B & J Engineering Pty Ltd v Daroczy, Joseph

notice of discontinuance - what constitutes "notice in

writing"

Words and Phrases

- "notice in writing"

Companies Ordinance 1962 (ACT) s.230(3)

ACT Supreme Court Rules - 0.30, rr.1, 2, 3; 0.67, r.4

B 6i J ENGINEERING PTY LTD (in

liquidation) v JOSEF

DAROCZY and HILTONIA INVESTMENTS PTY LTD

No. ACT G.36 of 1984

HILTONIA INVESTMENTS PTY LTD trading as ACY CONSOLIDATED

MACHINERY v JOSEF DAROCZY and B SI J ENGINEERING PTY LTD

No. ACT G.38 of 1984

Coram :	Davies, Sheppard and Everett JJ
Canberra

19 December 1984

IN THE FEDERAL COURT OF AUSTRALIA

)

AUSTRALIAN CAPITAL TERRITORY	Nos. ACT G.36 and G.38
DISTRICT REGISTRY	of 1984

GENERAL DIVISION

ON APPEAL F R O M THE SUPREME COURT

OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN : B & J ENGINEERING F"

LTD

(in liquidation)

Appellant

AND

JOSEF DAROCZY

and

HILTONIA INVESTMENTS PTY

Respondents

(No. ACT G.36 of 1984)

ON APPEAL F R O M THE SUPREME COURT

OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN : HILTONIA

INVESTMENTS PTY

trading as

CONSOLIDATED MACHINERY

Appellant

m	ENGINEERING PTY LTD
JOSEF DAROCZY and B & J
(in liquidation)

Respondents

(No. ACT G.38 of 1984)

O R D E R

JUDGES HAKING ORDER	Davies, Sheppard and Ekerett JJ
DATE OF ORDER	19 December 1984
WERE MADE	Canberra

1. The appeals are dismissed.

2. In each appeal the appellant

shall pay the

costs of the

respondent, Josef Daroczy, with

the intent that such respondent

recover only one set of costs.

IN THE FEDERAL COURT OF AUSTRALIA )

AUSTRALIAN CAPITAL TERRITORY

)

Nos. ACT G.36 and G.38

REGISTRY	DISTRICT	1	of 1984
1
GENERAL DIVISION	1

ON APPEAL FROM THE SUPREME COURT

OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN	:	B & J ENGINEERING PTY LTD
(in liquidation)

Appellant

AND	HILTONIA IN"FS!t"TS PTY
JOSEF DAROCZY and
LTD

Respondents

(No. ACT G.36 of 1984)

ON APPEAL FROM THE SUPREME COURT

OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN : HILTONIA INVESTME!NTS F'IY

-	LTD trading as
CONSOLIDATED MACHINERY

Appellant

AND

JOSEF DAROCZY and B & J

ENGINEERING FTY LTD

(in liquidation)

Respondents

(No. ACT G.38 of 1984)

REASONS FOR JUM;HENT

Coram : Davies, Sheppard and Everett JJ

19 December 1984

QAVIES and

JJ : On 17 July 1979, Writ No.1293

1979,

in which Josef

Daroczy was described as the plaintiff and B & J

Engineering Pty Limited (in liquidation) and ACY Consolidated Machinery (a firm) were described as defendants, was issued out of the Supreme Court of the Australian Capital Territory. "here

were two defects

in the writ, the first being that B & J

Engineering Pty Limited was a company in the course of liquidation and leave to commence proceedings against it had not been obtained in accordance with s.230(3) of the Companies

Ordinance 1962 (ACT) .

The second was that the writ was addressed

only to B & J Engineering Pty	Limited and not	to the other
defendant.

On 5 November 1979, the

solicitor for

the plaintiff

received a memorandum from hie secretary which advised that a notice of discontinuance against both defendants be given and

that a fresh action

be commenced.

"he solicitor endorsed the

memorandum with the

words "OK go ahead1 " and, against the

recommendation that there be a notice

of discontinuance against

both defendants, there was written

in the handwriting of the

secretary "File but dont serve". Whether this note was placed on the memorandum before it was seen by the solicitor or afterwards is not known, but we take the note to mean that the notice should

be filed in the Supreme

Court but not served.

