail themselves of the means of expedition that were open to them they had sat on their hands awaiting the service of the defendants' interrogatories. Thereafter the plaintiffs' answers to these interrogatories had only been delivered after the service of a notice of default and a summons by the defendants. By this time almost four years had elapsed since the action had been commenced, and almost seven since the events giving rise to the claim. The judge held that the plaintiffs had been guilty of inexcusable delay in this ten-month period. Her Honour plainly took the view that the service of a certificate of readiness at a time when the action was not ready for trial, followed by months of virtual inactivity thereafter with no attempt being made to bring the matter on for trial was no adequate answer to the claim of inexcusable delay.

61. By summons dated 24 July 1995 the defendants made application pursuant to Order 41.01 for the evidence of Norman Herbert Johns to be taken de bene esse by an examiner. The defendants had become concerned that Johns, who was said to be an important witness, was seriously ill and might not then have long to live. Johns (as I have said) had been the owner of the property at 341-343 Toorak Road, South Yarra and had leased the property to Giardino Pizza Pty. Ltd., and was also the owner of the land at the rear of that property known as the wood yard. In the amended statement of claim the plaintiffs had alleged, among other things, that the defendants had failed to inform the plaintiffs of the extent to which the wood yard formed part of the land subject to the assignment of the lease for the property at 341-343 Toorak Road; the wood yard, of course, was of importance because of the otherwise insufficient car parking available to the property the subject of the lease. In his affidavit in support of the application to take Johns' evidence, the defendants' solicitor said -

"Interlocutory steps in this matter are almost complete and as soon as the plaintiffs provide sworn Answers to the Defendants' interrogatories I shall serve a certificate of readiness for trial upon the plaintiffs' solicitors. However I am concerned with the state of the Court List, that this matter may not come on for hearing for at least twelve months after the case is set down for trial, during which time Mr Johns' medical condition may have deteriorated to such an extent that he is incapable of giving evidence or further, that he may have passed away."

The plaintiffs did not appear on 10 August 1995 before the master when the order was made for the examination of Johns. Johns was examined on 4 January 1996. In the absence of any explanation for the delay of five months in the examination being held, the judge did not attach any blame to the plaintiffs in relation to this five-month period. Norman Johns died during 1997.

The period from 5 January 1996 to 30 September 1996

67. Analysis of the agreed chronology shows that in this nine-month period once again virtually no steps were taken by the plaintiffs. On 1 February 1996 the defendants' solicitor requested further and better particulars of loss and damage. On 19 July the defendants sought by summons orders that the plaintiff provide further and better particulars of loss and damage and on 16 August the Senior Master ordered the plaintiffs to serve further and better particulars of loss and damage by 16 September. On 30 September the plaintiffs served further and better particulars of loss and damage each claiming $350,000, the first plaintiff in respect of the purchase of the business of Giardino's Pizza, and the second plaintiff the same amount for damages for purchase of the property at 345 Toorak Road, South Yarra, in each case together with interest or loss of opportunity to invest the said sums, the claim being based on a seating capacity of 120 seats rather than 240 seats, i.e. half the purchase price paid. As the judge said, in this nine-month period, no action was taken or initiated by the plaintiffs, all activity indeed being instigated or carried out by the defendants. Again her Honour found the plaintiffs were guilty of inexcusable delay during this period.

The period from 1 October 1996 to 25 August 1997

71. On 14 January 1997 the plaintiffs served a second certificate of readiness for trial. The defendants' solicitors indicated that the defendants now wished to amend their defence and seek further discovery arising out of the further and better particulars provided by the plaintiffs on 30 September 1996. Then on 20 February the matter became subject to the control of the Litigation Support Group for case management in the Supreme Court. Thereafter directions hearings were held before Teague, J. on 13 March, 10 April, 21 April, 26 May, 3 June, 30 June and 19 August 1997. On 27 June 1997 Master Wheeler ordered, there being no appearance for the plaintiffs, that the plaintiffs provide an affidavit as to certain documents. On 29 July the plaintiffs issued summonses seeking to set aside or vary the orders of Master Wheeler made on 27 June.

74. The defendants say of this fourth period lasting nearly 11 months that there was total inactivity by the plaintiffs save for the service of the notice of trial and certificate of readiness in January, and the issue of the summons to set aside the order of Master Wheeler. After noting that during most of the period the action had been subject to civil case management, the judge said that rather than use court management to expedite the proceeding, the plaintiffs allowed the matter to be adjourned repeatedly before Teague, J. and ignored the urgings of the Court on 13 March and 19 August 1997. Her Honour said that during this period the matter was not expedited "very much at all due to the actions and inactions of the plaintiffs" and again considered the plaintiffs were guilty of inexcusable delay. The case for the plaintiffs was, that the plaintiffs had served a certificate of readiness for trial and that the defendants had not taken up the offer of the hearing. The submission was that the defendants bore part of the responsibility for the matter not coming on for trial at that time, and that the judge had failed to take into account the context of the action and what the defendants had failed to do. Furthermore, on 27 February 1997 this Court gave its decision in Spitfire Nominees v. Ducco[7] and thereafter it was contemplated by both plaintiffs and defendants that these proceedings and the action of Spitfire Nominees v. Ducco be heard in tandem by the same judge, which added complexities to both matters being heard together.

The period from 1 October 1997 to 28 September 1998

78. During the fifth period, management of the proceeding by the court continued. On 18 September 1997 Teague, J. had ordered that mediation of the action should be completed by 12 December 1997. Her Honour noted that the plaintiffs had taken from 14 October 1997 to 6 February 1998 to provide answers to interrogatories concerning loss and damage and from 17 December 1997 until 23 March 1998 to notify their acceptance of an agreed mediator for the proposed mediation between the parties. The plaintiffs did not provide further particulars of loss and damage until 22 May 1998 and additional particulars of loss and damages were provided only on 12 October 1998. The defendants' case was that there was tardiness by the plaintiffs in a number of respects over this period of nearly 12 months, a submission accepted by the judge. In stating that the plaintiffs were slow throughout this period, notwithstanding the taking of some positive steps such as engaging in the mediation and the service of particulars of loss and damage, her Honour said that the slow approach of the plaintiffs was adopted at a time when the proceeding was over six years old and, furthermore, when more than 10 years had elapsed since the events that gave rise to the claim.

81. The plaintiffs again complain that the judge regarded the whole of the delay as attributable to the plaintiffs, no weight at all being placed on the conduct of the defendants. It is significant, so it was submitted, that from the beginning of 1997 the action had been subject to case management. The parties had engaged in mediation, but that had been unsuccessful. Furthermore, an order had been made by consent on 31 July for notice of trial to be given on 23 October 1998. At this point, the defendants had again been offered an opportunity for the hearing, and had until this point co-operated in management of the action in the court's system. It was submitted that taking all of these circumstances into account the issue of the summons to strike out for want of prosecution was really "litigation by ambush". The submission was that in the context of the whole of the litigation it was not open to the judge to find that all the delay was at the hands of the plaintiffs and, that, having regard to the way in which the defendants had co-operated in the litigation, it was inappropriate and wrong to find that the delay was inordinate and inexcusable.

