SUPREME COURT OF QUEENSLAND CITATION: Hatton v Westaway [2005] QSC 051 PARTIES: FILE NO/S: 504 of 2002 DIVISION: PROCEEDING: ORIGINATING COURT: ELAINE JOAN HATTON (Plaintiff) v LESLIE WESTAWAY and MARGARET BEVERIDGE WESTAWAY (Defendants) Trial Application Supreme Court at Cairns DELIVERED ON: 18 February 2005 DELIVERED AT: Cairns HEARING DATE: 10 December 2004 JUDGE: ORDER: Jones J 1. The plaintiff have leave to proceed with her claim notwithstanding that no action has been taken in the proceeding for two years. 2. The defendants by their solicitors identify all documents known to be in the possession of the defendants or under their control relating to the properties referred to in para 3 of the Statement of Claim and documents relating to loans between Elva Alice Elenore Westaway (deceased) and the Cairns Shopping Centre Syndicate and between either of the defendants. 3. The plaintiff have liberty to inspect the said documents. Such an inspection shall occur on a date suitable to the parties but no later than 28 days from the date upon which the defendants identify the relevant documents available for inspection. 4. The plaintiff s amended Statement of Claim be filed and served within 28 days of the inspection having been undertaken. 5. The parties have liberty to apply on four business days notice to the other party. 6. The plaintiff pay the defendants costs of and incidental to the application to be assessed on the standard basis. CATCHWORDS: PROCEDURE MISCELLANEOUS PROCEDURAL
2 MATTERS where plaintiff seeks leave to proceed following extensive delay whether delay is fatal to application delay is attributed to dilatoriness of plaintiff s former solicitors and plaintiff s impecuniosity whether prejudice to defendants is fatal to application prejudice minimised by reliance on documentary material COUNSEL: SOLICITORS: Uniform Civil Procedure Rules 1999, r 389(2); Limitation Act 1969 (NSW), s15; Limitation of Actions Act 1974 (Qld), s10 Tyler v Custom Credit Corp Ltd & Ors [2000] QCA 178 Ms A Turner for the plaintiff Mr M Jonsson for the defendants Williams Graham & Carman for the plaintiff [1] This is an application by the plaintiff seeking leave to proceed pursuant to r 389(2) of the Uniform Civil Procedure Rules 1999 (UCPR). The defendants oppose the granting of leave, arguing that the delay in the prosecution of the Act to date has caused significant prejudice to them such that it is not now possible for the issue to be tried fairly. [2] The plaintiff is the executor of the estate of Elva Westaway (hereinafter the testatrix ), probate of her will having been granted by the New South Wales Supreme Court on 3 December 1999. The plaintiff s Statement of Claim seeks on behalf of the estate a declaration of a half interest in certain properties in Cairns and an account of the rents and profits derived from those properties since 1966. The plaintiff s claim as presently framed, asserts that there was an agreement that the defendants and the testatrix and her late husband would hold the properties as to one half for the testatrix and her late husband and as to the remaining half for the defendants. Further, a regular amount of income was to be paid to the testatrix and her late husband for living expenses from the rental income derived from the properties. 1 [3] In an affidavit sworn on 30 May 2002, Mr Philip James Beazley, former solicitor to the plaintiff stated that the plaintiff did not intend proceeding with the claim for an interest in property but sought only an account for rents payable up to and including the date of the testatrix s death, namely 12 December 1997. However no formal application to amend the Statement of Claim to this effect has been made and Mr Beazley no longer represents the plaintiff. [4] The husband of the testatrix died on 12 September 1966. The evidence relied upon as going to the substance of the alleged agreement appears to be statements made by the testatrix and her husband to the plaintiff or her sister, Edna Easton. There is no suggestion of any such conversation being undertaken in the presence of the defendants nor of their having discussed the contents of those statements with the defendants. To echo the comments made earlier by Austin J, the evidentiary problems in making out the case are obvious. 2 1 2 See para 5 of Statement of Claim Judgment 21 May 2002 at para 3
3 [5] The facts upon which the defendants rely are outlined in the affidavit of Susan Elin Thompson at para [7]. The details are:- (a) The properties were originally purchased by Dr Westaway in his name only in about 1951. (b) At the time of the sale of the dairy farm and the Kyogle properties The solicitors for Dr Westaway s parents were Hannigans of Casino in New South Wales. Any relevant conveyancing files that remain in existence are likely to be held in New South Wales ( the Kyogle files ). (c) Since about 1963, the properties have been held upon trust for the defendants five children, being Helen Margaret Westaway, David Leslie Westaway, Beverley Anne Westaway, Donald George Westaway and John William Westaway ( the beneficiaries ). All beneficiaries reside in