Smith v Shilkin (No 2)

[2019] NSWSC 969

Supreme Court

New South Wales

Medium Neutral Citation:	Smith v Shilkin (No 2) [2019] NSWSC 969
Hearing dates:	11 and 12 June 2019
Date of orders:	01 August 2019
Decision date:	01 August 2019
Jurisdiction:	Equity
Before:	Hallen J
Decision:	Counsel are invited to agree upon a form of orders to give effect to these reasons and are directed to provide to the Court, within 14 days, in hard and soft copy, short minutes of order, for consideration. When these reasons are delivered, the matter of the costs of the two notices of motion will be listed for hearing and for the determination of any dispute as to the form of orders.
Catchwords:	CIVIL PROCEDURE – Commencement of proceedings – Statement of claim – Extension of validity of statement of claim for service – Uniform Civil Procedure Rules – Order extending validity made ex parte by Judge of the Court – Whether ex parte order should be discharged under UCPR r 12.11(1)(e) – Whether service of the Statement of Claim should be taken to have been effected upon each of the Defendants.
Legislation Cited:	Civil Procedure Act 2005 (NSW) Limitation Act 1969 (NSW) Service and Execution of Process Act 1992 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Abela v Baadarani [2013] 1 WLR 2043; [2013] UKSC 44 Agricultural & Rural Finance Pty Limited v Kirk & Anor (2011) 82 ACSR 390; [2011] NSWCA 67 Amadeaus Investment Ltd v Dr Lin Kao Kun [2019] HKCFI 797; [2019] HKCU 1186 Aristocrat Technologies Australia Pty Limited & Ors v Re Allam & Ors (2016) 327 ALR 595; [2016] HCA 3 Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104 Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd [2019] NSWCA 61 Bagshaw v RTS Super Pty Ltd [2019] WASCA 85 Bank of Swaziland v Hahn [1989] 1 WLR 506 Barclays Bank of Swaziland v Hahn [1989] 1 WLR 506 Barton v Wright Hassall LLP [2018] 1 WLR 1119 Battersby v Anglo American Oil Co Limited [1945] KB 23 Bobolas v Waverley Council [2016] (2016) 92 NSWLR 406; NSWCA 139 Brealey v Board of Management Royal Perth Hospital (1999) 21 WAR 79; [1999] WASCA 158 CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67 Choy v Tiaro Coal Ltd (in liq) (2018) 364 ALR 554; [2018] NSWCA 205 Clack v Murray [2017] WASCA 88 Combe v Ziade [2000] NSWSC 848 Dagnell v J L Freedman & Co [1993] 1 WLR 388 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 Hughes v National Trustees Executors and Agency Co of Australasia Ltd [1978] VR 257 Hunter v Hanson [2014] NSWCA 263 In the matter of Salfa Pty Limited (in liquidation) (ACN 082 308 101) [2014] NSWSC 1493 Kaki v National Private Air Transport Co [2015] EWCA Civ 731 Kleinwort Bensen Ltd v Barbrak Ltd [1987] AC 597 Moubarak by his tutor Coorey v Holt (No 2) [2019] NSWCA 188 Nata Lee Ltd v Abid and another [2014] EWCA Civ 1652 Onefone Australia Pty Ltd v One.Tel Limited; Weston v Publishing and Broadcasting Limited [2007] NSWSC 1320 Power v Meloy Whittle Robinson Solicitors [2014] EWCA Civ 898 R (Hysaj) v Secretary of State for the Home Department [2015] 1 WLR 2472; [2014] EWCA Civ 1633 Re Anderson Owen Ltd, Merrygold v Bates [2010] BPIR 37; [2009] EWHC 2837 (Ch) Rich v Long [2008] NSWSC 487 Smith v Pacific Trading Enterprises [1999] NSWSC 333 Smith v Shilkin [2018] NSWSC 1582 The IMB Group Pty Ltd (in liq) v Australian Competition and Consumer Commission [2007] 1 QdR 148 Tseitline v Mikhelson and others [2015] All ER (D) 252 (Oct); [2015] EWHC 3065 (Comm) Van Leer Australia Pty Ltd v Palace Shipping KK (1981) 180 CLR 337; [1981] HCA 11 Victa Ltd v Johnson (1975) 10 SASR 496 Wakim v Coleman [2010] NSWCA 221 Wakim v Coleman [2011] HCASL 38 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Weston in Capacity as Special Purpose Liquidator of One.Tel Ltd (in liquidation) v Publishing and Broadcasting Ltd [2012] NSWCA 79 Weston v Publishing and Broadcasting Limited [2009] NSWSC 321 Woodward & Anor v Phoenix Healthcare Distribution Ltd [2019] EWCA Civ 985 Young v Waterways Authority of New South Wales [2002] NSWSC 612
Category:	Procedural and other rulings
Parties:	Alexander Noel Smith (first Plaintiff) Adam Poche (second Plaintiff) Melissa Poche (third Plaintiff) Aidan Conrecode (fourth Plaintiff) Catherine Walsh (fifth Plaintiff) Steven Andrew Shilkin (first Defendant) Ashley Shilkin (second Defendant)
Representation:	Counsel: C E Bannan (Plaintiffs) R W Douglas (Defendants)   Solicitors: Horton Rhodes (Plaintiffs) Katja Levy, Sole Practitioner (Defendants)
File Number(s):	2018/00071614

Judgment

Introduction

1. HIS HONOUR: As is, or should be, well known, s 56 of the Civil Procedure Act 2005 (NSW) imposes upon parties to civil proceedings, a duty to assist the court to further the overriding purpose of the Act and of rules of court, in their application to proceedings, to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Similarly, solicitors and barristers representing the party in the proceedings, by their conduct, must not cause a party to civil proceedings to be put in breach of the duty identified.

2. Section 57 of the Civil Procedure Act provides that for the purpose of furthering the overriding purpose referred to in s 56(1), proceedings in any court are to be managed having regard to (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, and (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

3. Section 58 of the Civil Procedure Act, relevantly, provides that in deciding (a) whether to make any order or direction for the management of proceedings, including, any order of a procedural nature, the court must seek to act in accordance with the dictates of justice.

4. Section 59 of the Civil Procedure Act provides that in any proceedings, the practice and procedure of the court should be implemented with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial. As has recently been written, “the implementation of the practice and procedure of the court is as much the obligation of members of the profession as officers of the court as it is the obligation of the courts themselves”: Moubarak by his tutor Coorey v Holt (No 2) [2019] NSWCA 188, per Bell P, at [19].

5. In respect of the proceedings to which these reasons relate, the parties, and their legal representatives, appear to have failed to remember, and act in accordance with these sections, despite the fact that regard to each is statutorily compulsory: s 58(2)(a); Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230, per Allsop ACJ (as his Honour then was), at [38].

6. That this is not an unfair criticism will be demonstrated by the fact that proceedings involving the Plaintiffs and, at least the first Defendant, commenced in April 2017 (“the 2017 proceedings”); that those proceedings were amended, in November 2017, adding, amongst other things, the second Defendant; that a copy of the Statement of Claim, and the amended Statement of Claim, was in the possession of at least their legal adviser, and each of the Defendants, in December 2017; and that fresh proceedings were commenced in March 2018 (“the 2018 proceedings”), the Statement of Claim in respect of which was in the possession of the Defendants’ legal representative and both of the Defendants, shortly thereafter.

7. Even now, over one year having passed since the 2018 proceedings were commenced, no defence has been filed, by either Defendant, to the Statement of Claim in the 2018 proceedings. Furthermore, despite it having been accepted that “delivery” of that Statement of Claim was properly effected upon each of the Defendants, in late October 2018 (subject to discharging an order made by Rein J to which reference will be made), the Defendants have continued to argue about service of the initiating process.

8. In addition, there have been no less than four different occasions that the Court has had to deal with one, or other, aspect of the proceedings, extensively, without, it seems, the proceedings being able to be progressed in any meaningful way. On each such occasion, a significant amount of time has had to be spent, by the Court, dealing with the multitude of repeated issues that the parties’ legal representatives, have raised.

9. In the submissions, each party, at least in part, attributes the blame for the events that have occurred upon the other party. In my view, having considered all of the evidence that has been read in these proceedings, each of the parties, and their legal representatives, bear some of the responsibility for what has occurred and neither can escape censure.

10. The litigation has a long and unsatisfactory history. To date, it has been “another example of wasteful satellite litigation unconcerned with the merits of the underlying claim”: Power v Meloy Whittle Robinson Solicitors [2014] EWCA Civ 898.

The Present Interlocutory Proceedings

11. Before the Court on 11 June 2019, listed for two days, were two notices of motion. The first notice of motion, in time, was one filed on 23 October 2018, by the Plaintiffs. (There are five Plaintiffs named in the proceedings and in the notice of motion.) In that notice of motion, the Plaintiffs sought the following relief:

“1. A declaration that personal service of the Statement of Claim was effected upon the First Defendant on 22 October 2018 or such date as the Court determines in accordance with Rule 20.21 of the Uniform Civil Procedure Rules 2005 (NSW) and sections 15(2) and 16 of the Service and Execution of Process Act 1992 (Cth).

2. A declaration that personal service of the Statement of Claim was effected upon the Second Defendant on 23 October 2018, or such date as the Court determines in accordance with Rule 11.8AC of the Uniform Civil Procedure Rules 2005 (NSW).

3.   In the alternative to order 1, pursuant to Rule 10.14(3) of the Uniform Civil Procedure Rules 2005 (NSW), that service of the Statement of Claim on the First Defendant be taken to have been effected on 17 June 2018 or such date as the Court determines.

4.   In the alternative to order 2, pursuant to Rule 10.14(3) of the Uniform Civil Procedure Rules 2005 (NSW), that service of the Statement of Claim on the Second Defendant be taken to have been effected on 13 August 2018 or such date as the Court determines.

5. In the alternative to orders 1 and 3, pursuant to section 14 of the Civil Procedure Act 2005 (NSW), that the requirement to personally serve the First Defendant be dispensed with and service of the Statement of Claim on the First Defendant be taken to have been effected on 17 June 2018 or such date as the Court determines.

6. In the alternative to orders 2 and 4, pursuant to section 14 of the Civil Procedure Act 2005 (NSW), that the requirement to personally serve the Second Defendant be dispensed with and service of the Statement of Claim on the Second Defendant be taken to have been effected on 13 August 2018 or such date as the Court determines.

7. In the alternative to orders 1, 3 and 5, pursuant to Rule 10.14(1) of the Uniform Civil Procedure Rules 2005 (NSW), that the service of the statement of claim on the First Defendant be effected by service upon the solicitor, Katja Levy via:

a. Email to her email addresses [email protected] and [email protected] and

b. Registered post to her professional address at Level xx, Allendale Square,xx St Georges Terrace, Perth WA 6000.

