Buzzle Operations Pty Ltd (In Liquidation) v Breirl

[2008] NSWSC 746

CITATION:

Buzzle Operations Pty Ltd (In Liquidation) v Breirl [2008] NSWSC 746

HEARING DATE(S):

3 March 2008, 5 March 2008

 
JUDGMENT DATE : 

25 July 2008

JURISDICTION:

Common Law

JUDGMENT OF:

Rothman J

DECISION:

1. The Court makes the following orders:

(i) The motions of the defendants, for which notice was given on 2 July 2007 and 16 November 2007, be dismissed;

AND the Court proposes the following orders:

(ii) Pursuant to the Uniform Civil Procedure Rules, the time for service of the statement of claim upon the defendants be extended nunc pro tunc up to and including the date of these orders;

(iii) The service of the statement of claim be deemed to have been effected upon the defendants, and each of them, as at the date of these orders;

(iv) Costs of these proceedings be the defendants’ costs in the cause.

2. The parties have liberty, within 14 days of the publication of these orders and proposed orders, to address, in writing, the issues addressed in proposed orders (ii), (iii) and (iv) above, including the issue of costs.

CATCHWORDS:	PROCEDURE – extension of time for service previously granted ex parte – application by defendants to set aside – English Procedure – principles – relevant factors – broad discretion – balance of interests – extension of time confirmed.
LEGISLATION CITED:	Civil Procedure Act 2005 Corporations Act 2001 (Cth)
CATEGORY:	Procedural and other rulings
CASES CITED:	Apple Computer Australia Pty Ltd v Mekrizas & Ors (2003) 44 ACSR 518 Baly v Barrett [1988] N.I. 369 Battersby v Anglo-American Oil Co Ltd [1945] KB 23 Buzzle Operations Pty Ltd v Breirl and Ors [2007] NSWSC 922 Dagnell v J L Freedman & Co [1993] 1 WLR 388 El Ali v GIO of NSW (1988) 15 NSWLR 303 FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268 Holman v George Elliot & Co Ltd [1944] K.B. 591 Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597 Pell v Hodges [2007] NSWCA 234 Pontin v Wood [1962] 1 QB 594 Ramsay v Madgwicks [1989] V.R. 1 Re Beddoe; Downes v Cottam [1893] 1 Ch 547 Rich v Long [2008] NSWSC 487 Rich v Packer & Ors [2007] NSWSC 1290 Rust v Barnes [1980] 2 NSWLR 726 Savcor Pty Ltd v Cathodic Protection International APS [2005] VSCA 213; (2005) 12 VR 639 Tolcher v Gordon [2005] NSWCA 135; (2005) 53 ACSR 442 Van Leer Australia Pty Ltd v Palace Shipping Kk [1981] HCA 11; (1994) 180 CLR 337 Victa Limited v Johnson (1975) 10 SASR 496 Weston v Publishing and Broadcasting Ltd [2007] NSWSC 1318
PARTIES:	Buzzle Operations Pty Ltd (Plaintiff / Respondent) Steven Breirl and the persons who traded as Arthur Andersen as set out in Annexure A to the Statement of Claim filed 15 May 2006 (First Defendant / Applicant) Arthur Andersen Corporate Finance Pty Ltd (Second Defendant / Applicant) Neil Martin McDermott (Third Defendant / Applicant) Stewart Bright (Fourth Defendant / Applicant)
FILE NUMBER(S):	SC 20177/2006
COUNSEL:	J C Sheahan SC / M A Izzo (Plaintiff / Respondent) J T Gleeson SC / N M Bender (Defendants / Applicants)
SOLICITORS:	Piper Alderman Solicitors (Plaintiff / Respondent) Baker & McKenzie Solicitors (Defendants / Applicants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ROTHMAN J

25 JULY 2008

20177/06 Buzzle Operations Pty Ltd (In Liquidation) v Breirl & Ors

JUDGMENT

1 HIS HONOUR: These proceedings concern procedural matters of some significance to the parties. The proceedings themselves concern allegations by Buzzle Operations Pty Ltd (In Liquidation) (hereinafter “Buzzle”) that Arthur Andersen, a firm of chartered accountants, was liable in damages for certain losses incurred by Buzzle arising from conduct associated with the “merger” of a number of Apple computer resellers. Arthur Andersen is sought to be sued under various entities, including the partners thereof the first named of whom is Mr Steven Breirl. Hereinafter, the defendants will, except to the extent necessary to discriminate between them, be referred to as Arthur Andersen.

2 The Court is currently concerned with two motions, on notice, by Arthur Andersen, the effect of which motions would be to render ineffective such service of the originating statement of claim as has occurred and to require Buzzle to seek leave, once more, to serve the originating process out of time.

3 Essentially, the originating process was not served in a time allowed under the rules. An extension of time was sought and obtained, which extension of time allowed proceedings to continue in circumstances where the proceedings would otherwise have been time-barred. The defendants seek to overturn the effect of the extensions of time already granted and resist any further indulgence.

Factual Background

4 Buzzle was incorporated on 3 July 2000 and was formed for the purpose of acquiring the business of seven resellers of Apple branded products.

5 Prior to the incorporation of Buzzle, one of the entities that Buzzle was to purchase contacted, through its officers or agents, Arthur Andersen in relation to proposals to merge seven businesses (later to become six). This contact was on behalf of all of the “merging” companies. Arthur Andersen was appointed to advise the companies (hereinafter “the Vendor Companies”) and the proposed new entity (Buzzle) which, pursuant to that advice, was to be set up for the purpose of effecting the merger.

6 The details of the contract between the Vendor Companies and/or Buzzle and Arthur Andersen are, at this point, peripheral. It is sufficient for present purposes that Buzzle allege that Arthur Andersen breached its obligations under the contract, which obligations, Buzzle claims, include advice and implementation, competently and diligently, of a structure that was in the interests of Buzzle and the Vendor Companies.

7 On 14 September 2000, according to the Statement of Claim [24], the “Merger Deed” was executed. Buzzle claims that the merger agreement was effected in reliance upon advice and/or a representation that the newly formed merged company could anticipate revenues of $200 million per annum. The effect of the structure, according to the statement of claim, was that the new entity, Buzzle, had a starting financial position “being that it had negative assets [sic] of approximately $6 million.” I assume that “negative assets”, while somewhat of an oxymoron, is used in its common understanding to indicate that liabilities were greater than assets by an amount that would necessarily require, if available, a diminution in equity or the provision of greater equity.

