MBD Management Pty Ltd v Butcher

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FEDERAL COURT OF AUSTRALIA

MBD Management Pty Ltd v Butcher [2010] FCA 1071

Citation: MBD Management Pty Ltd v Butcher [2010] FCA 1071
Parties: MBD MANAGEMENT PTY LTD ATF MBD MANAGEMENT TRUST (ACN 084 458 159) v MARK BUTCHER AND THE PARTNERS OF ERNST & YOUNG AS LISTED IN SCHEDULE A TO THE FURTHER AMENDED APPLICATION, ANDERSEN PRIVATE WEALTH MANAGEMENT PTY LTD (ACN 091 034 007), STEVEN BREIRL AND THE PERSONS WHO TRADED AS ARTHUR ANDERSEN AS SET OUT IN SCHEDULE B TO THE FURTHER AMENDED APPLICATION and DEL MORRISON
File number: NSD 1114 of 2009
Judge: EDMONDS J
Date of judgment: 1 October 2010
Catchwords:

PRACTICE & PROCEDURE – O 4 rr 11 – 13 Federal Court Rules (Cth) (‘the Rules’) – requirement that the originating process be served not less than five days before the first hearing date – whether the Court should exercise its discretion to regularise short service where the respondents have not identified any relevant prejudice.

Held: Pursuant to O 1 r 8 of the Rules, and in accordance with the nature and purpose of O 4 rr 11 – 13, the requirement that the originating process be served not less than five days before the first hearing date, be dispensed with.

Legislation: Federal Court of Australia Act 1976 (Cth) ss 35A(1)(h), 51(1)
Federal Court Rules (Cth) O 4 rr 11 – 13
Supreme Court Rules 1970 (NSW) Pt 5 r 4A(3)
Cases cited:

Re BHP Trading Asia Ltd; BHP Materials Trading Pty Ltd trading as BHP International Group and John Lysaght (Australia) Ltd v Oceaname Shipping Ltd [1991] FCA 438 considered
CDJ v VAJ (1998) 197 CLR 172 cited
Howey & Co Pty Ltd v Creative Projects International Pty Ltd [1973] 2 NSWLR 898 considered
JC Techforce Pty Ltd v Pearce (1996) 138 ALR 522 applied
Protec Pacific Pty Ltd v Steuler Industriewerke GmbH [2007] VSC 93 applied
Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 cited
Robinson v Kuwait Liaison Office (1997) 145 ALR 68 applied

Pearce DC & Geddes RS, Statutory Interpretation in Australia (6th ed, LexisNexis Butterworths, 2006)  
Date of hearing: 15 and 16 July 2010
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 98
Counsel for the Applicant: Mr JC Sheahan SC with  Mr S Balafoutis
Solicitor for the Applicant: Piper Alderman
Counsel for the First Respondent: Mr RI Harper SC
Solicitor for the First Respondent: HWL Ebsworths Lawyers
Solicitor for the Second Respondent: No appearance
Counsel for the Third Respondent: Mr N Bender
Solicitor for the Third Respondent: Baker & McKenzie
Counsel for the Fourth Respondent: Mr DR Meltz
Solicitor for the Fourth Respondent: Thynne & Macartney

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1114 of 2009
BETWEEN:

MBD MANAGEMENT PTY LTD ATF MBD MANAGEMENT TRUST (ACN 084 458 159)
Applicant
AND:

MARK BUTCHER AND THE PARTNERS OF ERNST & YOUNG AS LISTED IN SCHEDULE A TO THE FURTHER AMENDED APPLICATION
First Respondent

ANDERSEN PRIVATE WEALTH…

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Details
Case
[2010] FCA 1071
Decision Date

CaseChat Overview and Summary

In the case of MBD Management Pty Ltd v Butcher, the parties were engaged in a legal dispute over the timing of service of originating process under the Federal Court Rules. The plaintiff, MBD Management Pty Ltd, sought an order under Order 4 Rules 12 and 13 to alter the first directions date to accommodate the late service of amended documents. The court had to determine whether the respondents would be prejudiced by the alteration of the directions date. The Federal Court was tasked with interpreting the relevant rules and assessing the impact of the late service on the respondents' ability to prepare for the hearing.

The legal issues before the court involved the interpretation of Order 4 Rules 12 and 13 of the Federal Court Rules, and whether these rules allowed for the alteration of the first directions date in the absence of prejudice to the respondents. The court also had to consider whether the respondents had suffered any prejudice from the short notice of the amended documents and if the alteration of the directions date would remedy any such prejudice. The court examined the principles developed by judicial decisions and compared them to the specific rules governing the service of originating process in the Federal Court.

The court found that the rules did not compel the plaintiff to serve the originating process within a particular time, and that the Federal Court intended proceedings to be controlled from commencement. The court noted the scarcity of written judgments concerning applications under Order 4 Rules 12 and 13, supporting the plaintiff's interpretation that these rules allow for the quick and inexpensive alteration of first directions dates. The court also observed that the respondents had not presented any evidence of prejudice arising from the short time for service, and that any potential prejudice was remedied by the directions made on the first directions date.

