New South Wales Supreme Court CITATION : French v Polar Technologies International Pty Ltd [2006] NSWSC 1260 HEARING DATE(S) : 21 November 2006 JUDGMENT DATE : 22 November 2006 JURISDICTION : Equity JUDGMENT OF : Hamilton J DECISION : Appeal dismissed. CATCHWORDS : EVIDENCE [75] – Facts excluded from proof – On grounds of privilege – Professional confidence – Legal profession – Waiver of privilege – Effect of Evidence Act 1995 – Issue in proceedings incapable of fair determination without reference to confidential legal advice - PROCEDURE [33] – Courts and judges generally – Courts – Dismissal of proceedings for want of prosecution – Principles applicable – Relevant considerations. Evidence Act 1995 ss 118 & 122(1) LEGISLATION CITED : Limitation Act 1969 s 16 Uniform Civil Procedure Rules 2005 r 12.7 Andresakis v Alexus Holdings Pty Ltd [2006] NSWCA 294 Birkett v James [1978] AC 297 Chen v City Convenience Leasing Pty Ltd [2005] NSWCA 297 CASES CITED : Hoser v Hartcher [1999] NSWSC 527 Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 Razvan v Berechet NSWCA 23 February 1990 unreported Stollznow v Calvert [1980] 2 NSWLR 749 Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 Andrew Boyd French (P) Polar Technologies International Pty Limited (D1) Noel Arthur Kneale (D2) PARTIES : John William Graham (D3) Janis Neimanis (D4) Thomas George Swift (D5) Polar Technologies Asia Pty Limited (D6) FILE NUMBER(S) : SC 4670/04 COUNSEL : G J Smith (P) M R Pesman (Ds) SOLICITORS : McCabe Terrill (P) Craddock Murray Neumann (Ds) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J WEDNESDAY, 22 NOVEMBER 2006 4670/04 ANDREW BOYD FRENCH v POLAR TECHNOLOGIES INTERNATIONAL PTY LIMITED & ORS JUDGMENT 1 HIS HONOUR: This is an appeal from a judgment of Macready AsJ dismissing proceedings for want of prosecution with due despatch under r 12.7 of the Uniform Civil Procedure Rules 2005 ("the UCPR"). 2 The correct approach by an appellate court to the decision of such an appeal was stated recently by the Court of Appeal in dealing with an appeal from the dismissal of proceedings by Garling DCJ under a similar rule previously in force in the District Court in Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274. Heydon JA said at [45]: "It is necessary to bear in mind some submissions of the defendants to the effect that a discretionary judgment can only be overturned in limited circumstances. These submissions were trite, but they are true, and they are vitally important. … … Garling DCJ had to make a discretionary decision on a matter of practice and procedure - an extremely important one, having potentially serious consequences for the plaintiff, but a discretionary decision on a matter of practice and procedure nonetheless. Any attack on decisions of that character must fail unless it can be demonstrated that the decision-maker: (a) made an error of legal principle, (b) made a material error of fact, (c) took into account some irrelevant matter, (d) failed to take into account, or gave insufficient weight to, some relevant matter, or (e) arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning. Even though this Court might conclude that it would have exercised the discretion differently if the discretion had been conferred on it in the first instance - might have adjourned the matter so as to permit the defendants to consider the late-supplied particulars, or might have held the plaintiff to the old particulars, or might have fixed one more 'final' date for outstanding matters to be completed by - any such conclusion would be immaterial. The law committed the exercise of the discretion to Garling DCJ. The law permits interference with his exercise of the discretion in only the limited circumstances just described. See House v R (1936) 55 CLR 499 at 504-505; Lovell v Lovell (1950) 81 CLR 513 at 518-519 and 532-533; Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621 at 627. These principles are applied to a wide range of discretionary judgments, but their application to this specific field, dismissal for want of prosecution, was approved by this Court in Stollznow v Calvert [1980] 2 NSWLR 749 at 751." 3 This approach was endorsed by McColl JA in Andresakis v Alexus Holdings Pty Ltd [2006] NSWCA 294 at [55]. Her Honour added at [56]: "Furthermore, the Court may only interfere with the primary judge's decision if it reaches 'a clear conclusion that by reason of some error, whether of fact or law, the primary judge not only has taken a view different from that which the judges of the Court of Appeal would have taken if they had been in his place, but has failed properly to exercise the discretion committed to him': Mace v Murray [1955] HCA 2; (1955) 92 CLR 370 at 378." 4 In Stollznow v Calvert [1980] 2 NSWLR 749 the Court of Appeal laid down in relation to such a matter: (1) Each case concerning the exercise of the discretion must be decided on its own facts. (2) Fixed formulae cannot be prescribed to limit the judicial discretion to do that which is just between the parties in the circumstances. (3) Default of a plaintiff's solicitor should not as a matter of course be attributed vicariously to the plaintiff. 