Background
1 The appellants commenced proceedings in this Court by filing an application and statement of claim on 9 July 1993. The respondents to the application included Grosvenor Hill (Queensland) Pty Ltd and John C Richardson ("the valuers") as the sixth and seventh respondents respectively. The proceedings against the valuers concerned a Property Valuation Report which was annexed to a prospectus issued by Interchase Corporation Ltd on or about 22 June 1987.
2 The application and statement of claim were not served on the valuers until 14 January 1998. They applied, pursuant to O 30 r 5 of the Federal Court Rules ("FCR"), to have the proceedings against them dismissed or stayed on the ground that the appellants had not prosecuted the proceedings with due diligence. The proceedings were stayed on that ground by orders of the Court given on 8 March 2000.
3 On 29 March 2000 the appellants filed a notice of appeal. In paragraph 2 of the notice of appeal they sought "To the extent that leave is necessary to bring this appeal, leave of the Court ...". If the order appealed from was interlocutory in nature and leave to appeal was necessary, O 52 r 10(2)(b) of the FCR required that the notice of motion seeking leave to appeal be filed and served within seven days from the pronouncement of the interlocutory judgment from which leave to appeal is sought. In order to protect their position, the appellants filed a notice of motion on 29 March 2000 seeking an extension of time to file and serve the notice of motion seeking leave to appeal to 29 March 2000, and by that motion formally sought leave to appeal. As there is no prejudice shown as a consequence of the brief delay in filing the application for an extension of time for leave to appeal we grant the extension of time up to and including 29 March 2000.
[2]
Leave to appeal
4 The appellants submit that the test to be applied to determine whether the order appealed from is final or interlocutory, is whether the order made finally disposes of the rights of the parties, and not whether there has been an adjudication on the merits leading to an order which finally determines the proceedings. This, they submit, follows from the decisions in Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35 at 38, and Licul v Corney (1976) 180 CLR 213 at 225. They submit that the decision appealed from has the practical effect of disposing of the entire proceedings between the appellants and the valuers, because it is unlikely that circumstances will ever change to permit the lifting of the stay, and is in consequence a final order for the purposes of O 52 r 10 of the FCR.
5 In Port of Melbourne Authority v Anshun Pty Ltd (No 1), Gibbs J, with whom Mason and Murphy JJ agreed, said (at 38) :
"If the view expressed in Licul v Corney (1976) 50 ALJR at p 444 is correct, and the true test of finality is whether the judgment or order, as made, finally disposes of the rights of the parties, it would seem clear that the order made in the present case was a final judgment. It is not necessary to consider whether the view expressed in Tampion v Anderson is one which is consistent with the view taken in the Australian authorities. There may well be a difference between a case in which the action is frivolous or vexatious in the ordinary sense, or in which the proceedings disclose no reasonable cause of action, and a case in which the abuse of process lies in an attempt to litigate an issue which is res judicata, and Tampion v Anderson has nothing to say about a case of the latter kind."
6 That it is the legal effect of the order and not its practical effect which is relevant to the issue of whether or not the proceedings are finally determined between the parties, was made clear by Gibbs CJ in Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246 at 248. The Chief Justice said :
"In my opinion the test in Licul v Corney requires the Court to have regard to the legal rather than the practical effect of the judgment . ..."
7 The present case is not analogous to the decision in Port of Melbourne Authority v Anshun Pty Ltd (No 1). In that case, the rights of the parties were finally determined by the application of a rule of law which was the operation of the doctrine of res judicata. That case was different to the exercise of a discretionary judgment to dismiss or stay an action on discretionary grounds such as abuse of process: Port of Melbourne Authority v Anshun Pty Ltd (No 1) at 36, 38; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 3) (1998) 86 FCR 374 at 392; Weatherall v Satellite Receiving Systems (Australia) Pty Ltd (1999) 92 FCR 101 at 103.
8 An order dismissing or staying a proceeding for want of prosecution merely determines the question of whether the proceedings have been prosecuted with due diligence. Such an order involves no final determination of a matter in issue between the parties in the proceedings: Hughes v Gales (1995) 14 WAR 434 (FC) at 437; Hart v Hall & Pickles Ltd [1969] 1 QB 405 (CA) at 411; Nieman v Electronic Industries Ltd [1978] VR 431 (FC) at 435. There is nothing to prevent the appellants filing fresh proceedings in a Court of competent jurisdiction. The dismissal of an action for want of prosecution is not a bar to the commencement of a fresh action based on the same cause of action: Birkett v James [1978] AC 297 at 322; Madden v Kirkegard Ellwood and Partners [1983] 1 QdR 649 (FC) at 652; Hughes v Gales at 438. Neither the dismissal for want of prosecution nor the expiration of an applicable limitation period would justify, for that reason alone, the dismissal or staying of any subsequent action as an abuse of process: Hughes v Gales at 438 - 439; Madden v Kirkegard Ellwood and Partners at 653 - 654.
9 The orders appealed from by the appellants were interlocutory orders. Unless the appellants obtain leave to appeal, the appeal proceedings are incompetent.
10 If the interlocutory order has the practical effect of finally determining the disposition of the proceedings, a case in fairness and justice exists for granting leave to appeal provided there is substance in the appellants' arguments: Ex parte Bucknall (1936) 56 CLR 221 at 225; Thai v Commissioner of Taxation (1994) 53 FCR 252 (FC) at 261; Lloyd Werft Bremerhaven GmbH v Owners of Ship "Zoya Kosmodemyanskaya" (1997) 79 FCR 71 (FC) at 80 - 81.
11 In our judgment, if the grounds advanced by the appellants to set aside the orders staying the proceedings against the valuers have substance, leave to appeal should be granted.
[3]
The grounds of appeal
12 Spender J, in his reasons for staying the proceedings, found that there had been inordinate delay in the prosecution of the proceedings, that the inordinate delay was inexcusable and that the valuers were likely to have been seriously prejudiced by the delay. His Honour went further and found that the delay had engendered specific prejudice to the respondents, including the valuers.
