Polodna v Mattiaccio - [2017] WASC 294

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: POLODNA -v- MATTIACCIO [2017] WASC 294

CORAM: MASTER SANDERSON

HEARD: 4 SEPTEMBER 2017

DELIVERED : 12 OCTOBER 2017

FILE NO/S: CIV 1219 of 2014

BETWEEN: RICHARD ANTHONY POLODNA
First Plaintiff
FRANK BRATOVICH
Second Plaintiff
AND
ENRICO MATTIACCIO
Defendant

Catchwords:

Practice and procedure - Whether entry of unconditional appearance waiver of a parties right to apply to set aside orders extending the validity of the writ when orders made ex parte - Basis for setting aside ex parte orders

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Service of writ set aside

Category: A

Representation:

Counsel:

First Plaintiff                  :     Mr M Robson
Second Plaintiff             :     Mr M Robson
Defendant:     Mr T J Langdon

Solicitors:

First Plaintiff                  :     TGC Lawyers
Second Plaintiff             :     TGC Lawyers
Defendant:     HWL Ebsworth Lawyers

Case(s) referred to in judgment(s):

Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561
Bell Group NV (in liq) v Aspinall (Unreported, WASC, Library No 970660, 1 December 1997)
Caltex Oil (Aust) Pty Ltd v Dredge Willemstad (1976) 136 CLR 529
Gauci v Briffa [2011] WASCA 20
Maronis Holdings Ltd v Nippon Credit Australia Ltd [2000] NSWSC 507; (2000) 175 ALR 36
Popovic v Panagoulias [2014] WASCA 86
Rothmans of Pall Mall (Overseas) Ltd v Saudi Arabian Airlines Corp [1981] QB 368
Sheldon v Brown Bayley's Steel Works Ltd [1953] 2 All ER 382