8. In the alternative to orders 2, 4 and 6, pursuant to Rule 10.14(1) of the Uniform Civil Procedure Rules 2005 (NSW), that the service of the statement of claim on the Second Defendant be effected by service upon the solicitor, Katja Levy via:

a. Email to her email addresses [email protected] and [email protected] and

b. Registered post to her professional address at Level xx, Allendale Square, xx St Georges Terrace, Perth WA 6000.

9.   In the alternative to orders 1, 3, 5 and 7, a declaration that the First Defendant has submitted to the Court’s jurisdiction.

9A.    Further, or in the alternative, an order nunc pro tunc pursuant to Rule 1.12 of the Uniform Civil procedure Rules 2005 (NSW), the time for service of the Statement of Claim on each of the First Defendant and the Second Defendant be extended to 30 October 2018.

10.   Costs be reserved.

11.   Such further or other orders as the Court considers appropriate.”

12. In support of the Plaintiffs’ notice of motion, the Plaintiffs read four affidavits of Ms Victoria-Jane Otavski, a solicitor in the employ of Horton Rhodes Legal Pty Ltd, the firm of solicitors representing them. Ms Otavski has had the day to day conduct of the matter on their behalf.

13. The affidavits of Ms Otavski were sworn, respectively, on 26 June 2018 (comprising 36 pages, including annexures); on 13 September 2018 (comprising 42 pages, including annexures); on 23 October 2018 (comprising 97 pages, including a bundle of documents accompanying the affidavit marked “VJO-1”); and on 13 May 2019 (comprising 47 pages, including a bundle of documents accompanying the affidavit marked “VJO-2”).

14. (An attempt was also made by counsel for the Plaintiffs to read a number of affidavits of purported service but these were rejected. This would have simply added more paper to the vast amount already required to be read without advancing the issues for determination.)

15. The second notice of motion was one filed by the first Defendant named in the Statement of Claim, Steven Shilkin, initially, on 10 July 2018. An amended notice of motion was filed on 14 November 2018, in which Ashley Shilkin, the second Defendant, was shown as an additional applicant for relief. There were other amendments to the relief sought that were also made.

16. Prior to the hearing, the Court was informed that only Paragraphs 1, 3, and 7 of the Defendants’ notice of motion would need to be determined. Those paragraphs are in the following terms:

“1. Pursuant [to] CPA 63(3) and UCPR 12.11(1)(e) & 36.15, an order discharging that Order made by the Honourable Justice Rein on 26 September 2018 extending the validity for service of the originating process for irregularity, being sought against good faith and for non-disclosure and mis-disclosure on ex parte application, and without adequate foundation.

…

3. Pursuant to UCPR 12.11(1)(c), a declaration that the originating process in these proceedings has not been duly served on the First Named Defendant or the Second Named Defendant, alternatively, pursuant to UCPR 12.11(1)(b) setting aside any service of the originating process.

…

7.   Pursuant to Civil Procedure Act 2005 (NSW) Part 7, Division 2 and UCPR 42.5(b), 42.6, 42.8, 42.9 and 42.10 and 12.11(i),4 the Plaintiffs (or, if thought fit the Plaintiffs’ Australian Legal Practitioners of record) do pay forthwith the costs of the First Named Defendant and the Second Named Defendant of and incidental to:

(a)   this Application; and

(b)    the First Named Defendant’s application to inspect the Court file, including all reserved costs of this proceedings, and all reserved costs of that proceedings Smith & Ors v Shilkin & Ors 2017/119572 which were reserved to this proceeding by the order of Slattery J made 19 October 2018, on an indemnity basis.”

17. (I should mention that it is no great accolade that the legal representatives reduced the amount of relief sought. Much of what was referred to in the evidence relied upon had been previously been raised in one, or other, of the earlier proceedings.)

18. In support of the amended notice of motion, the Defendants read five affidavits of Katja Jane Levy, who described herself as an “Australian Legal Practitioner within the meaning of s 6 of the Legal Profession Uniform Law”. She practices as such, holding a current practice certificate issued by the Legal Practice Board of Western Australia.

19. The five affidavits were respectively sworn on 6 July 2018, 4 September 2018, 11 September 2018, 14 October 2018, and 20 May 2019. These affidavits, including annexures, in total, comprised 215 pages. (They were included, compendiously, in a folder of documents which was used at the hearing for convenience.)

20. In addition, an affidavit of the second Defendant, Ashley Shilkin, sworn 25 October 2018, was also read. That affidavit, with annexures, comprised 16 pages. There were also two exhibits to this affidavit (tendered and marked Ex. NM1) each comprising 99 pages. He stated that he had sworn the affidavit in support of the notice of motion filed on 10 July 2018 “without otherwise submitting to jurisdiction” (at par 2).

21. A reason for identifying the notices of motion, the number, the length, and the dates of the affidavits, is to depict the amount of time that has been spent by the parties in preparing the notices of motion, to provide a reference to the costs they must have already incurred, as well as to demonstrate the time that has been devoted, by the Court, to reach this point in the proceedings. As stated earlier, even now, the substantive proceedings have not progressed in any material way, despite the fact that the events giving rise to the Plaintiffs’ claims are said to have occurred between 2008 and 2016.

22. Even though counsel for Steven Shilkin and Ashley Shilkin did not wish the Court to address them as “the Defendants”, I shall refer to them as the first Defendant and the second Defendant, respectively, and where necessary, to them jointly, as “the Defendants”. Counsel also maintained that the receipt by each of the Defendants, in late October 2018, should not be described as “service” upon the Defendants. Perhaps, this, too, demonstrates, the pedantic approach adopted by, or on behalf of, the Defendants, when it is abundantly clear that each of them has been served, personally, with the Statement of Claim in the 2018 proceedings. Even now, 8 months later, neither of the Defendants has filed an Appearance.

23. Finally, before moving on, it is necessary to note that it is not possible for the Court to determine the question of costs of the notices of motion in these reasons, as counsel for the Defendants said that there may be “without prejudice communications” that are relevant to the issue of costs: Tcpt, 12 June 2019, p 104(27-45). Of course, the argument on costs is likely to involve further costs, and further court time, but, regrettably, the Court has no alternative but to allow any argument on costs to be properly ventilated at a later time.

Procedural and events chronology

24. It is convenient, next, to set out the fairly intricate procedural, and events, chronology, which has prompted the filing of the notices of motion. The substantive proceedings were, as stated, initially, commenced over two years ago. What follows should be regarded as a summary. It is not possible to detail the minutiae of topics covered by the correspondence to which reference will be made. Facts traverse the period between April 2017 and the end of October 2018. Some of the critical events, however, occurred in September and October 2018.

25. On 21 April 2017, the five Plaintiffs commenced the 2017 proceedings by filing a Statement of Claim in which only the first Defendant was named as a party/Defendant. In circumstances to which I shall come, the Plaintiffs filed an amended Statement of Claim, on 17 November 2017, in which the second Defendant was added as a party/Defendant.

26. Speaking very broadly, the Plaintiffs, in the underlying claim, alleged that between 2008 and 2016, they advanced amounts, totalling in excess of $1.8 million, to the Defendants, or one of them, in order to acquire shares in, or to invest in the business undertaken by, Inosite Ltd (“Inosite”), a company principally engaged in the provision of residential accommodation for mining workers in Western Australia. They contended that the amounts were advanced as a result of a series of misleading or deceptive representations, and other misleading or deceptive conduct, by the Defendants, or one of them. The alleged representations were to the effect that Inosite had secured, or would secure, mining tenements; that those tenements had substantial ore deposits, or were otherwise valuable; and that Inosite would generate substantial profits from its ownership of those tenements. On 24 February 2017, a liquidator was appointed to Inosite. The Plaintiffs claimed the amounts that had been paid, interest, and costs.

24. In the amended Statement of Claim, the first Defendant was said to have been a director of Inosite from May 2008 until about November 2014. He was also described as “the Executive Chairman”. The second Defendant was described as having held himself out as “an Executive Director, Executive, Chief Financial Officer and/or Company Secretary”, of Inosite.

25. What was asserted by the Plaintiffs in the Statement of Claim must be regarded as merely a summary of the material facts on which they relied to establish what was said to be their causes of action against the Defendants. The truth, or otherwise, of the assertions of fact pleaded, has not been, and in light of subsequent events to which reference will be made, will not need to be, determined.

26. (In the affidavit of the second named Defendant that was read in the present applications, to the extent that it is relevant to the 2017 proceedings, he denied any liability to the Plaintiffs. I shall treat his assertions, also, as assertions that have not been tested or determined.)

27. At the relevant times, in 2017, the Plaintiffs were resident in New South Wales, the first Defendant was a resident of Western Australia, and the second Defendant, was a resident of Los Angeles, California.

28. On 19 October 2017, the then solicitors for the Plaintiffs filed a notice of motion seeking an extension of the time for service of the Statement of Claim in the 2017 proceedings.

29. On 26 October 2017, Registrar Walton made an ex parte order, nunc pro tunc, extending the time for service of the Statement of Claim, or of an amended Statement of Claim, from 21 October 2017 until 22 December 2017.

30. At the hearing of the Plaintiffs’ notice of motion, the Registrar was informed, by then counsel for the Plaintiffs, that new solicitors, acting for the Plaintiffs, had “decided that the proceedings in fact need to be amended to include … two new parties, one of which [sic] is the son of the current defendant. So…the current pleading[s] are now with senior counsel in the process of amending the claim”: Exhibit “B” accompanying the Affidavit of Ashley Shilkin, 25 October 2018, exhibiting Tcpt, 26 October 2017, p 2(25-36).

31. In explaining the delay in serving the Statement of Claim, counsel also informed the Registrar, that there were “problems with obtaining the file, the problems with the new solicitor, the problems with amending the matter, and the problems with actually determining what had actually happened with the file and whether the proceedings had been served that’s caused the delay…”: Exhibit “B” accompanying the Affidavit of Ashley Shilkin, sworn 25 October 2018, exhibiting Tcpt, 26 October 2017, p 2(41-45).

32. On 17 November 2017, the Plaintiffs filed an amended Statement of Claim.

33. On 27 November 2017, Ms Levy, the solicitor acting for the second Defendant, sent a letter to the Plaintiffs’ solicitors (Ex. NM1/1) stating:

“I act for Mr Ashley Shilkin and have to hand a copy of the Amended Statement of Claim filed by your clients. I have instructions to accept service of the Originating Process in the [2017 Proceedings] and trust that you will timely provide me with a copy of all documents and correspondence you have had with the court.”

37. On 28 November 2017, the Plaintiff’s solicitors responded (Ex. NM1/4) as follows:

“I confirm we will cease any personal service on Ashley Shilkin noting your office has accepted service on his behalf...”