On 3 December

1979, a notice

that "the plaintiff wholly

discontinues this action

against the defendants" was filed in the

Supreme Court.

The notice was signed by the solicitor for the

plaintiff.

The notice

was

not served on the defendants.

3 .

would conclude

from the whole of the evidence before the Court

that that

notice of discontinuance was filed with the authority

of the solicitor for the plaintiff and

we would so conclude

notwithstanding his affidavit and oral

evidence to the contrary.

In January 1980, the plaintiff's solicitor drafted

originating summons and supporting

affidavit seeking leave to

commence and continue proceedings

by Josef Daroczy against B & J

Engineering Pty Limited. The proposed writ annexed to the

affidavit showed Josef Daroczy as plaintiff and B & J hgineering

Pty Limited (in liquidation) and ACY Consolidated Machinery (a firm) as defendants. On 18 April 1980. an order was made on the originating summons giving leave to commence that proceeding.

However, for

reasons which have never

been explained, new

proceedings

were

not commenced but the Writ No.1293 was

subsequently served on the two defendants.

On 17 September 1980,

B & J Engineering Pty Limited entered an appearance.

On 20

December 1982,

Hiltonia Investments Pty

Limited trading as ACY

Consolidated Machinery entered an appearance. Defences

were

delivered and the action continued until, on 15 March 1984, as a

result of a search of the Court file, the defendants became aware

of the notice of discontinuance filed on

3 December 1979.

Proceedings were

then taken by the defendants seeking, in

substance, a declaration that the action

had been discontinued in

1979 and

that all

steps taken thereafter

the action were

invalid, and by the plaintiff seeking to uplift the notice of discontinuance on the ground that it was a nullity and to correct

the defects in the

writ which we have already mentioned.

On 14 June 1984, Mr

Justice Kelly made orders

as sought by

the plaintiff.

The only issue which is raised in this appeal is

whether Action 1293

of 1979 was discontinued by the filing of the

notice of discontinuance or by the step subsequently taken by the plaintiff's solicitor in obtaining leave to institute a fresh action.

Order 30, rules 1, 2 and 3, of the Rules of the Supreme Court of the Australian Capital Territory read :

"l.(l) The plaintiff may, where

there

are

pleadings, at

any time before the receipt

of the

defendant's defence, or, after

the

receipt

thereof, before taking any other proceeding in the action (save any interlocutory application), and, where there are no pleadings, the plaintiff may,

within fifteen days after

appearance, by notice in

writing, wholly discontinue his action against all

or any of the defendants, or withdraw any part or parts of his alleged cause of complaint, and thereupon he shall pay the defendant's costs of the action, or, If the action is not wholly

discontinued, the costs occasioned

the matter

so withdraw.

Such costs shall be taxed, and such

discontinuance or withdrawal

(as the case may be)

shall not be a defence to any subsequent action.

( 2 ) Save as

in this rule otherwise provided, it

shall not be competent for

the

plaintiff

withdraw

the record or discontinue

the

action

without leave of the Court or Judge, but the Court

or Judge may, before, or at or after the hearing

or trial, upon such terms as to costs and as to any other action and otherwise as are just, order the action to be discontinued, or any part of the alleged cause of complaint to be struck out.

(3) The Court or Judge may, in like manner, and with the like discretion as to terms, upon the application of a defendant, order the whole or any part of his alleged grounds of defence or counter-claim to be withdrawn or struck out, but it shall not be competent to a defendant to

withdraw his defence,	or any part thereof without
such leave.

2. A

cause may be discontinued at any time upon

filing a consent

in writing signed by all parties.

3. A defendant may enter judgment for the costs

the action

if it

is wholly

discontinued against

him, or for the costs

occasioned by the matter

withdrawn if the

action is not

wholly

discontinued,

in case such respective costs are

not paid within four days

after taxation."

Rule l(1) requires notice

in writing. It

was held by the

learned Judge

that this rule

required notice in writing to the

defendants.

His Honour said, inter alia,

*I...