13 The appellants had submitted to his Honour that the valuers must have known of the filing of the proceedings, notwithstanding a failure to serve the originating process and statement of claim on them. They further submitted that in an environment of case management, an implication as to want of due diligence in them prosecuting the matter could not be made out. His Honour rejected these submissions.
14 In coming to his decision, Spender J was heavily influenced by the reasons of McHugh J in Brisbane South Regional Authority v Taylor (1996) 186 CLR 541 at 551 - 554. After quoting extensively from those reasons, his Honour said :
"167. I have earlier indicated that it is premature, prior to the embarking on a hearing of the matters, to make a judgment as to when a cause of action under the TP Act arose, but the plain fact is that a basis for liability in respect of all the causes of action can only exist in this case in respect of conduct done or omitted to be done prior to the issue of the prospectus in June 1987. Again, as McHugh J noted in the quote above :
'The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.'
168. There is here the delay from the filing of the application in June 1994 to the service of the application and original Statement of Claim on the parties in late 1997 or the first months of 1998, which Statement of Claim alleges in the baldest fashion almost a generic case of the various causes of action against the respondents. There is the further delay until the service of the amended Statement of Claim sometime after 14 August 1998.
169. One of the reasons for the delay between the filing of the original Statement of Claim and the service of the Amended Statement of Claim, in my opinion, is the fact that for a large part of that time the applicants had not in truth made up their mind whether or not they wished to prosecute the Federal Court proceedings. The applicants accept that the original Statement of Claim pleaded matters in paras 9. 10, 14, 15, 19 and 20, admittedly without particularity. The applicants accept that those paragraphs contain 'bare facts'. The ignorance which the applicants permitted the respondents to be in concerning the claim of which the applicants wish now to make against them is reflected, in my opinion, by what I regard as a concession concerning the nature of the original pleading. The applicants, in their written submissions, acknowledge :
'The recipient of the original pleading might not have known which particular statements were alleged to be untrue (pars 9(1), 14(a) and 19(a)) or which representations as to future matters were said to be baseless (pars 9(b), 14(b) and 19(b)), or which material matters had been omitted from the various documents (pars 10, 15 and 20), but they would have known that the case was one centrally concerned with the following :-
(a) The issue of a particular Prospectus; (b) By them in their various capacities (Directors, Valuers and Leasing Agents); (c) That there were untrue statements in the various documents; (d) That there were predictions without foundation; (e) That there were omissions of a material nature; (f) That the Applicants relied upon the Prospectus in order to outlay money in obtaining share and notes; (g) That the value had been lost.'
170. For the above reasons, I make the following Orders : ..."
15 The appellants raised the following grounds of appeal :
(a) The determination that there was inordinate delay by the appellants which was inexcusable was not reasonably open on the evidence or was against the weight of the evidence before the Court.
(b) The determination that the valuers were likely to be seriously prejudiced at trial, whether by way of general or specific prejudice, was not reasonably open on the evidence or was against the weight of the evidence before the Court.
2. His Honour erred in concluding that delay in prosecuting the proceedings engendered or caused specific prejudice to the valuers by reason of the health of Leonard Beaumont and/or the loss or destruction of accounting records of the Beaumont Group of companies.
3. His Honour erred in not concluding that the case had been under the management of the Court since its commencement and that its progress had been in accordance with the Court's directions given from time to time.
4. His Honour erred in concluding that the valuers would not have been able to discover, except in the most general sense, until the filing and serving of the amended statement of claim what was alleged against them when such a finding was reasonably open on the evidence and was contrary to the evidence or the weight of the evidence.
16 The order of Spender J to stay the proceedings under O 30 r 5 of the FCR for want of prosecution was an exercise of discretionary judgment. Accordingly, the appellants must demonstrate some reviewable error on the part of his Honour in exercising the discretion: House v The King (1936) 55 CLR 499 at 504 - 505.
17 A major part of the attack made on the judgment below was based on the premise that the proceedings were at all material times, once they had been filed, under the management of the Court, and that absent Court intervention to direct the appellants to serve the proceedings on the valuers, there was neither inordinate nor inexcusable delay as found by Spender J. This, the appellants submit, follows from two decisions of Full Courts of this Court: E I Du Pont de Nemours & Co v Commissioner of Patents (1987) 16 FCR 423 and Lenijamar Pty Ltd v AGC (Advances) Limited (1990) 27 FCR 388.
18 In E I Du Pont de Nemours, Sheppard J said (at 424) :
"... No matter what agreements the parties have made in relation to these matters, the court always remains in overall control of the proceedings before it. Judges have power, until the hearing is concluded, to make, and to continue to make, such directions as seem to them best suited properly and adequately to manage and direct the cases in their lists. Obviously they will always pay due attention to what the parties themselves suggest and will usually accept consent timetables for procedural steps at their face value. But if an investigation of a matter at a directions hearing reveals that existing directions, whether made by consent or not, are not adequate for, or are not suited to, the needs of the case, the court has a duty to substitute appropriate directions for the existing ones, if necessary, against the will of the parties themselves."
In Lenijamar Pty Ltd, Wilcox and Gummow JJ said (at 395) :
"... the existence of a case management system within this Court is the backdrop against which the relevant rules must be considered and applied. That the Court follows the case management approach is well known to the legal profession. The practice was adopted immediately upon the establishment of the Court in 1977. It was, at that time, a radical innovation in Australian superior courts; and was recognised as such. It is reasonable to suppose that all litigious solicitors and all barristers are aware that if they choose this Court for the litigation of a claim - and, these days, there is a choice in matters arising under s 52 of the Trade Practices Act - they go to a Court which seeks to minimise the delays of litigation by issuing procedural directions to the parties which they are expected to observe. In return, the Court does its best to provide to the parties an early hearing date."
19 These two statements, the appellants submit, acknowledge a principle that the Court has an obligation to manage cases irrespective of the wishes of the parties (E I Du Pont de Nemours), and the parties and lawyers are entitled to act in the belief that the Court is managing the litigation to the Court's satisfaction, otherwise it will give directions in respect of matters that are unsatisfactory to the Court (Lenijamar Pty Ltd). Where there has been full disclosure by a party as to why a particular course has been taken, the conduct disclosed cannot be inexcusable or the delay inordinate, the appellants submit, because the Court in the course of its management of the proceedings permitted the conduct and the delay to occur.