38. In email correspondence of 6 December 2017, the second Defendant’s solicitor confirmed that she had a copy of “an amended statement of claim, but not the original statement of claim”: Ex. NM1/6.

39. On 6 December 2017, there followed a chain of email correspondence between the legal representatives for the parties which I shall not repeat (Ex. NMB/13). In broad terms, the Defendants’ solicitor required the Plaintiffs’ solicitor to provide a copy of the Statement of Claim as well as the amended Statement of Claim. For her part, the Plaintiffs’ solicitor tried to clarify whether the Defendants’ solicitors had instructions to accept service.

40. Furthermore, on 6 December 2017, the Defendants’ solicitor wrote to the Plaintiffs’ solicitor setting out, in detail, the basis for the contention of absent, defective, and ineffective, purported service, and, further, inviting the Plaintiffs to withdraw threats made of default, or summary judgment and freezing orders, without notice. This letter (Ex. NMB/14) went on to state:

“We are also in receipt of instructions to act for Mr Steven Shilkin in respect of the defects of your client’s originating process, the absence of any service thereof, and the defects in the purported amendments thereof, and your foreshadowed summary of default judgement [sic] application.”

41. On 7 December 2017, there was another chain of email correspondence passing between the solicitors (Ex. NMB15-16) that is not necessary to repeat. Remarkably, in a letter of this date, the Defendants’ solicitor stated that “you have not, and will not, provide us with any (purportedly) amended statement of claim”.

42. In a letter dated 13 December 2017, from Ms Levy to the Plaintiffs’ former solicitors, it was acknowledged that “[W]e have obtained an unauthenticated and evidently incomplete copy of a document purporting to be an ‘Amended Statement of Claim’.”

43. According to the evidence of the second Defendant, read in these proceedings, Ms Levy, his solicitor, on about 14 December 2017, sent to him, a copy of the Statement of Claim, filed in the 2017 proceedings, “which appeared to bear a stamp of the Supreme Court of NSW and the date 21 April 2017 and the Court number …” even though he was not a named party, and no relief had been sought against him, in the 2017 Statement of Claim. The second Defendant, in his affidavit, does not suggest that the document he had received was an incomplete copy of the amended Statement of Claim. (This statement clearly demonstrates that, by that date, Ms Levy must have had a copy of the Statement of Claim filed in the 2017 proceedings.)

44. Although the second Defendant, in his affidavit, does not expressly state that he was provided with a copy of the amended Statement of Claim filed in the 2017 proceedings, I am satisfied that he must have been provided with a copy of that document, as he refers to it in his affidavit. I am also satisfied that he must have received a copy of the amended Statement of Claim by on, or about, 22 December 2017, as he says that he gave instructions to his solicitor, on or about that date, to file and serve an application pursuant to UCPR r 12.11, which was to include seeking “a declaration that a document titled ‘Amended Statement of Claim’ was not an amended Statement of Claim in the 2017 Proceedings…”.

45. Although there was no affidavit of the first Defendant dealing with when he received a copy of the Statement of Claim and the amended Statement of Claim in the 2017 proceedings, and Ms Levy says nothing about it, I consider it more likely than not that he had been provided with a copy of both the Statement of Claim and the amended Statement of Claim, in the 2017 proceedings, earlier than 22 December 2017. In any event, during the course of the hearing, it was accepted that the second Defendant had been provided with the amended Statement of Claim, in the 2017 proceedings, as had the first Defendant, in December 2017: Tcpt, 12 June 2019, p 99(11-23). (The reference to “the Plaintiffs” at p 99(19) should be a reference to “the Defendants”.)

46. Pausing there, the provision of the Statement of Claim and the amended Statement of Claim in the 2017 proceedings is relevant, in my view, as there was no dispute that the contents of the amended Statement of Claim filed in the 2017 proceedings were effectively, in the same terms as the Statement of Claim in the 2018 proceedings. However, as will be made even clearer, this Court is now concerned with the 2018 proceedings and not the 2017 proceedings.

47. At no time, has either Defendant filed an Appearance in relation to the 2017 proceedings.

48. On 14 December 2017, the Plaintiffs filed a notice of motion for deemed service, or substituted service, of the amended Statement of Claim on the Defendants: Tcpt, 12 June 2019, p 99(25-41).

49. Correspondence between the solicitors for each of the parties followed, and then, on 22 December 2017, the Defendants named in the amended Statement of Claim, filed a notice of motion seeking declarations pursuant to Uniform Civil Procedure Rules (“UCPR”) r 12.11 (which permits a party served with process outside the jurisdiction to apply to the Court for a range of orders, including an order setting aside the originating process and a stay, or dismissal, of the proceedings).

50. Importantly, UCPR r 12.11(3) permitted such an application to be made without the defendant party being required to enter an appearance, so long as the notice of motion seeking the relevant relief was filed within the time that would otherwise apply in relation to the entry of an appearance. UCPR r 12.11(4) provided that the making of an application for an order under r 12.11(1) does not constitute submission to the jurisdiction of the court. Of course, both of the Defendants were outside the jurisdiction.

51. On 30 January 2018, Registrar Walton listed Paragraphs 1 and 2 of the Plaintiffs’ notice of motion, filed 14 December 2017, and the Defendants’ notice of motion, filed on 22 December 2017 (said to have been filed on 18 December 2017), before me on 26 April 2018, with an estimated duration of 1 day. The Registrar also made directions for the exchange of affidavits, written submissions, and the delivery of a Court Book.

52. In addition, the Registrar made an order granting leave to the Defendants “to inspect the Court file until further order, including by his [sic] solicitor, Ms K Levy, including by accessing the Court’s electronic portal, in all respects as if the First Named Defendant and the Second Named Defendant were [sic] each a party to these proceedings”.

53. On 5 March 2018, the Plaintiffs commenced the 2018 proceedings by filing a Statement of Claim, in which they made similar, if not identical, claims against both Defendants. I shall not repeat the allegations made in the Statement of Claim filed in the 2018 proceedings, since the broad assertions have been set out above (in relation to the 2017 proceedings), and, as earlier pointed out, they have not been tested or determined.

54. At this point, it suffices to say that there is a real likelihood that, at least, many of the material facts asserted by the Plaintiffs in the 2018 proceedings will be disputed, and that some of the causes of action pleaded are said to be statute-barred. There are other matters, relating to the form of the Statement of Claim, that were raised, in argument, by the Defendants which need not be referred to.

55. Counsel for the Defendants persisted, during submissions, with the proposition that the form, and content, of the Statement of Claim in the 2018 proceedings, was relevant to the determination of the Defendants’ notice of motion to which I have referred. This was despite the Court informing him, more than once, that it was not possible, at the hearing, to form any concluded view about the merits of the Plaintiffs’ claims, or about the denials that had been made, or that might be made, by the second Defendant.

56. As in respect of the 2017 proceedings, the assertions in the 2018 Statement of Claim, are to be treated as merely assertions of material facts, in respect of which no defence has yet been filed by either Defendant, and in respect of which no hearing has yet occurred. Similarly, I shall treat the denials in the affidavit of the second named Defendant that was read in the present applications, as assertions of fact that have not been tested or determined. (How the first Defendant might respond to the 2018 Statement of Claim is not known.)

57. (The Defendants, by counsel, contended, initially, that 40.8 per cent (equating to $770,000) of the Plaintiffs’ claims are statute barred. Later, on 23 October 2018, they contended that that 47.5 per cent (equating to $896,000) was statute barred. That, of course, even if proved to be correct, would still leave about $900,000, or thereabouts, in dispute: Tcpt, 12 June 2019, p 101(45) – p 102(7). On 10 June 2019, they contended that 56 per cent ($1,057,000) of the Plaintiffs’ claims, by value, was statute barred: Ex. NMB/90. That, of course, even if proved to be correct, would still leave about $750,000, or thereabouts, in dispute.)

58. In an email sent on 8 March 2018, the Plaintiffs’ solicitors informed Ms Levy, “by way of courtesy”, that the Plaintiffs had “filed a fresh Statement of Claim… in identical terms as the amended Statement of Claim” in the 2017 proceedings. A copy of the Statement of Claim that had been filed in the 2018 proceedings was attached to this email: Ex. NMB/25.

59. In the email (which was sent by the Plaintiffs’ former solicitors), it was said that “[W]e do not propose serving the fresh 2018 Statement of Claim upon the Defendants at this stage.” The reason stated for not doing so was “in order to preserve any limitation periods in our client’s favour, to any extent necessary, in case our clients’ notice of motion [in the 2017 proceedings] is unsuccessful, and/or your clients’ notice of motion [in the 2017 proceedings] is successful…”. It was pointed out that the matter was listed before the Registrar on 9 April 2018, at which time, the Court would be asked “to stand the matter over until after the determination of the parties’ respective notices of motion [in the 2017 proceedings] (listed for hearing on 26 April 2018)”.

60. Following the receipt of a copy of the Statement of Claim filed in the 2018 proceedings, the Defendants’ solicitor wrote to the Plaintiffs’ solicitor stating:

“We do not have instructions to accept service of the 2018 Proceedings and do not accept that your communicating with us constitutes service...The institution of contemporaneous proceedings for identical relief, or relief on the same grounds is abusive. Your clients are squarely, on their own admissions, in that circumstance. The proper response to an abusive proceeding is, at least, a stay. The [2018] Proceeding plaintiffs do not offer a stay and, indeed the use to which the [2018] Proceedings may be put is carefully reserved."

61. Ms Levy also maintained that “…we have a limited retainer with respect to [the 2017 proceedings]. To say as you do that we ‘act for Steve Shilkin and Ashley Shilkin in the 2017 case’ is false.”

62. On 5 April 2018, the Plaintiffs’ solicitor sent an email to the Defendants’ solicitor stating:

“The plaintiffs agree that the 2018 proceeding should be stayed pending determination of the parties’ respective notices of motion in the 2017 proceeding.”

63. The Plaintiffs’ solicitor pointed out that as “the Defendants have not been served, we do not need their consent for any orders in the 2018 proceedings”. However, the orders to be sought were provided “by way of courtesy”.

64. On 6 April 2018, an email was sent to the Court addressed to the Equity Registrar (with a copy sent to Ms Levy) in the following terms:

“Dear Registrar

We act for the Plaintiffs in this matter.

This matter is listed for directions on Monday 9 April 2018.

The Statement of Claim has not been served on the Defendants, but has been sent to their solicitor by way of courtesy. We have copied in their solicitor, by way of courtesy.

This 2018 proceeding makes the same claims as made in case number 2017/00119572 (2017 case), and without admissions, was filed to protect the plaintiffs from any limitations act [sic] arguments.

The parties agree that the appropriate course is for this 2018 proceeding to be stayed until the parties’ notices of motion in the 2017 case have been determined by Hallen J.

Accordingly please see attached short minutes of order which stay this 2018 matter until 25 May 2018.