The method provided for discontinuance, notice in writing, is to be contrasted with the method for taking other steps in an action which involve filing documents in the Court. See, for example,

Order 14, r.11

and Order 56, r.2. Notice of a

step in an action or of any kind

is not given to

the Court. Where necessary, documents are filed in Court but notice is given to the other party

parties to an action by service, delivery or other means. In my view, therefore, the method of discontinuance provided for by Order 30, r.1 is notice in writing given to a defendant or

defendants. The notice need not be in any special form. Spincer v Watts, (1889) 23 Q.B.D. 350.

.....

be construed as meaning 'notice in writing to the

... I think the words 'notice in writing' ought to

defendant or defendants'."

In the United Kingdom, during most

of the

nineteenth

century, it was necessary to obtain the leave of the Court to discontinue. Chitty's Archbold's Practice of the Court of

Queen's Bench, Vol.11,

12th ed

(published 1866) describes the

practice, at pp.1483-6, as follows,

"If the plaintiff find

that he has misconceived his

action, or that for some defect in the pleadings, or other reason, he will not be able to maintain it, he may obtain a rule for leave to discontinue.

...

This rule may be had at any time, as of course,

after the commencement of the action, and before trial or writ of inquiry or demurrer argued and allowed; but not during a rule with a stay of proceedings. ...

.....

The terms upon which a party is allowed

discontinue are in the discretion of the Court. In general, the payment of costs is imposed. ...

As soon as you have obtained the side-bar rule, or

rule absolute, take it to one of the Masters, and ~~~~~ qet an appointment on it to tax ~costs. serve^ a COPV of the rule and appointment on the defendant's attorney or asent, and attend at the time appointed, and the Master will tax the costs.

...

Where plaintiff has leave to discontinue upon payment of costs, they should be paid forthwith; for, until paid, the action is not discontinued or stayed, and the plaintiff may be compelled to proceed therein as usual. ...

When

the

plaintiff has obtained a

rule to

discontinue, the defendant may by motion, or summons and order, compel the plaintiff to enter the judgment of discontinuance, and carry in the judgment roll; but if the plaintiff had leave to discontinue upon payment of costs, they must first

be paid.

. . .

A subsequent change to the rules permitted

discontinuance

by notice.

The

13th edition

of Chitty's King's

Bench Forms

(1902) sets out the then rule, 0.XXVI r.1, as follows, at p.160 :

"The plaintiff

may, at any time before receipt of

the defendant's defence, or after the receipt thereof before taking any other proceeding in the action (save any interlocutory application), by notice in writinq, wholly discontinue his action against all or any of the defendants or withdraw

any part or parts of his alleged cause of

complaint, and thereupon he shall pay such defendant's costs of the action, or, if the action be not wholly discontinued, the costs occasioned by the matter so withdrawn. Such costs shall be taxed, and such discontinuance or withdrawal, as the case may be, shall not be a defence to any Subsequent action. Save as in this rule otherwise provided, It shall not be competent for the plaintiff to withdraw the record or discontinue the action without leave of the Court or a Judge,

1 .

but the Court or a Judge may before, or at, or after the hearing or trial, upon such terms as to costs, and as to any other action, and otherwise,

as may be just, order

the

action

discontinued, or any

part of the alleged cause of

complaint to be struck out. The Court or a Judge

may, in like manner, and with the

like discretion

as to terms, upon the application of a defendant,

order the whole or any part of his alleged grounds

of defence or counter-claim to be withdrawn or

struck out, but it shall not be competent to a

defendant to withdraw his defence, or any part

thereof, without such leave."

It will

be seen that the new rule

dispensed with leave of

the Court in

the circumstances specified, but required notice in

writing to be given and also

provided for the payment by the

plaintiff of the defendant's taxed costs.

Clearly, the notice intended was not notice to the Court but notice to the defendant, for leave of the Court was dispensed with and notice to the parties was substituted. The service of the notice was intended to inform the defendant of the discontinuance of the action and also to inform the defendant of the defendant's entitlement to costs and to enter judgment in respect of those costs if they be not paid.

The form of notice set out in Appendix B No.19 to the

Rules

of Court, was a notice "To the above-named defendant, and to Mr. 2 . . his solicitor or agent". See Chitty's King's Bench Forms,

13th ed, p.160.