20 Such a submission, in our judgment, is ill-conceived and seeks to give to the passages cited an operation not intended by the makers of the statements.
21 Sheppard J was, in the context in which he was speaking, dealing with consent orders made or sought to be made by the parties in respect of interlocutory matters in the conduct of the litigation. So understood, all his Honour was saying is that the parties do not have the power to abrogate by agreement the Court's power to make such directions as to the Court shall seem necessary for the conduct of the proceedings. Importantly, his Honour does not say that case management exonerates a party from the consequences of a decision taken by that party in the conduct of its litigation, even if the conduct and the reason for it is disclosed to the Court.
22 Nor is it discernible in the statement of Wilcox and Gummow JJ that responsibility for the consequences which flow from the manner in which a party chooses to run its litigation is to be sheeted home to the Court and not the party concerned. All their Honours have said is that the FCR are to be considered and applied against a system of case management which exists in the Court, and, that they are subject to procedural directions which the parties are expected to observe.
23 The conduct of litigation in this Court is controlled by the FCR subject to such directions as may be made from time to time by the Court in the management of the proceedings. Accordingly, one looks firstly to the FCR to ascertain the obligations, if any, imposed by the FCR on a party filing initiating proceedings in the Court.
24 When the appellants filed the application and statement of claim on 9 July 1993, they became bound by O 4 r 11 of the FCR. That rule provides :
"11 An application and affidavit or statement of claim shall, unless the Court otherwise orders, be served upon the respondent named in the application in accordance with Order 7, not less than five days before the date appointed for hearing pursuant to rule 8 or rule 9 of this Order."
25 The date of the first directions hearing was stated in the application as being listed for 10 August 1993. Order 4 r 11 required that the application and statement of claim be served on or before 4 August 1993.
26 The appellants did not seek an order of the Court excusing compliance with O 4 r 11. Rather, on 6 August 1993 they sought from the Registrar under O 4 r 12 a later date for the directions hearing and returned the service copies of the application to be re-engrossed with such altered date. The date was altered by the Registrar to 5 October 1993.
27 The matter came before the Court on its first directions hearing on 5 October 1993. At that time the proceedings had not been served on the valuers, or any other respondents, and there was in consequence a failure to comply with the requirements of O 4 r 11 as to service.
28 Spender J made specific findings as to the dealings between the solicitors for the appellants and the Court relating to the future conduct of the matter. Those findings are not challenged by the appellants. However they submit that the history as found by his Honour is by no means exhaustive.
29 His Honour made the following findings :
"44. It is also necessary to set out in some detail the history of the directions hearings concerning this matter. On 6 August 1993, the applicants' solicitors wrote to the Registrar, advising that the application had not yet been served on any of the respondents and seeking that the first directions hearing (scheduled for 10 August 1993) be postponed for approximately six weeks, because:
'… applicants are not yet in a position to give us instructions as to the directions to be sought at the first hearing…one of [the] applicants, National Mutual Life Association of Australasia Limited, also sues as representative of over 1600 shareholders and noteholders of Interchase…'.
[4]
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Cooper, Whitlam and Tamberlin.
[5]
Associate:
Dated: 13 March 2001
Counsel for the Applicant: P Morrison QC with P Roney
Solicitor for the Applicant: Allen Allen & Hemsley Lawyers
[6]
Counsel for the Respondent: D Fraser QC with A Duffey
Solicitor for the Respondent: Ebsworth & Ebsworth Lawyers
[7]
Date of Hearing: 15 August 2000
Date of Judgment: 13 March 2001
Parties
Applicant/Plaintiff:
The National Mutual Life Association of Australasia Limited
PRACTICE AND PROCEDURE - Appeal against stay for want of prosecution - consideration of whether stay final or interlocutory - whether exercise of discretion miscarried - demonstrable error - consideration of case management practices.
Evidence Act 1995 (Cth) s 91
Federal Court Rules O4 r 11 O30 r 5 O52 r 10
Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35 Dist
Licul v Corney (1976) 180 CLR 213 Appl
Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246 Appl
Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 3) (1998) 86 FCR 374 Cited
Weatherall v Satellite Receiving Systems (Australia) Pty Ltd (1999) 92 FCR 101 Cited
Hughes v Gales (1995) 14 WAR 434 Appl
Hart v Hall & Pickles Ltd [1969] 1 QB 405 Appl
Nieman v Electronic Industries Ltd [1978] VR 431 Appl
Birkett v James [1978] AC 297 Appl
Madden v Kirkegard Ellwood and Partners [1983] 1 QdR 649 Appl
Ex parte Bucknall (1936) 56 CLR 221 Appl
Thai v Commissioner of Taxation (1994) 53 FCR 252 Appl
Lloyd Werft Bremerhaven GmbH v Owners of Ship "Zoya Kosmodemyanskaya" (1997) 79 FCR 71 Appl
The letter also said:
'…the applicants [shareholders or noteholders] are still in the process of reaching agreement as to the way in which decisions will be made on their behalf as to the conduct of the litigation, and as to what portion of the costs of the case will be met by each applicant.'
It noted that those matters were currently being considered by the applicants, and that final agreement was expected within four to six weeks. Further, the letter stated:
'These proceedings were instituted on 9 July 1993 in order to avoid a possible limitation argument.'
The letter sought the Registrar's discretion under O 4 r 12 to alter the date of the first directions hearing to a later date. Service copies of the application were supplied with a request that they be re-engrossed with an altered date for the first directions hearing some six weeks as is.
On 5 October 1993, at the first directions hearing, the Court was told that the respondents had not been served pending the outcome of public examinations for which a date was not yet set, and that a cost sharing agreement between the applicants had not yet been reached. An adjournment of approximately eight weeks was sought. On that occasion, I commented: 'The only difficulty is I do not want it just to go [into] limbo', and adjourned the matter until 15 December 1993.