Please let us know if the Orders are suitable to the Court.”

65. Shortly thereafter, also on 6 April 2018, Senior Deputy Registrar Hedge responded (with a copy sent to Ms Levy) in the following terms:

“Dear parties

Not prepared to ‘stay’ on an email and with no consent orders (which if not yet served, not possible).

However will note that not served and will grant one adjournment until Thurs 24 May 2018 (do not sit on a Friday) - (and noting that advised claims also in pending matter 17/119572)

It may well be that there will need to be an appearance and motion/affidavit if actual stay order is to be sought etc.

Matter is still in the list on 9 April but NO appearance will be required and will be adjourned to 24 May.”

66. (A copy of the two emails of 6 April 2018, were tendered, without objection, as Ex. NMA. However, they also formed part of Ex. NM1, being the exhibit to the second Defendant’s affidavit.)

67. (It is to be noted that in Battersby v Anglo American Oil Co Limited [1945] KB 23, at 32, Lord Goddard wrote that it was for the Court, and not for one of the litigants, to decide whether there should be a stay. The statement was made in the passage that was cited, with approval, in Kleinwort Bensen Ltd v Barbrak Ltd [1987] AC 597; by Lord Browne-Wilkinson in Dagnell v J L Freedman & Co [1993] 1 WLR 388; and by Ipp JA in Arthur Anderson Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104, at [81].)

68. At the recent hearing before me, it was accepted that the first Defendant had been provided with a copy of the Statement of Claim filed in the 2018 proceedings in late March 2018: Tcpt, 12 June 2019, p 101(15-16). The second Defendant, in his affidavit, did not refer to having been provided with a copy of the Statement of Claim filed in the 2018 proceedings in late March 2018, or at all. However, I consider it more probable than not, that having provided a copy to the first Defendant, Ms Levy would also have provided the second Defendant with a copy of that document in March 2018.

69. Despite the 2018 proceedings having been commenced, the Defendants’ notice of motion, which, of course, had been filed in respect of the 2017 proceedings, came on for hearing, before me, on 26 April 2018. The Court Book relied upon comprised some 244 pages: Tcpt, 26 April 2018, p 4(26-29). The transcript of the hearing on that day spanned 68 pages.

70. At the hearing on 26 April 2018, all parties appeared by lawyers (the Plaintiffs, then, by different counsel). Part way through the hearing, it became clear that the matter would not be completed within the time allotted, so various interlocutory directions, and notations, were made, in relation to the 2017 proceedings. The interlocutory proceedings filed in the 2017 proceedings were then listed, for hearing, before me, on 31 October 2018, with an estimated duration of 2 further days.

71. The fact that the 2018 proceedings had been commenced was raised by the Court, during the hearing on 26 April 2018. Without demur from counsel for the Defendants, counsel then appearing for the Plaintiffs stated, at Tcpt, 26 April 2018, p 16(25-33), that:

“They've been stayed by consent, as I understand it, your Honour, pending a determination as to the fate of these proceedings. But can I just confirm that. My solicitor nods and tells me that's what's happened. So they were filed I think March, and a precautionary measure against obviously the outcome of this suit. But we couldn't press both. We couldn't press both, your Honour.”

72. It was clear from what was said by counsel for the Plaintiffs, then, that the Plaintiffs appreciated that they could not continue with the two proceedings concurrently.

73. During the course of the hearing, I said, at Tcpt, 26 April 2018, p 12(27-34):

“…I have to say that the amount of paper in these two cases on both sides really defies belief. It seems clear that the defendants are well aware of the proceedings and you'd both be aware of the Court's power in s 14 to dispense with the rules. I have to say that a year has passed; you haven't got anywhere on both sides. You're both making arguments which really, at the end of the day, are not of great benefit to everyone because I doubt very much that from the plaintiffs' point of view, if you win these arguments, it's just going to continue and start all over again.”

74. And, at Tcpt, 26 April 2018, p 17(42-45):

“…as of today, does your side have instructions to accept service of any documents?

DOUGLAS: I don't have those instructions today.”

75. The solicitors who filed the Statement of Claim in the 2018 proceedings were the Plaintiffs’ former solicitors, Yates Beaggi Lawyers. On 16 May 2018, the current solicitors filed a Notice of Change of Solicitor in the proceedings. (The Notice of Change of Solicitor, itself, was not read in the proceedings.) A copy of the Notice was provided to Ms Levy and receipt thereof was acknowledged by her in an email dated 7 May 2018: Ex. NM1/40. The Plaintiffs’ current solicitors replaced their previous solicitors, Yates Beaggi.

76. Notwithstanding what had been told to the Court on 26 April 2018, regarding the consensual stay of the 2018 proceedings, the Plaintiffs, on 17 June 2018, purported to personally serve the Statement of Claim in the 2018 proceedings on the first Defendant in Western Australia. (A copy of the affidavit of service, which, itself, was not, separately, read in these proceedings, is annexed to Ms Otavski’s affidavit sworn 26 June 2018.)

77. On 14 June 2018, the Plaintiffs’ solicitor wrote to the Defendants’ solicitor noting that a copy of the Statement of Claim in the 2018 proceedings had been provided to her; advising that the 2018 proceedings were listed for a directions hearing on 20 June 2018; and asking whether the solicitor was authorised to accept service of the 2018 Statement of Claim on behalf of each of the Defendants. The letter also included the terms upon which the Plaintiffs proposed that the 2018 proceedings could continue “in the event that you are authorised to accept service of the Statement of Claim on behalf of each of the [D]efendants”. In the event that the solicitor was not authorised to accept service, an application for substituted service was threatened.

78. On 18 June 2018, Ms Otavksi wrote to Ms Levy confirming that the first Defendant had been personally served with the Statement of Claim in the 2018 proceedings and again asked whether Ms Levy had instructions to accept service on behalf of the second Defendant.

79. By a 5-page letter, dated 18 June 2018, to the Plaintiffs’ solicitor, Ms Levy referred to the status of the 2018 proceedings, stating that these proceedings were “an abuse of process and should be immediately dismissed or stayed”. The letter went on to note that “we do not hold instructions to accept service for, nor otherwise act for, Mr S Shilkin, in the [2018] proceedings”… we do not hold instructions to accept service for, or otherwise act for, Mr A Shilkin in the [2018] proceedings”. Despite this, Ms Levy noted that she had “not been provided with a copy of any notice of change of solicitors” in the 2018 proceedings, and that she was “unable to inspect the Court file without leave”.

80. On 20 June 2018, there was also an attempt to serve the second Defendant, in Western Australia. (It was not disputed that notice had been given to the Plaintiffs’ former solicitors that the second Defendant then resided in the United States of America. Counsel for the Plaintiffs acknowledged this to be so: Tcpt, 12 June 2019, p 112(25-30).)

81. Between 19 and 22 June 2018, there were various attempts made to serve the Statement of Claim in the 2018 proceedings on the second Defendant in Western Australia, despite the fact that the Plaintiffs ought to have been aware, since at least mid-March 2018, that he resided in California.

82. (It was accepted by the Plaintiffs that their former solicitors had learned that the second Defendant may be living in Los Angeles, California and that attempts had been made to serve the 2017 amended Statement of Claim there. Indeed, on 13 March 2018, Ms Levy had provided “a new address for” the second Defendant: Affidavit, Katja Jane Levy, 14 October 2018, which annexed Affidavit of Danielle Gleeson, 5 April 2018 at par 21, in the 2017 proceedings (which affidavit, itself, was not separately read in these proceedings).)

83. However, what had been stated appeared to the Plaintiffs to be inconsistent with a copy of an ASIC Organisation Extract for a company identified as Change Financial Limited, extracted on 19 June 2018, which revealed that the second Defendant was a director and that his address was “xx Nicholson Road, Subiaco WA”: Affidavit, Victoria-Jane Otavski, 26 June 2018 at par 22.

84. By letter dated 22 June 2018, Ms Levy, again, confirmed that she continued to act for the first and second Defendants as applicants under UCPR r 12.11 in relation to the 2017 proceedings. She then confirmed that she “now hold[s] limited instructions to act for the first [D]efendant” in the 2018 proceedings “as a UCPR r 12.11 applicant”. Ms Levy confirmed that she did “not hold instructions to accept service of any process” in the 2018 proceedings “on behalf of the second Defendant”. Ms Levy also stated that the grounds of the r 12.11 application “will include (i) that the proceedings is an abuse of process…and (ii) a failure to comply with mandatory s 16 of the Service and Execution of Process Act 1992 … in purportedly serving a person in Western Australia with an initiating process originating in New South Wales”. The letter went on to state “We do not hold instructions to accept service of any process in the [2018] Proceedings on behalf of the second [D]efendant”. She also noted “evident defects in the purported SEPA notice [which] substantially mirror those in notices relied upon by the plaintiffs” in the 2017 proceedings.

85. Also on 22 June 2018, the Defendants’ solicitor provided the Plaintiffs’ solicitor with case authority to the effect that it was an abuse to commence, or maintain, two, or more, proceedings which raise the same issues: Combe v Ziade [2000] NSWSC 848, a decision of Simpson J (as her Honour then was). (Exhibit NMB/33 incorrectly states the date on which the email was sent as 11 June 2018.)

86. On 26 June 2018, the Plaintiffs filed, in the 2018 proceedings, a notice of motion for substituted service of the Statement of Claim. (The notice of motion, itself, was not read in the matters before me on 11 and 12 June 2019, but is annexed to Affidavit of Katja Jane Levy, 14 October 2018, at p 146 – 149).)

87. On 27 June 2018, by letter, the Defendants’ solicitor requested the Plaintiffs to stay the 2018 proceedings. The Plaintiffs, in response, it appears, continued their attempts, as set out above, to serve each of the Defendants.

88. At the hearing before me, the Defendants’ counsel maintained that there was an abuse of process and that this matter should be considered as important in the determination of the notices of motion. However, he did not point to any correspondence in which the Plaintiffs’ solicitor had actually stated that they wished to prosecute both proceedings at the same time.

89. Earlier, I have referred to the Plaintiffs’ ex parte application for substituted service of the Statement of Claim in the 2018 proceedings upon the named Defendants, without notice to either. On 3 July 2018, Registrar Chetty dismissed the Plaintiffs’ notice of motion for substituted service. The learned Registrar noted:

“The application for substituted service has been refused.

If the person is neither within Australia, nor otherwise able to be served in accordance with Part 11 of the UCPR, at the time the proceedings are commenced, an order may not be made for substituted service.”

90. (Although counsel for the Plaintiffs submitted at this hearing that the Registrar’s decision was wrong, no review of that decision had been sought.)

