By Stuart Eustice, Partner and Rory MacDonald, Associate

The Victorian Court of Appeal recently considered whether a long-running proceeding should be dismissed for want of prosecution. Its decision serves as a reminder to litigants of what can happen when proceedings suffer from significant delay.

Background

The dispute arose from a failed property development at the former Pentridge Prison site in Coburg, Victoria. In 2005, Pentridge Village Pty Ltd and West Homes Australia Pty Ltd, the applicants, entered into a facility agreement with Capital Finance Australia Ltd, the respondent, worth $60 million, which later increased to over $167 million. After various defaults, the joint venture collapsed.  Thereafter, Pentridge Village went into liquidation in 2014.

In June 2016, the applicants commenced proceedings in the Supreme Court of Victoria against Capital Finance for approximately $840 million, alleging misleading representations and unconscionable conduct. The proceeding was subject of extensive delays, multiple changes of representation, and repeated default of court timetables.

Dismissal Application

In April 2023, Capital Finance sought dismissal of the proceeding for want of prosecution.  Capital Finance highlighted five separate periods of inordinate and inexcusable delay by the applicants (such as delays in settling pleadings and preparing lay evidence). The excuses offered by the applicants, including COVID disruptions and funding issues, were deemed inadequate. The primary judge agreed that these delays had caused serious prejudice and risked an unfair trial. The primary judge granted the application (see Pentridge Village Pty Ltd (in liq) (recs and mgrs apptd) v Capital Finance Australia Ltd (No 3) [2023] VSC 605), and the proceeding below was dismissed in November 2023.

Court of Appeal Decision

The applicants sought leave to appeal the dismissal, arguing the wrong legal test had been applied, relying on GLJ v Trustees of the Roman Catholic Church for the Diocese of Lismore (2023) 280 CLR 442. They argued that dismissal should only occur if a fair trial was impossible. The Court of Appeal disagreed, confirming the established test: whether the delay creates a substantial risk that a fair trial cannot be had or causes serious prejudice. It also importantly highlighted that modern case management principles, and the Civil Procedure Act 2010 (Vic), require consideration of efficient use of court resources.

Although the Court of Appeal found that the primary judge had erred by not distinguishing between prejudice caused by post-writ delay and prejudice that would have occurred in any event, it conducted its own review. It found further delays including a year to serve the writ, two and a half years to settle pleadings, seven months to make discovery, and over a year to prepare lay evidence.

The Court of Appeal concluded that these delays caused real prejudice, such as lost documents, fading witness memories, and prolonged exposure to an $800 million claim. In weighing up the applicants’ lost opportunity against the prejudice to Capital Finance, and the strain on court resources, leave to appeal was granted but the appeal itself was dismissed.

This judgment reinforces the principle that litigants who delay unreasonably in prosecuting their case risk losing their right to be heard, particularly in complex and high value cases where delay compromises fairness and court efficiency. In the instant case, the right of action had accrued in 2014, proceedings subsequently issued in June 2016 and the application to dismiss, filed April 2023.  The proceeding had thus been on foot for 6.5years and the applicant remained not ready for trial.