On 8 December 1993, the applicant's solicitors wrote to the court concerning the public examination of persons connected with Interchase, including some of the respondents. The letter indicated that the public examinations had commenced only on 7 December 1993 and would continue into 1994, and that service had not yet been effected, that no cost sharing agreement had yet been reached and that it would be premature to serve until after the public examinations were concluded. An adjournment of the approaching directions hearing until March 1994 was then sought. The directions hearings for 15 December 1993 were then delisted.
On 30 March 1994, the applicants' solicitors sought an adjournment of the directions hearing for one month, the public examinations being said to be still incomplete. On 13 April 1994, proceedings were commenced in the Supreme Court by Interchase against two sets of valuers, one being Hillier Parker.
On 22 April 1994, the second directions hearing in this Court was held. The Court was told that the application had been filed because of the statute of limitations, that 'there is about approximately another month's work to do,' and that:
'the liquidator…was intending to run a public examination of the people involved with the Myer Centre to determine whether there might be a cause of action that the liquidator might have and also relevant to a cause of action that the shareholders might have arising out of the original prospectus in 1987.'
I then said:
'…what I am minded to do is, given the history of the matter and its apparent complexity, if I adjourn this until 15 July, that at least will give you, one would have thought, time to determine whether to proceed or not.'
The third directions hearing was held on 15 July 1994, and the Court was told that service had still not occurred. I asked: 'When is something going to happen about it, do you know?', and was told that investigations were still continuing which would not be finished before 31 August. The matter was adjourned until 31 October 1994.
On 31 October 1994, the fourth directions hearing occurred. On that occasion, the Court was told again that the proceedings had not been served, although 'a number of the parties are aware of the Federal Court proceedings.' A further adjournment was sought by the applicants to mid-December. The Court was told 'There are parallel proceedings in the Supreme Court'. As will be later indicated, this was a serious and worrying mis-statement. I indicated: 'I am quite happy for the Supreme Court to look after anything - everything.'
The matter was adjourned until 8 February 1995. I said that I hoped: 'that in the meantime all those questions can be resolved.'
On 6 February 1995, the fifth directions hearing was heard. The Court on that occasion was told: 'There is a somewhat parallel action running in the Supreme Court.' I asked: 'Well, why can I not get rid of this then?'
I was told: 'Your Honour, the other action could only be instituted in the Supreme Court. This one, being a class action, can only be instituted in the Federal Court.'; and that the Federal Court action 'was filed in order to preserve the statute of limitations period. Whether it proceeds will depend on the evidence adduced in the Supreme Court.' On that occasion, I adjourned the matter to the Registry, to be brought on on 14 days notice, with the Registrar to review the matter annually.
In the middle of 1996, there were contested applications in the Federal Court by the liquidator, who wished to examine persons associated with the indemnity insurer of Hillier Parker. Kiefel J ordered that the examinations proceed. Her Honour's orders were the subject of an unsuccessful appeal.
The Registrar wrote to the solicitors for the applicants on 11 February 1997 seeking information as to the state of the proceedings. By letter of 20 March 1997, the solicitors for the applicant stated that service had still not occurred, and that:
'The parallel Supreme Court proceedings to which reference was made at the last review of this matter before Mr Justice Spender on 6 February 1995 were virtually ready for trial and were about to be set down for mediation when one of the insurers advised that it declined indemnity…it is expected that it will be at least another three months before the matter is ready for trial.'
On 1 September 1997, I had my Associate contact the solicitors for the applicants, and a directions hearing occurred on 12 September 1997. Ms T Harrip of Allen, Allen and Hemsley, solicitors for the applicants, announced her appearance and I said:
'Yes, I am a bit concerned about this. Why should not this be struck out? … [the] application was filed in July 1993. There are nine named respondents and there has not been any service, and from what I understand of the matter, there has not been any attempt at service.'
Ms Harrip agreed that was correct and said:
'The proceedings were issued in July 1993 with a view to avoiding a possible limitation argument.'
I interrupted:
'That is a fortiori then why is it unfair to keep going. This is all stale. Do the respondents know this is on foot? What happens when they are served with these proceedings?'
I was then told:
'The respondents are aware that the matter is on foot. The named applicants in this matter have taken the position all along that they are prepared to await the outcome of related proceedings by the liquidator against the same valuers in the Supreme Court. … The named applicants are still prepared to take the position that they would prefer to await the outcome of the Supreme Court matter before getting this matter up and running, although they have always been prepared to abide any order of the Court that this matter should now be served if that is what the Court wishes.' (emphasis added)
I asked:
'Why is the Federal Court concerned with this?' and 'Why should these proceedings not be part and parcel of the liquidator's proceedings?'
The transcript then records as follows:
'MS HARRIP: It is a different valuation, your Honour, and this is a representative action with over a thousand class members, each and every shareholder and noteholder is represented by the representative applicant in this matter. If this matter were to be brought on now and served and got going, the next directions which would need to be made would be the provision of a date for the opt in or opt out by those represented members, and the---
HIS HONOUR: Why should that not happen? You see, at the moment, you have got people who are going to be sued or may be sued in respect of matters that are now well and truly stale. Why should not they, just as a matter of justice be entitled to be in a position to know what the allegations are against them, so that they can find out what the evidence is? This trial is now seven years old.
MS HARRIP: Yes. Well, if the Court is of the view that the proceedings should now be served of course the applicants---
HIS HONOUR: It is not a question for the Court. All I am concerned with at the moment, you see, you brought proceedings and sat on your hands. It just seems to have been a case where proceedings have been parked in the Federal Court, and I cannot really see at the moment what the connection is between doing nothing here and the Supreme Court proceedings. Is it the case that - well, I understood that the continuation of these proceedings was dependent upon whether the application by the plaintiff in the Supreme Court to join insurers was successful.