5 In Micallef it was specifically held that Stollznow is still good law. Heydon JA said at [62]: "At all events, if anything the trend of authority since the time of Stollznow v Calvert affirms the width of the discretions recognised by Walsh JA and approved by Stollznow v Calvert . That case is a considered authority of the judges of this Court which their successors are obliged to follow until it is explicitly overruled either by this Court or by the High Court. Neither this Court nor the High Court has ever been invited to do so, and neither court has done so." 6 In particular, Heydon JA at [51] specifically rejected as part of the law of New South Wales the limitations on the exercise of this power proposed by Lord Diplock in Birkett v James [1978] AC 297 at 318. It should also be noted that his Honour said at [59] on the subject of prejudice to the defendant: "There is also a form of prejudice which arises from the fact that the defendants had to remain active in litigation that was apparently never being brought to finality." 7 In my view, the central principle remains that the court must in determining such an application "do that which is just between the parties in the circumstances." 8 A list of factors relevant to the exercise of the discretion was set out by Simpson J in Hoser v Hartcher [1999] NSWSC 527 at [19] - [30]. The list is of assistance in drawing attention to factors which may be relevant in cases where they are applicable, but must not, in my view, be treated as some checklist which must be attended to in every case. Five of those factors which are of some materiality in the present case are: (1) that the discretion should be exercised only in a clear case where it is manifestly warranted; (2) consideration of any explanation given by the plaintiff; (3) the balancing of prejudice to the defendant against prejudice to the plaintiff; (4) the plaintiff's prospects of success; (5) the exercise of the discretion should not incorporate any element of punishing a tardy plaintiff. 9 As to the first of these, I have some doubt as to whether this proposition is sound or whether it imposes a restriction on the exercise of the discretion such as those that were rejected in Micallef supra. The only authority cited for the proposition by Simpson J was that of Kirby P in Razvan v Berechet NSWCA 23 February 1990 unreported. Simpson J's judgment, of course, predates Micallef. The other four considerations set out above I do not doubt are relevant. 10 The learned Associate Judge's judgment is largely taken up by a long and detailed catalogue of the plaintiff's delays and failures to comply with directions. There is no need to repeat them here. In short, after four years, first in the District Court and then in this Court, no evidence has been filed by the plaintiff. This is despite repeated opportunities and directions to do so and the fact that discovery has long since been given, albeit by agreement informally. The plaintiff has had three firms of solicitors acting for him, Summit Law, then Turnbull Hill, now McCabe Terrill. It was Turnbull Hill who carried out the inspection of documents. The plaintiff's response to the motion for dismissal was to file a motion for discovery in terms identical to one previously dismissed by consent at the time of the agreement for informal discovery. There was no explanation for the non filing of evidence. His Honour rejected the submission that the inference was that it was for want of discovery. He dealt with the only explanation that was given in evidence, which will be set out below. He rejected that explanation. He noted that, in the face of an application such as was before him, a plaintiff will often assert that he has a substantial case and offer to file his evidence, but this was not the case here. He noted that "there might be some continuing right to royalties that might enable an action to be brought" and referred to the costs being incurred on behalf of the defendants and borne by the fourth defendant. His conclusions were encompassed in the words: "All that has happened is there has been full discovery with the plaintiff still not proffering any evidence ... if there was any chance that the plaintiff might have some prospect of success one would have seen a case formulated by this stage." I take it that his Honour was by the expression "a case" referring to an evidentiary case. These conclusions were in the context of the whole history of delays and non-compliances which his Honour had set out. I should add that the evidence shows that it was made plain in January and February this year to McCabe Terrill, the new solicitors, that the documents were available for them to inspect, but they have not done so. 11 Recognising that he must demonstrate error of principle in the discretionary judgment appealed from for this appeal to succeed, the plaintiff asserted first that the learned Associate Judge had relied on evidence that he had wrongly admitted and then alleged, as the matter was argued before me, six errors of principle into which his Honour is said to have fallen. 