8 On 30 March 2001, a receiver was appointed to Buzzle and Buzzle has remained in liquidation at all relevant times. The liquidator is Andrew Wily. As a consequence, Buzzle relies on the particular responsibilities of the liquidator in the exercise of the discretion reposed in the Court in these applications. That relationship also gave rise to a submission by Arthur Andersen, on the basis of the knowledge gained by Buzzle and Mr Wily in earlier proceedings, the circumstances of which are included in these facts.

9 In proceedings number 5729/2001 in the Equity Division, in the matter of Buzzle Operations Pty Ltd (In Liquidation), the liquidator sought and obtained production from Arthur Andersen (or interests associated with them) of various documents relating to advice, given by Arthur Andersen, and meetings between Arthur Andersen and Buzzle, the Vendor Companies and Apple Computer Australia.

10 The production of documents also included the production of insurance policies of Arthur Andersen, in its various guises, in relation to any advice provided by them to Buzzle and/or the Vendor Companies. It also sought financial models and other information which would be necessary or desirable in assessing the prospects of any proceedings by Buzzle against Arthur Andersen. Those documents were sought, initially, by 7 September 2005.

11 Between late September 2005 and early 2006, Mr Wily also issued examination summonses on a number of witnesses pursuant to the provisions of the then Corporations Act 2001 (Cth), inter alia, for the stated purpose of determining whether Buzzle had a cause of action against Arthur Andersen in relation to its advice (or advices) concerning the establishment of Buzzle and the “merger” of the previous corporate entities.

12 From approximately 2003, monies were available to Buzzle and Mr Wily to conduct the proceedings and, to the extent necessary, to meet any order of the Court or to meet security for costs (Transcript, p 29, line 15 and p 41, lines 20-37).

13 Shortly prior to 15 May 2006, Piper Alderman (the solicitors for Buzzle) advised the liquidator, Mr Wily, that the limitation period was about to expire and that it was, therefore, necessary to file a statement of claim.

14 On 15 May 2006, Buzzle filed the statement of claim in these proceedings in the Supreme Court.

15 On 20 September 2006, Senior Deputy Registrar Flaskas conducted a conference hearing at which only Buzzle appeared. The matter was stood over until 21 March 2007, with liberty to apply on seven days’ notice. The Registrar’s note is that “the statement of claim is yet to be served”.

16 On 15 November 2006, the time permitted by the rules for the service of the statement of claim expired. On 21 March 2007, Senior Deputy Registrar Flaskas conducted another conference hearing at which he noted that “the statement of claim had not yet been served” and extended the time for the plaintiff to serve the statement of claim until Friday 15 June 2007. The matter was stood over until 20 June 2007 with liberty to restore on three days’ notice.

17 On 14 June 2007, Piper Alderman wrote to Baker & McKenzie, now the solicitors on the record for Arthur Andersen (and the solicitors on the record for interests associated with Arthur Andersen during the liquidator examinations), enquiring whether Baker & McKenzie had instructions to accept service. On the evidence before the Court, this was the first time that Buzzle had taken steps to effect service.

18 On 15 June 2007, Ms Stephanie Bronk, a partner in Baker & McKenzie, replied to the letter from Piper Alderman dated 14 June 2007 relating to the acceptance of service. She acknowledged that Baker & McKenzie act for Arthur Andersen Corporate Finance Pty Ltd and Arthur Andersen (in dissolution). The letter confirmed that instructions were taken from one of the administration partners of Arthur Andersen. It made clear that that partner may or may not have authority to instruct Baker & McKenzie to accept service, but at that stage Baker & McKenzie did not have instructions to accept service. The letter invited Piper Alderman to provide a “non-service copy” of the claim to allow the partner in Arthur Andersen to consider his authority.

19 Also on 15 June 2007, there was a series of letters between Piper Alderman and Baker & McKenzie dealing with the service of the statement of claim. Piper Alderman gave notice at or about 12.02pm that service would be effected on that day on Messrs Martin Madden, Stewart Bright and Neil McDermott. The latter two, Mr Bright and Mr McDermott, are the third and fourth defendants in these proceedings.

20 On 15 June 2007, Arthur Andersen Corporate Finance Pty Ltd was served at its registered office. Piper Alderman served Baker & McKenzie, on behalf of Mr McDermott, pursuant to advice from Mr McDermott that he had instructed Baker & McKenzie to accept service on his behalf. Mr Madden was also served and Mr Bright was served care of KordaMentha Pty Ltd. Each letter accompanying the service gave notice of the matter being listed before the Court on 20 June 2007.

21 Baker & McKenzie sought sealed copies of the orders extending the time for service and were provided with same. This occurred on 18 June 2007. On 20 June 2007, Baker & McKenzie informed Piper Alderman that Arthur Andersen Corporate Finance Pty Ltd, Mr McDermott and Mr Madden took issue with the service that had been purportedly effected and that they were intending to apply to the Court by notice of motion to set aside service. The basis of that application is in or to the same effect as the motions with which the Court is now dealing. Further the letter made clear that Baker & McKenzie reserved their clients’ position and their clients would take no step in the proceedings until the question of service had been dealt with.

22 On 20 June 2007, Senior Deputy Registrar Gray, at a further conference hearing, noted that those defendants, who had been purportedly served, intended to challenge the order extending time for service and noted the submission of the first defendant that the statement of claim needed to be served on each of the partners. On the same day, Mr Bright was “served” with a copy of the statement of claim.

23 On 2 July 2007, the first of the notices of motion were filed on behalf of Messrs Madden and McDermot and on behalf of Arthur Andersen Corporate Finance seeking the discharge of the orders extending the time in which service could be effected.

24 On 6 July 2007, Buzzle filed a notice of motion seeking substituted service orders and a further extension of time to serve the statement of claim.

25 On 3 August 2007, Buzzle filed an amended notice of motion.

26 On 20 August 2007, Malpass AsJ heard Buzzle’s amended motion. In so doing, his Honour refused permission to the applicants on the motion of 2 July 2007 to make submissions and heard ex parte the application for an extension of time in which to serve. Arthur Andersen’s notice of motion, dated 2 July 2007, was stood over generally, with liberty to apply for a hearing date, if necessary.

27 On 22 August 2007, Malpass AsJ issued orders granting Buzzle until 22 October 2007 to serve the statement of claim pursuant to prayer 3 of its amended notice of motion and issued reasons therefor.