85. In support of the plaintiffs' arguments as to delay reliance was placed on Spitfire Nominees v. Ducco[8] for the proposition that a judge cannot simply gross up the period of delay as elapsed time, but must analyse the steps and set out the length of the net delay occasioned, and the prejudice, if any, which had been sustained as a consequence of this, rather than the general elapsing of time. In Masel & Ors v. Transport Industries Insurance Co. Ltd. & Ors[9] the Appeal Division of the Supreme Court said that delay is relative and must be seen in context when considering whether the excuses for the delay given by the plaintiff are credible and satisfactory; the size and complexity of the action are relevant for these purposes; furthermore in considering these matters one must also look at the extent of the diversion created by other parties to the litigation either directly or through their lawyers. Another relevant factor mentioned in Masel is the question whether the processes of the Court have contributed to the delay. Then in McKenna v. McKenna[10] McGarvie, J. referred to the proposition[11] that a defendant, by taking steps in an action which caused a plaintiff to incur further cost, may thereby preclude himself from relying on prejudice to him which flows from the plaintiff's past delays. But in McKenna[12] McGarvie, J., correctly in my view, had held that an application to dismiss for want of prosecution is not to be decided by a formula, and that the judge is never precluded from looking at and taking into account the reality of the whole history of the case. The plaintiffs also placed reliance on the following passage in the judgment of Moffitt, P. in Stollznow v. Calvert[13] -

"Similarly, despite some judicial observations concerning the right of defendants to let sleeping dogs lie and that defendants should not be penalised for earlier inaction when subsequently an application is made to dismiss proceedings for want of prosecution, no rigid rule can be laid down on the matter. ... It is too simplistic an approach to regard preparation for, and bringing the proceeding to trial, as a one-sided affair resting entirely on the plaintiff, who has the carriage of the action. I cannot accept, for example, that a defendant, who has written complaining of the delay and warning that particular prejudice will occur to him if delay continues, is not, on a later application to dismiss the proceedings, in a position superior to that of a defendant who has lain silent, and later claims for the first time that prejudice has occurred by reason of the delay. Whatever may have been past views of the adversary system in regarding skill and exploiting the rules in an adversary duel as some kind of virtue, current ideas of justice, at least in this country, are directed to the substance of things. The exercise of the undoubted right of a defendant to do nothing runs the risk of being classified in the circumstances of some cases as being in the category of the `ambush' approach to litigation."

90. In considering the issues raised by the plaintiffs in the context of the cases just mentioned it must be borne firmly in mind that the plaintiffs must show error in the judge's exercise of discretion. As was said in House v. R.[14] -

"It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous and irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been failure a properly to exercise the discretion which the law reposes in the court of first instance."

Consideration of the plaintiffs' submissions as to delay

95. Counsel for the plaintiffs referred first to the fact that on several occasions the judge in considering the various periods of delay referred only to "inexcusable" delay rather than "inordinate and inexcusable" delay, in such a way, it was suggested, as to indicate that her Honour misapplied the relevant test. Her Honour however repeatedly stated the test as to delay in its correct form (i.e. that it must be both inordinate and inexcusable delay) and it was clearly at the forefront of her Honour's mind that this was the test that had to be met. After referring to all periods of delay, her Honour concluded that the plaintiffs' delay met "the test laid down in the authorities as being inordinate and inexcusable."

98. At the outset in considering the plaintiffs' arguments on delay, it must be remembered that the plaintiffs had waited four years before issuing the writ after the cause of action was said to have arisen. There had been very little attempt by the plaintiffs to explain this delay, save to assert that there had been difficulty in obtaining files from the defendants. But if the defendants were being unreasonable in refusing to deliver up documents, it was always open to the plaintiffs to seek pre-trial discovery or apply suitable pressure through the Law Institute of Victoria. Furthermore the claim in this action is not (as the plaintiffs themselves submitted) particularly complex and, leaving to one side the question of damages and the documents relevant to that issue, was only to a small extent dependent on documents. In any event, the judge's approach to the question of delay in issuing the writ was, I think, clearly correct. Her Honour did not treat the plaintiffs as solely responsible for the delay in issuing the writ. In the process of assessing whether the later delay was inordinate and inexcusable, her Honour did not include the four years before issuing the writ in her assessment of the extent of the delay that had occurred after the writ was issued. Her Honour's approach to delay before the issue of the writ, in accordance with authority,[15] was that a plaintiff who chooses to wait until late in the limitation period to issue must be expeditious thereafter. As Tadgell and Ormiston, JJ. said in Bishopsgate Insurance Australia Ltd. (In Liq.) v. Deloitte Haskins & Sells[16], plaintiffs are obliged to move with greater speed if they have left the issue of proceedings until very late in the limitation period.

The service by the plaintiffs of two certificates of readiness considered by reference to the five periods of delay

102. I turn then to the plaintiffs' reliance upon having served twice a certificate of readiness on the defendants' solicitors. The significance of these events must be looked at in the context of the whole history of the action and for that purpose an analysis of the events shown by the agreed chronology must be undertaken. Such an analysis however reveals quite clearly the extraordinary length of time taken by the plaintiffs in formulating their claim for loss and damages. The writ when first issued gave little information as to what damages were said to have been caused by the defendants' alleged negligence.

106. The first period of suggested delay commenced on 11 November 1992 and lasted until June 1994. On 9 December 1992 the defendants served notice for further discovery (the plaintiffs had already served an inadequate affidavit of documents on 6 February 1992). Although the defendants had served an affidavit of documents on 8 December, the plaintiffs were also seeking a separate affidavit of documents from Mr Cain, one of the two solicitors in the defendant firm who had conduct of the plaintiffs' affairs. That period of 19 months was properly described by the judge as one of total inactivity on the part of the plaintiffs.

110. The second period of delay of more than nine months commenced on 9 September 1994 and concluded on 25 July 1995. The plaintiffs served an amended statement of claim in August 1994, and an amended defence was delivered in September. The first certificate of readiness was sent by the plaintiffs' solicitors on 23 November. But the defendants now not unreasonably wished to interrogate the plaintiffs. Interrogatories were served in February 1995 by the defendants and the remainder of the second period was taken up in the defendants' attempts to obtain answers by the plaintiffs to those interrogatories. Notice of default in making discovery had been served on the plaintiffs in March 1993. At the time the plaintiffs served the first certificate of readiness, they were in default in making further discovery and the later history of the action shows that the plaintiffs were then themselves anything but ready for trial. The defendants' interrogatories were not answered until the end of the second period, and even then a substantial number of interrogatories were not answered at all.