The new rule was always so understood. The 6th

edition of Daniell's Chancery Practice (1882), said, at page 567,

"A notice of discontinuance or withdrawal must be

served on the other parties to the action in the

manner before described, and a defendant may sign

judgment for the costs of the action if it is

wholly discontinued, or for the costs occasioned

by the matter withdrawn if the action be not

wholly discontinued."

That view

of the rules has

not since been questioned.

Williams Supreme Court Practice, Vol.1, 2nd ed, states, at p.1404

"Notice of Discontinuance.

If the plaintiff

desires to discontinue or to withdraw part of his claim in a case where he can do so without leave he must serve on the defendant a notice of discontinuance. For form of notice, see Appendix B, No.19. This form should be followed, but no particular form is necessary. A notice by the plaintiff's solicitors that they were instructed to proceed no further with the action has been held sufficient (The Pommerania (1879), 4 P.D.

see Spincer v. Watts (1889), 23 Q.B.D. 350 p.352; at v. Fearby, C19233 l K.B. at p.503; C19223 All E.R. Rep.790; The Salvbia, C19103 P.25); while a letter stating that the plaintiff would discontinue and would send a notice to that effect was held insufficient in

195;

v. Dickinson (1890). 63 L.T.766.

Although the Rule is silent on the

question,

notice of discontinuance must be served on the defendant. However, it need not be served

personally.

See Metropolitan Permanent Buildinq

Societv v. McClwont, C19833 Qd.R.160."

In the Pommerania Case (1879) 4 PD 195, the solicitors for

the plaintiff wrote to the solicitors for the defendant, "We are instructed to proceed no further with this action. We presume you do not require a formal order dismissing it." Sir Robert Phillimore held that letter to be a sufficient notice of discontinuance. As can be perceived, that notice was not a

notice to

the Court or even in the form of

a document suitable

for filing in Court. It

was a letter from one party to another.

In Splncer v Watts

(1889) 23 QBD 350, the plaintiff's solicitors

had written to the defendant Watts informing him that they did not propose to prosecute the action any further against him as

far as the plaintiff's claim was concerned.

It was held that

that letter was a good notice of discontinuance.

At page 353,

Lopes LJ said,

"I think that it amounted to such a notice

writing

was

contemplated

by the rule."

Lindley LJ also

accepted the letter to be a notice of discontinuance.

We are therefore

satisfied that

the notice in writing

which Order 30 r.l(l) speaks is a notice in writing by the plaintiff to the defendant and that an action may not be

discontinued	unless	such	notice	is given	within	the	time
specified.

It was submitted by Mr J.C. Campbell, who appeared for the appellant, that such notice was given in the present instance by

being filed in the	Registry.	Mr Campbell relied upon Order 67
r.4 which reads :

"4.(1) Where no appearance has been

entered for a

party, or

where a party or

his solicitor (as the

case may be), has omitted to give an address for service as required by Orders 5 and 13, all writs, notices, pleadings, orders, summonses, warrants,

and other documents, proceedings, and

written

communications in respect of which personal service is not requisite may be served by filing them.

( 2 ) Any document

so filed shall be posted up in

the Registrar's office and shall remain so posted

up for

fourteen days."

However, as is stated both in The Annual Practice 1956 (UK), at p.1534, and in Williams Supreme Court Practice, Vo1.2, 2nd ed, at p.2499, this rule applies only to a case where it is incumbent

upon a

party

to enter an appearance

otherwise to give an

address for service. The present was not such a case, for the writ had not been served. Earlier forms of the rule are stated

10.

in Chitty's Archbold's Practice, Vol.1, 12th ed (1866), as

fOllOW5, at p.168 :

"Where a party

sue8 or defends by an attorney, and

the attorney has

neglected to make an entry of his

name and place of business, a8 directed by r.165, H.1853, 'the fixing up of any notice or the copy of any pleadings, notice, summons, order, rule, or other proceeding for such attorney in the Master's office shall be deemed a sufficient notice.' And

gee r.166, H.1853,

ante,

165, as to sticking up

proceedings in the Master's office, where a party sues or defends in person, and has neglected to leave his address at the Master's office, as

directed by that rule.