the Cairns area in Queensland. (d) The settlor of the trust in 1966 was William Stanley Gordon Reece, the defendants former accountant and family friend. Mr Reece and his wife Sarah Ruth Reece were appointed as trustees. Mr and Mrs Reece, now deceased, resided in Mossman in the State of Queensland, north of Cairns. (e) Upon the death of Mr Reece Dr Westaway s parents, namely George William Westaway and the testatrix were appointed as trustees for the properties. The trustees in partnership with Mrs Westaway carried on the business under the firm name, Cairns Shopping Centre Syndicate, in relation to the commercial shopping premises at 117-117A Abbott Street in Cairns. (f) Upon the death of George William Westaway, the defendants and the testatrix were appointed as trustees. (g) From time to time other real property has been purchased and sold by the trustees on behalf of the beneficiaries. All such property has been located in the Cairns region. [6] For several decades the business affairs of the defendants have been managed by their accountants C.E. Smith & Co. The response of that firm to the plaintiff s initial inquiry was a letter dated 6 July 1999 which disclosed that there were two loan accounts in which the amounts owing to the estate were Cairns Shopping Centre Syndicate $1,000.00 Dr L Westaway $3,600.00 The interest payable was paid monthly by direct debit from the respective entities bank accounts. The accountants advised also that the loans were established many years ago and (the firm) have no record of the original agreements and terms. The above loan principal balances are shown on our clients balance sheets. 3 [7] Before commencing this action the plaintiff s then solicitor sought copies of the defendants financial records 4 by letter dated 26 June 2000. By letter dated 13 July 2000 the defendants solicitors indicated they were attempting to locate those 3 4 Ex 6 to the affidavit of Andrea Jane Turner sworn 9 November 2004 Affidavit of Philip L Beazley sworn 16 April 2002 Ex A
4 records but needed more time. The action was commenced on 2 January 2001, apparently without documents having been produced. [8] On 10 January 2001 the plaintiff served a Notice to Produce but on 6 February 2001 the defendants objected to its form and to the breadth of the records sought. On the same date the defendants requested detailed particulars of the Statement of Claim. There is no evidence of any action being taken between then and 26 February 2002 when the plaintiff s solicitors objected to the nature and scope of that request for particulars. Ultimately this led to hearings before Austin J in the New South Wales Supreme Court on 22 May 2002 and on 31 May 2002. Austin J noted that six boxes and 12 archive files containing documents relevant to the proceedings were located in Cairns; that the process of discovery had not taken place. He commented that substantial work needs to be done before the plaintiff s case is in a proper shape for the case to go forward to hearing. 5 [9] The true issue between the parties has not been defined and cannot possibly be defined unless there is discovery. It seems now that the plaintiff s claim is for an account to be taken of some dealings between the testatrix and the defendants. The plaintiff characterises that as an account for profits received from investment properties. However, the proper accounting might relate to the repayment of loan and interest. The nature of the dealings is more likely to be revealed from a perusal of documents than any reliance upon the evidence of the only remaining participants, namely the defendants. For reasons that will be discussed hereunder there is little likelihood of evidence being able to be given by the defendants personally. [10] The plaintiff s attempt to effect discovery has been frustrated in a number of ways - firstly, by the objections of the defendants prior to the action being commenced and thereafter in the manner identified at the hearing before Austin J. After that hearing there was some delay in the file being transferred to the Cairns Registry of the Supreme Court of Queensland but it appears there was no request for discovery until 22 January 2003. By letter dated 29 January 2003 the solicitors for the defendant noted that there was no discovery order but invited the plaintiff s solicitors to propose a timetable for the inspection of documents. By letter dated 12 February 2003 the then solicitors for the plaintiff partially identified what documents were required and the defendants solicitors replied by again inviting either a timetable for inspection of documents or an application for directions. Neither was forthcoming from that solicitor, though it appears that he did prepare some drafts of documents with a view to seeking an order for preliminary discovery. [11] The plaintiff s current solicitor was retained on 19 December 2003 and on 20 January 2004 received part of the files of the plaintiff s former solicitors. Between that time and 20 September 2004 the only activity related to identifying and then retaining solicitors in Cairns who would act on a contingency fee basis. There was no contact with the defendants solicitors until 20 September 2004 when a Notice of Intention to Proceed was filed. By this date more than two years had elapsed without a step having been taken, hence the necessity for the plaintiff to make this present application. 5 Ex tempore judgment 31 May 2002
