The Supreme Court of Queensland considered an application by the defendant to take a step in the proceeding pursuant to Rule 389(2) of the UCPR despite there having been a delay of more than two years. No step had been taken in the proceedings since 26 March 2008 – three and a half years since the last step when the defendant delivered a List of Documents.

1.1 Background

Rule 389(2) of the UCPR provides as follows:

“(2) If no step has been taken in a proceeding for 2 years from the time the last step was taken, a new step may not be taken without the order of the court, which may be made either with or without notice.”

McMeekin J., considered the principles to be taken into account when determining whether in the interests of justice the case should be dismissed. In Tyler v Custom Credit1, it was held that the rule is founded on the general proposition that unnecessary delay in proceedings has a tendency to bring the legal system into disrepute and decrease the chance of a fair and just result.

The matters that were considered in Tyler’s case were as follows:

  1. How long ago the events alleged in the statement of claim occurred and what delay there was before 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 attributable 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 defendant is responsible for the plaintiff’s impecuniosity;
  8. Whether the litigation between the 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
  12. Whether or not the delay has resulted in prejudice to the defendant leading to an inability to ensure a fair trial.

The plaintiff (“Bird”) was the general manager of Ensham Resources Pty Ltd (“Ensham”) who were involved in proceedings brought by Southern Cross Management Pty Ltd (“Southern Cross”) to recover monies outstanding in relation to the hire of a drag line. Ensham counter-claimed and joined Bird and others as defendants on the basis that they breached their contractual and fiduciary duties owed in that Ensham had been induced to enter into the drag line hire agreement. Bird sought and obtained from Ace conditional indemnity under insurance policies indemnifying directors and officers and whether he was entitled to that indemnity was at the heart of the proceedings.

Initially Ace had paid out $1,165,352.46 for Bird’s legal costs but had reserved its position as to whether it was under an obligation to pay out under the policy. At a later time Ace decided that it had paid out the monies under a mistaken view of its obligations and on 23 November 2005 denied liability under the policy. Bird subsequently sued Ace to recover additional costs that he had paid out to compromise the claim against Ensham. Ace counterclaimed to recover the monies it had already paid out.

After Bird brought his claim in November 2006 Ace commenced their counter-claim 19 months later in June 2007. There had been a substantial delay in the prosecution of the counter-claim and in particular no step had been taken since March 2008.

1.2 Findings

McMeekin J., dismissed the application determining that leave should not be granted to continue the proceedings and they were subsequently at an end.

It was held that there was no satisfactory explanation for the three and a half year delay since the last step was taken. The respondent argued this was due to the fact that between 10 to 14 years had elapsed since the relevant events occurred. It was considered also that the matter was not immediately ready for trial and was unlikely to occur for a further seven months at a minimum.

The applicant did not persuade the court that they had clear prospects of success in the action. Effectively the parties had let the proceedings go to sleep. The plaintiff may have done so deliberately assumingly because he was impecunious and hoping it would go away. The defendants were unable to satisfactorily explain the delay in their conduct. Insufficient reason was then provided for allowing the proceedings to continue and there was grounds for considerable concern that a fair trial may occur.

1.3 Conclusion

The decision is a clear reminder that litigants must be proactive in the prosecution of their claims and explanations in delay should be able to be clearly provided to the court whilst showing that the applicant has good prospects of success in the action. Although each case will be judged on its circumstances it is clear that courts will apply the provisions of Rule 389 quite strictly as ultimately proceedings will not be allowed to meander endlessly due to the prejudice that it may cause.