114. The third period of delay was said to have commenced on 5 January 1996 and lasted some nine months until 30 September 1996. In choosing 5 January 1996 it might be said the judge was more than a little generous to the plaintiffs. The defendants had become concerned to obtain the evidence of Norman Johns and his evidence was in fact taken, as I have said, on 4 January 1996. However, an examination of the correspondence in evidence shows that some months of delay in taking the examination of Johns was almost entirely due to the other commitments of Issac Brott. In any event on 1 February 1996 the defendants' solicitors sought further and better particulars of the plaintiffs' loss and damage. It then took the plaintiffs eight months to provide particulars of loss and damage and those particulars when supplied claimed amounts totalling in excess of $1m. The plaintiffs now claimed that the restaurant had a seating capacity of 120 seats rather than the capacity of 240 seats the plaintiffs were said to have estimated at the time of purchase, this claim being made for the first time nine years after the original transaction.

118. The fourth period lasted from 1 October 1996 to 25 August 1997. It was during this period that the new case management procedure was instituted in the Supreme Court, and on 14 January 1997 the plaintiffs again served a certificate of readiness for trial. The new and substantially inflated claim having been served at the end of September 1996, the defendants replied that the certificate of readiness was now premature and they sought further discovery and indicated a desire to amend the defence. Thereafter much of the fourth period of delay was taken up with the defendants seeking further discovery. The chronology for the first half of the year 1997 shows repeated attempts by the defendants to obtain further discovery from the plaintiffs, whether of books of account relevant to loss and damage, financial records, or tax returns, or a document known as the "Blue Sky Paper" which remained shrouded in mystery but which had been mentioned by Issac Brott in conversation with the defendants' solicitor as bearing upon the plaintiffs' financial expectations of the purchase of the restaurant. When the plaintiffs finally delivered a further affidavit of documents on 25 August 1997, that affidavit asserted that books of account and financial records relating to Giardino Pizza for four years up to the date of purchase had been taken to the tip and dumped in 1988. On 15 September 1997 the plaintiffs' solicitor swore an affidavit to the effect that the "Blue Sky Paper" had last been in his possession in 1988. Thereafter Teague, J. on 18 September 1997 gave directions for the defendants to deliver further interrogatories and for mediation to take place and a notice of trial to be given by 19 December 1997.

122. The fifth period of delay commenced on 1 October 1997 and lasted until 28 September 1998. The defendant delivered further interrogatories for the examination of the plaintiffs on 14 October 1997, answers not being provided until 6 February 1998. In this period the unsuccessful mediation took place. On 20 April 1998 the mediation began before Mr Timothy North, but at the end of the first day was adjourned so that the plaintiffs could prepare further and better particulars of loss and damage. Then on 15 May 1998 the plaintiffs served a statement of an expert witness making calculations of diminution in value of the restaurant business based upon capitalisation of net business profit. The new further and better particulars of loss and damage served on the same day asserted that "the plaintiffs' loss and damage will be proven by expert evidence and is calculated by a diminution in value of the premises at $500,000 together with interest paid from the date of purchase of the business to the date of receivership". The mediation concluded with the case unresolved on 21 August 1998 and on 24 August the defendants' solicitor wrote to the plaintiffs' solicitor indicating he was prepared to go to trial on the plaintiffs' particulars of loss and damage of 15 May 1998 but saying that his client "will not countenance any amendment of these particulars" and giving notice that his client would be severely prejudiced if there was any endeavour by the plaintiffs to amend their claim for loss and damage. To this letter the plaintiffs' solicitor responded by letter dated 4 September 1998 that -

"As you well know, the loss and damage that our client will be claiming at trial extends well beyond the loss set out in the particulars dated 15 May 1998. We will shortly let you have up-to-date court documents reflecting our client's claim that will be made at trial."

This letter was presumably the straw that broke the proverbial camel's back. On 28 September 1998 the defendants then filed their summons to strike out the plaintiffs' claim for want of prosecution. Finally on 12 October 1998 the plaintiffs served new amended particulars of loss and damage.

127. The above analysis of the steps shown to have been taken by the parties in the agreed chronology demonstrates, in my view quite clearly, that on both occasions the plaintiffs served a certificate of readiness when neither party was ready for trial. The plaintiffs themselves repeatedly amended the particulars of their claim for loss and damages thereafter and on neither occasion could the plaintiffs reasonably have expected the defendants to sign the certificate. Nor, as the judge observed, did the plaintiffs, after serving the certificates for readiness, take any of the steps open to them to force the action on for trial.

The Case Management System introduced by the Supreme Court in 1997

131. It is necessary now to deal with the plaintiffs' reliance on the Case Management System introduced in the Supreme Court at the start of 1997. The case became subject to the control of the Litigation Support Group on 20 February 1997 and thereafter the parties appeared frequently in front of Teague, J. and various masters for sundry directions and orders. The plaintiffs accordingly rely on the defendants' apparent co-operation in the management of the case in this period and on the defendants' willingness to have the matter set down for trial as at 31 July 1998, and as shown by the letter from their solicitors dated 24 August 1998.

134. The Case Management System was introduced for the clear purpose of managing cases efficiently and economically in the Supreme Court and ensuring (inter alia) that cases would be brought to trial and disposed of as expeditiously as the interests of justice dictate. Practice Note No. 1 of 1996 - Civil Case Management[17] included the following statement -

"All litigation is expensive. All proceedings should be brought to an end as soon as that can be done, consistently with the need of each party to have a reasonable opportunity for considering its position and preparing and presenting its case. The new proposals are framed with those considerations in mind."

The quick and efficient disposition of litigation was emphasised by the Chief Justice in a statement published in the Law Institute Journal[18], saying that it was anticipated that cases would be ready for fixing for trial about ten months after being issued. The new procedure contemplated greater control being exercised by the Court, after a high degree of consultation with the parties. The management of the case by the Court however obviously was intended to take control of the preparation of the action for trial to an extent out of the hands of the parties, and the new system was introduced to allow the parties much less opportunity for delay. The Practice Note referred to above also contained the statement -

"The parties and their practitioners will be expected to take all reasonable steps to ensure that the momentum of the case is maintained. It follows that if a party (or the practitioner for a party) is responsible for delaying the progress to trial, that party, or that party's practitioner will be penalised in costs."

A necessary consequence of the introduction of the new system was that the parties in practice had no real alternative other than to appear at directions hearings and to demonstrate co-operation in the efficient management of the case thereafter.