MASTER SANDERSON: This application concerns a series of orders made in this proceeding to extend the validity of the writ of summons. The writ was filed on 13 February 2014 and under O 12 r 1(1) of the Rules of the Supreme Court 1971 (WA) was required to be served on or before 12 February 2015. Orders were made extending the writ on four separate occasions - the first order being made on 13 February 2015 and the last order being made on 30 June 2016.
On each occasion on which the plaintiffs sought orders extending the validity of the writ the plaintiffs filed an affidavit which stated that:
(a)the proceeding was related to a proceeding against CK Locke & Partners Pty Ltd (in liq);
(b)as CK Locke was in liquidation the plaintiffs could not proceed with that related proceeding without leave of the court; and
(c)the plaintiffs expected that CK Locke would be insured for their claim.
The only ground relied on to justify delaying service of the writ was that the plaintiffs did not want to serve the writ on the defendant before the proceeding against CK Locke had been determined. The plaintiffs did not take any step towards obtaining leave to proceed against CK Locke until 29 June 2016. The evidence relied upon by the plaintiffs in support of their applications to extend the validity of the writ did not, so the defendant alleged, disclose that fact nor give any reason for their failure to take any step to apply for leave to proceed against CK Locke. The defendant says the statement of claim discloses that the action is based on a financial transaction that occurred in or around February 2008. The defendant says the limitation period likely expired in early 2014. That contention is not challenged by the plaintiffs.
After service of the writ on the defendant the defendant's then solicitors (not the defendant's present solicitors) entered an unconditional appearance. By this application the defendant seeks leave to withdraw that appearance, enter a conditional appearance and have service of the writ set aside. The defendant says, and the plaintiffs do not dispute, that as the orders for extension were made ex parte an application to set aside those order is a hearing de novo and there is no need to first establish an error on the part of the original judicial officer or a failure to disclose material information by a party who obtained the order. In support of that proposition reliance was placed on the decision of the Court of Appeal in Popovic v Panagoulias [2014] WASCA 86 [54] ‑ [55].
The first question then is whether or not by entering an unconditional appearance the defendant waived his right to apply to set aside service of the writ by challenging the ex parte orders made extending its validity.
Remarkably enough this question appears not to have been determined in this jurisdiction or in the United Kingdom. The plaintiffs relied upon the decision of the Court of Appeal in Sheldon v Brown Bayley's Steel Works Ltd [1953] 2 All ER 382. In that case the plaintiff had issued a writ against two defendants. The writ was served more than 12 months after it was issued - that is to say it was stale. One of the defendants lodge a conditional appearance and was successful in having service of the writ set aside. The other defendant lodged an unconditional appearance and when it learned of the success of having the writ set aside of the other defendant it too applied to have the writ set aside.
The application was at first instance successful. On appeal that decision was overturned. A summary of the decision as found in the headnote reads as follows:
Failure to serve the writ within the prescribed time did not render it a nullity, but was an irregularity which had been waived by the defendants' unconditional appearance, and, therefore, service of the writ would not be set aside.
The difference between that case and this case is immediately apparent. In Sheldon the writ had not been renewed - it was stale when it was served. Here the writ had been renewed and was properly endorsed to that effect. So the real question in this case can be formulated in this way: is it necessary for a party seeking to challenge ex parte orders made extending the validity of a writ to enter a conditional appearance? Or put another way: if a party enters an unconditional appearance do they waive the right to challenge orders made ex parte extending the validity of the writ?
The starting point is that as a general rule the entry of an unconditional appearance amounts to a submission to the jurisdiction of the court and is a waiver of irregularity. The case most often cited for that principle is Caltex Oil (Aust) Pty Ltd v Dredge Willemstad (1976) 136 CLR 529. In particular reference is made to the decision of Gibbs J at (539). His Honour states the principle but does not expand upon it. In Civil Procedure Western Australia at [12.1.8] reference is made to the Western Australian Court of Appeal decision in Gauci v Briffa [2011] WASCA 20. In fact the point did not receive consideration in that case. The question of whether an unconditional appearance had the effect of waiving any alleged irregularity in the writ was raised only an hour prior to the hearing of the appeal. The respondent complained he had been given no time to apply to withdraw the unconditional appearance prior to the appeal. The court accepted that submission and specifically declined to deal with the issue. The case offers no support for the statement of principle.
There is authority in New South Wales which suggests entry of an unconditional appearance does not preclude the court from exercising a discretion to set aside service of its process. The case is Maronis Holdings Ltd v Nippon Credit Australia Ltd [2000] NSWSC 507; (2000) 175 ALR 36. The case has to be approached with some caution because the rules of the New South Wales Supreme Court are significantly different to our rules. Further the case concerned service on a person resident outside the jurisdiction and in New Zealand. Having said that the case does offer some guide as to the proper approach. It is convenient to begin by setting out those parts of the judgment which detail the applicable rules:
Part10 r1A of the Supreme Court Rules authorises originating process to be served outside Australia in a number of cases which are there stated, including '(f) where the proceedings are for contribution or indemnity in respect of a liability enforceable by proceedings in the court'. These cross‑claims clearly fall within case (f). Pt10 r6A makes provision for setting aside service outside Australia in these terms:
'6A(1) The Court may make an order of a kind referred to in Pt11 r8 (which relates to setting aside etc originating process) on application by a person on whom an originating process is served outside Australia.
(2)Without limiting subr(1), the Court may make an order under this rule on the ground -
(a)that the service of the originating process is not authorised by these rules; or
(b)that this Court is an inappropriate forum for the trial of the proceedings.'