By r.162, H.T.1853,

'where

the residence

of a defendant I s unknown, rules,

notices, and other proceedings may be stuck up in the office, but not without previous leave of the Court or a judge'."

It necessarily fOllOW5 that no notice in writing was given

to the defendants within the time specified

Order 30 r.l(l)

and therefore that the action was not discontinued.

Mr Campbell submitted that, by his

action in seeking

approval of the Court to the commencement of fresh proceedings against the defendants, the plaintiff had lost the right to allege that the action had not been discontinued. But if the action was not discontinued by the filing of the notice of discontinuance, it was not discontinued by the action of the plaintiff's solicitor in proceeding as though that notice had been valid and effective. No ground of estoppel arises for the

defendants

did not

know of the notice

discontinuance until

March 1984 and were

not misled by it.

In these circumstances, the appeals should

be dismissed.

In each appeal, the appellant shall pay the

costs of the

11.

respondent Josef Daroczy

with the

Intent that

such respondent

recover only one

set of coats.

ATJSTFALIBN rAPITAL TERRITORY	'1	Mqs.	FCT	G .	and I;.	? R
DISTRICT REGISTRY	1	'7f 1 ? R 4

2 .

their view that "notice i n writinu" in hrder 30. rule 1 means notlce to the defendant.. The authorltles and t ex t s t t n whlch

thev refer make that rlear.

In a.

case

to whlch

the ri.iIe

applies

there can be

ef€ertlve d1scontlnllance nf

the

proceedinas unless notice be

qlven the de€Pndant.

For my part. however I I wolild prefer to rest my

conclusion that, the

appeals sholild

be dismissed lipon a

- _

r\lffer?nt ?round. In my

opinlon, olrder T U ,

rule l( 1

I of the

Rules has no appllcation

t o the rlrcumstances

qf a case such

+S thls.

That 1 s because the writ had not been served at the

t.ime the notice of discontlnuance was flled. In

my opinlon

thls case

is noverned, not

by Order -0 , riile 1111 but by

Order 30.

rule L ( 2 r .

Thete roulil be no dlscontlnuance

without the leave

n€ the I'aurt.

Mv reasons €t>r thls

n e w stem frrm a cnnslderat1on of =I

number

of the

provisions of the

r l ~ l r s , Lncludln?

those

l-lrder

i n , rule 1.

The

wnrds ,-f rhat r1 t1e make lt ,-I,?ar that:

in a case where there are

no plea'ilnqs and

no appparance

h a s

been entered. there can be no discontinuance Without Leave. The relevant p a r t of the rule provldes that, where thete are

no pleadinqs, the

plalntlff

may.

wlthln

15 days

After

appearance.

discontinue.

such

a case

there

IS no

entitlement to discontlnue as of course

-Ither

before

3ppearance or after the explratlm of l5 days from the entry

of the appearance.

3 .

That	part of the rule is not relevant to the present

case because there was

a statement of claim.

It was indorsed

on the writ as provided for in Order

4, rule 5.

Counsel for

the appellants relied on the seeminqly wide words

of Order

30, rule l(1). "The plaintiff may, where there are pleadlnss,

at any time before the receipt of the defendant's defence ...

wholly

discontinue

his

action".

Here

the

notlce

discontlnuance was filed before the	films of any defence by
the defendants.

The question is whether those words should

be construed

widely as is contended for by

counsel.

first

observation

is that it

not

necessarv

Indorse

statement of claim on

a writ.

plalntiff may do so: but

Order 2 4 ,

rule 1 permlts the alternatlve course of filinq

statement: of claim within

14 days after appearance. It would

seem odd if Order

30, rule l(1) applled before appearance

a case where the statement of claim was Indorsed on the writ

or accompanied

it, but had no such application in

a case

where the plaintiff chose not to plead at the

time he issued

his writ. The application or not of the rule would depend on

which of the elections provided for in the rule a solicitor

or party made. Furthermore. there can be no discontinuance

as of course before appearance In actions

for libel. slander,

malicious prosecution. false imprlsonment, seduction or breach of promise of marrlaqe, or In actlons in which fraud

is alleged. In such cases

a statement of claim may not

indorsed on

the writ nor delivered with It; see Order

rule 5.