141. One consequence of the introduction of such a system, it is to be hoped, will be the end of disastrous delays such as have occurred with the present action. But, in examining the history of the procedural steps of this case, the plaintiffs are entitled to draw rather less support from what is claimed to be the co-operation of the defendants in getting the matter to trial than would otherwise be the case, in light of the court's having taken control of the management of the action.

145. When the plaintiffs' arguments as to the judge's treatment of delay are examined in the context of what is demonstrated by the chronology, it will be seen that the plaintiffs had still not completed particularising their claim by 4 September 1998, 11 years after the cause of action arose and more than seven years after proceedings were first instituted. The claim for loss and damage had changed repeatedly and had apparently increased substantially in quantum over the period since 1991. The plaintiffs had been dilatory in the extreme in making discovery and in answering interrogatories. Indeed time and again the defendants had been the party taking steps to force the plaintiffs into disclosing what their case on loss and damage really was and into producing the documents relevant to that case.

148. The judge did not, in my view, attribute all the delay in bringing the action to a state of readiness for trial to the plaintiffs. Indeed her Honour's very careful analysis of what had occurred in the overall pattern of the litigation shows clearly that she recognised that delay is usually and inevitably contributed to by both parties. But the question which her Honour had to address was whether the plaintiffs had been guilty of inordinate and inexcusable delay. The examination of the history of the action set out above, and of the steps set out in the agreed chronology, leaves me in no doubt whatever that her Honour was correct so to hold. The judge plainly did not make the mistake of simply grossing up the whole of the period of delay after the cause of action arose, or after the writ was issued, which was one of the principal errors leading to the decision of this Court in Spitfire Nominees v. Ducco[19]. Her Honour was entitled, I think, also to conclude that the defendants had not, on the evidence, engaged in a pattern of blocking and diverting conduct or set up obstacles deliberately in the path of the plaintiffs to frustrate their efforts to reach a trial date.[20] That the defendants engaged in mediation with the plaintiffs when the matter came under the control of the court is, in my view, no basis for claiming that the defendants are not now entitled to seek to have the action dismissed for want of prosecution.

151. The plaintiffs' counsel also attacked her Honour's statement that the defendants were under no duty to stir up the inactive plaintiffs.[21] In this respect reliance was placed on the passage from the judgment of Moffitt, P. in Stollznow v. Calvert set out above.[22] The first of the two issues of law as to which there was dispute referred in [8] above, is the extent to which a defendant is entitled to let sleeping dogs lie. But it is not, I think, necessary to consider this question in any detail because it cannot here be said that the defendants took any such course. On the contrary they repeatedly attempted to stir the sleeping dog, most particularly in seeking to have the plaintiffs settle on a final form of particulars of loss and damage, the issue which had been the principal bone of contention between the parties for a number of years. In so far also as the defendants had stirred the plaintiffs into action and indicated a willingness to go to trial in May 1998, the fact remains that in September 1998 the plaintiffs were still refusing to limit themselves to such particulars as had been supplied and instead delivered new amended particulars of loss and damage even after the summons to strike out was served. Her Honour's conclusion that the plaintiffs had failed to explain satisfactorily the various periods of delay that have occurred is also in my view indisputably correct. In my view no error is to be found in her Honour's reasons on the subject of delay.

155. I turn then to the question of prejudice. In Bishopsgate[23] Tadgell and Ormiston, JJ. said -

"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. ... In each case, however, one must look at each of the elements of prejudice asserted and examine the time at which it is likely to be suffered, always making due comparison between prejudice which the defendant has suffered or will be likely to suffer because of inordinate and inexcusable delay and any prejudice it might have suffered in any event. So far as likely prejudice to the conduct of a fair trial is concerned the critical time is the time at which the action is likely to be heard."

Her Honour, correctly with respect, commenced her discussion of this issue by looking at the question when the action might have been heard but for the delay. The defendants had submitted that absent the delays the matter would have been heard between 1992 and 1994. Since the action had been commenced in July 1991 her Honour was, I think, entitled to take the view that the action should have been heard in 1993 or 1994. The action was, as has been said, not of particular complexity, save for the difficulty met by the plaintiffs in formulating their claim for loss and damage.

160. The plaintiffs submitted that the only evidence before the judge as to diminished memory was that Messrs Cain and Brett Young would have been called by the defendants to give evidence of the retainer, although the defendants' case was that the retainer was in writing, and had not been reached orally with Stan Shneider. For their part the plaintiffs claimed they retained the defendants through Shneider, and the evidence of Shneider was that he had a good recollection of what had taken place. The plaintiffs submitted in this Court that her Honour both ignored the evidence of Shneider and incorrectly treated the prejudice as having arisen by the plaintiffs' allowing 11 years to elapse before evidence could be given at trial.

163. The judge did, I think, make it quite clear in dealing with prejudice of this kind that it was delay after the action would have been heard but for the plaintiffs' delay that her Honour was considering. In this context her Honour said expressly that "It is undesirable that courts be called upon to determine facts on the basis of witnesses' recollection of events that occurred so long ago when it was possible for evidence to be given when it was more fresh in the minds of the particular witnesses." But the plaintiffs cannot argue that the only witnesses whose recollection was important were Cain and Brett Young. As her Honour said the case required detailed attention to be given not only to the retainer of the defendants but also to the circumstances surrounding the purchase of the restaurant business. The particulars of loss and damage required in effect a reconstruction of the restaurant as it had existed 11 years before, together with the evidence of Issac Brott and the plaintiffs' other witnesses as to their views of the seating capacity of the restaurant, the car parking for it, and the restaurant's ability to comply with car parking restrictions by use of the wood yard. All of this depended at least to an extent on the recollections and oral testimony of witnesses for both parties. Furthermore the plaintiffs' relied on representations said to have been made by the vendors of the business as to the number of seats available in the restaurant at the time of sale. It followed that the plaintiffs' witnesses could be expected to make statements as to the number of seats that were in the restaurant at the time of sale, the physical capacity of the restaurant at the time, matters that were represented to them by the vendors and the type of enquiries that could and ought to have been made by the defendants. In my view her Honour could be well satisfied that the defendants and their witnesses would be placed at a distinct disadvantage by the plaintiffs' having allowed 11 years to elapse before evidence could be given at trial, (as opposed to, say, six or seven years). Her Honour was plainly entitled to take the view that the defendants might be unable to rebut or respond to such evidence in 1998 or 1999 as against the ability they might have had to do so in 1993 or 1994. Furthermore the transcript of the evidence of Norman Johns taken de bono in January 1996 clearly showed the difficulty the defendants' counsel had in eliciting evidence from him, as her Honour said. Her Honour found that the defendants were prejudiced because they were deprived of the opportunity of calling him at that earlier time, and that the death of Mr Johns was a substantial prejudice to the defendants' case, notwithstanding the fact that a transcript of some evidence from him was obtained in his lifetime. In my view no error is to be found in these conclusions.