5 [12] The factors relevant to an application of this kind have been dealt with in a number of cases to which I have been referred. Many of these factors are listed in the judgment of Atkinson J (with whom McMurdo P and McPherson JA agreed) in Tyler v Custom Credit Corp Ltd & Ors. 6 That list whilst not intended to be comprehensive includes (1) how long ago the events alleged in the statement of claim occurred and what delay there was before the litigation was commenced; (2) how long ago the litigation was commenced or causes of action were added; (3) what prospects the plaintiff has of success in the action; (4) whether or not there has been disobedience of Court orders or directions; (5) whether or not the litigation has been characterised by periods of delay; (6) whether the delay is attributed to the plaintiff, the defendant or both the plaintiff and the defendant; (7) whether or not the impecuniosity of the plaintiff has been responsible for the pace of the litigation and whether the plaintiff is responsible for the plaintiff s impecuniosity; (8) whether the litigation between parties would be concluded by the striking out of the plaintiff s claim; (9) how far the litigation has progressed; (10) whether or not the delay has been caused by the plaintiff s lawyers being dilatory. Such dilatoriness will not necessarily be sheeted home to the client but it may be. Delay for which an applicant for leave to proceed is responsible is regarded as more difficult to explain than delay by his or her legal advisers; (11) whether there is a satisfactory explanation for the delay; and whether or not the delay has resulted in prejudice to the defendant leading to an inability to ensure a fair trial. Delay [13] In this case there was some delay in the institution of the proceedings, and significant delay in pursuing the discovery of documents on which the identification of the cause of action clearly depends. The desultory attempts by the plaintiff s former solicitors to obtain discovery really came to nothing, even though the defendants solicitors sought on two occasions a timetable for discovery and apparently had a large number of documents available for inspection. It seems to me that much of this delay is to be attributed to the plaintiff s legal representatives. There is no suggestion that the plaintiff personally contributed to the delay. [14] It is evident from the material placed both before Austin J and later before me that the plaintiff s impecuniosity was a significant factor in the delay. Impecuniosity was clearly a factor in the lack of progress between the plaintiff s engagement of her present solicitors and the filing of this application. To some extent that explains the delay but there are other factors to be considered. Prejudice 6 [2000] QCA 178
6 [15] The first named defendant, who is now 80 years of age, retired from his medical practice in 2002. Thereafter he was responsible for the management of the businesses carried on at the subject premises. On or about 11 September the first defendant suffered a number of medical problems, the most significant of which for present purposes is of a cerebrovascular accident. His present physical and mental capacity renders him unable to give evidence. His condition was assessed by Dr Michael Suthers who opines that:- His current communication abilities are severely impaired. He also has cognitive disabilities. It can be difficult to recognize the individual components of his overall disability but it is fair to say o Dr Westaway is fully conscious and alert. He is orientated in place and time. He watches and listens to the TV and looks at rather than reads the paper. o He understands simple things and commands, but may falter if things become more complex. For instance, he can point to a pencil or a book, but may not be able to point to the book with the pencil. o He provides consistent yes/no answers, and can read single words and short sentences. o He strongly indicates he understands the significance of things that are said to him. o At the present time I consider that Dr Westaway does not have sufficient cognitive and communication capabilities to enable him to participate in legal proceedings. Dr Westaway's communication and cognitive abilities became markedly impaired as a result of his stroke, and are now slowly improving. It is very difficult to define the extent of short and long term memory abilities, but it is reasonable to think that his memory will have been substantially impaired by the stroke, including his ability to recall events occurring in the 1950 s and 1960 s. Dr Westaway has a long slow path ahead with regard to his recovery. He will not make a full recovery. 7 [16] The opinion of Dr Turner, specialist geriatrician, is to the same effect. 8 [17] The second named defendant is also 80 years of age and has recently suffered from physical disabilities. It is not clear on the material the extent to which she was involved in the management of the businesses apart from her known role as trustee of the properties. [18] The loss of cognitive function by the first named defendant could raise a serious prejudice for the defendants if explanations become necessary as to how the various financial arrangements came into being. Subject to any capacity in the second named defendant to explain the details, the likelihood is that financial arrangements between the defendants and the estate of the testatrix would have to be determined 7 8 Ex MBS1 to affidavit of Michael Suthers sworn 2 December 2004 Ex GT2 Affidavit of Geoffrey Turner sworn 3 December 2004