28 On 10 October 2007, Buzzle moved on notice, filed in Court, seeking orders for substituted service of an amended statement of claim on all defendants by serving Mr Madden either personally or by serving it on Baker & McKenzie. This motion was heard ex parte. The Registrar made the orders sought, subject to an undertaking that Buzzle would pay the costs incurred by Mr Madden in serving the other defendants.

29 On 22 October 2007, Buzzle sent to Baker & McKenzie a copy of the statement of claim and a copy of the amended statement of claim. The amended statement of claim was a document that was unfiled and unverified. The covering letter claimed that this effected service on all of the defendants other than the already-served defendants (Arthur Andersen Corporate Finance Pty Ltd, Messrs McDermott, Madden and Bright).

30 On 16 November 2007, Arthur Andersen (and all interests associated with it) filed a notice of motion seeking the discharge of all of the extension orders and setting aside such service or purported service as had been effected. This is the second of the motions by Arthur Andersen with which the Court is now dealing.

31 There are affidavits from Mr Wily and Ms Bronk, most of the material in which is formal, annexes or exhibits documents, or is material that one would expect. Mr Wily was cross-examined mostly concerning the reasons, if any, for the late service.

32 Arthur Andersen submits that the Court should treat with considerable reservation the evidence of Mr Wily, particularly the evidence relating to whether he could recall being told by his solicitor of the six months’ time-limit associated with the service of the statement of claim. Mr Wily is an experienced litigator and liquidator, yet I accept that he largely left the details of time limits and the like to his solicitors. I also accept that, between he and the litigation funder, there was a confidence in the outcome of the proceedings in terms of judgment of the Court, but a serious and crucial issue relating to whether or not monies would be available to satisfy any damages that may be awarded.

33 The above comment does not mean that there was no doubt in the mind of Mr Wily and/or the funder as to the outcome of proceedings. It means, as one would expect, that, while litigation is never certain, there was a confidence that Arthur Andersen would be held liable and an award of damages would be made. There was real doubt (and may still be) as to whether, assuming a successful outcome to the litigation in terms of the orders issued by the Court, sufficient money would be available from Arthur Andersen (and in particular its insurers) to satisfy damages at a level that would warrant the continuation of the litigation. Nevertheless, it is clear that Mr Wily, in those circumstances, was content to rely on the solicitors to do that which was necessary without his detailed involvement.

34 While counsel for Arthur Andersen deprecate the importance of the issue of recoverability as one which could have had such a significant impact upon the decisions of Mr Wily as to whether or not to serve the proceedings, it seems that these recoverability issues were genuinely significant in the mind of the liquidator. I do not consider that such concerns were unreasonable in circumstances where the liquidator had duties to the creditors not to expend monies in litigation that would not achieve a practical result; where there may be significant limitations on the monies available under insurance policies; and, where other litigation (HIH litigation) against Arthur Andersen interests may have exhausted the insurance resources that would otherwise be available.

35 I make it clear that I do not find against Mr Wily on credit. I considered Mr Wily to be a truthful witness. While there are areas in which it would have been more helpful if he had taken a more active role in the litigation process and/or considered it significant enough to recall, I consider that he genuinely did not recall in circumstances where he was asked and answered in that way (i.e. “I do not recall” or, sometimes, “I am not sure”).

36 Next, I make it clear that I do not consider that there is necessarily an inconsistency between statements made by Mr Wily that the only reason for the delay in the service and processing of the litigation was the doubt about recoverability and the statements made that between July and August 2007 there was a need to investigate the strength of the claim and the likelihood of success. Nor do I consider it unlikely that Mr Wily or Ms Banton would brief senior and junior counsel to advise not only on the liability and damages available in proceedings, but also to advise on the recoverability of any amount.

37 There is clear and unequivocal evidence as to the reason for the delay in the service. The statement of claim was issued, at the time it was issued, because of fears of statute of limitation problems. It was initially not served within time (or at all) because of issues associated with the duties on Mr Wily to ensure that the proceedings, to which the statement of claim would give rise, were more than arguable on liability and damages and would warrant the expenditure necessary for such significant proceedings. Given that Arthur Andersen were in liquidation, there were reasonable and appropriate issues associated with the recoverability of any damages, if awarded.

38 It was not unreasonable to have regard to other litigation against Arthur Andersen interests in that regard, and in particular the HIH litigation. Further, it seems, on the evidence of Mr Wily and otherwise available on the documentation, that the ultimate decision to serve was a balancing of the commercial decision on the likelihood of success; the likelihood of receiving substantial damages that would warrant the litigation; the likelihood of recovering those damages; and the risk that the litigation would lapse if service was not effected. Once Mr Wily balanced those considerations and the decision was taken to effect service, there was the obvious practical difficulty associated with serving all of the partners of Arthur Andersen in the short time then available.

39 Before dealing with the principles, it is necessary to note that no cause of action pleaded by Buzzle in the statement of claim can have a limitation period in excess of six years. It would seem, at the latest, that limitation period would be a period of six years from 30 March 2001 and perhaps as early as 3 July 2000. In reality, the losses sustained are likely to date from sometime between 3 July 2000 and 30 March 2001. In Apple Computer Australia Pty Ltd v Mekrizas & Ors (2003) 44 ACSR 518 at [76], the date suggested upon which Buzzle was experiencing financial difficulties was 19 September 2000.

40 On that basis, I accept, for the purpose of the interlocutory proceedings, that the limitation periods are likely to have expired, for any damages in tort, some time in the second-half of 2006 and, in relation to the breaches of contract at an even earlier date, given that the losses sustained were the result of alleged breaches of contract that must have occurred earlier than the losses and possibly, in some cases, earlier than incorporation.

41 One other matter that may be relevant, and on which a finding should be made, is that the defendants were notified during the course of the liquidator examinations in or about September 2005 that Buzzle (and/or Mr Wily, its liquidator) were conducting examinations and seeking material for the purpose of determining whether Buzzle had a cause of action against Arthur Andersen in contract and/or for misleading and/or deceptive conduct. Further, as of June 2007, the solicitors for Arthur Andersen were on notice that service was sought to be effected upon its clients.

The Principles

42 Having outlined the chronology of events and come to the conclusions of fact that are necessary in the exercise of the discretion now conferred on the Court, it is necessary to outline the principles associated with the exercise of discretion.

43 Two fundamental issues need to be noted in dealing with the authorities on the exercise of the discretion of the Court on these issues. First, on and from 15 August 2005, the provisions of ss 56, 57, 58 and 59 of the Civil Procedure Act 2005 affect the exercise of a discretion to make any order or direction for the management of proceedings before the Court and, to the extent relevant, inform the exercise of the discretion of the Court in the matters now before it.

