Can a claim be renewed when no steps have been taken to serve the defendant? – King & Ors v Gunthorpe & Ors [2018] QSC 1; King & Ors v Gunthorpe & Ors (No 2) [2018] QSC 5

On the written advice of a small financial planning firm, provided in 2005 and 2006, Mr King Snr invested in a number of agribusiness investments totalling $1.2 million, including a $300,000 investment in olive tree "grovelots". Upon the passing of Mr King Snr in 2014, Mr King Snr's son (Mr King) reviewed his parents' financial affairs as executor of the estate. Mr King became concerned that his parents had received questionable advice regarding the agribusiness investments.

Mr King subsequently consulted solicitors in March 2015. As the company associated with the olive tree investment had been placed into administration on 23 April 2009, on 22 April 2015 urgent proceedings were commenced by Mr King as executor of Mr King Snr's estate, Mr King Snr's widow, and the trustee of Mr King Snr's family trust (the plaintiffs) against the defendants (including the financial planning firm and its director) in order to safeguard against the expiry of the limitation period. The claim disclosed a clear cause of action sufficient to resist any strike out application. It was relevant that the financial advice given by the defendants:

• was provided without undertaking any property assessment of Mr and Mrs King Snr's risk profile;
  
  
• failed to provide a suitable investment strategy and gave no explanation as to the risks inherent in the recommended investments; and
  
  
• was wholly inappropriate given the financial circumstances of Mr and Mrs King Snr.
  
  

Rather than serve the proceedings on the defendants, the plaintiffs sought an opinion from a forensic accountant in relation to the advice given to Mr King Snr. The forensic accountant made a number of requests to the plaintiffs' solicitors for further information and material which was needed to finalise his report.

After receiving further documentation in February 2016, a draft report was provided by the plaintiffs' forensic accountant in early March 2016. Following receipt of the draft report, the plaintiffs' solicitor briefed Queens Counsel to provide advice as to the liability of the defendants.

On 22 April 2016, the proceedings filed one year earlier became stale.

On 20 June 2016, Queens Counsel provided his advice as to prospects.

The plaintiffs' solicitor wrote to the Registrar on 6 July 2016 requesting the proceedings be renewed for a period of 12 months. On 15 July 2016, the Registrar renewed the proceedings for a period of 12 months effective from 22 April 2016.

The defendants were served with proceedings in August 2016. The defendants subsequently filed an application to set aside the Registrar's renewal of the proceedings.

The Supreme Court of Queensland (the Court) identified two key factors for consideration:

• Whether the defendants had suffered prejudice. The Court found in this case that the defendants would likely be deprived of a limitation defence, but no additional significant prejudice as the case was predominantly founded in documentary evidence; and
  
  
• Whether the plaintiffs had proceeded expeditiously as required by The Uniform Civil Procedure Rules 1999 (Qld). The Court held that while certain steps may have been taken more quickly, the plaintiffs had proceeded expeditiously, noting the investigations required in order to determine whether the claim was a viable one were by no means straight forward.

The Court accepted that it was appropriate for the plaintiffs to thoroughly investigate the claim and determine the merits of proceeding prior to serving the proceedings on the defendants. The Court noted that service of unmeritorious proceedings may have put the plaintiffs at risk of a substantial costs order. In the circumstances, the Court concluded that there was good reason to renew the claim. The defendants' application was dismissed, though in a concession to the defendants, costs were ultimately determined to be each party's costs "in the cause".

This case underscores that, in the absence of substantial prejudice beyond being deprived of a limitation defence, a defendant must establish that the proceedings became stale through some fault or inaction of the plaintiff.