The court ultimately granted the plaintiff's application to alter the first directions date to 21 April 2010, finding that the respondents would not be prejudiced by such an order. The court emphasised that the respondents had sufficient time to engage lawyers and that the only direction made on the first directions date did not prejudice the respondents. The court concluded that the alteration of the directions date would not affect the validity of the proceedings, and that the respondents had a substantial period of time to consider the originating process.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

What is important for present purposes is that Pt 5 r 4A was not designed to compel the plaintiff to serve the originating process within a particular time. That function was performed by Pt 7 r 7 which has, it may be assumed deliberately, no analogue in the Rules. The likely explanation is that proceedings in the Federal Court were intended to be conducted on a different model to any of the state supreme courts – proceedings were intended to be controlled by the Federal Court from commencement.(c) Principles developed by judicial decisions There are very few reported or even unreported judgments of applications made under O 4 r 12 – 13 or the NSW Supreme Court equivalent. The paucity of written judgments supports MBD’s contention that O 4 rr 12 – 13 contain a mechanism for the quick and cheap alteration of first directions dates. It is inconsistent with such a rule for the Court to produce a written judgment recording its decision to alter a first directions date. MBD has been able to locate one written judgment where the Supreme Court equivalent of O 4 r 13 was considered. In Howey & Co Pty Ltd v Creative Projects International Pty Ltd [1973] 2 NSWLR 898, Mahoney J considered whether a summons had been served five days before the date of the appointment for hearing. Mahoney J decided that the summons had been served four days before the appointment for hearing. On that basis, Mahoney J altered the appointment for hearing to a date three weeks later and authorised the solicitor to make a corresponding alteration in a copy of the summons for service. The case was reported because of the interpretation of the words ‘not less than five days before’. However, for the purposes of the present proceedings, it is noteworthy how perfunctorily Mahoney J dealt with the application to alter the hearing date. His Honour did not consider any reason that the plaintiff had for serving the summons late; his Honour appeared to alter the first directions date as a matter of course. Once again, this is consistent with MBD’s interpretation of the Rules. None of the cases upon which the respondents rely (with the exception of Re BHP Trading Asia which has been already considered above) involve O 4 rr 12 – 13 or the NSW Supreme Court Rules equivalent. Most of the cases upon which the respondents rely involve court rules of the type set out in [50] above. That is, rules which provide that an originating process is not valid for service after a period of six months or one year. Typically, in those cases, the plaintiff has failed to serve the originating process within the prescribed time and then applies for a ‘renewal’ of the originating process. As observed by Morling J in Re BHP Trading Asia (see [51] above), those rules should not be equated with O 4 rr 11 – 13. With respect, Morling J was clearly right for at least two reasons. First, the text of O 4 rr 11 – 13 is entirely different from the rules which provide that an originating process is not valid for service after a period of six months or one year. O 4 rr 11 – 13 do not state that the originating process is invalid for service if service is not carried out in accordance with those rules. Indeed, s 51 of the Federal Court Act provides that no proceedings in the Court are invalidated by an irregularity, unless the Court is of the opinion that substantial injustice has been caused by the irregularity and that the injustice cannot be remedied by an order of the Court.

Ratio Decidendi

Legal Principle Established

I agree with MBD’s submission that the evidence demonstrates that the respondents would not be prejudiced by such an order:(a)There is no doubt that Ernst & Young, Mr Madden and Ms Morrison all had sufficient time to engage lawyers to appear on their behalf. Ernst & Young, Mr Madden and Ms Morrison were all represented by lawyers on the first directions date on 24 March 2010. APWM, which may be an inactive company, was not represented and has still not entered an appearance;(b)the only direction made on the first directions date was that the applicant file and serve any Further Amended Application and Further Amended Statement of Claim by 31 March 2010. None of the legal representatives of the respondents objected to those orders at that time. It is difficult to see what prejudice was caused by those orders;(c)the respondents have not adduced any relevant evidence that they have suffered prejudice arising from the short time for service. Had there been any such prejudice, Ernst & Young and Mr Madden would have led such evidence in support of their motions. In the absence of such evidence, the inference is that no relevant prejudice has been suffered.In their written submissions, the respondents suggest that it is ‘possible’ that MBD’s causes of action may have become time barred after the commencement of the proceedings in October 2009. None of the respondents have suggested any cogent basis for this possibility. In any event, such a possibility is not relevant to an application for abridgement of time for service. Time stopped in relation to any limitation period relevant to any cause of action upon filing of the Application. The proceedings remain valid. Abridgement or otherwise of time for service does not affect the validity of the Application; and(d)any prejudice suffered arising out of the short service of the Amended Documents was remedied by the directions made on 24 March 2010. Those directions adjourned the matter until 21 April 2010 without requiring the respondents to take any further step. The respondents were thereby granted a substantial period of time to consider the originating process.Order for alteration of the first directions date to 21 April 2010 As an alternative to an order pursuant to O 4 r 11, MBD seeks an order pursuant to O 4 rr 12 or 13 to alter the first directions date to 21 April 2010. In accordance with the principles set out above, the principal consideration is whether the respondents were prejudiced by receiving insufficient time prior to 24 March 2010 to prepare for the directions hearing. For the reasons set out in [78] above, the respondents were not prejudiced by the short notice of the originating process. However, if they were, it would be appropriate to alter the first directions date to 21 April 2010. It is to be noted that on 24 March 2010, Pipers informed the Court of the failure to serve the originating process and initially requested an alteration of the first directions date. The following exchange occurred between Pipers and the Court:‘[Pipers]:We’re here today because service occurred. . .within the five day period before the first hearing date. We’re seeking – the plaintiffs are seeking an order today that the first hearing date be altered for one week to next Wednesday or whatever suits your Honour – 31 March.His Honour: So the only order that you’re seeking this morning is that the matter be stood over till next Wednesday?[Pipers]:That’s correct.’