91. On 10 July 2018, the first Defendant, in the 2018 proceedings, prompted by the events to which reference has been made, filed a notice of motion in which he sought a declaration under UCPR, r 12.11(1)(c) that the Statement of Claim, filed in the 2018 proceedings, “has [not] been duly served on the First Named Defendant” (that the word “not” was not included was, presumably, a typographical error) an order that the Statement of Claim in the 2018 proceedings be set aside as an abuse of process, or that the 2018 proceedings be permanently stayed, an order that leave be granted for the first Defendant to inspect the Court file, and an order that the costs of and relating to the motion be paid by the Plaintiff, or their legal practitioner. (Again, the notice of motion filed 10 July 2018 was not formally read, but a copy of it appears as an annexure to the Affidavit of Victoria-Jane Otavski, 23 October 2018 at p 35 – 38).

92. The basis of the first Defendant’s application was that the substance of the allegations in the 2018 proceedings had substantially replicated the substance of the allegations in the 2017 proceedings and that for the Plaintiffs to pursue both proceedings, against the same named Defendants, would be an abuse of process.

93. (At the time of the filing of the notice of motion of July 2018, service of the initiating process in the 2018 proceedings had not been effected on the second Defendant. However, it appears that the Plaintiffs were asserting that he had been served. This is a matter to which reference will later be made.)

94. The Plaintiffs contended that, on 13 August 2018, the second Defendant had been personally served with the Statement of Claim in the 2018 proceedings at xx Bronson Avenue, Los Angeles, in California. Leaving aside whether that occurred or not (there being a real dispute about it), the cover sheet used was as required by the Service and Execution of Process Act rather than as required for service outside of Australia by Form 161 of the UCPR.

95. As the Statement of Claim in the 2018 proceedings had been filed on 5 March 2018, it was required to be served upon each of the Defendants by 5 September 2018. There was no dispute that proper service of the Statement of Claim had not been effected prior to that date.

96. The first Defendant’s notice of motion, in relation to the 2018 proceedings, was listed, for directions, before Parker J on 21 August 2018, in the Applications List. Both lawyers, who appeared by telephone link, estimated the duration of the hearing as “2 hours or less”. On any view, this was a gross underestimate.

97. Mr Douglas informed the Court (Parker J) that:

“It is an application brought by the putative defendant under UCPR r 12.11 on two grounds. The first one is that the proceeding is entirely duplicative or alternatively overwhelmingly duplicative with an existing proceeding that has been brought in this Court. At the same time there is a dispute between the parties as to an amendment made or not made that would make it identical. There is no dispute that if it is identical it is an abuse of process.

The second issue is that service was effected without notice and therefore it is invalid.”

98. His Honour listed the notice of motion, for hearing, on 19 October 2018.

99. On 14 September 2018, four days before written submissions in the 2017 proceedings were due, in relation to the hearing listed before me in October 2018, the Plaintiffs’ solicitor proposed that the Plaintiffs would consent to the dismissal of the 2017 proceedings on the condition that both Defendants instructed Ms Levy, their solicitor, to accept service of the 2018 proceedings, with no order as to costs.

100. On 17 September 2018, the Defendants’ solicitor wrote a 6-page letter to the Plaintiffs’ solicitor, inter alia, advising that the proper course was to unbundle the costs question and for the Plaintiffs to consent to the Defendants’ application for relief under UCPR 12.11 and once done, move to discontinue the 2017 proceedings, at their leisure, without troubling the Defendants.

101. On 20 September 2018, Ms Otavski appeared before Registrar Walton in respect of a notice of motion, filed on 17 September 2018, on behalf of the Plaintiffs, in which orders for the extension of time within which to serve the Statement of Claim in the 2018 proceedings were sought.

102. At the date of the hearing before Registrar Walton, the Plaintiffs were about two weeks late in serving the Statement of Claim (which should have been served by 5 September 2018). This was the first, and the only, application for such relief that was made by the Plaintiffs in relation to the 2018 proceedings (although, of course, a similar application had been made in the 2017 proceedings.)

103. Registrar Walton made the following note and orders (as it is recorded in the Court's computerised court record system):

“THE COURT ORDERS:

1. NOTE: Motion not served on the defendant.

2. I (Registrar Walton) am of the view that in light of the listing before Justice Slattery, the motion should be served. I therefore refuse to deal with the Motion.

3. Plaintiff to [notify] the Defendant of the listing.”

104. The transcript reveals, that several times during the hearing before her, the Registrar referred to the possibility of the Plaintiffs approaching the Duty Judge if they were dissatisfied with what she proposed to do.

105. In fact, as will be read, about one week later, counsel for the Plaintiffs appeared before Rein J in the Duty Judge List. It will be necessary to return to the hearing before Rein J and his Honour’s order as this is the subject of the Defendants’ application.

106. The application before Rein J was the only occasion on which the Plaintiffs sought an order under UCPR r 1.12 on an ex parte basis for an extension of time for the service of the Statement of Claim in the 2018 proceedings.

107. (Although there was some debate, during submissions before me, about what was to be notified to the Defendants, having read the transcript of the proceedings before her, I am satisfied that the Registrar was referring to the Plaintiffs’ application for an extension of time to serve the Statement of Claim in the 2018 proceedings. Since the Registrar had stood it over to the hearing, on 19 October 2018, before Slattery J, she obviously wished the Defendants’ solicitor to be informed that this is what had occurred (unless the Plaintiffs approached the Duty Judge).)

108. Even if the learned Registrar meant that the Defendants’ solicitor should be informed when the notice of motion was to be heard, on the basis of Onefone Australia Pty Ltd v One.Tel Limited; Weston v Publishing and Broadcasting Limited [2007] NSWSC 1320, the Defendants were not entitled to appear on the hearing of the Plaintiffs’ notice of motion for the extension of the time for service of the Statement of Claim in the 2018 proceedings.

109. On 10 October 2018, on 12 October 2018, and again, on 15 October 2018, service of the Statement of Claim in the 2018 proceedings was attempted on the first Defendant in Western Australia. (The first Defendant contended that at this time he was in hospital.)

110. The Defendants’ notice of motion, referred to earlier, which had been listed by Parker J, came on for hearing, on 19 October 2018, before Slattery J, in the Applications List. I shall return to what occurred before his Honour later in these reasons.

111. On 22 October 2018, the first Defendant received, by delivery to him, a copy of the Notice of Change of Solicitor filed 16 May 2018 in the 2018 proceedings, a copy of the Statement of Claim, filed in the 2018 proceedings, and a Notice to first Defendant under the Service and Execution of Process Act 1992. At this time, he accepted “delivery” of the Statement of Claim in the 2018 proceedings in Western Australia.

112. On 24 October 2018, the second Defendant received, by delivery to him, a copy of the Notice of Change of Solicitor filed 16 May 2018 in the 2018 proceedings; a copy of the Statement of Claim, filed in the 2018 proceedings; a Notice to second Defendant in the form of Form 161 headed “Service outside the Jurisdiction”. The delivery of these documents, in the 2018 proceedings, to him was achieved because he had agreed to make himself available at a time, and place, in Los Angeles, that he agreed to attend for that purpose.

113. In his affidavit, the second Defendant stated:

“…I told my solicitors that they should tell the plaintiffs that I accept that the Statement of Claim in the 2018 Proceedings had now, for the first time, been delivered to me together with the required notice…”

114. Despite all of the above, at the hearing of their notice of motion, before me, counsel for the Defendants, continued to maintain that “proper service” had not been effected on either of the Defendants. As I understood what was submitted, this was because “such delivery will not be service if the Order [sic] of Rein J, to extend the time for service is [discharged], because the claim will be out of time…”: see affidavit of Ashley Shilkin, 25 October 2018 at par 32(a).

115. (The same point had been made in a letter dated 24 October 2018 from the Defendants’ solicitor to the Plaintiffs’ solicitor in the following terms:

“…

7. The foregoing is subject to this qualification: the originating process in the [2018] Proceedings was served pursuant to an ex parte extension of time.

8. Each named defendant retains his right to apply to set aside an ex parte order by way of inter partes hearing de novo pursuant to UCPR 12.11…

…

10. Each named defendant is concerned that the 23 October Motion seeks:

(a) unnecessary and inconsistent declarations and deeming orders without foundation in law or fact…;

(b) to re-open a point which was directly before Slattery J on 19 October 2018 as to whether Mr S Shilkin was ever served. That question was resolved by an admission in open Court, in lieu of the otherwise inevitable declaration sought;

(c) to assert, for the first time, an alleged service or delivery of the originating process to Mr A Shilkin on 13 August 2018, in the face of repeated admissions by your clients that Mr A Shilkin had not been served…

(d) declarations and orders which, necessarily, call into question each of their honesty and candour, and which may therefore bear on their credibility on contested issues in the [2018] Proceedings…;

(e) prematurely and impermissibly, interlocutory and ex parte declarations, contrary to law.

(f) to re-open whether the [2017] and [2018] Proceedings were duplicative and abusive, a matter which was resolved, conclusively, by the hearing giving rise to Slattery J’s order.

11. Each named defendant observes that, in light of the personal delivery of the originating process in the [2018 Proceedings] for the first time (a matter which each recognises), the [plaintiffs’ motion of 23 October 2018 seeking a declaration of valid service] is unnecessary.

12. They are therefore concerned that the 23 October Motion, inadvertently or advertently serves some collateral purpose, including an unwarranted, ex parte attack on credibility under the guise of (unnecessary) service orders…

13. If the named defendants have been validly served, the relief sought is unnecessary. If they have not been validly served, the relief sought is ex parte, the declarations are unavailable and the balance of the relief sought is interim, and reviewable de novo and inter partes. This will just multiply interlocutory hearings...” (The footnotes and italics used in original document have been omitted.)

116. In accordance with the orders made by Slattery J, and as has been referred to earlier, the Plaintiffs served a notice of motion on 23 October 2018, seeking orders for substituted, or informal, service, with the notice of motion to be listed, before me, for hearing on 31 October 2018.

117. In an email dated 26 October 2018, from Ms Levy, notice was given that Ms Levy “now hold[s] instructions to apply to set aside Rein J’s order. I attach an amended Notice of Motion which effects those instructions”.

118. On 31 October 2018, as anticipated by Slattery J, the matter came before me. Due to other Court commitments, and as I had earlier been informed that it would not be necessary to deal with the notice of motion relating to the 2017 proceedings that had been listed in April 2018, I was unable to deal with the Plaintiffs’ then recently filed notice of motion.

119. I referred the proceedings to the Registrar, noting that “there are continuing disputes relating to service of the Statement of Claim”.

116. On 9 November 2018, Registrar Walton listed the two notices of motion, to which I have referred, before me for two days. The Registrar made the following orders and directions (as recorded in the Court's computerised court record system):

“1. The UCPR 12.11 applicants (being the persons named as defendants in this proceedings) have leave to amend and file their motion originally dated 10 July 2018, in the terms attached hereto.

