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Supreme Court allows appeals from High Court, and grants orders dismissing claims by a company in administration alleging negligence against two firms of accountants that had carried out audits, where there had been substantial delay prior to the issue of the summonses, and eleven years had passed since the proceedings issued, on the grounds that the prejudice to the defendants resulting from the inordinate and inexcusable delays by the plaintiff would make it impossible that a fair trial between the parties could be had, and that the interests of justice required that the proceedings be dismissed.
Hamilton CJ: Orders made in High Court to dismiss proceedings - want of prosecution - O. 63, r. 1, sub-r. 8 of the Rules of the Superior Courts, 1986 - plenary summons 1984 - statements of claim 1986 - 1993 application to dismiss proceedings - claim dismissed by Master of High Court - appeal to High Court - appeal allowed - Order 122, r. 11 - whether inordinate or inexcusable delay - prejudice - inactivity of other party - onus of establishing delay - balance of justice - liability of party for inactivity of his solicitor - whether a fair trial could be had - delay prior to summons - delay after issue of summons - delay on part of defendant - time to comply with discovery reqruirements - whether four months had been sufficient - failure of defendants to comply with discovery order - claim against auditors of company - plaintiff going into insolvency - whether auditors negligent - discovery process taking two years - estoppel where defendant has by conduct induced a belief that action was to be allowed to proceed - whether defendant had acquiesced in delay - incorrect test applied by trial judge.
“Applying this guideline to the facts of the present case, it appears to me that a very important and substantial step was taken by the defendants when they participated in the application for the order and cross-order of discovery, and that the plaintiff was thereby induced to embark upon the 'mammoth task' (which it undoubtedly was) of examining, collating and recording over 200,00 insurance files, together with thousands of other miscellaneous documents listed in the schedules to the affidavit of discovery, which itself is over 200 pages in length. The expenditure of time and money on this exercise must have been far in excess of what was involved in the other reported cases where a similar plea has been put forward in answer to an application to dismiss for want of prosecution.”
“(a) the courts have an inherent jurisdiction to control their own procedure and to dismiss a claim when the interests of justice require them to do so;
(b) it must, in the first instance, be established by the party seeking a dismissal of proceedings for want of prosecution on the ground of delay in the prosecution thereof, that the delay was inordinate and inexcusable;
(c) even where the delay has been both inordinate and inexcusable the court must exercise a judgment on whether, in its discretion, on the facts the balance of justice is in favour of or against the proceeding of the case;
(d) in considering this latter obligation the court is entitled to take into consideration and have regard to
the implied constitutional principles of basic fairness of procedures,
(ii) whether the delay and consequent prejudice in the special facts of the case are such as to make it unfair to the defendant to allow the action to proceed and to make it just to strike out the plaintiff's action,
(iii) any delay on the part of the defendant — because litigation is a two party operation, the conduct of both parties should be looked at,
(iv) whether any delay or conduct of the defendant amounts to acquiescence on the part of the defendant in the plaintiff's delay,
(v) the fact that conduct by the defendant which induces the plaintiff to incur further expense in pursuing the action does not, in law, constitute an absolute bar preventing the defendant from obtaining a striking out order but is a relevant factor to be taken into account by the judge in exercising his discretion whether or not to strike out the claim, the weight to be attached to such conduct depending upon all the circumstances of the particular case,
(vi) whether the delay gives rise to a substantial risk that it is not possible to have a fair trial or is likely to cause or have caused serious prejudice to the defendant,
(vii) the fact that the prejudice to the defendant referred to in (vi) may arise in many ways and be other than that merely caused by the delay, including damage to a defendant's reputation and business.”
“It is obvious from the consideration of such judgment that the learned trial judge considered that the fact that S.K.C. had sought a cross-order for discovery of documents when the plaintiff had applied for an order for the discovery of documents against them on the 25th January, 1991, and the fact that the plaintiff had incurred considerable expense in complying with such order, constituted an estoppel and a bar to their application for an order that the proceedings against them be dismissed for want of prosecution.”
“The learned trial judge would have been entitled to regard these facts as relevant factors to be taken into account by him in the exercise of his discretion whether or not to strike out the claim, but he did not so regard them: he regarded them as fatal to S.K.C.'s claim to have the proceedings dismissed.In so holding he erred in law in the exercise of his discretion and the appeal by S.K.C. against his order refusing the application made on their behalf to have the proceedings against them dismissed for want of prosecution must be allowed on this ground alone.”
“I am satisfied that the prejudice caused to S.K.C. by the inordinate and inexcusable delay on the part of the plaintiff as outlined in the course of this judgment is such as to place an inexcusable and unfair burden on S.K.C. in defending these proceedings; is such as to make it impossible that a fair trial between the parties can now be had and that the interests of justice require that the proceedings brought by the plaintiff be now dismissed.”
“I am satisfied that the prejudice caused to Freaneys by the inordinate and inexcusable delay on the part of the plaintiff as outlined in the course of this judgment is such as to place an inexcusable and unfair burden in defending these proceedings and is such as to make it impossible that a fair trial between them can now be had and that the interests of justice require that the proceedings brought by the plaintiff be now dismissed.”
O’Flaherty J: Applications to dismiss proceedings for want of prosecution - two appeals - application of Insurance (No 2) Act 1983 - allegation of negligence, breach of duty and breach of statutory duty against two firms - suing for consequences of negligent mis-statement - exposure of accountants to liability for thoughtless slips or blunders - allegation that auditing of accounts was grossly inadequate - claim for millions - passing of Act and appointment of administrtor - inordinate and inexcusable delay - changes in auditing standards - effect of publicity on defendant accountancy firms - prejudice to firms - difficult in obtaining professional indemnity cover - participation by defendants in discovery process.
“If A runs its business into a state of hopeless indebtedness and borrows money from B which B willingly lends sufficient to get A back afloat can B, having through an agent taken over the running of A, through that agent sue C on the grounds that C helped put A into a state of indebtedness in the first place and so recover what B lent of its own volition? I cannot find a solution to this theorem in any of our known jurisprudence.”
“I have formed the firm view that we have here circuitous litiation which is incapable of producing any result. There is no nexus between any negligence ... on the part of the defendants that would entitle the plaintiff to bring home a claim of damages against them.”
“I have no confidence that expert witnesses could ever unravel this case. They cannot take the place of those who experienced at first hand the auditing of the relevant accounts.”
“There is much in Mr Landy’s pithy suggestion which he made at the outset of his submission: that once delay which is inordinate and inexcusable is established then the matter of prejudice would seem to follow almost inexorably. ... In addition, however, I believe that we do no injustice to a party who has little hope of success in making out any plausible case in negligence against these defendants ...”
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