Consolidated by orders dated 8 June 1994 and 21 September 1994

Practice and procedure - Dismissed for want of prosecution - Delay of 10 years - Prejudice to plaintiff - No new principles

First Appellant (First Defendant) : Mr N W McKerracher QC &

Second Appellant (Second Defendant) : Mr N W McKerracher QC &

First Appellant (First Defendant) : Solomon Brothers

Second Appellant (Second Defendant) : Slater & Gordon

Cooper v Hopgood & Ganim (a firm) - [1998] QCA 114; [1999] 2 Qd R 113

Duke v Royalstar Pty Ltd - [2001] WASCA 273

House v The King [1936] HCA 40; (1936) 55 CLR 499

Jakovljevic v Doslov - [2000] WASCA 131

Johnson Tiles Pty Ltd v Esso Australia Ltd - [2000] FCA 1572; (2000) 104 FCR 564

Micallef v ICI Australia Operations Pty Ltd - [2001] NSWCA 274

Sangora Holdings Pty Ltd v Hodder - [2003] WASCA 108

Spitfire Nominees Pty Ltd & Melibee (No2) Pty Ltd v Ducco - [1998] 1 VR 242

1 JUDGMENT OF THE COURT: At the conclusion of the hearing on 5 November 2003 the Court ordered that the appeal be allowed and that the orders made by Master Sanderson be set aside. The Court further directed that the action be listed before the long causes list Judge managing the matter, Murray J, as soon as convenient for directions regarding the future programming of the action to have it brought to trial as soon as possible.

3 This is an appeal from the decision of Master Sanderson reported as Tipperary Developments Pty Ltd v The State of Western Australia [2002] WASC 283.

4 A detailed chronology of the action is to be found in the judgment at [4] and it is unnecessary to reproduce it in these reasons.

5 Tipperary Developments Pty Ltd, whom we shall refer to as the plaintiff, commenced proceedings against The State of Western Australia by writ in CIV 2490 of 1992 on 24 November 1992, notice under the Crown Suits Act having been previously given on 28 September 1990. Subsequent writs have also been issued.

6 In essence, and this is a very much abbreviated statement, the plaintiff alleges that it was induced to make a loan of $50 million to Rothwells Ltd ("Rothwells") in 1988 shortly before that company went into provisional liquidation on 3 November 1988.

7 It is alleged that the plaintiff, and more particularly Warren Anderson, the driving force behind the plaintiff, was induced to enter into the agreements due to misrepresentations said to have been made by government ministers and government officers. Although the plaintiff has recovered a proportion of the amount of $50 million, the amount of $27 million remains outstanding.

8 On 30 December 1988 a settlement occurred between the parties during which Anderson and the plaintiff released ministers, officers and instrumentalities of the State, from liability in respect of the $50 million advanced to Rothwells but the plaintiff pleads that the deed of release does not extend beyond ministers, officers and instrumentalities, so as to release the State itself.

9 The State, as the defendant, strongly resists the claim made against it and in turn has counterclaimed against the plaintiff and Anderson seeking inter alia rectification of the deed of release to include The State of Western Australia.

10 The Master noted that the parties agreed that the principles governing the application are to be found in cases such as Birkett v James [1978] AC 297; Ulowski v Miller [1968] SASR 277; Lewandowski v Lovell (1994) 11 WAR 124; Wan v Sweetman & Anor, unreported; FCt SCt of WA; Library No 960456; 14 August 1996; Dzienciol v Logie Brae Pty Ltd, unreported; FCt SCt of WA; Library No 980078; 25 February 1998 and Hughes v Gales (1995) 14 WAR 434.

11 The Master relied particularly on Ulowski per Bray J at 280 and what are there described as the five paramount matters to be considered:

• The length of the delay;
• The explanation for the delay;
• The hardship to the plaintiff if the action is dismissed and the cause of action left statute-barred;
• The prejudice to the defendant if the action is allowed to proceed notwithstanding the delay;
• The conduct of the defendant in the litigation.