166. The plaintiffs also challenged the statement made by the judge that the operation of the restaurant might have been different in 1998 to the operation that was conducted there in about 1987, saying that there had been no evidence of any physical change in the restaurant and that it was not open to her Honour to make this finding or to infer change. I do not accept this argument. I have no doubt that her Honour was entitled reasonably to draw the inference that in so far as a restaurant might continue to be operated on the premises at 341-345 Toorak Road, it might be different to the operation that had been conducted there in about July 1987. The real question is how much more reliable the evidence of the circumstances of the restaurant might have been had it been given in 1992 to 1994 when the matter might otherwise have come to trial as opposed to 1998 or 1999 which was then likely to be the case. Apart from the fact that the condition of a pizza parlour in South Yarra was likely, as a matter of inference, to have altered substantially over a period of five or more years, the defendants' difficulty in defending this claim had already been increased by the fact that in or about 1988 the books of account and financial records of the business had been taken away and dumped and the receiver's file had been destroyed. In these circumstances it seems to me that it was highly probable that the operation of the business in 1998 or later would be significantly different to the operation conducted in or about July 1987 and the probability of such difference made it increasingly hard to make any objective assessment of what expectations the plaintiffs had formed of the restaurant they were buying in 1987.

169. The remaining element of prejudice found by her Honour raises the second of the legal issues as to which there was some dispute. The judge found that the fact that the defendants were a practising firm of solicitors meant that they suffered additional prejudice since they had been exposed to an allegation of negligence for a protracted period, relying on what was said in Bishopsgate.[24] The plaintiffs for their part argued that the defendant firm no longer exists and that the defendants are accordingly not subject to the same prejudice. The essence of the decision in Bishopsgate, as the defendants submitted in this Court, is in my view that professional people, and in particular solicitors, suffer special prejudice when professional negligence is alleged against them and the allegation is maintained unresolved and for inordinate periods. In this case the action for professional negligence had, when the application to dismiss for want of prosecution was brought on for hearing, remained pendant for in excess of seven years. It plainly reflected upon the competence and probity of the solicitors involved, and to that extent was relevant and entitled at least to some weight for the reasons given in Bishopsgate and quoted in her Honour's reasons[25]. This is not, with respect, a factor to which I would have attached great weight in the assessment of prejudice, so far as the defendants were concerned, but I accept that it was a matter that her Honour was entitled to bring into consideration. While I might have been prepared to attach less weight to this element than did her Honour, I do not accept that any error has been shown in the exercise of the discretion. The judge concluded that the plaintiffs' delay would give rise to a substantial risk that a fair trial is not possible and that the defendant would suffer prejudice and, further that there was real prejudice and injustice to the defendants in allowing the action to proceed further. Again in my view no error is to be found in her Honour's reasons for so deciding.

173. By summons dated 2 April 2001 the plaintiffs sought leave to adduce fresh evidence before this Court. The fresh evidence sought to be tendered was that of Stanley Shneider, Katherine Mary Dealehr and Jack Sher, their proposed evidence in each case being rendered by affidavit. I shall deal with each of these prospective witnesses in turn.

176. Shneider said he had discussed this action with Issac Brott and had provided him with an earlier affidavit which was available but not produced in the proceedings before the judge. The plaintiffs suggest that Shneider was guarded in the terms of what he had been prepared to say to Brott, but it is claimed that it is apparent from his recent affidavit that he has a good recollection of all matters relating to his conduct in respect of the retainer and the legal work done pursuant to it whilst he worked with the defendant. In particular in his affidavit he stated -

"Brott was very concerned with a number of matters all of which were carefully noted in writing by me. I recall he was particularly concerned with the reputation of the vendor whom he described as being very tricky, and was concerned that his vendor would want to sell the restaurant when it was enjoying a booming trade according to his own sources of information. I was in no position to allay his concerns other than to assure him and his then prospective partners that all the normal searches which should always be done in matters of this type would be undertaken. Requisitions would be issued with respect to both the freehold and business purchases and all prudent enquiries could be expected to be made. Isaac Brott is a forceful and somewhat anxious fellow who pressed the point of his concern and I recall assuring him we would check Prahran City Council records and all search files held at the Liquor Licensing Commission, MMBW and other authorities and that a full town planning search would be undertaken and I am certain I carefully noted these assurances."

The plaintiffs argue that the terms of the retainer were broader than the written retainer as alleged by the defendant and that Shneider had a very good recollection. They submit that Shneider's new evidence was not available to Brott at the time of the hearing before her Honour and could not reasonably have been obtained by Brott.

181. Following the dismissal of the action for want of prosecution, Katherine Dealehr attended a taxation before Master Bruce on 11 April 2000. In the course of that taxation a file note was disclosed to her by the defendants which indicated that the defendants believed that Shneider had a very good recollection of the events and moreover would not be a helpful witness for the defendants. It is submitted that this evidence was not available at the hearing and could not reasonably have been obtained.

184. Jack Sher is a solicitor who acted for the vendors of the restaurant Giardino Pizza Pty. Ltd., and was also solicitor for the vendor of the freehold of the property. The plaintiffs claim that during the course of various interlocutory stages in the action between Spitfire Nominees and Ducco, various attempts had been made to obtain the vendor's file, but had been unsuccessful. Following the dismissal of the action Sher took part in discussions with Brott in which he revealed the following. Sher said that three or four days before settlement of the purchase of Giardino Pizza in 1987, Brett Young of the defendants, acting for the purchasers, contacted him in relation to trying to obtain particulars of rates and outgoings payable with respect to the two properties, asking for specific up-to-date figures owing for council and water rates and querying if land tax was payable. Sher said he asked if Brett Young had not obtained relevant certificates and said that Brett Young admitted that they had not obtained certificates. Sher said the admission was along the lines that they [presumably the defendants] had "overlooked getting the certificates" or words to that effect.

187. The plaintiffs now submit that if the above evidence had been before the judge, her Honour would have concluded that Shneider, who was relevant on the question of the retainer, would give evidence of having a clear recollection of events, and contrary to the retainer pleaded by the defendants; secondly, that the submission that all witnesses' memories were diminished was not in fact correct; and thirdly, that there had been a failure by the defendants to obtain the relevant certificates or engage in searches prior to settlement which, according to Shneider, was a clear breach of the terms of the defendants' retainer.

190. This Court has power to receive further evidence upon questions of fact by virtue of O.64 r.22(3). The plaintiffs accepted that leave to introduce fresh evidence in this appeal would only be given if, first, it had been shown that the evidence could not have been obtained with reasonable diligence for use at the trial; and secondly, that it must also be reasonably clear that the fresh evidence if accepted would have led to an opposite result. A third condition is also well-established on the authorities that the evidence must be apparently credible; see Orr v. Holmes[26]; Council of the City of Greater Wollongong v. Cowen[27]; Akins v. National Australia Bank[28].

