Needham v May

[2004] VSC 227

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL LIST

No. 2076 of 2003

F5606

NANCY J. NEEDHAM AND OTHERS

Plaintiffs

v

ROGER T. MAY

- and-

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.

Defendant

Third Party

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JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATE OF HEARING:	25 June 2004
DATE OF JUDGMENT:	2 July 2004
CASE MAY BE CITED AS:	Needham v May
MEDIUM NEUTRAL CITATION:	[2004] VSC 227

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Practice and procedure – third party notice – service out of Australia – whether third party necessary and proper party – whether leave should be granted nunc pro tunc – service set aside.
R. 7.01(1), 7.07(3).

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APPEARANCES:	Counsel	Solicitors
For the Defendant	Ms My Anh Tran	Herbert Geer & Rundle
For the Third Party	Mr David Bailey	Coadys

HIS HONOUR:

1. In this proceeding eight plaintiffs seek enforcement against the defendant, Roger Thomas May, of a final judgment given on 25 June 2003 in their favour in a circuit court of the Fifteenth Judicial Circuit in and for Palm Beach County in the State of Florida in the United States of America.  The amount of the judgment is US$16,532,997 together with US$4,286,751.76 interest.

1. In his defence filed on 23 January 2004, Mr May says that the judgment was made without jurisdiction, that it was made in breach of the rules of natural justice and that its enforcement by this Court would offend public policy.

1. In further defence to the claim of the plaintiffs, Mr May raises a set off.  It seems that, in the Florida proceeding, the plaintiffs sued not only Mr May but also a company, Advanced Communications Technologies Inc ("ADVC"), and one Jack Halperin.  Mr May was the chief executive officer of ADVC and Mr Halperin its corporate counsel.  Mr May claims an entitlement to set off against the plaintiffs' claims in this Court the amount of consideration received by them from ADVC and Mr Halperin upon settlement of their claims against those parties.  By order made on 30 April 2004, I granted leave to Mr May to file a third party notice against ADVC by 10 May.  This was done on 3 May and the process was served in the United States upon ADVC on 19 May 2004.  ADVC objects to the jurisdiction of this Court.

1. In the statement of claim annexed to the third party notice Mr May alleges against ADVC that it was under an obligation to indemnify him against any liability incurred by him in the course of performance of his role as a director and chief executive officer of ADVC. This right of indemnity is said to arise pursuant to the general law in Florida as well as pursuant to a provision of the articles of incorporation of ADVC. An alternative claim for contribution against ADVC is brought pursuant to s. 23B of the Wrongs Act 1958 and/or under Florida law. It is said that since the acts alleged against Mr May as giving rise to liability to the plaintiffs were performed by him on behalf of ADVC and with the knowledge and concurrence of the board of directors, these acts were in fact the acts of ADVC. Accordingly, the plaintiffs might have sued ADVC for their loss which was the same loss as that incurred by them as a consequence of Mr May's wrongful acts. I express no view as to the prospects of success of their third party claims.

1. By summons filed on 18 June 2004, ADVC seeks an order pursuant to Rules 7.05 and 8.09 setting aside the third party notice or its service.

1. The third party notice contains an endorsement pursuant to Rule 7.02(1) identifying paragraph (l) of Rule 7.01 as the basis for service out of the jurisdiction.  This paragraph provides for service out of Australia where:

"(l)the proceeding is properly brought against a person duly served within or out of Victoria and another person out of Australia is a necessary or proper party to the proceeding."

The endorsement then states that the proceeding has been properly brought against Mr May and that he has been duly served in Victoria with the writ and the statement of claim.  It then says that ADVC is a necessary or proper party to that proceeding. 

1. This basis for service must fail.  As I observed in Shantou Hesheng Commercial Development Co v P & O Swire Containers Ltd[1], it is established by authority binding on me that paragraph (l) has no operation where it is said that the third party is a necessary and proper party not to the proceeding, but to the proceeding between the plaintiff and the defendant.

   [1][1999] 3 VR 478 at 479-80 [5]

1. Next, it is said that I should grant leave nunc pro tunc pursuant to Rule 7.07(3).  This I decline to do.  The issues which, it appears, Mr May would raise against the third party must be determined pursuant to Florida law.  They are unconnected with the issues raised in this proceeding.  They might properly and perhaps ought to have been raised in the Florida proceeding but they were not.  The jurisdiction under Rule 7.07(3) is to be sparingly exercised and it is not appropriate that I should do so, where, as here, the allegations against ADVC are not relevantly related to the plaintiffs' action on the judgment obtained in Florida. 

1. I will therefore set aside service on the third party.

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