12 Before this Court some considerable attention and argument was devoted to the question as to the proper legal principles to be applied and, in particular, whether there needs to be a finding of contumelious delay or an inexcusable delay. Notwithstanding the agitation of the issues, it does not seem to us that the Master acted on a wrong principle of law in his general acceptance of the authorities referred to. Rather we consider the Master's discretion miscarried in the application of the authorities to the particular facts of the case.

13 The Master's reasons are based upon the five paramount matters in Ulowski. He concluded in [6] that the length of delay is inordinate. Ten years had passed since the first writ was issued. The matter was not ready for trial, although the Master noted that, subject to the provision of the plaintiff's expert report and the answering of interrogatories, the matter should be ready for hearing; the matter is likely to occupy some four weeks of hearing time and it was therefore unlikely that it could be heard before the middle of 2003. The Master considered that this was a factor very much in favour of the defendant.

14 The Master noted that the defendant had not contributed in any way to the delay in progressing the action. Part of the delay has been caused by the need to obtain expert evidence as to Rothwells' solvency at material times. The defendant at an early stage flagged that this would be an issue in the action. The State has consistently declined to admit the fact of Rothwells' insolvency. In late 1996 the plaintiff's then solicitors realised that an expert report would be required and Murray J, who was then managing the case, ordered that expert reports be filed by 25 April 1997. For reasons which are outlined by the Master between [10] and [15] the report was not available until the beginning of 2002 but, at the time of hearing before the Master in October 2002, he was advised the report could be filed and served within "the next few weeks".

15 Further delay was caused by the plaintiff's liquidity problems, although the Master was advised that the cash flow difficulties had been overcome and the plaintiff was in a position to progress the action. The Master concluded that the plaintiff's explanation for delay was unsatisfactory:

"18 On balance, I am not satisfied that the explanation for the delay is satisfactory. Reduced to its essentials, the plaintiff seeks to explain the delay in two ways. First, it did not anticipate that the solvency of Rothwells would be an issue between the parties. This led to a delay in actually commissioning the expert's report. With respect it seems to me that from the first, the plaintiff should have appreciated that the solvency or otherwise of Rothwells in the relevant period was central to its case. It should then have moved promptly to ensure that a report was available. As I have indicated, the defendant did nothing at any stage to lead the plaintiff to believe that the issue would be conceded. This aspect of the plaintiff's explanation for the delay is unsatisfactory.

19 The second reason given for the delay is the plaintiff's impecuniosity - it simply was not able to pay the fees of the accountants to prepare the report.

20 There is no doubt that having the accountants prepare the expert report was an expensive undertaking. I also accept that from time to time the plaintiff has had cash flow difficulties. But in my view none of that provides a satisfactory explanation for the delay. A party who undertakes significant litigation must expect to incur heavy costs - both legal costs and costs of experts involved in the litigation. From time to time it may be that the demands of costs are such that delay in the proceedings is inevitable. But here the delay has been lengthy and in my view, simply to plead poverty is not a sufficient answer.

21 It is true that from time to time delay was occasioned by the unavailability of accountants whom the plaintiff wished to instruct. The plaintiff wished to instruct those accountants because of their familiarity with Rothwells. However, when it became clear that instructing those accountants was likely to lead to significant delay, the plaintiff could have been expected to instruct an alternative expert. In my view the unavailability of certain accountants does not provide any explanation for the delay."

16 The Master concluded there was no proper explanation for the delay. He did not express any opinion as to whether the delay was contumelious.

17 The Master found, correctly, that if the action was dismissed it would occasion hardship to the plaintiff:

"23. There is no doubt that if this action is dismissed it will occasion hardship to the plaintiff. The plaintiff's claim will be time-barred and there is no question of the action being recommenced. Accordingly the plaintiff will be precluded from recovering any amount to which it may have been entitled. Furthermore, legal expenses of millions of dollars have been incurred and will be wasted. The costs associated with the expert report will be wasted. In addition, the plaintiff will be liable for the defendant's costs of the action which will be substantial."