The plaintiff must await appearance by the defendant

before delivering hls statement of claim. There

will thus be

no pleadings until after appearance. Yet the construction

sought to be put upon Order

30, rule

1 by the appellants

would permit discontinuance as of course before appearance In

cases

involvins

all

other

causes

action

provided

statement of claim was indorsed on

or accompanled the writ.

I can think of no reason why this distinction should exlst.

The consequences

of the construction contended for by

counsel for the appellants are thus arbitrary and capricious.

One ought not give the rule that construction unless the

words of the rule plainly requlre

It.

It is to be noted that the words In the rule do not

refer to the appearance, but to the defence. Order

13 of the

rules provides for appearances: Order

25 for defences. Rule

thereof provides

that where

defendant has entered an

appearance, he shall deliver his defence wlthin

14 davs from

the time limited €or

appearance, or from the delivery of the

statement of

claim, whichever is the later.

The assumption

upon which

the rule proceeds is

that the defendant may not

file	a defence unless he has first entered an appearance.

Once he has entered it,

he has a period of 14 days after the

time llmited for his appearance expires or the service of the

statement of claim in which to flle his defence. He is not

obliged to file his defence at the same time

as he enters an

appearance,

although

may

so.

The rules

thus

contemplate an interval between appearance and defence	of 14
days.

I return to the words used in Order 30,

rule l(1).

there are pleadings, there may be discontinuance as of course

at any

time

before

the

defendant's

defence.

The

rule

concentrates on that event

as the event after which there can

be	no discontinuance as of course unless in the excepted

cases specified in the rule.

The

rule thus contemplates

discontinuance as

of course at least between appearance and

defence. Does it contemplate more than that?

The

fact that there may be

dlscontinuance as

course

before

appearance

actions

where

there

are

pleadings stronqly suggests that it does not. Such	a	view
gives the rule a cohesive and sensible operation. It	will

apply in

the same way whether there have been pleadings

not.

cases where a writ has not been served or has been

served but

no appearance has been entered. a plaintlff will

always be able to seek the leave

of the Court to dlscontlnue

the action pursuant to Order

30, rule l ( 2 ) .

In my opinion

the rule needs to be understood

as though the words "after

appearance and" were inserted after the words "at any time"

so that

reads.

"The plaintiff

may,

where

there

are

pleadings,

any

time

after

appearance

and

before

the

receipt of the defendant's defence

... wholly dlscontlnue his

actlon

. . .

At first sight the conclusion

I have reached may seem

cumbersome. But Order

9 .

rule 1 provides that

writ of

summons shall not be in force

for more than

12 months from

its date. That is subject to the power of the Court to renew

it in situations provided for in the rule. A plaintiff who

has not served a writ, either because he 1s dlsincllned to do

so or cannot find the defendant, may thus simply allow it

lapse.

Belng

unserved,

the

defendant

wlll

not

act in

relatlon to it and it has no effect durlng its llfe.

That leaves cases where

a defendant has been served, but

has not appeared. Such a case may occaslon a plaintiff some

procedural difficulty

if he wishes to bring the proceedlngs

to an end without qolnq to the expense of an appllcation for

leave to dlscontinue. There may be

case for an amendment

to the rule to provide

for leave to discontinue as of course

at any time after the service

of a wrlt.

rather than after

appearance, provided notlce be glven the defendant. If that

were to be done.

I would think notice would need to be served

on the defendant In the same manner as the wrlt Itself was or

could be served on him. It would seem undesirable that the

procedure

provided

for

Order

6 7 , rule 4 should be

available in such

a case.

That enables servxe, where no

C '

appearance has been entered, by the filing of the document

and the posting up of it In the Registry for 14 days.

In the result I agree that the appeals should be dismissed with costs.

f ocertffy i.lu^t t!,ls acd th?

prezedlng

pages are a t r u e copy of t h e reasons for

judgment herem of The HQnQurable

Mr Justice Sheppard.

. /p:

[1984] FCA 459

12 Dec 1984