It will be seen that the grounds on which the Court may act under r6A are not limited to the two grounds mentioned in subr (2).
Part11 r8 is in these terms:
'8(1)The Court may, on application made by a defendant to any originating process on notice of motion filed within the time fixed by subr(2), by order -
(a)set aside the originating process;
(b)set aside the service of the originating process on the defendant;
(c)declare that the originating process has not been duly served on the defendant;
(d)discharge any order giving leave to serve the originating process outside the State or confirming service of the originating process outside the State;
(e)discharge any order extending the validity for service of the originating process;
(f)protect or release -
(i)property seized, or threatened with seizure, in the proceedings; or
(ii)property subject to an order restraining its disposition or disposal or in relating to which such an order is sought.
(g)declare that the Court has no jurisdiction over the defendant in respect of the subject matter of the proceedings;
(h)decline in its discretion to exercise its jurisdiction in the proceedings;
(j)grant such other relief as it thinks appropriate.
(2)Notice of a motion under subr(1) -
(a)may be filed without entering an appearance;
(b)shall bear a note 'The defendant's address for service is' and state the address;
(c)shall be filed within the time limited for entering an appearance.
(3)The making of an application under subr(1) shall not be treated as a voluntary submission to the jurisdiction of the Court. ' [5] ‑ [7]
Having set out the relevant rules Bryson J continued:
Part11 r8 does not oblige a person applying under that rule to proceed without entering an appearance under subr 8(2), and the procedure under that rule is not applicable to this application. In my opinion the fact that a person applying under Pt10 r6A has submitted to the jurisdiction of the court by filing an appearance is a relevant factor within the ambit of discretion under the rule, but is not conclusive and does not exclude the discretionary power. Submission to the jurisdiction of the Court is not conclusive because no provision of Pt10 r6A or elsewhere in Pt10 makes it conclusive. The fact that it is not conclusive is illustrated by the terms of para(h) in Pt11 r8(1), which is incorporated in Pt10 r6A, and shows that the Court may have jurisdiction and decline in its discretion to exercise it. The fact that Mr Boscawen has filed an appearance and in that way submitted to the jurisdiction cannot in principle prevent him from asking the Court to exercise its jurisdiction, including its jurisdiction to set aside service of the originating process. There is no inconsistency between accepting that the Court has jurisdiction and asking the Court to set aside service of the process, and there cannot be any question of waiving the second by electing the first. In a previous state of the law setting aside service was a recognition that there was no jurisdiction. The discretionary element in the present rule is an indication of a far-reaching shift in the law, as there could be no discretion about giving effect to a proved lack of jurisdiction. Mr Boscawen has shown readiness to participate in the proceedings if he has to, but his readiness appears to me to be of very little weight for a decision whether the Court will set aside its own process [10].
The court's reasoning has much to recommend it. In this case when the writ was served it was stamped with the requisite notice showing that it had been extended. The affidavits which had been lodged in support of the extension applications were not served with the writ. It is not a requirement of the rules that they should be. The defendant then had no way of knowing the basis upon which the writ was extended. Of course it would have been open to him to lodge a conditional appearance, call for copies of the affidavits and then to determine whether or not to issue a summons seeking to have service of the writ set aside. But in taking that course he would have been speculating; there is no way without the affidavits he could have made an informed decision. To say in those circumstances the filing of an unconditional appearance is a waiver which is final is not in my view consistent with the underlying philosophy of the rules.
Furthermore, in one sense a party has to consent to jurisdiction of the court if he is to apply to set aside the orders made ex parte. Unless and until the ex parte orders are set aside the writ is validly served and the defendant is forced to submit to the jurisdiction of the court. I would regard it as an open question whether, when a defendant seeks to set aside ex parte orders, he is obliged to file a conditional appearance. That was certainly done in Bell Group NV (in liq) v Aspinall (Unreported, WASC, Library No 970660, 1 December 1997) but the question of whether that was an appropriate procedure was not the subject of argument.
If that conclusion is wrong I would nonetheless grant the defendant leave to withdraw his appearance and substitute a conditional appearance. The court's discretion to give leave to withdraw an appearance is unfettered: see Rothmans of Pall Mall (Overseas) Ltd v Saudi Arabian Airlines Corp [1981] QB 368, 377. The relevant fact here is that the defendant did not at the time the appearance was entered have copies of the affidavits upon which the plaintiffs relied in seeking renewal of the writ. True it is the defendant did not lead any evidence as to why the unconditional appearance was entered. There is no suggestion it was done by mistake. Nonetheless it is clear that the defendant was not, as at the date the appearance was entered, in a position to make an informed judgment. When properly advised the defendant took steps to set aside the orders made ex parte. In all the circumstances I am satisfied leave should be given to withdraw the appearance and to enter a conditional appearance.
That then leaves the question of whether on the facts of this case the orders made ex parte ought be set aside. In fact although the defendant applied to set aside all of the ex parte orders it is really only necessary to focus on the last of these orders. If that order is set aside then the writ when served was irregular and service should be set aside. In considering this issue it is convenient to begin with a consideration of the plaintiffs' statement of claim dated 16 March 2017.
It is pleaded the plaintiffs were at all material times private investors. The defendant was a senior investment advisor with a firm of stockbrokers CK Locke. It is alleged by the plaintiffs that on or about 14 or 15 February 2008 the defendant made certain oral representations to the plaintiffs in relation to an investment in a United Kingdom company. Although the statement of claim is not easy to understand it would appear the defendant represented he would assist the plaintiffs to make a profit if they invested an amount of $230,000 in a UK based company. The plaintiffs made the investment but the profit was never forthcoming - the plaintiffs say the defendant did not keep his side of the bargain. The plaintiffs seek damages for breach of contract and an account of the dealings by the defendant with the plaintiffs' investment of $230,000.