193. The evidence proposed to be given by Stanley Shneider takes the matter no further than the evidence already before the judge. The proposed fresh evidence adds nothing other than confirmation to the conclusion already reached by the judge, because the plaintiffs had already put before her Honour a conversation which had taken place between Brott and Shneider to the effect that Shneider had a good memory of the circumstances in which the retainer was given. There is nothing to suggest that her Honour did not approach the case on this basis. Exactly the same may be said of the proposed evidence of Mrs Dealehr. So far as Shneider's evidence is concerned, the fact that there was already in evidence before the judge details of the conversation had by Brott with Shneider makes it also very difficult for the plaintiffs now to establish that any evidence given by Shneider could not have been obtained with reasonable diligence for use at the trial. So far as the evidence proposed to be given by Jack Sher is concerned, his statements support the view that Brett Young had not obtained relevant certificates before completion of the purchase. But it had never been suggested at any stage in the history of this action that the defendants had obtained such certificates. The principal issue between the parties had for long been the question of loss and damage. Sher's evidence would not have assisted the plaintiffs to reduce the judge's perception that the defendants would be at a disadvantage in their relative ability to recall the events in issue. Furthermore, no evidence was put forward to show that the supposed new evidence of Jack Sher could not have been procured by the plaintiffs by reasonable diligence. No explanation was given on the part of the plaintiffs why it was that Sher did not reveal to Brott before the hearing before her Honour what was said now to have been revealed as soon as the hearing was over. There is nothing in any of the supposedly fresh evidence now tendered which makes it at all likely that the acceptance of such evidence would have led to a different result.

196. I would accordingly reject the plaintiffs' application to call new evidence in this appeal on the grounds that in each case the evidence was not sufficiently significant to warrant an order permitting fresh evidence to be given, and, in the case of Messrs Shneider and Sher, that it had not been established that the evidence could not have been obtained with reasonable diligence for use at the trial.

199. For all these reasons in my opinion error has not been shown in her Honour's reasons for judgment in dismissing this action for want of prosecution, and I would dismiss the appeal.

Date of retainer between plaintiffs and defendant whereby defendant to act for the first plaintiff in relation to its purchase from Giardino Pizza Pty. Ltd. of a business known as Giardino Pizza, being a restaurant and take-away food bar operated from 341-345 Toorak Road, South Yarra and to act on behalf of the first plaintiff in connection with the obtaining by it of an assignment of lease between Giardino Pizza Pty. Ltd. as lessee and Herbert Johns as lessor and a further retainer between the second plaintiff and the defendant to act on the second plaintiff's behalf as solicitor in relation to the purchase by it from Eightieth Newcomer Pty. Ltd. of the property known as 345 Toorak Road, South Yarra.

Date of settlement of the purchase of the restaurant and purchase of the freehold.

Letter - Defendants to TIA Forbes referring to TIA Forbes letter to them requesting file.

Letter - Defendants to TIA Forbes advising they have in their possession Malibee P/L, Spitfire P/L purchase, and Amlsam & Spitfire Licence application files.

Letter TIA Forbes to Defendants requesting Plaintiffs files.

Letter TIA Forbes to Defendants again requesting Plaintiffs files.

Letter TIA Forbes to Defendants - again requesting files & noting Defendants advises to them on 24/5/1991 that the only file had in their office was the one referred to in their account of 24/5/1991 (ie Licence application file).

TIA Forbes to Law Institute of Victoria advising of numerous attempts to obtain files from Defendants with no success and seeking the Institutes intervention.

Letter - Plaintiffs to Defendants seeking files to be made available to Law Institute of Victoria immediately failing which proceedings will be issued.

Letter - Professional Standards to Plaintiffs confirming receipt of files.

Defence delivered and Notice of Change of Solicitor on behalf of defendant filed and served. Molomby & Molomby went onto the record for the defendant.

Plaintiffs provided Further and Better Particulars of Statement of Claim in related proceeding, but entitled in this proceeding.

Defendant issued Summons seeking security for costs.

Discussion between Brott and Stogdale that defendants failed to comply with Notice for Discovery.

Letter - Plaintiffs to Defendants pressing for Affidavit of Documents.

Master Evans adjourned hearing of Application for Security for Costs to 19 May, 1992 and ordered plaintiffs to pay the defendant's costs of the day.

Master Evans ordered the plaintiffs to pay into Court the sum of $8,000.00 as security for costs to the setting down for trial of this proceeding, and ordered the plaintiffs to pay the defendant's costs of the application.

Letter - Plaintiffs to Defendants again further pressing for Affidavit of Documents.

Letter from Molomby & Molomby to Prothonotary about form of Security for Costs.

Letter from Defendants to Law Institute of Victoria acknowledging that the Plaintiff has requested Affidavit of Documents and that the Defendants are seeking inspection of the original file.

Letter - Defendants to Plaintiffs acknowledging Plaintiffs are pressing for Affidavit of Documents.

Letter - Plaintiffs to Defendants - pressing for affidavit of documents and further documents.

Defendant serves Notice of Default in making discovery of documents.

Letter Stogdale to Brott re Affidavit of Documents.

Correspondence - Plaintiffs to Lachlan Watts of Counsel requesting he take action.

Plaintiffs filed Summons seeking leave to amend Statement of Claim.

Order of Master Evans giving leave to file and serve Amended Statement of Claim. Plaintiffs to pay defendant's costs of the application.

Defendant filed Defence to Amended Statement of Claim.

Certificate of Readiness with letter from Brott to Stogdale.

Further letter of Brott seeking signing of Certificate.

Letter Stogdale to Brott - happy to sign Certificate; wish to interrogate first; inspection of documents offered.

Stogdale stated to Brott he was not prepared to discuss Shneider's Statement.

Letter Brott to Stogdale - confirmed Stogdale will interrogate within a week to 10 days; inspection arranged; and confirming Stogdale will not discuss Shneider's Statement.

Correspondence - Plaintiffs to Scott Stuckey of Counsel requesting he take action.

Defendant served Interrogatories for the Examination of the Plaintiffs (Interrogatories 9 & 10 concerned loss and damage).

Correspondence - Plaintiffs to Lachlan Watts of Counsel requesting he take action.

Correspondence - 13/2/95 - 22/2/95 Correspondence - Plaintiffs to Scott Stuckey of Counsel requesting he take action.

Defendant served Notice of Default in Answering Interrogatories.

Plaintiffs swore (but failed to deliver) Answers to defendant's Interrogatories.

Defendant issued Summons seeking plaintiffs' Answers to Interrogatories.24/07/95

Defendant filed Summons seeking an Order pursuant to Rule 41.01(1)(a) that the evidence of Norman Herbert Johns be taken by an examiner.