2. The relief sought by paragraphs 1, 3 and 7 only of that amended motion referred to in paragraph 1 above and whole of the plaintiff’s notice of motion filed 23 October 2018 (together, Motions) be listed for hearing together on with an estimate of 2 days.

3. Not later than 28 days prior to the hearing, each litigant file and serve any further evidence in relation to any of the Motions, including any evidence by any litigant as to whether on rehearing any new order should be made to extend time to serve the originating process.”

4. Not later than 21 days prior to the hearing, each litigant to file and serve any evidence in reply.

5. Not later than 14 days prior to the hearing, each litigant to file and serve any written submissions in support of any Motion.

6. Not later than 7 days prior to the hearing, each litigant to file and serve any written submissions in concession or opposition to any Motion.

7. The motions are listed for hearing on 11 & 12 June 2019 before Justice Hallen for 2 days.

8. The Court makes the usual order for hearing.

9. The Court makes the usual time directions.

10. Costs reserved.”

121. On 14 November 2018, the named Defendants filed an amended notice of motion to which reference has been made and which the Court has now had to deal.

122. Upon being informed that the matter was before me, my Associate, at my request, listed the matter for a pre-trial directions hearing, on 6 May 2019, on which date I made additional directions for the preparation of the hearing. The directions made were complied with.

123. At no time has either Defendant filed an Appearance in relation to the 2018 proceedings.

The application before Rein J

124. I propose next, to set out, briefly, what occurred in the proceedings with which Rein J dealt on 26 September 2018. I shall return to aspects of the matter by reference to the transcript, a copy of which formed part of the evidence before me, because the Defendants submitted that one of the reasons why an order should now be made under UCPR r 12.11 is that there were material non-disclosures made by counsel to his Honour at the time his Honour made the orders.

125. His Honour, having read the evidence, including the Statement of Claim, and having heard the submissions of counsel, concluded that “given [the Defendants’] assertion that there has been no effective service … the Plaintiffs should be given an opportunity to effect service”.

126. In a short, ex tempore judgment, his Honour concluded:

“HIS HONOUR: …Now, I will say this, that in support of the application for an extension of time I have received the affidavit of Ms Otavski of 13 September, and I note that there are number of letters attached to that affidavit from the solicitor who is acting for the named first and second defendants, but only in relation to a conditional appearance filed asking the solicitors for the plaintiff to bring to the Court’s attention correspondence from her, and that correspondence is annexed to the affidavit of Ms Otavski, and I have read it.

I will just say … , that essentially there are issues about whether or not service of these current proceedings and earlier proceedings has been effective, and the matter has been fixed before Slattery J on 19 October this year for determination.

The plaintiffs are seeking a way to avoid the need for those matters to be ruled upon and to effect service afresh without any of the problems that have been identified previously, and in my view, it is appropriate that time be extended for the service of the statement of claim in these current 2018 proceedings. In particular, I have regard to the fact that on the defendant’s case there has been no effective service to date on their part, and their only appearance to date has been to contest the effectiveness of earlier service.

In those circumstances, I think it is appropriate that, given their assertion that there has been no effective service, that the plaintiffs be given an opportunity to effect service without any of those issues, and I extend the time.

I make an order in accordance with the short minutes of order, initialled by me and dated with today’s date and placed with the papers, initialled in the top right hand corner of that document.”

127. His Honour then made the following orders (as recorded in the Court's computerised court record system):

“VERDICT ORDER OR DIRECTION:

1. Orders made in accordance with the Short Minutes of Order initialled by his Honour, dated with today’s date and placed with the papers (ex tempore reasons given):

(1) Pursuant to Rule 1.12 of the Uniform Civil Procedure Rules 2005 (NSW), the time for service of the Statement of Claim on each of the First Defendant and the Second Defendant be extended to 5 December 2018.

(2) Costs reserved.”

128. No submission has been made that Rein J failed to give adequate reasons for making the orders that his Honour did.

The application before Slattery J

129. I shall next set out what occurred in the proceedings with which Slattery J dealt on 19 October 2018. I do so by reference to the transcript, a copy of which formed part of the evidence before this Court and his Honour’s reasons for judgment.

130. Slattery J, unsurprisingly, described what had occurred as “a disgrace”, as “really appalling” and as “a public scandal”. His Honour noted that the Defendants’ notice of motion raised three issues for the Court’s consideration: whether there should be a stay or dismissal of the 2017 proceedings; whether a declaration should be made to the effect that legal process in the 2018 proceedings had not been validly served on the first Defendant; and whether the Court had jurisdiction to entertain any application under UCPR, r 12.11 before the Defendants had been served with legal process. (Some of these issues were resolved by the time the notice of motion came to be heard.)

131. Following discussions between Bench and Bar, the transcript of which covers 38 pages, Slattery J delivered an ex tempore judgment which bears the medium neutral citation Smith v Shilkin [2018] NSWSC 1582.

132. In the reasons for judgment, his Honour stated, at [12]- [29]:

“Stay or Dismissal?

The defendants contend that the 2018 proceedings are an abuse of process because they duplicate the allegations made against them in the 2017 proceedings. It is not in contest that the allegations in both proceedings are substantially the same.

It is trite law that a party cannot bring proceedings making the same allegations or substantially the same allegations against another party in two jurisdictions: see Mason J’s judgment in Moore & Ors v Inglis (1976) 50 ALJR 589 (‘Inglis’) and Henry v Henry (1996) 185 CLR 571; [1996] HCA 51, at 591. Neither the allegations nor the parties need to correspond exactly in both proceedings for the principle to apply, provided there is a substantial overlap.

But in response to this, in their written submissions and again in Court, the plaintiffs said that they would consent to a permanent stay of the 2017 proceedings and only wished to maintain the 2018 proceedings in future.

That would solve any problem of vexation or oppression, which would otherwise arise from the bringing of two sets of proceedings. The defendants’ initial response to the plaintiffs taking this position was that the plaintiffs had previously taken an inconsistent position, in which they had undertaken not to pursue the 2018 proceedings and only to pursue the 2017 proceedings. But it is certainly not clear from the correspondence that the plaintiffs had given any such undertaking. Moreover, even if it had been given, it could have been withdrawn with leave. But, subject to an issue to which I will shortly come, there is now no opposition by the defendants to the course the plaintiffs foreshadow of agreeing to a permanent stay of the 2017 proceedings.

So, the Court will issue a permanent stay in the 2017 proceedings.

But a subsidiary issue arises as to the timing of this stay. This issue has been the subject of short argument today. A number of procedural issues in the 2017 proceedings were listed for two days' hearing before Hallen J on 31 October and 1 November 2018. One of these was whether or not Mr Ashley Shilkin was indeed a party to the 2017 proceedings as a result of the amendment sought to the originating process in those proceedings.

Mr Douglas, on behalf of the defendants, the applicants on the motion, has pressed upon the Court today that this question should be allowed to be determined before a permanent stay is imposed in the 2017 proceedings. Mr Douglas submits that Mr Ashley Shilkin is a director with public responsibilities, who will have to disclose that he is arguably a party to the 2017 proceedings and that he is entitled to know whether or not he is such a party before this permanent stay is imposed. Mr Douglas submits that this question should therefore be determined before the stay is put in place.

I disagree. Any analysis of the past 18 months’ conduct of these proceedings enables the view to be quickly drawn that there have been far too many interlocutory applications, all dealing with procedural questions relating to whether or not legal process has been served. The substantive issues in the proceedings are still a long way from determination.

Given this history, it cannot be realistically contemplated that the Court will invite yet another interlocutory hearing to be conducted in proceedings which are about to be permanently stayed in the orders I am to make today. Moreover, there is very little public interest in determining the question of Mr Ashley Shilkin's position as a party to the 2017 proceedings. Once the proceedings are permanently stayed, there is little difference from Mr Ashley Shilkin’s point of view in him having to disclose that he is arguably a party to proceedings which have been permanently stayed compared with his not having to make any disclosure at all.

Should a Declaration Be Made?

The second issue is whether or not, it having been conceded that service has not taken place on Mr Steven Shilkin, that a declaration to that effect should now be made. At first, the applicants on the motion wanted a declaration made. But after a clear admission was placed on the record by the plaintiffs that service on Mr Steven Shilkin had not been effected, that issue has gone away. And the defendants no longer pressing for a declaration to be made.

The position of both parties is now consistent with established principle that courts should not make declarations unless the parties have a real interest in a matter being determined between them: Ainsworth v Criminal Justice Commission (1992) 174 CLR 564; [1992] HCA 10. It seems to me that the issue of service on Mr Steven Shilkin has resolved and the declaration is not needed.

The Defendants’ Locus Standi at this Stage

The third issue is whether, on the July 2018 motion, the defendants had standing to seek orders that the originating process in the 2018 proceedings was an abuse of process or to seek any other relief under UCPR, r 12.11, prior to service on either defendant of the 2018 proceedings. Once the plaintiffs conceded that they had not as yet validly served the 2018 proceedings on Mr Steven Shilkin, they were therefore not contending that they had served either defendant with process in these proceedings. So the question of their locus standi arose.

The Court handed down to the parties a copy of Barrett J’s decision in Onefone Australia Pty Ltd v One.Tel Limited; Weston v Publishing and Broadcasting Limited [2007] NSWSC 1320 (‘Onefone’), which was considered with approval in Weston in Capacity as Special Purpose Liquidator of One. Tel Ltd (In Liquidation) v Publishing and Broadcasting Limited (2012) 88 ACSR 80; [2012] NSWCA 79. According to Onefone, applications for extension of time to serve process are normally undertaken in the absence of the defendant. It follows that some other applications that are akin to applications for extension of time can all be undertaken in the absence of the defendants. Based on the principles stated by Barrett J in Onefone, there is no obligation in such cases for the Court to give the defendants a hearing when, after service, they will have an entitlement to be heard to challenge the decision.

After considering Onefone, the defendants did not contend they had standing to appear to pursue the July 2018 motion. Although the issue of standing had become academic so far as the July 2018 motion was concerned (given the parties’ agreement to a permanent stay of the 2017 proceedings and the plaintiffs’ admission that the 2018 proceedings had not been served on Steven Andrew Shilkin), the issue will not be entirely academic in what is left of the service issues in the 2018 proceedings. The plaintiffs foreshadowed that they wished to bring another motion, for substituted service and related orders, which they contended either fell within the principles of Onefone, or upon or which the defendants had no right to appear.

Prior to the parties agreeing to a permanent stay of the 2017 proceedings they had been listed for two days before Hallen J on 31 October 2018 and 1 November 2018. Those hearing dates can now be vacated, as there is now no present need to argue any matter in the 2017 proceedings. But after consulting with Hallen J, I have given leave to the plaintiffs to make returnable any proposed motion in the 2018 proceedings before his Honour at 10.00am on 31 October 2018. For the reasons stated here, it is anticipated that any such motion will be unopposed and should take little time.