44 Second, while agreeing with Young CJ in Eq that the “English Procedure” is now too firmly entrenched to be altered, there are difficulties associated with the proposition that a plaintiff be granted an extension of time upon which it then relies and later having that extension of time set aside, rendering service pursuant to it ineffectual. Nevertheless, other than the operation of some kind of fictional service on solicitors, if any, known to act for particular defendants sought to be served, there seems little practical alternative to the “English Procedure”.

45 The reference to the “English Procedure” is a reference to a procedure, which permits the defendants to be heard, on the question of an extension of time for service, at a time when they have appeared or conditionally appeared and their status before the Court is unquestioned: Rich v Long [2008] NSWSC 487 (21 May 2008), per Young CJ in Eq at [13]. His Honour, the Chief Judge in Equity, referred to and cited with approval the consideration he described as fundamental arising from the application of the Procedure and deriving from Dagnell v J L Freedman & Co [1993] 1 WLR 388 in which the House of Lords said:

“The fundamental consideration is that a defendant has a right to be served with proceedings (if at all) within the statutory period of limitation plus the period of validity of a writ.” (Per Brown-Wilkinson LJ at 396.)

46 However, the “fundamental consideration” derives, it seems, from the proposition that a person (including, in this context, any potential party to litigation) is entitled at the conclusion of the limitation period and the time during which a writ can be validly served, to conduct itself on the basis that no litigation will be forthcoming. This “peace of mind” principle is qualified in a number of respects.

47 There are statutory provisions by which limitation periods may be extended in some cases. The rules, which allow for the extension of the time in which to serve any originating process validly, would be of no effect if the “fundamental consideration” was conclusive. The reference to the “fundamental consideration” by Brown-Wilkinson LJ in Dagnell must be seen in the context of those proceedings. The trustee plaintiffs in those proceedings declined to serve the originating process which, in the UK, could be validly served within 12 months, and applied for a number of extensions of time on the basis that the trustees had made a Beddoe application safeguarding their position as to costs. (A Beddoe application is a reference to Re Beddoe; Downes v Cottam [1893] 1 Ch 547 under which a trustee seeks and obtains approval for the bringing of litigation and thereby ensuring that the trustee would be indemnified against such costs.) Beddoe was a judgment that required the trustees to be personally liable for the costs in circumstances where they brought proceedings, the running of which cost nearly a quarter of the trust fund, and the court held that the trustee had acted imprudently.

48 The principles applicable to the extension of the time in which originating process (in the UK a writ) could be extended were considered at length by the House of Lords in Dagnell. The House of Lords referred to Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597 and Baly v Barrett [1988] N.I. 369, amongst other judgments, with approval. They recited the statement by Lord Brandon of Oakbrook in Baly v Barrett being the summary of the principles that apply to such an extension:

“(1) … The power to extend the validity of a writ should only be exercised for good reason.


(2) The question whether good reason exists in any particular case depends on all of the circumstances of that case. Difficulty in effecting service of the writ may well constitute good reason, but it is not the only matter which is capable of doing so.


(3) The balance of hardship between the parties can be a relevant matter to take into account in the exercise of the discretion.



(4) The discretion is that of the judge and his exercise of it should not be interfered with by an appellate court except on special grounds the nature of which is well established.

In the Waddon Case the House corrected an apparent misunderstanding of principle (3) above by emphasising that the question of the balance of hardship between the parties can only arise if matters amounting to good reason for extension, or at least capable of so amounting, have first been established. In that case the balance of hardship between the parties may be a relevant factor in the exercise of the court’s discretion. But, if no matters amounting to good reason for extension, or capable of so amounting, have been established, the effect of principle (1) is that there is no room for the exercise of discretion at all, and the question of the balance of hardship between the parties does not therefore arise.” (Per Lord Brandon of Oakbrook in Baly v Barrett , supra, at 416-417, cited with approval by Brown-Wilkinson LJ in Dagnell , supra at 393.)

49 Further, the House of Lords in Dagnell expressed the view that, while that which must be found to exist is a good reason for granting the extension of the writ, such good reason would generally be impossible to show if there were no good reason for the failure to serve the writ during the period of its validity. They also express the view that collateral proceedings will rarely be good reason. The latter comment was made in the context of the Beddoe application protecting the personal liability of the trustee for taking the litigation: see Dagnell at 394.B and 395.G.

50 Nevertheless, the discretion is a broad one and may be exercised for any good reason: Weston v Publishing and Broadcasting Ltd [2007] NSWSC 1318 (per Barrett J); Rich v Packer & Ors [2007] NSWSC 1290 (per Barrett J); Buzzle Operations Pty Ltd v Breirl and Ors [2007] NSWSC 922 (per Malpass AsJ); and Rich v Long, supra.

51 The High Court in FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268 has commented on the operation of powers for extension of time. The Court (Wilson J, with whom Brennan, Deane, Dawson and Gaudron JJ agreed), analysing the extension of time powers in the rules of the Supreme Court of New South Wales, said:

“The plain meaning of these words is very wide. The Court may extend ‘any time’ fixed by ‘any ... order’ and may do so as well after as before the time expires and even though the application to extend is not made until after the time has expired. As Baggallay L.J. said in Carter of the analogous English rule, it gives ‘very full discretionary power; indeed, I can hardly imagine a more extended discretion’ (at p 120). It is a remedial provision which confers on a court a broad power to relieve against injustice. The discretion so conferred is not readily to be limited by judicial fiat. The fact that it manifestly is a power to be exercised with caution and, in the case of conditional orders, with due regard to the public policy centred in the finality of litigation does not warrant an arbitrary limitation of the power itself, not expressed in the words of the rule, so as to deny its capacity to apply to circumstances such as those which are to be found in the present case. It would be wrong to so read the rule as to deny to a court power to prevent injustice in circumstances where the party subject to a conditional order ought to be excused from non-compliance.” (At 283-284.)