MS HARRIP: That has happened and that has been successful in relation to the insurers of one of the valuers, not the valuers involved in this case. The Supreme Court proceedings have many overlapping issues, but they are not identical. One of the valuers who the liquidator has sued in the Supreme Court is the same as the valuers who are the respondents in this case. It is not the same valuation, but many of the matters which appear in the prospectus valuation, which are alleged to be negligent by the liquidators, are the same as in that case.'
I later asked:
'If there are a lot of overlapping issues why cannot there be two trials heard concurrently?
MS HARRIP: Because of this, the valuation in the liquidator's action is a valuation 12 months later in time, and many of the same aspects of that valuation occurred in the prospectus valuation. They are not the same issues because what may have been negligent in 1988 may not have been negligent in 1987. Those kinds of issues. But many of the facts in the liquidator's action would be of use to the applicants in this action.
HIS HONOUR: Well, I am just very concerned that people are going to be exposed to litigation in respect of events and opinions that were formed more than 10 years ago…in respect of litigation they have not even been served yet.'
I was told the valuers were aware of the existence of these proceedings. I asked 'Were all the respondents valuers?' and was told:
'No, some of the respondents are former directors of the company who are aware of these proceedings also because they have been publicly examined by the liquidator. Some of the respondents are former property managers of the Myer Centre who have also been publicly examined by the liquidators, and others are officers of the companies. The named applicants' preferred position in relation to these proceedings is that they be - they continue to be left in abeyance pending the outcome of the Supreme Court proceedings, but of course, they are prepared to abide by any decision of the Court that they should now be served and a directions hearing set.' (emphasis added)
I concluded the directions hearing by saying:
'I will list this matter for directions on 6 February 1998. One way or the other the boil will have to be lanced on that day…Really, when proceedings are in their twelfth year, when the events are 12 years old and we are talking about very big money, it is a little bit unfair.'
There was one further directions hearing on 4 February 1998, and then hearings of the various motions from April 1998 onwards.
The so-called 'parallel proceedings' in the Supreme Court, which have a relevance to the application that these proceedings be stayed for want of prosecution (pursuant to O 30 r 5), were the subject of a judgment by White J on 8 February 2000: Interchase Corporation Limited v ACN010087573 P/L & Ors [2000] QSC.
In very abbreviated summary, the Supreme Court proceedings concerned a 'Development Agreement' between Interchase and the builder of the Myer Centre that a 'a completion valuation' would be arrived at by averaging two valuation reports. Those two valuation reports were received by Interchase some 12 months after the publication of the prospectus which is at issue in these proceedings. In effect, the Development Agreement provided that for every dollar the Myer Centre was valued over $425 million, Interchase would pay 25 cents to the builder, whilst for every dollar the Myer Centre was valued under $425 million, there was to be a dollar refunded to Interchase. The two valuations, the average of which formed the completion valuation, were performed by the sixth respondent in the Federal Court proceedings, Hillier Parker, and a firm of valuers, Colliers. Colliers valued the centre at $500 million and Hillier Parker at $490 million, which gave a completion valuation of $495 million. This was $70 million more than the $425 million, so Interchase was required to pay an extra $17.5 million to the builder.
The liquidators of Interchase in the Supreme Court proceedings alleged negligence on behalf of both Colliers and Hillier Parker. Interchase reached a settlement with Colliers on 17 March 1999 in which liability was admitted, with damages to be assessed up to a limit of $20 million. The proceedings continued to trial against Hillier Parker, who denied liability and further contended that there was never any capacity in respect of the recipients of the payment to repay to Interchase $17.5 million or any further sum or part of it, and so, if they were liable, there was no prospect that, at the relevant time, Interchase could recover the sum sought or any part thereof.
White J assessed $410 million as the 'correct' value of the Myer Centre which a competent valuer would have ascertained at the relevant date. Her Honour delivered extensive reasons for judgment of some 154 pages, giving judgment for Interchase against Colliers in the sum of $12.994 million plus an interest component to be calculated from 30 June 1993 to judgment at 6% per annum. Her Honour gave judgment for Interchase against Hillier Parker for $12.031 million plus interest from 30 June 1993 to judgment at 6% per annum. The fact that interest ran only from 30 June 1993 reflected her Honour's view that the lengthy delay in the Supreme Court proceedings dictated that interest should not run prior to that date. The loss which Interchase suffered had been discounted by her Honour, and the amounts awarded were approximately 77% of the loss by Interchase.
While the material before me suggests that the valuation by Hillier Parker contained in the prospectus appears to have been the precursor of Hillier Parker's completion valuation (and so aspects of whether the latter valuation was negligent might also be highly material to the allegation that Hillier Parker's prospectus valuation was negligently performed), it is simply not true to say that the proceedings in the Federal Court and the Supreme Court were parallel, or even 'somewhat parallel'. The proceedings in the Supreme Court are of almost peripheral relevance to the allegations against the directors and the leasing agents, and the valuations were at different times and were performed for different valuation dates. The Supreme Court proceedings have none of the difficulties associated with the question of when the shareholders' or noteholders' loss or damage, in reliance on the prospectus or parts of it, occurred; nor with the question of whether the proceedings could or should be brought as representative proceedings under O 6 r 13 of the Rules or under Part IVA of the TP Act. These aspects will have to be considered later, in the context of the claim that the proceedings should be dismissed or stayed for want of prosecution."
30 Senior Counsel for the appellants submits that those findings, and the letters and transcripts which form part of the appeal records, show that the appellants reported regularly to the Court as to why they were not serving the proceedings and invited the Court to give directions and tell them if the Court wanted the proceedings served.
31 An examination of the material does not support the submission that the appellants sought or invited directions from the Court as to service of the proceedings. At its highest, the correspondence concluded with an offer to attend a directions hearing and explain what was happening and receive further directions. At the directions hearing the position taken was that the appellants would comply with a direction to serve the proceedings if the Court made such a direction. Overall the position revealed from this material is that the appellants were adverse to service of the proceedings unless ordered to do so by the Court.
32 In the end result, the appellants never sought an order under O 4 r 11 of the FCR relieving them from the obligation to serve the proceedings. Rather, on each occasion the appellants sought from the Court an adjournment of the directions hearing to a later date.