Argument then proceeded to deal with issues of costs. But before that, a subsidiary issue was raised. The Court adverted to the fate of another motion filed on 17 September 2018 in the 2018 proceedings to extend time for the service of the statement of claim on the first and second defendants up to 5 December this year.

That motion was heard before Rein J on 26 September 2018. Rein J made orders on 26 September extending the time for service of process in the 2018 proceedings until 5 December 2018. But past disputes had arisen about whether Rein J’s 26 September 2018 orders were validly made in the absence of the defendants. The parties did not refer Rein J to Onefone, which entirely justified the orders which Rein J made in the absence of the defendants. I have now referred the parties to Onefone and it seems to me that Rein J’s extension of time order is not liable to be set aside on the grounds that the defendants were not present when the orders were made.

After reading Onefone, the defendants did not seek to advance on this occasion any contentions challenging Rein J’s 26 September 2018 orders. The Court will proceed on the basis that they are not challenged.”

133. His Honour then made the following orders, at [36]:

“1. Order that proceedings 2017/119572 (‘the 2017 proceedings’) be permanently stayed.

2. Note the plaintiffs in the 2018 proceedings admit that service of process in those proceedings has not taken place on Steven Andrew Shilkin.

3. The plaintiffs are to file by 4pm on 23 October 2018 any notice of motion (‘the proposed motion’) seeking orders for substituted or informal service and related orders in proceedings 2018/71614 (‘the 2018 proceedings’) together with any evidence upon which they wish to rely in support of the proposed motion.

4. Order that any application for costs in the 2017 proceedings for matters and events occurring up to the date of this stay order, will be determined in accordance with order 10 below.

5. The Court notes that the counsel and solicitors who appeared for Steven Andrew Shilkin and Ashley Shilkin (‘the Shilkins’) on other applications before the Court today were asked whether it might be useful to serve the proposed motion upon their solicitor Katja Jane Levy, in order to provide advance notice of that motion to the Shilkins; and the Court was informed in response that the Shilkins, who are likely to be the respondents to the proposed motion, have given no present instructions to counsel or solicitors on the issue of accepting service but they said that they would attempt to communicate with the Shilkins and if they obtained instructions they said they would communicate those instructions to the plaintiffs.

6. Direct that by 4pm on 23 October 2018 that the plaintiffs serve the proposed motion on the offices of Katja Jane Levy, solicitor, care of her professional address in Perth but service in accordance with this order will not bind the defendants to any form of service of the said process and should be effected only for the better administration of justice.

7. If the defendants wish to appear at the hearing before Hallen J on 31 October 2018, having received documents from the plaintiffs in accordance with the above orders by 23 October 2018, the Court expects that they will file and serve any evidence upon which they wish to rely to support their appearance by no later than 4pm on 26 October 2018.

8. Direct that by 4pm on Monday, 29 October 2018 that the plaintiffs file and serve any submissions upon which they wish to rely in support of their applications before Hallen J on 31 October 2018 upon Katja Jane Levy care of her professional address in Perth. Service in accordance with this order may be effected for the convenient administration of justice and without thereby binding the defendants to any form of service of the process.

9. The hearing of the eight questions listed for determination by Hallen J on 31 October and 1 November 2018 is vacated and instead any proposed motion filed in accordance with Order 3 may be made returnable for hearing before Hallen J on 31 October 2018.

10. Costs of the Shilkins’ July 2018 motion and of today’s application are reserved for determination by the trial judge after the hearing of the 2018 proceedings (together with the determination of all issues of the costs of the 2017 proceedings before they were stayed today).”

134. Relevantly, before Slattery J, in written submissions sent to his Honour, counsel for the Plaintiffs accepted the Plaintiffs only wished to continue with the 2018 proceedings and that a permanent stay of the 2017 proceedings should be granted.

135. For his part, despite what had been written in his written submissions (and I might say what was advanced orally before me), counsel for the Defendants, accepted that, because the Defendants had not been served, they did not have the right to appear before Rein J on the application to extend time for service of the Statement of Claim in the 2018 proceedings, and that, an admission having been made that the first Defendant had not been served, it was unnecessary for declarations to be made that service of the Statement of Claim in the 2018 proceedings had not occurred. Counsel also maintained that he was not appearing for the second Defendant as he had not been served.

The issues currently before this Court for determination

136. In accordance with directions made by this Court, the parties’ lawyers provided a Joint Memorandum dealing with various matters required to be dealt with by agreement. Relevantly, the lawyers identified “The Precise Issues to be determined by the Court at the Hearing” as follows:

“Issues for determination (identified by the Plaintiffs)

1.   Whether the plaintiffs are entitled to a declaration that personal service of the Statement of Claim was effected, or is to be taken to have been effected, upon the defendants (paragraphs 1 to 4 of the plaintiffs’ notice of motion filed on 23 October 2018).

2.   Alternatively, whether the plaintiffs are entitled to an order that the requirement of personal service of the Statement of Claim on the defendants be dispensed with, or that service upon the defendants be effected by service upon the solicitor for the defendants (paragraphs 5 to 8 of the plaintiffs’ notice of motion filed on 23 October 2018).

'chooses not to serve a claim where the facts of the case sufficient to enable the claim to be pleaded are known to the plaintiff.'

This observation was made having regard to the requirement in the Queensland rules that a party impliedly undertakes to the Court and to the other parties to proceed in an expeditious way. In Buzzle, Ipp JA pointed out that (at [35]) the provisions of the CP Act are 'akin to (and, in some aspects, go further than) the Queensland ... rules'. In Kirk, Tobias JA distinguished IMB on the facts, but cast no doubt on the applicability of the reasoning in that case in New South Wales."

226. Sackville AJA, referred to Rich v Long and stated, at [41]:

“In view of the criticisms made by Young CJ in Eq and the arguments advanced in the present case, there is much to be said for amending the UCPR to confer a discretion on the court to allow the unserved party to be heard in opposition to an application for an extension of time for service. Among other advantages, this might minimise delay and unnecessary expense, at least in the long run. It is also likely to avoid the risks to the perceived institutional integrity of the court that can flow from decisions that may be seen (particularly by those unversed in the nuances of ex parte applications) as difficult to reconcile.”

227. Because it is relevant to one of the matters raised by the Defendants, even though Slattery J already referred to it in his decision, I repeat what was said by Barrett J in Onefone Australia Pty Ltd v One Tel Limited [2007] NSWSC 1320, at [9]-[12]:

"There is, in any event, a strong indication in the rules of the court themselves that a person named as a defendant in unserved originating process is not intended to be heard on an application for extension of the time for which the process remains valid for service. Rule 12.11(1)(e) of the Uniform Civil Procedure Rules 2005 is in these terms:

'In any proceedings, the court may make any of the following orders on the application of a defendant:

...

(e) an order discharging any order extending the validity for service of the originating process.

This, it seems to me, recognizes the obvious point that there will be cases in which filed but unserved process is never served. Unless and until a filed process is served, the defendant has not been drawn into the proceeding. The rule works on the basis that the named defendant is a non-participant in the process by which the court decides whether the time for service should be extended and that a defendant’s interest in that question, if there is any, is something that is to be aired and dealt with after the event – that is, when the plaintiff has, by service, shown that it does in truth draw the defendant into the proceeding.

To put this another way, a defendant who has been served and who is thereby given a definitive status in relation to proceedings which it is by then clear will be pursued should be heard only retrospectively on the question of extension of time for service, assuming he or she wishes to be heard at all.

This is, to my mind, an example of a situation in which the rules of court expressly put to one side the general expectation that affected persons should be heard before any order affecting them is made. The expectation evidenced by the rules in this area is one of being heard after the event, not before the event, in much the same way as one might expect in relation to, for example, a subpoena. Much time and effort could be wasted if an unserved defendant were heard on a question that would become entirely academic if the plaintiff eventually decided not to serve at all."

228. Thus, the rule gives, to a defendant, a right to be heard retrospectively in all cases where renewal is granted. Whilst the application by the plaintiff may be made ex parte, an order extending the time for service of a statement of claim made on an ex parte basis must be regarded as provisional pending any application made by the defendants to set aside the ex parte order.

229. In this case, one of the reasons why the Court is asked to discharge the order made by Rein J, is alleged “mis-disclosures”, or non-disclosure, of material matters.

230. In Aristocrat Technologies Australia Pty Limited & Ors v Re Allam & Ors (2016) 327 ALR 595; [2016] HCA 3, a decision of Gageler J, his Honour wrote, at [15]:

“It is an elementary principle of our ordinarily adversarial system of justice that full and fair disclosure must be made by any person who seeks an order from a court ex parte, with the result that failure to make such disclosure is ordinarily sufficient to warrant discharge of such order as might be made. The principle is not confined to particular types of interlocutory orders. Its rationale lies in the importance to the administration of justice of the courts and the public being able to have confidence that an order will not be made in the absence of a person whose rights are immediately to be affected by that order unless the court making the order has first been informed by the applicant of all facts known to the applicant which that absent person could be expected to have sought to place before the court had the application for the order been contested.” (Omitting citations)

231. It is difficult to provide a general definition of the extent of the disclosure required on an ex parte application because each case depends so much on its own facts.

232. However, the principles were discussed by Ward J (as her Honour then was) in Weston v Publishing and Broadcasting Ltd [2011] 83 ACSR 206; [2011] NSWSC 433, at [165]-[167]:

“The relevance of non-disclosure on an application of this kind was considered in Savcor Pty Ltd v Cathodic Protection International APS (2005) 12 VR 639, [2005] VSCA 213, where Gillard AJA noted the existence of the court's inherent jurisdiction (unless displaced by statute), in circumstances where an order is made ex parte without notice, to re-hear the application and contrasted the position where an application is made to set aside an ex parte order based on non-disclosure.

There, Gillard AJA noted (at [21] - [22]):

... The Rules of Court also give the right to a party to apply to the court for an order to set aside an order made without notice. See r 46.08(b). If an application is made to the court pursuant to the inherent power or the Rule, the court re-hears the original application. In those circumstances, the general practice is to refer the matter back to the judicial officer who made the order but it is not fatal if that is not done. It is a re-hearing of the whole application. However, at the re-hearing the judicial officer has the benefit of submissions and any material the opposing party wishes to place before the court. I do not accept the statement made by the Full Court of Western Australia in Bellgroup NV (in liq) v Aspinall where the Court seemed to be of the view that an application to set aside in those circumstances could only proceed if new material evidence was placed before the court. In my opinion, the jurisdiction is much wider and gives the right to the party affected by the order to appear before the court and put submissions as to why the order should not be made on the materials which were before the judge who made the first order. It is a re-hearing and the court may reach a different decision after hearing submissions. Sir John Donaldson MR in WEA Records Ltd v Visions Channel 4 Ltd wrote concerning ex parte orders:

He (the judge) expects at a later stage to be given an opportunity to review his provisional order in the light of evidence and argument adduced by the other side and, in so doing, he is not hearing an appeal from himself and in no way feels inhibited from discharging or varying his original order.