52 The general view relating to extensions of time was also expressed by Kirby P (as he then was) in El Ali v GIO of NSW (1988) 15 NSWLR 303. At 309 his Honour said:

“Finality of judgments is important. But so is justice in the particular case. The District Court Rules , Pt 3, r 2, does not provide a right to an extension of time. It enlivens the exercise of a judicial discretion. It is a discretion which may be exercised both before and after the expiry of the time in question. It is a discretion to be exercised wisely, for reason and, where necessary, upon conditions. In the present case, the discretionary elements which led Phelan DCJ to his view have not been challenged. It is thus conceded that, if there is power, this was a proper case in which to exercise it. By the standards of like extensions in this Court, where short time intervals are involved, there is nothing surprising in what Phelan DCJ did. Of course, these observations do not provide a source of power if the legislation fails to afford it or excludes it. But because legislation is to be given a sensible and not an artificial or narrow construction, the construction of the Arbitration (Civil Actions) Act 1983 to envisage the incorporation of the general powers for extension does no obvious offence to the achievement of finality which is an obvious purpose of s 17 and s 18 of that Act. It is finality not rigidly achieved but secured in the context of rules which provide, in particular cases, for an extension of time.” (Per Kirby P at 309.)

53 The Court of Appeal of New South Wales in El Ali, supra, applied the general approach in FIA General Insurance, supra, and, after citing it, said:

“The effect of this decision is that the court has power to extend time after the expiry of the time specified in the conditional order of dismissal notwithstanding that once that time had expired the action had already been, at least notionally, ‘dismissed’. As Lord Denning MR said in R v Bloomsbury and Marylebone County Court; Ex parte Villerwest Ltd [1976] 1 WLR 362 at 366; [1976] 1 All ER 897 at 900: ‘... the courts (have) always power to bring it to life again, by extending the time.’

Likewise, in my opinion, the District Court has power under its rule to re-open the matter by extending time notwithstanding that the award has been deemed a judgment of the court.

In FAI the court was dealing with the extension of time fixed by an order. In this case the court is concerned with the District Court Rules … which enables an extension of any time fixed by the rules or by any judgment or order. Obviously the principle applies equally to time limits fixed by rules. There is no reason for limiting or reading down the clear meaning of the words and thus to deny the court a power to remedy cases of injustice.” (at 317 per Clarke JA.)

54 A single Justice of the High Court of Australia had occasion to consider the precise issue relating to whether an extension of time ought be granted to serve what would otherwise be a “stale” writ: see Van Leer Australia Pty Ltd v Palace Shipping Kk [1981] HCA 11; (1994) 180 CLR 337. In that case, Stephen J considered Battersby v Anglo-American Oil Co Ltd [1945] KB 23, which was foundational to the judgment of the House of Lords in Dagnell, supra. In discussing the view taken by the Court of Appeal in Battersby and contrasting it with the judgment in Holman v George Elliot & Co Ltd [1944] K.B. 591, Stephen J said:

“It has been in some Commonwealth jurisdictions that the more liberal view adopted in Holman’s Case , emphasizing the width of the Court’s discretionary power, has found favour. In Holman the Court of Appeal stressed the wide discretionary power conferred by the equivalent of O. 60, r. 6 and made the point that since the relevant limitation period had been satisfied by issue of the writ within time, it us only service out of time under the Rules of Court that was in issue. The Commonwealth cases which follow Holman do not give to the expiration of a limitation period quite the same great significance as does most English authority; they look rather to the general justice of the case, paying regard to all the circumstances, including not only any limitation statute but also the relative hardships which grant or refusal of renewal would impose upon the parties. They also recognize that it is non-compliance with rules of court, not disregard of a statute of limitations, that has brought an applicant to Court seeking an exercise of discretion in his favour.” (Per Stephen J at 342.)

55 Van Leer, supra, then discusses the approach in a number of the Australian jurisdictions, together with the approach in Canada and New Zealand. His Honour then recites the facts of the case and notes the extensive delay before, even informally, the defendant was made aware of proceedings against it.

56 In Van Leer, at the time the ex parte order was obtained to extend the writ for six months, some two years had passed since the delivery of the steel in question and almost a year since both issue of the writ and the expiration of the twelve months’ limitation period had expired, during which time the plaintiff had done nothing directly to inform the defendant of the damaged condition of the steel which was the subject of the suit. His Honour held that reasonable efforts had not been made to serve the defendant. His Honour then discussed whether there was some other good reason for the renewal of the writ and said that:

“In considering whether there did exist such ‘other good reason’, I do not, for the reasons already stated, regard the expiration of the limitation period of twelve months as of itself casting upon the plaintiff that heavy onus which the English decisions would impose. However I do take account of the long delay in serving Palace Shipping. It bears at least three aspects: first, it involved a very considerable period, secondly, it was quite deliberate, there being no question of mishap or oversight; thirdly, no notice was given to the defendant in this case, although the giving of such notice may sometimes mitigate the prejudice which a defendant may otherwise suffer through delay in actual service of process.


These are all substantial considerations. To be weighed against them is the plaintiff’s effective loss of its rights against Palace Shipping if the renewal of the writ in November 1979 is to be set aside. But this seriously prejudicial consequence will be present whenever renewal of a writ is in question after a limitation period has run its course; and in the present case the prejudice is self-inflicted in the sense that Palace Shipping did nothing to induce delay in service or to encourage a belief that the claim against it might be settled without recourse to litigation.” ( Van Leer , supra, per Stephen J at 350-351.)

57 Ultimately, an extension of time in which to serve originating process will be granted only for good reason, which would not usually include awaiting the outcome of other proceedings: Pell v Hodges [2007] NSWCA 234; Ramsay v Madgwicks [1989] V.R. 1.

58 In Pell v Hodges, supra, the Court of Appeal in New South Wales made clear that the discretion to grant an extension of time is “unfettered”. The defendant did not have a prima facie right to retain the benefit of the expiry of the limitation period, but neither did the plaintiff have a prima facie right to an extension because of the legitimate interest in the prosecution of the case. It is necessary to balance the interests of both the plaintiff and of the defendant. In doing so, the time period during which the limitation period ran was a relevant factor in assessing delay and prejudice. At [41], Handley AJA (with whom Tobias JA and, relevantly, Basten JA agreed), after discussing Tolcher v Gordon [2005] NSWCA 135; (2005) 53 ACSR 442, said:

“[41] In that case the plaintiff decided to proceed if litigation funding could be obtained, and filed the statement of claim shortly before the expiration of the limitation period. Funding was obtained two months later, and attempts at service were then made without success because the defendant was not at his country property.

[42] The present case is essentially different. The defendant was still in practice and there would be no difficulties in effecting service. The plaintiff’s problem was that she had not decided whether to proceed and if so on what basis. In these circumstances, in my opinion, the case is a limitation case and not a want of prosecution case within the reasoning in Tolcher v Gordon (above). Essentially the plaintiff wanted more time within which to decide whether she would proceed with her case.