33 The decision not to serve the proceedings on the respondents, including the valuers, was a conscious forensic decision made by the appellants, as his Honour found. There was, in our judgment, sufficient material for his Honour to find :
"169. One of the reasons for the delay between the filing of the original Statement of Claim and the service of the Amended Statement of Claim, in my opinion, is the fact that for a large part of that time the applicants had not in truth made up their mind whether or not they wished to prosecute the Federal Court proceedings. ..."
34 Importantly, the decision not to serve the proceedings and the obtaining of a later date for a directions hearing (which ultimately would be conveyed to the respondents when the altered service copies were served) occurred in the absence of the respondents and without notice to them. The import of the submission which the appellants make is that they could engage in the conduct which they did, which may have prejudiced the valuers in the conduct of their defence, and that notwithstanding such prejudice, the valuers were precluded from complaining of the inordinate and inexcusable delay because the Court did not direct service of the proceedings at an earlier date. To state the proposition is to expose the fallacy of it. The appellants as between themselves and the respondents, were always at risk in the absence of service of the proceedings, that once served, the respondents, including the valuers, would apply under O 30 r 5 of the FCR to have the proceedings dismissed or stayed for want of prosecution based on the delay the appellants had consciously chosen to allow to occur. The respondents' right to have the proceedings litigated against them with due diligence was not abrogated in any way by disclosure to the Court as to the circumstances motivating the appellants not to serve the application and statement of claim.
35 In our judgment, this is sufficient to deal with the argument that the delay was neither inordinate nor inexcusable because it was condoned by the Court as part of its management of the case. However, his Honour went further and found that the information conveyed to him as to the reason for the delay to the extent that the proceedings in this Court were parallel to and dependent upon proceedings initiated in the Supreme Court of Queensland was simply not correct. His Honour's finding, that notwithstanding there were some common issues in the two proceedings, the proceedings were separate and distinct being neither dependent one on the other or parallel to it, were open to him.
36 It follows from his Honour's findings that because the proceedings in this Court were not parallel to and dependent on the Supreme Court proceedings, the existence of the Supreme Court proceedings and the course that the litigation took in the Queensland Supreme Court, did not justify or excuse the delay in prosecuting the proceedings in this Court. The proceedings in this Court involved an earlier valuation report prepared by the valuers, one of whom was not a party to the proceedings in the Supreme Court and was not the author of the valuation report the subject of those proceedings. The valuation report used in a prospectus which persons, different from the plaintiff in the Supreme Court, say caused them actionable damage in respect of which they have sued in this Court. His Honour acknowledged that the earlier valuation was the precursor of the valuation the subject of the Supreme Court proceedings, and that some common questions of valuation methodology may be involved in the two proceedings. But in his Honour's judgment, that was insufficient of itself to justify the delay which had occurred, and as appears from the lengthy findings set out above from his Honour's reasons, since October 1994 it was the asserted relationship between the two proceedings which had consistently been advanced as the reason why service had not occurred.
37 In our judgment, the view taken by his Honour was open on the material before him.
38 The appellants submit, that notwithstanding any delay which occurred between commencement of the proceedings in July 1993 and service of the application and statement of claim in January 1998, there was no prejudice to the valuers, and that his Honour erred in finding that presumptive and actual prejudice had been suffered by them. Such findings, the appellants submit, were against the evidence before his Honour, which evidence included the reasons for judgment of Justice White in the Supreme Court of Queensland in the proceedings brought in that Court by the liquidator of Interchase Corporation Ltd against Grosvenor Hill (Queensland) Pty Ltd and another valuer, Brian Waghorn.
39 The proceedings in the Supreme Court of Queensland were heard between 27 April and 16 September 1999. They were heard after the several notices of motion, including the one giving rise to this appeal, were reserved by Spender J in this Court, and after the further hearings on the motions and the filing and service of an amended statement of claim on the respondents around 14 August 1998. The judgment was delivered and published on 8 February 2000. A copy of the reasons for judgment in the Supreme Court proceedings were delivered to the Associate to Spender J on 7 March 2000 with a covering letter addressed to the Associate, in the following terms :
"Dear Sir
National Mutual Life Association of Australasia Limited & Ors -v- Colin William Reynolds & Ors
No G110 of 1993
Please find enclosed a copy of the judgment of White J delivered on 8 February 2000 in the Supreme Court proceedings Interchase Corporation Limited v ACN 010 087 573 Pty Ltd & Ors, which judgment is relevant to the applicants' prospects of success in these proceedings.
Yours faithfully ..."
40 There was nothing to indicate whether or not the judgment was forwarded as relevant to all notices of motion then reserved by Spender J, or any particular one of them.
41 The Supreme Court judgment was forwarded to the Court without reference to the valuers who became aware later that the reasons for judgment had been sent. They had no opportunity to make any submission to Spender J as to the use to which his Honour could or should have put the judgment. The reasons for judgment of Justice White in the Supreme Court proceedings comprised 155 pages. His Honour's attention was not drawn to any particular section of the judgment nor were any submissions made as to the judgment.
42 The orders of Spender J were made on 8 March 2000 and his reasons were delivered also on that date. As appears earlier in these reasons, his Honour had regard to the judgment of Justice White and he used the reasons to justify his conclusion that the proceedings in this Court were not in fact parallel to or dependent upon the Supreme Court proceedings. The appellants submit that such a use of the reasons was a wrong and insufficient use of them by his Honour.
43 The appellants now submit that the reasons for judgment in the Supreme Court proceedings were evidence that :
(a) The claim brought by the appellants in this Court against the valuers was a strong one;
(b) Grosvenor Hill (Queensland) Pty Ltd was a defendant in both the Supreme Court proceedings and in these proceedings, and had been found negligent in the Supreme Court proceedings in respect of a valuation report, the precursor of which was the valuation report annexed to the prospectus in issue in the proceedings in this Court;.
(c) John Richardson, the seventh respondent in these proceedings, gave evidence in the Supreme Court proceedings, although not a party to those proceedings, in respect of the valuation report annexed to the prospectus.