18 The Master addressed the question of specific prejudice to the defendant. He declined to conclude that there was particular prejudice. He said that it must be acknowledged that there is the general prejudice that the defendant would suffer as a consequence of the time between these proceedings being initiated and any trial, but he was of opinion that this was not a matter of overwhelming significance.

19 In the circumstances of this case we would respectfully agree. It may be accepted that delay is almost always the cause of some prejudice. In this case the events surrounding the rescue of Rothwells in 1987 and its subsequent collapse in 1988 have been comprehensively explored by the State by a Commission of Inquiry, by a Royal Commission, and, in part, by a criminal trial.

20 The Master concluded at [32] that the decisive factors to exercise his discretion were the length of the delay and the inadequate explanation for the delay:

"...If the plaintiff had a legitimate grievance it should have pursued it promptly. It did not do so and in my view, it has not adequately explained the reasons for not doing so. This action should be consigned to history's dustbin."

21 Of the five paramount matters in Ulowski, two can be put aside. They are the prejudice to the defendant and the defendant's conduct in the litigation. We would not disturb the Master's conclusions that the defendant's conduct had not contributed to the delay, nor his conclusion that prejudice to the defendant is not a matter of overwhelming significance.

22 That leaves for consideration the length of the delay, the explanation for the delay, and the hardship to the plaintiff.

23 Undoubtedly there has been a very significant delay and it may be accepted that some of the delay is not satisfactorily explained. However, as against that, there are the following factors. Part of the delay occurred when it was necessary for the plaintiff to change solicitors because of a perceived conflict of interest. It seems to us that no blame could be attributed to the plaintiff in respect of the change of solicitors.

24 Much of the delay in progressing the litigation has turned upon the need to obtain an expert report as to the solvency of Rothwells at particular times. It was reasonable for the plaintiff to have attempted to instruct Ferrier Hodgson, who were the liquidators of Rothwells, because of their familiarity with the matter and the accounts. The pursuit of Ferrier Hodgson for a time accounts for a portion of the delay. When other accountants were engaged there was further delay, in part as a result of the plaintiff's inability to pay them.

25 This is a complex action involving a large quantity of documents. The litigation has been productive of many interlocutory applications from either side. The matter has been managed in the long causes list. It is significant that the Judge managing the list has from time to time made programming orders which have not been complied with and has pressed the parties as to the conduct of the litigation. However, it is not suggested that the Judge considered the overall delay was approaching the point at which judgment should be entered in favour of the defendant. This case highlights the desirability, where practical, in listing this sort of application before the managing Judge.

26 With respect, the Master erred in his view of the matter adverse to the cash flow difficulties the plaintiff encountered from time to time in funding the litigation and the expert fees. A litigant should not be shut out from bringing litigation merely because delays might be caused by cash flow difficulties. We recognise that some of the difficulty was caused by the need to fund other litigation, but that cannot necessarily be regarded as an adverse fact. The question is one of fact and degree depending on all the circumstances but in this case there was no sufficient analysis of the effect of lack of money on the progress of the litigation from time to time.

27 We think that the Master's discretion also miscarried because he effectively failed to accord any weight to the undoubted prejudice to the plaintiff to which he referred. Having found that there was no particular prejudice occasioned to the defendant and that the general prejudice was not of overwhelming significance then the matters referred to in [23] of his decision should have been decisive.

28 It is hard to overlook the fact that the case was close to being entered for trial and/or at the least, with robust management, could be entered for trial within a reasonable period. The accountant's report which was the cause of much of the delay has been completed. In these circumstances the discretion miscarried. The matters which the Master regarded as decisive, namely, the length of delay and inadequate explanation for the delay, could not properly be decisive in this case. What was necessarily decisive in the circumstances of the case was the overwhelming prejudice to the plaintiff absent any serious degree of prejudice to the defendant.

• Background to the appeal
• Legal principles
• The Master's reasons
• Delay
• Hardship to the plaintiff
• Prejudice to the defendant
• The length of the delay
• The explanation for the delay
• Prejudice to the plaintiff