[43] The limitation period of three years is intended to provide a reasonable time for a plaintiff who has suffered personal injuries to seek and obtain appropriate medical and legal advice and to decide whether legal proceedings are justified. It was not suggested that her injuries contributed to the delay.

[44] In these circumstances delay within the limitation period is also relevant to the exercise of the discretion to extend time for service of proceedings. A plaintiff who issues proceedings just before the limitation period and only then has the merits of the case investigated should not have any expectation of obtaining an extension of time to enable investigations to continue. There should also be no expectation that time spent in this way after the statement of claim has been issued, especially after it has become stale, will be accepted as an adequate explanation for such delays. Her case is not improved if investigations were carried out with reasonable diligence, but proved negative.

[45] Proceedings for professional negligence differ from the general run of personal injury cases as they affect the defendant personally and his or her professional reputation. One may reasonably infer that considerations such as this prompted the reduction in the time for service of the statement of claim for cases in the Professional Negligence List and the warnings in the Practice Direction.”

59 The principles to be applied in Australia were also discussed by the Full Court of the Supreme Court of Victoria in Savcor Pty Ltd v Cathodic Protection International APS [2005] VSCA 213; (2005) 12 VR 639. In that judgment, Gillard AJA (with whom Ormiston and Buchanan JJA agreed) summarised the authorities as establishing the following general propositions:

“(i) It is the duty of the plaintiff to serve the writ promptly.
(ii) There must be a good reason for the grant of an extension and if the application is made after the period has expired the reason must be one of substance.
(iii) It is not possible and indeed is unwise to attempt to define the circumstances which amount to a good reason. It is trite observation but not very helpful that whether or not it is a good reason must depend upon all the circumstances of the particular case. As a general proposition difficulties serving the writ within the 12 months’ period will usually establish a good reason. By way of example where the defendant is evading service, his whereabouts are unknown or some other difficulty is experienced in serving the defendant.
(iv) By reference to decided cases it is possible to compile a list of the circumstances which constitute a good reason. The cases also provide examples where the circumstances have not been a good reason to extend the period of validity. For example, it is not a good reason that negotiations are continuing between the parties, or legal aid has not been granted and the plaintiff is waiting for the grant. There are cases which say that the latter proposition is not a good reason. But in Waddon v. Whitecroft-Scovill Ltd it was said delay caused by the authorities to grant aid may be a good reason. Other examples which have not found favour are difficulty tracing witnesses or obtaining evidence.
(v) The Australian cases differ from the English cases as to the effect of a limitation defence arising after the issue of a wait but before the application to extend the validity of the writ. The difference is traced by Stephen J in Van Leek Australia Pty Ltd v. Palace Shipping K.K. , supra at pp.245-247. His Honour preferred the approach of the Australian and Canadian courts. He quoted with approval what Bray, C.J. said in Victa Ltd v. Johnson . Bray, C.J. stated that there was no rule that a defendant acquired an absolute right to immunity when a writ issued within the limitation period is not served and in the meantime the period expires. The English cases had stated a test that if the limitation period had expired it was only in exceptional circumstances that the writ would be renewed. This is not the Australian position.” ([41] at 651-652.)

60 The discussion of the authorities on this question would not be complete without a further reference to the judgment of the Court of Appeal in New South Wales in Tolcher. In that judgment Hodgson JA agreed with the orders and reasons of Tobias JA. In the course of his reasons to that effect, Hodgson JA said:

“[3] Although the three-year period is a limit for the commencement of such proceedings, not service of the proceedings, in my opinion an important aspect of the public policy behind the limitation period is that potential defendants should be made aware of claims against them within a reasonable time; so that in my opinion, delay in service of such proceedings, in contravention of the rules, is particularly serious if it occurs after the expiration of the three-year limitation period. A liquidator who does not commence proceedings until just before expiry of the limitation period should in my opinion be especially diligent in pursuing prompt service of the proceedings.


[4] In those circumstances, even the first extension of time granted on 1 August 2003 required justification by a reasonable explanation of why it was required. I do not doubt that this extension was justified in this case, but I make this point because it shows that the unexplained delay between 1 September 2003 and 13 January 2004 is a very serious matter.


[5] It also makes all the more unsatisfactory the absence of any explanation for this delay: the solicitor’s ignorance of Part18 rule 9 is not an explanation for the delay in seeking a further extension of time for service, and in pursuing service after 1 September 2003.


[6] When an application is made to the Court for relief from the consequences of delay, an explanation should always be given as to why the delay occurred, even if it is only that the matter was overlooked. In the absence of an explanation, such an application would ordinarily be dismissed. Alternatively, if the Court considers that the fault is with a legal adviser of the party and that the party itself is not at fault and should not be penalised, it may be appropriate to require an affidavit from the legal adviser and to order that he or she pay the costs involved in any delay arising from the need to provide that affidavit.” (Per Hodgson JA.)

61 Justice Tobias in Tolcher, discussed the authorities at length and carefully examined the principles to be applied. Most of the authorities to which his Honour made reference are, on the relevant issue, outlined above. His Honour also made reference to the judgment of Bray CJ in Victa Limited v Johnson (1975) 10 SASR 496 at 502 as confirming the establishment of a tendency of late to relax rigid time limits in circumstances where there is no undue prejudice or injustice to the other parties by that relaxation: see [53] of Tolcher.

62 In the course of his reasons for judgment in Tolcher, Tobias JA considers that it is unnecessary to show “exceptional circumstances” where an extension of time would deprive the opponent of a defence under the statute. Nevertheless, Tobias JA considered that such a criterion was a relevant factor in performing the balancing that was necessary in the exercise of the discretion.

63 In discussing Pontin v Wood [1962] 1 QB 594, his Honour Justice Tobias cited with approval the comments by Holroyd Pearce LJ (at 609). The judgment of Holroyd Pearce LJ distinguished between an extension of time limit, even in the English Practice, that would take away a defence, from an extension of time that did no more than allow the normal assistance one would give to the regularisation of proceedings otherwise commenced within time: see Tolcher at [61] and [62]. His Honour then cited with approval a judgment of Master Allen (as he then was) in Rust v Barnes [1980] 2 NSWLR 726 which determined that the time for the expiry of the limitation period was not a time that ought be taken into consideration in the determination of the “delay” in the service of an originating process. Nevertheless, it confirms the view that defendants are entitled to know, with some degree of certainty, at the expiry of some defined time, whether or not they are being pursued in the Courts.