(d) Richardson was not an impressive witness before Justice White, and her Honour so found, and he had approached his valuation task in 1986 and 1987 with a figure desired by the client in mind.
(e) Richardson was tested in cross-examination as to his earlier valuations "by reference to all documents".
(f) Richardson had a poor recollection of the events of 1986 and 1987, although he had been extensively examined on behalf of the liquidator of Interchase over three days at the end of 1993 and early 1994, when his recollection was a little more detailed and her Honour so found.
(g) The methodology used in respect of the valuation the subject of the Supreme Court proceedings was the same or similar to that used to prepare the valuation report annexed to the prospectus, and thus the findings of negligence in the Supreme Court "mattered" to the issues in the proceedings in this Court.
(h) Richardson did, in respect of the preparation of the valuations in 1987 and 1988, the things recorded by Justice White in her reasons and findings in paragraphs 88 - 99 inclusive.
(i) There was no substantial deficiency in the documentation, at least in so far as it related to the work of Waghorn as her Honour recorded in paragraph 112 of her reasons.
44 Senior Counsel for the appellants submits that the "evidence" contained in the reasons for judgment demonstrated that the appellants had a strong case of negligence against the valuers in the present proceedings, and ought to have been used by Spender J to conclude that there was no prejudice to the valuers consequent upon the delay since commencement of the proceedings. As to how his Honour should have used the evidence as to the occurrence of a public examination of Richardson in 1993 and 1994, and her Honour's treatment of his evidence, Senior Counsel for the appellants submits :
"What we sought to demonstrate before his Honour, and we say we did, by putting the transcript before him and referring to it, was that at an earlier point in time, '94 - end of '93, early '94 - the man had been cross-examined on this valuation by reference to his documents. When you look through it, there was no occasion where he said, 'I have a terrible memory; I can't recall', the 'I can't recalls' were about inconsequential things.
Now, in the light of that, what we submitted to his Honour, and what we submit here, is that that was reasonable evidence that the normal erosion of time is negated here, and it's added to by what we're now referring to, namely that having done that exercise in '94 - and let us just concentrate on '94 - what then follows - and you can see it from the material before his Honour - is the case is worked up in a detailed way in the Supreme Court over the next few years, clearly involving this man as a witness, and this firm as a party, and the steps are disclosure and answering particulars and pleading and so forth, and then the trial is had in '99 where again he is required to deal with the events.
Now, her Honour said that in '99 he had a poor recollection, but that all the documents were available, and he had a better recollection back in '93, '94, when he did the public examination. Now, what we say about that is that that is evidence which his Honour should have weighed in favour of my side but did not weigh almost at all in any way we can detect. And we say that with the greatest respect to him. We cannot detect, beyond referring to the fact inferentially in a directions hearing that the man had been subjected to a public examination, notwithstanding the transcript was before him it weighs not at all that we can detect in his reasoning, let alone the evidence about the Supreme Court side of things - let alone that."
45 There are two responses to the made to these submissions. Firstly, Spender J was never taken through the Supreme Court reasons for judgment and asked to use any or all of the parts of it to which reference has been made on the hearing of the appeal or asked to deal with it in the way which is now sought to be relied upon. Secondly, the judgment of Justice White was not admissible as evidence of the matters upon which the appellants now seek to rely.
46 The judgment of Justice White in the proceedings in the Supreme Court of Queensland was admissible, if relevant, in the proceedings in this Court to prove its existence, date or legal effect. Evidence of the decision, or of a finding of fact in an Australian or overseas proceeding, is not admissible to prove the existence of a fact that was in issue in that proceeding: Evidence Act 1995 (Cth) s 91(1). Evidence that is not admissible under Part 3.5 of the Evidence Act 1995 (Cth) to prove the existence of a fact may not be used to prove that fact, even if it is relevant for another purpose: s 91(2).
47 The rationale for these provisions is set out in the Report of the Australian Law Reform Commission Interim Report No 26 on Evidence at page 445 as follows :
"Evidence of Civil Judgments
Proposal. It is recommended that a civil judgment not be admissible to prove the facts on which it is based. Its probative weight is considerably less than that of a conviction. It is founded upon the evidence chosen by the parties, who are not obliged to make available all known relevant evidence, as is a Crown Prosecutor. Further, the standard of proof is merely upon balance of probabilities and so there may be little to distinguish a successful or unsuccessful action by a plaintiff. The disadvantages of admitting evidence of a civil judgment (the potential for waste of time and costs in investigating the judgment, and the greater likelihood of challenge to the evidence) outweigh the minimal probative value of the evidence. An exception is made, however, in respect of grants of probate and letters of administration - as is the case in most jurisdictions."
48 The observations of Justice White as to the conduct of Richardson, his reliability as a witness, and as to the adequacy of the available documentation in proceedings between different parties as to different valuations made by different valuers at different points in time, even if there are some factual overlaps between the two proceedings, are in truth statements of opinion which are irrelevant to the proceedings in this Court: Hollington v F Hewthorn & Co [1943] 1 KB 587 (CA) at 594 - 597; Land Securities PLC v Westminster City Council [1993] 1 WLR 286 at 288. Relaxation of the general rule as to the inadmissibility of a judge's finding of fact against a non-party may only occur where the connection of the non-party with the original proceedings is so close that he or she will not suffer any injustice by allowing for such an exception to the general rule, eg when considering in a summary way the making of a costs order against a non-party: Symphony Group plc v Hodgson [1994] QB 179 (CA) at 193; Murphy v Young & Co's Brewery [1997] 1 WLR 1591 (CA) at 1598. That is not this case.
49 Further, the opinion of Justice White as to the evidence of Richardson in the proceedings before her was res inter alios acta and the evidence of that opinion was not admissible for any purpose against Richardson: Reg v Dick [1982] Tas R 252 at 259.
50 What Spender J was entitled to do with the judgment as the record of a superior court of record, which he did, was to ascertain the parties to the Supreme Court litigation and the issues raised in that litigation as disclosed in the reasons, and to determine whether the proceedings in this Court were in fact parallel, or substantially parallel to and dependent upon, the Supreme Court proceedings as had been put to him on the appellants' behalf.