7 on documents and the instructions to accountants. It is unlikely that the accountant involved in those matters in the 1950 s and 1960 s would still be in practice so ultimately the best evidence ultimately is likely to be documentary. Conclusion [19] The issue for me is to weigh the rights of the plaintiff to have the matter determined and the rights of the defendants against whom the claim has been made but not yet properly identified. The action as presently identified seeks an account of profits from investment properties. By reason of the deaths of the testatrix and her husband and the incapacity of the first named defendant there seems to me little prospect of establishing the arrangements between the parties, other than what is revealed by documents and the inferences that might be drawn from their terms. Though now on foot for more than four years the action has not advanced to the point of showing an identifiable claim. That is the direct result of discovery of documents not being undertaken despite the plaintiff having first requested this on 26 June 2000. The defendants have properly sought to have the scope of discovery defined but this seems to have caused difficulty for the plaintiff s previous legal advisers. This fact, coupled with the plaintiff s impecuniosity, has resulted in the delay in undertaking the basic first step. The plaintiff s right to pursue this claim arose upon the grant of probate on 3 December 1999. For that cause of action the limitation period of six years applies both in New South Wales and in Queensland. 9 Consequently the action is still within time. [20] I am conscious of the prejudice to the defendants interests in their being denied the opportunity to give an oral explanation of how the financial arrangements came into being. In one sense reliance upon documents which have evidenced the arrangement between the parties for such a long time is likely to lead to a more balanced and less controversial approach. If the rights of the parties are governed by documentary evidence the prejudicial effect of the delay becomes less significant. [21] Such documents as can now be found are available for the examination of the plaintiff s present legal advisers. On the material before me these have been identified only as being those contained in six boxes and 12 archive files. The defendants advisers need to identify in some clear way all the relevant documents and certify that these are all the documents known to be in the defendants possession or under their control. [22] Having regard to the matters referred to above and particularly given the background of the plaintiff s attempt to inspect documents, she should now be allowed to proceed with her claim but subject to specific directions to ensure that the matter proceeds speedily. I propose therefore to fix time limits within which the inspection of documents should occur and thereafter the time within which the Statement of Claim is to be amended so as to identify the defendants claim as one for the taking of an account and the bases upon which such an account is sought. I will give each of the parties liberty to apply should they wish to vary the timetable which is set out in my orders. Order 9 s 15 Limitation Act 1969 (NSW); s 10 Limitation of Actions Act 1974 (Qld)
8 [23] I order that:- 1. The plaintiff have leave to proceed with her claim notwithstanding that no action has been taken in the proceeding for two years. 2. The defendants by their solicitors identify all documents known to be in the possession of the defendants or under their control relating to the properties referred to in para 3 of the Statement of Claim and documents relating to loans between Elva Alice Elenore Westaway (deceased) and the Cairns Shopping Centre Syndicate and between either of the defendants. 3. The plaintiff have liberty to inspect the said documents. Such inspection to occur on a date suitable to the parties, but no later than 28 days from the date upon which the defendants identify the relevant documents available for inspection. 4. The plaintiff s amended Statement of Claim be filed and served within 28 days of the inspection having been undertaken. 5. The parties have liberty to apply on four business days notice to the other party. 6. The plaintiff pay the defendants costs of and incidental to the application to be assessed on the standard basis.