12 I shall deal first with the evidentiary question. That arose as follows. The Evidence Act 1995 ("the EA") by s 118 provides for client legal privilege, but by s 122(1) does not prevent the adducing of evidence given with the consent of the party. The only explanation given by the plaintiff of his delays in proceeding was as follows: "32 I was aware that Mr Adam Mooney of Turnbull Hill Solicitors inspected documents produced by the Defendants informally in August 2005 but I was not aware that a Notice of Motion seeking verified discovery of those documents was withdrawn by Turnbull Hill on 6 September 2005. When the file first went to Turnbull Hill Lawyers Nathan Hepple handled the matter and after he left the firm Merridy Elphick was my point of contact. Merridy Elphick later left Turnbull Hill and my file was handled by Steve Underwood and Tim Osborne. Some time later I was informed by Turnbull Hill that Adam Mooney would be handling my case under the supervision of John Woodward who was a partner of the firm. 33 My impression was that Turnbull Hill lost interest in my matter after Merridy Elphick left the firm and I was dissatisfied that the file passed through so many sets of hands without one person taking responsibility for the file. Turnbull Hill ceased to act on my behalf in October 2005 and I then retained McCabe Terrill solicitors who now act on my behalf." The defendant tendered correspondence between the plaintiff and Turnbull Hill, including material privileged under s 118 of the EA. This the learned Associate Judge admitted on the basis that privilege had been given away by consent under s 122(1). The consent relied on was an implied or imputed consent. 13 Whether or not consent in s 122(1) includes implied consent has been the subject of extensive debate in the courts. However, this debate has been settled for the purposes of a trial judge in New South Wales by the decision of the Court of Appeal in Chen v City Convenience Leasing Pty Ltd [2005] NSWCA 297, where Gzell J said at [30] - [31] that s 122(1) must be construed to include implied consent. His Honour at [37] cited with approval what was said in the Federal Court of Australia in Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 at 166 concerning the application of s 122(1) in an undue influence case: "A party who initiates an undue influence case puts in issue in the proceeding the quality of his or her consent or assent ( Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 per Deane J at 474). The quality of such consent or assent will ordinarily be affected by relevant legal advice received by the party. The principle that requires that in such circumstances the party not be entitled to maintain the confidentiality of such advice is one of fairness which goes to the integrity of the legal process. To allow a party to put in issue the quality of his or her consent or assent whilst, at the same time, withholding evidence relevant to that issue, would be to allow him or her unfairly to handicap the opposing party to the proceeding, and to comprise the ability of the court realistically to determine the issue." 14 In this case the learned Associate Judge took the view that in par 33 of the affidavit the plaintiff was asserting as an explanation of delay, indeed the only explanation of delay given, that those solicitors had not proceeded with the matter as they should have done for want of interest, so that the delay was in part occasioned by their lack of action. The plaintiff has contended that par 33 should be taken merely as a statement of belief by the plaintiff arising from the changing of the guard within that firm in relation to his matter. But unless proffered as an explanation of delay, his belief had no relevance. It could not be an explanation of his dismissal of Turnbull Hill, as he did not dismiss them. In my view, his Honour was correct to view the statement in par 33 as an explanation of delay, as occasioned by those solicitors. In my view, once the plaintiff put this forward as an explanation, what the solicitors had done became relevant, including their communications with the plaintiff. And if those communications contained privileged matter, it was only fair that he should be treated as consenting to that matter being adduced in evidence in the circumstances. In my view, the learned Associate Judge was correct to admit the material. 