51 In our judgment, Spender J did not err in his use of, or failure to use, the judgment and reasons for judgment of Justice White in the Supreme Court proceedings.
52 The appellants submit that the following circumstances weighed against there being any prejudice suffered by the valuers :
(a) Richardson was publicly examined by the liquidator in 1993/1994 in relation to the preparation of his valuations by reference to the documentation then available to the liquidator; irrespective of the present memory of Richardson, he had available to him a "preserved memory" in the form of the transcript of that examination;
(b) It ought be inferred from the fact that Richardson gave evidence in the Supreme Court proceedings that he was intimately involved in the preparation of that litigation and has had occasion to address in those proceedings the same issues which will arise in the proceedings in this Court.
(c) The valuers, since the public examination of Richardson, have been aware of the existence of these proceedings and are therefore on notice that the appellants intended to hold them responsible for losses sustained in consequence of their relying on the valuation report annexed to the prospectus.
(d) The inability of Mr Beaumont to give evidence because of the onset of Alzheimers Disease and thus his unavailability to the valuers in the preparation of their defence was a circumstance which had occurred prior to the commencement of these proceedings by the appellants. That is, such prejudice as flowed from the unavailability of Mr Beaumont was not caused by any delay in prosecuting these proceedings.
(e) Sufficient original documents, or copy original documents, remained so that the valuers would not be prejudiced in the conduct of a fair trial by the loss of documents.
(f) The valuers were in a better position than the other respondents in their ability to defend the proceedings brought against them and their position required that they be considered separately and apart from the other respondents.
53 The appellants submit that Spender J failed to give any or any proper weight to each of these matters.
54 We do not accept that Spender J was unappreciative of the fact that Richardson had been publicly examined by the liquidator and was aware of the existence of the proceedings. The matter of concern to his Honour was that the valuers were unaware of the specific case made against them until the filing and service of the amended statement of claim. So much is apparent from the following extract from his Honour's reasons :
"159. The applicants submit that, notwithstanding what has been sworn to by some of the respondents, it is likely that any relevant board Minutes will be available from the liquidator [and] that some of the respondents were aware of the proceedings from as early as 1994. The valuers must have known of these proceedings and that many of the respondents were the subject of applications for public examination, although not all of those summoned to be publicly examined were so examined. The directors produced what documents they then had relevant to proceedings in 1987 and 1988.
.....
It is in my opinion crucial that the case which the respondents are called on to meet would not have been able to be discovered by them, except in the most general sense, until the filing and serving of the amended Statement of Claim. It is only then that they would have been fairly appraised in a sensible and meaningful way of what was alleged against them.
This is so of all respondents, although in my opinion the case of the directors in this regard is particularly strong, that of the leasing agents less strong, and that of the valuers least strong. Nonetheless, the fact is that it was not until about 14 August 1998 that the case that in fact is being levelled against them, in respect of conduct in 1987 and 1988, was given to them."
55 His Honour's concluding remarks disclose that he was aware that the situation in which the various respondents found themselves differed and as between the directors, the leasing agents and the valuers, the latter were better placed than the other two to have some indication of the case likely to be alleged against them. It is apparent, in our judgment, that Spender J dealt with the valuers separately from the other respondents and had regard to the circumstances which were of relevance to them.
56 In so far as the position of Mr Beaumont was concerned, his Honour put it no higher than that in 1993 Mr Beaumont, although then suffering from Alzheimers Disease, would probably have been able to give some evidence which was relevant. On the evidence of his son, who was also his treating general medical practitioner, that finding was open. We agree with his Honour that it is no answer to say that Mr Beaumont would probably not have been in a position to give evidence in 1993, and that documentation concerning the Beaumont Group was lost or destroyed, prior to the commencement of the proceedings. The point which his Honour makes is that the fact that such evidence is not now available means there is nothing to ameliorate the prejudice which otherwise flows from delay in the prosecution of the proceedings. That is, if Mr Beaumont was available to give evidence and if the original accounting records of the Beaumont Group were available, those circumstances may have negatived any suggestion of prejudice from delay in respect of dealing with the specific accusation involving the Beaumont Tenancies which were first made in the amended statement of claim around 14 August 1998. However, such was not the case.
57 There is considerable force in the final observation of his Honour that it was not until the service of the amended statement of claim in 1998, (more than ten and a half years after the relevant prospectus was issued), that the valuers were properly on notice of the precise case sought to be made against them.
58 In the final analysis, Spender J did not decide to grant the stay on the basis of specific prejudice. Rather, he decided that :
"... to me this is a strong case where the general prejudice that flows from a lack of prosecution of the case for approximately 10 years (in the sense of an absence of communication of what is the case the applicants wish to make) is such that the proceedings against all respondents should be stayed."
His Honour concluded :
"167. I have earlier indicated that it is premature, prior to the embarking on a hearing of the matters, to make a judgment as to when a cause of action under the TP Act arose, but the plain fact is that a basis for liability in respect of all the causes of action can only exist in this case in respect of conduct done or omitted to be done prior to the issue of the prospectus in June 1987. Again, as McHugh J noted in the quote above:
'The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.'
168. There is here the delay from the filing of the application in June 1994 to the service of the application and original Statement of Claim on the parties in late 1997 or the first months of 1998, which Statement of Claim alleges in the baldest fashion almost a generic case of the various causes of action against the respondents. There is the further delay until the service of the amended Statement of Claim some time after 14 August 1998."
59 In our judgment the appellants have failed to make out the case of appealable error which they sought to advance. The decision of Spender J, on the material which was before him, was one which was open to him to make and was not on that material unreasonable or plainly unjust. There is no basis for this Court to interfere with the exercise of his Honour's discretion to order the stay.
60 As we are not persuaded of the merit of the appellant's appeal, the application for leave to appeal is refused and the appellants' notice of motion is to that extent dismissed. The appeal will be dismissed as incompetent. Costs will follow the event.