64 In Tolcher, supra, Tobias JA concluded:

“[73] In the present case the claimants seek an extension of time with respect to both the service of the SLC as well as the operation of Part 18 rule 9. The authorities to which I have referred and, in particular, that of Master Allen in Rust , support the proposition that the failure to serve the SLC within one month from the date on which it was filed as required by Part 5 rule 5(1)(c) of the Rules was only an irregularity within the meaning of s 159(1)(a) of the District Court Act 1973. Consequently, that irregularity did not have the effect that the opponent acquired a defence under s 588FF(3)(a) of the Act. To adopt and adapt what Holroyd Pearce LJ said in Pontin (at 609), the contention of the opponent that he would be deprived of an existing right if an extension of time was granted, would be to argue in a circle since he would only have an existing right if one presupposed that the court will not use its power under Part 3 rule 2 to extend the time for service.


…


[76] I can see no reason in principle why the approach adopted by Master Allen in Rust should not apply to any application for extension of time under Part 3 rule 2 irrespective of the rule in respect of which the extension is sought. The reasoning of Holroyd Pearce LJ in Pontin is applicable in both cases with which the present proceedings are concerned: the opponent would only acquire a defence under the relevant limitation statute (s 588FF(3)(a)) if the court refused to accede to the application by the claimants to exercise its discretion under Part 3 rule 2 to extend the time limits referred to in the two rules under consideration.


[77] As this is not a case where the breach in respect of which a cure is sought is one which truly involves the deprivation of a right to plead the statute of limitations which has in fact accrued, but rather a case where that right only accrues if and when the court refuses to accede to the application by the claimants to extend the time limits referred to, it follows that the principle or general rule referred to in Heaven had no application to the exercise of the primary judge's discretion.


[78] Finally, on this aspect of the matter, although it was contended that the primary judge was merely giving determinative weight to the fact that, if he exercised his discretion in favour of the claimants, the opponent would be deprived of the benefit of the limitation period, in my opinion he went significantly further. His finding that the opponent had a prima facie right to retain the benefit of the expiry of the limitation period, as a consequence whereof he should be reluctant to exercise the discretion in the claimants' favour, indicates that he intended to approach the exercise of his discretion from a position of reluctance to favour the claimants. In my opinion, that approach amounted to an unjustified fetter upon what was an otherwise unfettered discretion. It constituted the application of a wrong principle and was thus demonstrative of error in the exercise of his discretion.


…


[84] I would also infer that at that time both the liquidator and Mr Pignone had reason to believe that, firstly, a litigation funding agreement would be entered into within a reasonable time of the filing of the SLC and, secondly and more importantly, that there would be no particular difficulty in serving process upon the opponent. Although unaware of Part 18 rule 9 of the Rules, subject to obtaining an extension of the time for service pursuant to Part 5 rule 5(1)(c) which Mr Pignone had successfully achieved on 1 August 2003, the claimants had until 1 December 2003 within which to serve the opponent and ensure that a defence was filed or otherwise default judgment entered.


…


[91] In limitation period cases, the relevant time limit begins to run from the accrual of the cause of action. In want of prosecution cases, on the other hand, the relevant time period begins to run from the time proceedings are instituted. This difference reflects the period of delay that is relevant to the exercise of the court’s discretion in each case. In the case of the former, the court is being asked to exercise its discretion to extend the time within which a plaintiff is entitled to initiate proceedings. Thus, it is the delay in instituting the proceedings that is relevant. Such delay is to be measured from the time at which the plaintiff could first have instituted proceedings (that is, the time of the accrual of the cause of action). In the case of the latter, by contrast, the court is being asked to exercise its discretion to strike out proceedings on the grounds of inaction in prosecuting proceedings already commenced within the limitation period. Thus it is the delay in prosecuting the proceedings that is relevant. This delay is to be measured from the time at which the action was instituted (that is, the time of the filing of the statement of claim).


[92] McHugh J particularly recognised this distinction in Brisbane South Regional Health Authority . His Honour had earlier in his judgment (at 552) set out the four rationales of limitation periods (see [33] above). The second, third and fourth rationales reflect the fact that the defendant's potential liability expired at the end of the limitation period so that (at 555)


‘to extend the period may result in the imposition of a new legal liability on the defendant.’


[93] However, as his Honour then observed,


‘[i]f the action had been brought within time, it would have been irrelevant that, by reason of the delay in commencing the action, Dr Chang [a witness for the defendant] might have had little independent recollection of his conversation with the applicant and that the defendant might have had difficulty in fairly defending itself.’


[94] In other words, the law permits proceedings to be instituted at any time within the limitation period. If at that time the delay between the time the cause of action arose and the filing of the initiating process makes it difficult for the defendant to obtain a fair trial, then that is irrelevant. This is because that difficulty is a product of the defendant having a potential liability until the limitation period expires in respect of which it may, if it sees fit, take precautions such as seeking out evidence when the possibility of a claim becomes known.


[95] On the other hand, once the limitation period expires without proceedings being instituted, the defendant becomes freed of that potential liability. It then becomes, as it were, a whole new ball game. If a new potential liability is to be imposed upon the defendant by an extension of time in which to commence proceedings, the central issue revolves around the capacity of the defendant then to obtain a fair trial. The answer to this question logically requires a consideration of the effect of the delay from the time the cause of action arose. As McHugh J points out at 554-5, to refer in such a case to only the marginal prejudice created by the delay would downplay and overlook the second, third and fourth rationales for the imposition of a rigid time limit in the first place. But those rationales are satisfied once the proceedings are commenced within the relevant time limit.


[96] Of course, the present case is neither a limitation period case nor a want of prosecution case, but a case involving a service of process rule and a case management rule. What then is the position in such a case? In my view, the position is the same as that in want of prosecution matters. In the case of both Part 5 rule 5(1)(c) and Part 18 rule 9, time begins to run from the filing of the statement of claim. The court in the present case is being asked to extend these time limits in order that the action, already commenced within the relevant limitation period, may be prosecuted. Thus, as in the case of want of prosecution matters, it is only the delay in prosecuting the action that is relevant to the exercise of the court’s discretion. That delay is to be measured from the time the action was commenced.


…


[106] I can accept for present purposes that it was the decision of the liquidator to delay the institution of the action until such time as litigation funding to enable the proceedings to be properly prosecuted had been put in place. As I have already observed ([31]) above), that may explain at least part of the delay between March/April 2001 when the opponent and his son were examined and 2 May 2003 when the SLC was filed. The primary judge described this decision as a commercial one: this is in part true, but I would also designate it as a responsible decision.