It is immediately apparent from this brief summary of the facts that the limitation period must have expired in or about February 2014. It is also worthy of note that the fact the limitation period had expired when the last renewal application was made was so obvious it could not have been overlooked.
Turning then to the affidavit in support of the last application for an extension of time. It was sworn by the first plaintiff and is dated 29 June 2016. In par 4 of that affidavit the first plaintiff says the writ was issued 'to avoid possible limitation of action issues'. The first plaintiff then goes on to explain why he sought to extend the validity of the writ:
4.1There are other proceedings on foot by the Plaintiffs against CK Locke & Partners Pty Ltd in CIV 2170 of 2012 that concern themselves with common questions of fact. Copies of the Writ of Summons and Statement of Claim in CIV 2170 of 2012 are Annexed hereto and marked RAP-1.
4.2The Defendant in CIV 2170 of 2012 (CK Locke & Partners Pty Ltd) is in liquidation. The Plaintiffs have now applied for leave to proceed against CK Locke & Partners Pty Ltd (in Liquidation) ACN 081 957 271. Letters from the Liquidator are Annexed hereto as copies marked RAP-2. I also Annex as a copy marked RAP-3 the Originating Process application seeking leave to proceed against the Defendant CK Locke & Partners Pty Ltd in CIV 2170 of 2012 and my own affidavit filed in support of that Originating Process.
4.3I am expecting that the Defendant in CIV 2170 of 2012 will be insured against the relevant liability. Leave is being sought to proceed against the Defendant in CIV 2170 2012 in order to obtain payment from the insurer although that does not mean that the Defendant in these proceedings (who has still not been served) may not be found to be personally liable. That remains a matter still to be determined by the Court. It is conceded by the Plaintiffs that both Defendants, CK Locke Partners Pty Ltd and Mr Mattiaccio may ultimately both be found to be liable.
4.4The Plaintiffs wish to progess [sic] the litigation in CIV 2170 of 2012 to finality as soon as possible.
4.5If leave is given to proceed with CIV 2170 of 2012 I believe there may potentially be a consolidation of CIV 2170 of 2012 and CIV 1219 of 2014.
4.6A successful resolution to CIV 2170 of 2012 will I believe result in the Plaintiffs saving in overall litigation costs and might potentially obviate the necessity to proceed with CIV 1219 of 2014.
The basis upon which the defendant seeks to have the ex parte order set aside was set out in some detail in counsel's written submissions. It is convenient if I quote the relevant paragraphs:
In Brealey v Board of Management Royal Perth Hospital [1999] WASCA 158, Ipp J summarised the policy behind the time limit in Order 7 rule 1 as follows:
'It is undesirable to allow a plaintiff to issue a writ before the expiry of a limitation period and then to delay service for an indefinite period. Lengthy delays cause difficulties in the ascertainment of the truth. It is unfair to require potential defendants to contemplate potential litigation indefinitely. The unfairness stems from the uncertainty and concomitant financial and other burdens that would be the consequence. As Young CJ (with whom Kaye and Southwell JJ agreed) said in Ramsay v Madgwicks [1989] VR 1 at 5, "it is not right that people should be left in ignorance of proceedings that have been taken against them if they are here to be served." Finally, the proper administration of the court would be hampered if writs could be issued and then left to lie dormant for indefinite periods.
In exercising the discretion to extend the validity of a writ of summons, the Court should have regard to the entirety of the circumstances, and relevant factors may include:
(a)the length of the delay;
(b)whether the delay was caused by mistake and whether such mistake is excusable;
(c)the nature of any attempts made at service;
(d)the hardship or prejudice caused to the plaintiff by refusing the renewal or to the defendant by granting it;
(e)whether the applicable limitation period has expired; and
(f)whether any applicable limitation period has expired.
It is not ordinarily a legitimate reason for failing to serve a writ that the plaintiff desires to hold up the proceedings while some other case is tried or to await some future development. It is also necessary for the plaintiff to demonstrate that it has taken steps to investigate the matter since the writ was filed and to get the proceeding moving. That is particularly so where the writ was filed shortly before the limitation period was due to expire.
In this case, the factors militating against making the orders extending the validity of the writ outweigh any factors in favour of extending the validity of the writ. Those factors militating against the making of the order include:
(a)the fact that the limitation period in respect of the claims appears to have been due to expire shortly after the writ was filed;
(b)the length of the delay in serving the writ;
(c)the delay in serving the writ was deliberate, rather than accidental;
(d)the delay was not caused by failed attempts to serve the writ;
(e)the only reason the writ was not served within the usual time was that the Plaintiffs wished to await the outcome of the proceeding against CK Locke;
(f)despite that, the Plaintiffs took no steps to progress that outcome until June 2016, 28 months after the writ was filed;
(g)that was despite the fact that the Plaintiffs had commenced the proceeding against CK Locke in 2012, and CK Locke's winding up commenced on 2 October 2013;
(h)the Plaintiffs made no effort to notify the Defendant of the fact that the writ of summons had been filed;
(i) the Plaintiffs therefore did not make any productive use of the 12 month period (or the subsequent periods of extension of time);
(j)the Plaintiffs offered no explanation for their delay in progressing the proceeding against CK Locke;
(k)by applying for each extension of time ex parte, and without notifying the Defendant, the Plaintiffs accepted the risk that the orders might subsequently be set aside under Order 58 rule 23, particularly in circumstances where the Plaintiffs appear to have failed to make full and frank disclosure to the Court as to the fact that they did not progress the proceeding against CK Locke;
(l)the facts alleged in the statement of claim occurred over 9 years ago, and any witness' recollection is likely to have become less reliable over time;
(m)it appears that there is limited documentary evidence that would assist the Court in determining the facts at issue; and
(n)the Defendant will suffer prejudice if the orders are not set aside [13] ‑ [16]. (footnotes omitted)