15 A second submission put in relation to this material was that, even if wrongly admitted, the part it played in the decision was so slight as not to vitiate the decision. The only portion of the material adverted to in the judgment was the letter in which the solicitors had advised the plaintiff that they had surveyed the discovered material and concluded that the plaintiff did not really have a case. In his judgment the learned Associate Judge concluded from the objective material, as set out in his judgment, that "all that has happened is there has been full discovery with the plaintiff still not proffering any evidence." In my view, his Honour cited the material from the letter only as confirmatory of the view that he had formed from the objective evidence. I accept the submission that, even if the evidence were wrongly admitted, the part it played in the decision was so slight as not to vitiate the decision. 16 I now turn to the other six errors of principle contended for on behalf of the plaintiff before me. They were: (1) That his Honour failed to balance the prejudices of the plaintiff and the defendants. (2) That his Honour failed to exercise his discretion to dismiss only in a clear case where it was manifestly warranted. (3) That his Honour failed to properly take into account the plaintiff's explanation for delay. (4) That his Honour placed inappropriate weight on the prejudice to the defendants. (5) That his Honour failed to properly consider the plaintiff's prospects of success. (6) That in exercising his discretion his Honour incorporated an element of punishing a tardy plaintiff. I shall deal with these matters seriatim. 17 I shall deal with the proposed errors (1) and (4) relating to prejudice together. The learned Associate Judge did not, perhaps, balance these prejudices in terms. However, his Honour adverted to the potential existence of a right of the plaintiff to royalties. His Honour adverted to the ongoing burden of costs on the defendants. No evidence had been brought forward to quantify or give reality to the plaintiff's loss. His Honour clearly placed this case in the category of those where defendants were being subjected to the ongoing burden of litigation which was going nowhere. I should add that, in the debate before me, it became clear from an examination of the amended statement of claim that the earliest date as at which royalties were claimed was 18 May 1994. His Honour's judgment was delivered on 26 June 2006. It was agreed that the relevant limitation period was that relating to actions on deeds, namely, 12 years, as prescribed by s 16 of the Limitation Act 1969. Only one month's royalties (if there were any) would have been barred as a result of his Honour's decision. I note that the plaintiff has not, as an insurance against failure in this appeal, recommenced proceedings to stop time running. I do not find any error in his Honour's approach to the questions of prejudice. 18 As to the proposed error (2), failure to dismiss only in a clear case where it was manifestly warranted, I have already in [9] above expressed my doubt as to the correctness of this proposition. However, it is, in any event, obvious that his Honour regarded this as a clear case in which the dismissal was well and truly warranted and where dismissal was what was required to do justice between the parties in the circumstances. I do not find any error by his Honour established in this regard. 19 As to the proposed error (3), failure to properly take into account the plaintiff's explanation for this delay, there is no substance in my view in this complaint. His Honour found that no explanation was put forward other than that contained in par 33 of his affidavit. His Honour rejected the proposition that delay was caused by Turnbull Hill having lost interest in the matter. Even if that proposition were correct, looking at it in the overall context of the delays regarded by his Honour, it would not afford an adequate explanation for those delays. There is, in my view, no substance in this complaint about his Honour's judgment. 20 I turn to the proposed error (5), failure to properly consider the plaintiff's prospects of success. The conclusion that his Honour drew that the plaintiff's prospects of success were dim was drawn from the total lack of an evidentiary case to date. No quantification of any loss of royalties was put forward. I can see no error in his Honour's judgment established on this ground. 21 As to error (6), the last of the proposed errors, that his Honour's judgment incorporated an element of punishing a tardy plaintiff, there is no trace, on the face of the judgment, of any motive, intention or actuality of punishment of the plaintiff as a motivation of the judgment. In my view this complaint, likewise, is not made out. 22 The conclusion therefore is that none of the complaints of error made concerning his Honour's judgment is established. The result of that conclusion is that his Honour's exercise of discretion has not been successfully impugned and the plaintiff's appeal must be dismissed. The plaintiff must pay the defendants' costs of the appeal. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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