…


[108] Furthermore, it seems to me that it would have been irresponsible for the SLC to have been served upon the opponent before that litigation funding was in place and which provided for any costs order in favour of the opponent to be met. Otherwise once the opponent had been served, he would have commenced to incur legal costs in preparation of a defence to the allegations contained in the SLC which would not have been recoverable from Senafield (as it had no assets), although such costs would have been recoverable against the liquidator personally but in circumstances where there were no assets of the company from which he could be reimbursed.”

65 It seems, on the authorities, that there is some difference as to the principle to be applied in calculating the delay and the necessary prejudice on the defendants occasioned by the delay, in particular during the period before the filing of the originating process.

66 The principles adumbrated by the Full Court of the Victorian Supreme Court in Savcor, supra, relevantly summarise the principles.

67 Nevertheless, it is, ultimately, an exercise of a broad discretion, fettered by the purposes of the Civil Procedure Act 2005 and the balancing of injustice to both plaintiff and defendant. In that regard, the purpose adumbrated by Hodgson JA in Tolcher, supra, and by the Court in a number of other judgments, is that the rule requiring service within a period of six months is to make the defendants aware of the proceedings and there is always a need to explain delay that has been occasioned.

68 The Court will also adopt the approach, in these proceedings, of disregarding the earlier orders for extension of time. In that respect, the Court in these proceedings does not sit on appeal from the earlier judgments made, as they were, ex parte. Rather it addresses the issues, with the benefit of submissions from the defendants, as if it were dealing with the matter afresh and bearing in mind the passage of time that included, essentially, October 2007.

Conclusions

69 I take into account the following relevant factors:

(a) A statement of claim was instituted within the limitation period (except irrelevantly to the extent otherwise conceded), and, but for the alleged operation of orders already made to extend time, could not have been validly served and would now be taken to have been dismissed;

(b) Unless the extension of time is confirmed (or not quashed), fresh proceedings cannot be instituted because of the limitation period expiration. The consequent loss by the claimants of their cause of action would be a hardship;

(c) Attempts at service of the statement of claim did not first occur until 15 June 2007, some thirteen months after the filing of the statement of claim;

(d) There was funding for the litigation, as early as 2003, subject to conditions relating to advice on the prospects of success being favourable and subject to the decision as to whether the proceedings would be worthwhile in terms of the recoverability of any award of damages from defendants who, while insured, were in liquidation;

(e) The defendants were put on notice in 2005 that proceedings were contemplated. This is a two-edged sword in that, notice having been received, the defendants should have then taken steps to ensure material was otherwise available should proceedings commence. However, by November 2006, subject to extensions of time, the defendants were entitled to take the view that the notice previously received had not been acted upon;

(f) Proceedings are based on a cause of action for negligent advice from a professional for which the limitation period, unlike personal injury cases, has not been truncated and there is significant time during which the alleged claim can be finalised. On the other hand, because the cause of action relies upon professional advice, it is likely that the evidence in the proceedings will largely be related to matters in which there are written advices, documentary evidence and notes of conferences and/or meetings. No evidence of special prejudice to the defendants has been adduced in that regard;

(g) No evidence has been adduced by the solicitors on the record for Buzzle that limitation periods for service of the statement of claim were not advised to the liquidator and I draw the inference that such advice was given. I also find that, as has been made clear, the liquidator left, largely, those matters of details to the solicitors;

(h) I find that the reason for the delay was only very belatedly the difficulty in serving the 141 named first defendants. The reason for the delay was essentially the need for satisfaction of the liquidator (and the litigation funder) of the recoverability of any damages that may be awarded;

(i) While the recoverability issue is, from time-to-time, described as a desire to await collateral litigation (the HIH litigation), in truth it was, at all times, an issue relating to satisfaction of the liquidator (and the litigation funder) of recoverability of costs and damages. The costs alone in proceedings of this kind would be significant. That issue did not concern (cf Dagnell , supra) protection of the liquidator or the litigation funder, it concerned protection of the resources, if any, available to creditors, which itself is a matter of significant public interest;

(j) The liquidator is not entirely blameless (and may be wholly to blame) for the delay in the service of the statement of claim. While I accept, above, the public interest in ensuring that the creditors’ resources are not dissipated and the defendants’ costs are not incurred, each of those considerations could have been (and should have been) accommodated by the service of a statement of claim (including substituted service) and a process which would minimise the incurring of costs by Buzzle and/or Arthur Andersen, pending the satisfactory determination of the recoverability issues;

(k) The statement of claim was filed within time and notice (formal or informal) was effected within six-and-a-half years of the appointment of a receiver (the culmination of the losses) and within seven years of the formation of Buzzle (as a result of the advice of Arthur Andersen);

(l) Ultimately, the most significant issue is the limitation issue. On the part of Arthur Andersen, if the extension were granted, the statement of claim (otherwise within time) would not lapse and proceedings would continue against them. From Buzzle’s perspective, the statement of claim, otherwise within time, would lapse.

70 These considerations represent a fine balance. The proceedings and alleged losses are not insignificant. The refusal of the application of the defendants would result in them being burdened by proceedings that would require them to incur significant costs. At the same time, if the allegations of Buzzle be correct, then Buzzle and the Vendor Companies and principals behind it or them, have suffered great loss and/or damage by the negligence of Arthur Andersen.

71 Ultimately, while I do not consider the liquidator blameless, I consider, on a very fine balance, that, given the nature of the proceedings, the delay in the notification of the defendants of the existence of the proceedings does not outweigh the injustice to Buzzle if the proceedings were allowed to lapse.

72 It follows from the foregoing that the defendants’ motions should be dismissed and the state of the proceedings should be clarified. In relation to the latter matters, leave is granted for the parties to address the Court within 14 days of the issue of the orders.

73 The Court makes the following orders:

(i) The motions of the defendants, for which notice was given on 2 July 2007 and 16 November 2007, be dismissed;

AND the Court proposes the following orders:

(ii) Pursuant to the Uniform Civil Procedure Rules, the time for service of the statement of claim upon the defendants be extended nunc pro tunc up to and including the date of these orders;

(iii) The service of the statement of claim be deemed to have been effected upon the defendants, and each of them, as at the date of these orders;

(iv) Costs of these proceedings be the defendants’ costs in the cause.

74 The parties have liberty, within 14 days of the publication of these orders and proposed orders, to address, in writing, the issues addressed in proposed orders (ii), (iii) and (iv) above, including the issue of costs.

**********