Two things may be said about the way this case was approached. First, the defendant did not submit any new evidence which was not available when the last ex parte application was made. Second, there was no suggestion that I was misled in any way during the course of that application. There was some suggestion in submissions made by counsel for the defendant that at the extension hearing the plaintiffs' counsel did not explain when the application for leave to proceed against CK Locke would be heard. The transcript of the ex parte hearing reveals that was not the case; I asked the question of counsel and counsel answered frankly.
That then leads to the question of the basis upon which it is open to the court to set aside an ex parte order. On the basis of Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561 it could not be said there is any basis for setting aside this order. No new evidence has been produced and there is no suggestion the court was misled. Thus the jurisdiction to set aside the order is not enlivened and the application should be dismissed. However, in Popovic v Panagoulias the Court of Appeal doubted the correctness of the Bell v Aspinall decision. Their Honours said:
There is one final matter. It was unnecessary in the present case to consider the decision of the Full Court in Bell v Aspinall (1998) 19 WAR 561, in which it was held that in order to enliven the court's jurisdiction to set aside an ex parte order under O 58 r 23, it is necessary for the applicant to adduce additional material which throws a new and different light on the situation of the parties involved. In this case, there was additional material before the primary judge. However, the correctness of the decision in Bell v Aspinall must now be regarded as in doubt. In Savcor Pty Ltd v Cathodic Protection International APS [2005] VSCA 213; (2005) 12 VR 639, the Court of Appeal of Victoria expressly declined to follow it and it is also inconsistent with the approach taken by the Court of Appeal of New South Wales in Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104. In both of those cases, the court took the view that it was unnecessary to demonstrate error on the part of the initial judge or to put additional material before the court. Rather, the matter was to be heard de novo [54].
If I were to approach the matter on the basis that this was a hearing de novo I would set aside my earlier order. Looking at all the matters raised by the defendant and bearing in mind the efflux of time I am not now satisfied the extension ought be granted. Given the way in which the plaintiffs have approached this it is unfair to the defendant to allow events which occurred in 2008 to be litigated more than 10 years after the relevant events.
The question then is what is to be done. With great hesitation I have concluded I should follow the Victorian and New South Wales cases and approach the matter on the basis that it is unnecessary to demonstrate error in the original decision or to put additional material before the court. In other words it seems to me the law has moved on since the decision of the Full Court of this court almost 20 years ago.
Accordingly I would set aside service of the writ in this matter. I will hear the parties as to the precise form of orders and as to costs.