Affidavit of Stogdale deposing that he will serve certificate of readiness after sworn answers provided.

Master Evans ordered that defendant's Summons seeking Answers to Interrogatories be dismissed but that the plaintiffs pay the defendant's costs of the application. Master Evans ordered that the further hearing of the defendant's application for an Order pursuant to Rule 41.01 be adjourned to 10 August 1995.

Master Wheeler ordered that Norman Herbert Johns be examined before a Judge's Associate and the costs of the examination be costs in the proceeding.

Norman Herbert Johns examined before Mr Norris, Associate to Byrne J. Plaintiffs attended through Counsel.

Letter from defendant's solicitor to plaintiffs' solicitors requesting Further and Better Particulars of Loss and Damage.

Letter from plaintiffs' solicitors to defendant's solicitor: List of Special Damages to be provided within 120 days.

Letter from defendant's solicitor to plaintiffs' solicitors seeking Particulars of Loss and Damage.

Correspondence - Plaintiffs to Lachlan Watts of Counsel requesting he take action.

Defendant filed Summons seeking Orders that the plaintiffs provide Further and Better Particulars of Loss and Damage pursuant to Order 13.11.

Master Wheeler adjourned application seeking Further and Better Particulars of Plaintiffs' Loss and Damage to 16 August 1996.

Senior Master Mahony ordered plaintiffs to file and serve by 16 September 1996 Further and Better Particulars of Loss and Damage and plaintiffs to pay defendant's costs of the application in the sum of $500.00.

Correspondence - Plaintiffs to James Nixon of Counsel requesting he take action.

Plaintiffs serve Further and Better Particulars of Loss and Damage claiming $350,000.00 damages in respect of the purchase of the business of Giardinos Pizza, and $350,000.00 for damages for the purchase of the property at 345 Toorak Road, South Yarra, and interest or loss of opportunity to invest the said sums of $350,000.00 (first step by plaintiffs since 4 January 1996, alternatively since 4 July 1995).

The claim was based on seating capacity of 120 seats rather than 240 seats, therefore the claim equals half of the purchase price paid.

Correspondence - Plaintiffs to James Nixon of Counsel requesting he take action.

Correspondence - Plaintiffs to Watts & Nixon requesting they take action.

Plaintiffs served Notice of Trial and Certificate of Readiness for Trial.

Letter from Brott to Molomby & Molomby requesting defendant cease from delaying the matter.

Letter from defendant's solicitor to plaintiffs' solicitors seeking discovery of books and records and stating that service of Notice for Trial and Certificate of Readiness premature.

Notice from Litigation Support Group that Directions Hearing to be heard on 20 February 1997.

Teague J. ordered that Rule 34.05 as to dismissal of proceedings commenced by Writ and not managed did not apply to this proceeding and that Directions Hearing was adjourned to 13 March 1997, and leave granted to defendant to deliver an Amended Defence.

Decision in Spitfire v Ducco [1998] 1 VR 242.

Stogdale sought to defer delivery of Defence pending discovery.

Letter from defendant's solicitor to plaintiffs' solicitors seeking discovery of books and records.

Stogdale states "Your barrister agreed with our suggestion that both this matter and proceeding number 10047 should be heard together by the same Judge.

Plaintiffs appeared before Teague J. Teague J. gave Directions for an Amended Defence by 26 March 1997 and a further Directions Hearing on 10 April 1997.

At 5.00 p.m. defendant delivered Amended Defence to Amended Statement of Claim pursuant to the Order of Teague J.

Plaintiffs appeared before Teague J. Directions Hearing adjourned to 21 April 1997.

Letter from defendant's solicitor to plaintiffs' solicitors seeking response to letter of 28/2/97 re further discovery.

Defendant filed Summons seeking further and better discovery from the plaintiffs, particularly of books of account relevant to loss and damage claim.

Master Evans ordered that hearing date of application in the Summons be amended to 26 May 1997.

Affidavit of purchasers (para.6): most books of account were lost; the plaintiffs do not have books of account for the 1980s and early 1990s.

Defendant's application for further and better discovery further adjourned to 27 June 1997.

Teague J. adjourned Directions Hearing to 10 July 1997 and reserved costs.

Affidavit of Stogdale: conversation with Brott concerning "Blue Sky paper" in respect of purchase of the business for Esanda Finance.

Order of Master Wheeler (no appearance by the plaintiffs): plaintiffs to provide Affidavit as to documents relating to financial performance of the business including books of account etc. After being adjourned on 12, 15, 26 and 28 May 1997.

Defendant filed Summons seeking to strike out plaintiffs' claim for failure to comply with Order of Master Wheeler made on 27 June 1997.

Plaintiffs issued Summons seeking to set aside or vary the Orders of Master Wheeler made on 27 June 1997 (first step by plaintiffs since 14 January 1997).

Order of Master Wheeler made on 27 June 1997 be set aside;

defendant's Summons filed on 24 July 1997 be struck out;

plaintiffs file further Affidavit of Discovery of by 20 August 1997 of -

* documents relating to purchase of Giardino's Pizza;

* books of account, financial records and tax returns of Giardino's Pizza;

plaintiffs pay defendant's costs of Summons filed on 28 July 1997 on solicitor and own client basis and costs of defendant's Summons filed on 24 April 1997 on party/party basis save for costs thrown away by reason of plaintiffs' failure to attend the adjourned hearing of the Summons on 27 June 1997 which costs were to be paid on a solicitor/client basis.

Plaintiffs appeared before Teague J. for Directions.

Further Affidavit of Documents of the plaintiffs delivered; Books of account and financial records relating to Giardino Pizza for four years from date of purchase were taken to the tip and dumped in 1988. Taxation returns of Giardino Pizza discovered for the years 1987/88 to 1991/92.

Defendant filed Summons seeking that the plaintiffs' claim be dismissed for failure to comply with Order of Master Kings made on 30 July 1997 (failure to make discovery of "Blue Sky" paper).

Master Evans ordered that by 9 September 1997 the plaintiffs make, file and serve an Affidavit as to possession of "the Blue Sky paper".

Plaintiffs swear Affidavit as to possession of "the Blue Sky paper";

Affidavit of Brott; the "Blue Sky paper" was last in his possession in 1988.

* defendant to deliver further Interrogatories by 10/10/97;

* plaintiffs to answer these further Interrogatories by 21/11/97;

Defendant delivered further Interrogatories for the examination of the plaintiffs concerning claim for loss and damage.

Letter from Brott to Stogdale requesting agreement on mediator.

Letter Stogdale to Brott rejecting mediators including Delaney; suggesting others.

Letter from Brott to Stogdale rejecting Stogdale's proposed mediators and suggesting other mediators.

Letter - Plaintiffs to Defendants noting non-agreeance with mediators and suggesting a further 3 alternatives.

Conversation Stogdale and Brott at Brott's office: see letter of 25/11/97. Brott would get instructions as to mediator.

Letter Brott to Stogdale. All agree on Delaney as mediator save Stogdale.

Letter from Brott to Stogdale re selection of mediator.

Letter Brott to Stogdale. Requesting response re selection of a mediator.

Teague J. adjourned Directions Hearing to 16/12/97 and reserved costs pending answers.

Letter from Stogdale to Brott requesting Answers to further interrogatories.

Letter - Defendants to Teague J. applying for extension to deliver further interrogatories.

Conversation between Stogdale and Brott in which Stogdale says he will mediate with North, Griffin or Klemens.

Directions - no appearance for plaintiffs. Order Teague J. vacating mediation date. Teague J. extended the time nunc pro tunc for delivery of interrogatories to 15 October 1997 and extended the time for filing and service of Answers to Interrogatories to 30 January 1998 and vacated the other dates in his Order of 18 September 1997. He directed that the matter come before him again on 6 February 1998 unless Orders could be made "on the papers".

Letter Stogdale to Brott suggesting mediation 3 March 1998; by any of mediators proposed in Brott's letter of 15/12/97.

Plaintiff & Defendant attend before Teague J. for Directions Hearing.

Letter Brott's office to Stogdale advising Brott has left for overseas and would not be returning until 27/1/98.

Letter Stogdale to Brott agreeing that Mr North be appointed as mediator.

Conversation Brott's office to Stogdale's office: will they agree to Tim North as mediator?

Letter Brott to Strauss etc. - notes agreement reached but Stogdale not available until after 16 February.

Date Answers to Interrogatories due by Order of Teague J.

Master Wheeler adjourned defendant's application for further Security for Costs (pursuant to liberty to apply reserved on 19 May 1992) to 25 February 1998.

Letter Stogdale to Brott: mediation no use until Interrogatories answered. Said he agreed to North on 8 January 1998.

Plaintiffs served Answers to defendant's further Interrogatories dated 12 September 1997.

Master Bruce ordered that mediation be completed by 7 April 1998 and further Directions Hearing occur on 1 May 1998.

Letter Brott to Stogdale seeking meeting to organize mediation. Asked Stogdale when available.

Master Wheeler ordered that Brott and Natalie McAra-Brott pay to the defendant any costs that may thereafter be ordered to be paid in this proceeding to the defendant by the plaintiffs or either of them including costs of taxation or otherwise within 30 days after such costs were agreed or taxed, upon the Court noting the undertakings and acknowledgments given to the Court by Brott and Natalia McAra-Brott.

Letter Brott to Stogdale, attempting to get dates available from Stogdale.

Mediation began, together with mediation of the related proceeding, No. 10047 of 1991. At the end of the day the mediation in No. 10047 of 1991 was terminated. The mediation in this proceeding was adjourned so that the plaintiffs could prepare Further and Better Particulars of Loss and Damage.

Master Bruce adjourned Directions Hearing to 31 July 1998 and reserved costs.

Plaintiffs served Statement of Expert Witness (Mr Bice) dated 15 May 1998: calculations of diminution in value based on capitalization of nett business profit (apparently based on 1998 tax return).

Plaintiffs' Further Particulars of Loss and Damage:

"The plaintiffs' loss and damage will be proven by expert evidence and is calculated by a diminution in value of the premises at $500,000 together with interest paid from the date of purchase of the business to the date of receivership."

Master Bruce ordered that mediation conclude by 26 August 1998; plaintiffs to file and serve any further Interrogatories by 11 September 1998 and defendant answer those Interrogatories by 16 October 1998; Notice of Trial to be given by plaintiffs by 23 October 1998; Pre-Trial Directions to be held on 1 December 1998.

Defendant's solicitor wrote to plaintiffs' solicitors requesting copies of the plaintiffs' tax returns from 1997 onwards.

Defendant's solicitor wrote to plaintiffs' solicitor indicating he was prepared to go to trial on the plaintiffs' Particulars of Loss and Damage dated 15 May 1998.

Plaintiffs' solicitors wrote to the defendant's solicitors proposing that further Court documents will be served "reflecting our clients' claim" to be made at trial.

Affidavit in support of defendant's Summons to strike out the plaintiffs' claim for want of prosecution sworn by George Stogdale.

Defendant's Summons to strike out plaintiffs' claim for want of prosecution filed.

Letter from plaintiffs' solicitors requesting adjournment of defendant's Summons.

First return date of the defendant's Summons to strike out the plaintiffs' claim for want of prosecution. Summons dismissed.

Notice of Appeal from dismissal of defendant's Summons dated 28 September 1998.

Amended Particulars of Plaintiffs' Loss and Damage.

Plaintiffs serve Notice for Trial and Certificate of Readiness.

Plaintiffs provide defendant copies of tax returns 1988 to 1996.

Prothonotary Subpoena issued to Corrs to produce files relating to the financing of the purchase of the restaurant.

[1] [1998] 1 V.R. 242.

[2] [1989] 1 A.C. 1197 at 1203.

[3] [1968] 2 Q.B. 229.

[4] [1978] A.C. 297.

[5] [1966] VicRp 59; [1966] V.R. 418 at 432 per Pape, J.

[7] [1998] 1 V.R. 242.

[9] [1995] VicRp 59; [1995] 2 V.R. 328 at 345.

[10] [1984] VicRp 58; [1984] V.R. 665 at 675-677.

[11] Based on what had been said by Lord Diplock in Birkett v. James at 318.

[13] [1980] 2 N.S.W.L.R. 749, at 753-754.

[14] [1936] HCA 40; (1936) 55 C.L.R. 499 at 505 by Dixon, Evatt and McTiernan, JJ. Cf. Spitfire Nominees v. Ducco at 246.

[15] Birkett v. James at 232, Lewandowski v. Lovell (1994) 11 W.A.R. 124 at 133.

[16] [1999] 3 V.R. 863 at 874-875.

[17] [1997] 1 V.R. 257.

[20] Cf. Shellard & Ors v. Henry Orlanski Trading as Gordon & Orlanski [2001] VSCA 147 at [8] and [28].

[21] Cf. Duncan v. Lowenthal [1969] VicRp 21; [1969] V.R. 180, 186.

[22] [1980] 2 N.S.W.L.R. at 753-754; cf. also Chapmans Ltd. v. Davey & Ors [1998] N.S.W.S.C. 148 per Bryson, J. at p.9; Tamworth Base Hospital & Anor v. Durant [2000] N.S.W.C.A. 209 at [76]- [78].

[26] [1948] HCA 16; (1948) 76 C.L.R. 632.

[27] [1955] HCA 16; (1955) 93 C.L.R. 435.

[28] (1994) 34 N.S.W.L.R. 155 at 160.