See also observations of Sir Leo Cussen in Zinc Corporation Ltd v Hirsch, to the same effect. In my opinion, this jurisdiction is different to the situation when an order made ex parte is set aside because there was a material non-disclosure of a material matter by the party who obtained the order. The order is set aside because of some irregularity and not on the merits. When this jurisdiction is enlivened, the court's function is to determine on the material that was placed before the judicial officer at first instance, whether a party has failed to discharge the obligation which rests upon any party seeking an order ex parte, namely, making a full and fair disclosure of all matters within its knowledge and which are material, to the court. The court is not concerned whether the order should have been made on the material before the court. Whether or not the court will set aside the order upon proof of the failure to discharge the obligation depends upon the particular circumstances. (my emphasis)

Ordinarily, where an ex parte order has been set aside for material non-disclosure at the time it was made, the party who obtained that order is able to make a fresh application for the order (based on full disclosure).”

Determination

233. I have considered, de novo, the ex parte order made by Rein J on 26 September 2018, extending the time to serve the Statement of Claim. I have, in doing so, naturally, considered all of the evidence read on the application: Issue 1.

234. The following matters lead me to conclude that the decision made by Rein J was unexceptionable, and that an order in the terms that he made it ought to have been made. In all the circumstances, I do not propose to discharge his Honour’s order.

235. Relevantly, the time for service of the Statement of Claim expired on 5 September 2018. The application to extend the time was made by notice of motion filed within 2 weeks of that date, and Rein J dealt with the matter within 3 weeks of that date. There is no dispute that the application for the extension of time was made after the period within which to serve the Statement of Claim in the 2018 period had expired: Issue 2(a).

236. In my view, the length of the delay was relatively short and unintended by the Plaintiffs. It is clear from all that I have read, that this is also not a case in which the Plaintiffs were delaying service upon each of the Defendants deliberately or intentionally (other than, for a short period of time, because of the fact that the 2017 proceedings were listed before me at the end of October 2018).

237. The Statement of Claim in the 2018 proceedings was not filed and then left to lie dormant for a long period. Within a few days of the 2018 proceedings having been commenced, a copy of the Statement of Claim was provided to the Defendants’ solicitor “as a matter of courtesy”. I am satisfied that this was an obvious step taken for the purposes of bringing the Statement of Claim to the notice of the Defendants. (A party may be aware of proceedings being on foot without the claim having been formally served: Agricultural & Rural Finance Pty Ltd v Kirk, at [123].)

238. It was then a matter of a few weeks during which time discussions of a stay of the proceedings occurred, following which period, the Plaintiffs’ solicitors attempted to serve the Statement of Claim but continued to have difficulties serving the Defendants. From mid-June 2018, attempts were made to serve the Statement of Claim.

239. I accept that some of the difficulties were caused by service of a Statement of Claim on the first Defendant without ensuring that the proper notice under the Service and Execution of Process Act was attached, and attempting to serve the second Defendant, in Western Australia when, to the knowledge of at least the Plaintiffs’ former solicitors, he was in Los Angeles, California.

240. In this regard, the Plaintiffs’ former solicitors must assume some responsibility for the failure to serve the Statement of Claim more promptly than it was. In my view, these errors are not ones for which the Plaintiffs, themselves, should be held responsible. Undoubtedly, they could have been avoided.

241. In my view, the length of the delay, and the causes of the delay, as set out above, at least in part by errors on the part of the Plaintiffs’ solicitors, was each excusable. There was a candid account given to Rein J of the problems being faced in respect of service and there has been a candid account given to this Court on behalf of the Plaintiffs. Action on the part of the Plaintiffs, even though, perhaps, misconceived and certainly ineffective, should be regarded more indulgently than complete inaction: Victa Ltd v Johnson (1975) 10 SASR 496, per Bray CJ, at 502: Issue 2(b).

242. The explanations that have been offered for the delay in serving the Statement of Claim in the 2018 proceedings go far beyond the alleged “playing of ducks and drakes”. I confess that a jaundiced view of events might suggest such an element existed.

243. In this regard, it is fair to say that until October 2018, the Defendants have not made it easier to formally serve the Statement of Claim on either of them. Whilst this is not a case where either Defendant could not be located, neither assisted in agreeing to formal service of a document, a copy of which was in his possession, and in the possession of his solicitor, until they did so following the hearing before Slattery J in October 2018.

244. The Defendants were well aware of the proceedings, having been provided with a copy of the Statement of Claim in the 2018 proceedings, which had been provided to their solicitor on 8 March 2018, and provided to each of them, later, in March 2018, by her. Indeed, the amended Statement of Claim, filed in the 2017 proceedings, which was in the same terms, had been provided to their solicitor, Ms Levy, in December 2017, and to each of the Defendants, by her, later in December 2017. Having been made aware for some time, both that the Statement of Claim had been filed and the general nature of the claims being made against each of them, each of the Defendants could have made arrangements to accept formal service at any time prior to the expiry of the time for service, or could have instructed Ms Levy to accept service. However, each of the Defendants maintained that he was not amenable to the jurisdiction of the Court.

245. (In this regard, no inference is being adversely drawn about the Defendants’ conduct. It is simply a fact that, on the evidence relied upon, and as I have found in relation to both of the Defendants, each had a copy of the Statement of Claim and the amended Statement of Claim in the 2017 proceedings, in December 2017, and a copy of the Statement of Claim filed in the 2018 proceedings in March 2018.)

246. If that were not enough to ensure that the Defendants were made fully aware of the proceedings brought by the Plaintiffs, in late October 2018, in accordance with what the Plaintiffs had been told, and with the co-operation of each of the Defendants, both were served with the Statement of Claim in the 2018 proceedings. They have continued to argue about service since then, even now asserting that the Statement of Claim was “delivered” not “served”.

247. This is not a case where either of the Defendants has been left in ignorance of proceedings that had been taken against them. In fact, despite over 18 months having passed since the amended Statement of Claim in the 2017 proceedings, which revealed the nature of the case being advanced against each of them, the case has not been advanced because various interlocutory steps, most of which involve disputes about service, have been taken: Issue 2(d).

248. Detailed knowledge of the existence of the proceedings, and of the originating process, must be regarded as going some distance to mitigating any prejudice that a defendant might otherwise suffer through delay in actual service of process, if unaware of the proceedings until service is actually effected.

249. To the extent that the Defendants have sustained any prejudice since December 2017, it is arguable that prejudice has been caused by disputing proper service since that time. (I have picked that month even though the 2017 proceedings have been stayed as it was accepted that the amended Statement of Claim in the 2017 proceedings and the Statement of Claim in the 2018 proceedings are in identical terms.)

250. One matter of prejudice relied upon by the Defendants relates to a resolution sought to be put to a Meeting of Creditors of Inosite, held on 7 November 2018, which related to the disposal of the books and records of the company 12 months after the dissolution of the Company or earlier at the discretion of ASIC, which resolution was passed without dissent.

251. It is important to note that the Meeting of Creditors occurred nearly 12 months after the Defendants came to have a copy of the Statement of Claim in the 2017 proceedings, and almost 8 months after the Defendants came to have a copy of the Statement of Claim in the 2018 proceedings. There is no evidence that each of the Defendants was not given notice of the Meeting (although in submissions it was asserted, from the Bar table that they were not creditors of Inosite): Tcpt, 11 June 2018, p 59(6-19).

252. In any event, there is no suggestion that either of the Defendants have informed the Liquidator of the 2018 proceedings, or that either has, or both have, made a request that the books and records of Inosite not be disposed of. They did not need to be creditors to take either of those steps.

253. The evidence from Ms Levy on this point is instructive. On 14 May 2019, she telephoned the office of the Liquidator and spoke to Ms H Ponton, Head of Forensic Accounting who gave her certain information. Ms Levy, apparently, did not ask, and was not told, anything about whether the books and records of Inosite had been disposed of, and there is nothing to suggest that Ms Levy informed Ms Ponton of the 2018 proceedings, or asked how the Defendants could ensure that if they had not been, how disposal of the books and records of Inosite, could be protected: Affidavit, Katja Jane Levy, 20 May 2019.

254. If the books and records of Inosite are disposed of, and if there is prejudice suffered by either of the Defendants, each appears to have had available to him an opportunity to avoid that prejudice.

255. As earlier stated, the Defendants may, in any defence, raise limitation issues if either wishes, or both wish, to do so. Furthermore, if they do so, and are found to be correct, they must still deal with the balance of the claims made by the Plaintiffs: Issues 2(e), (f) and (g).

256. I have earlier dealt with the Defendants’ complaint regarding the Plaintiffs alleged failure to comply with the duty of disclosure. I am not persuaded, having read the transcript of evidence before Rein J, that the complaints have any merit at all. In any event, since I must deal with the matter afresh, I am satisfied that all relevant matters have been disclosed

257. Generally, the Court regards it inappropriate to determine a question as to the application of limitation periods on an interlocutory application, such a question best being best considered in light of all of the facts: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 and Young v Waterways Authority of New South Wales [2002] NSWSC 612.

258. As earlier stated, counsel for the Defendants maintained that the merits of the Plaintiffs’ action constitute a factor to be weighed in the balance in determining whether the time should be extended. However, as I repeated during submissions, assessing the merits for that purpose is not possible in this case at this time. The claims against the Defendants are of serious misconduct and the material facts, currently, are no more than assertions that have not been supported in evidence and have not been tested. Similarly, since no defence has been filed, or served, by either, it is not possible to know, with any degree of certainty what will be raised by each of the Defendants. It does not seem to me, that an application, such as the one currently before the Court, is the occasion for a determination of the merits of the Plaintiffs’ claims: The IMB Group Pty Ltd (in liq) v Australian Competition and Consumer Commission [2007] 1 QdR 148, at [38]; [2006] QCA 407.

233. Furthermore, the question of limitation, which is relied upon by the Defendants, at least in respect of some of the claims, might be complex and, in all probability, will require investigation of the facts and also substantial argument. Extending the time for service of the Statement of Claim will not deprive the Defendants of any limitation defence as that defence can still be pleaded in any Defence to the Statement of Claim. It is non-compliance with the UCPR, not disregard of the Limitation Act 1969 (NSW), which has brought the Plaintiffs to Court seeking the exercise of discretion to extend the time. However, I have not ignored there being, at least potentially, a Limitation Act defence that may be raised by the Defendants.

234. For the reasons set out earlier, the order made by Rein J should not be set aside upon the bases identified in Issue 3. The Defendants, because they had not been served, had not been drawn into the 2018 proceedings when, on 26 September 2018, the matter was dealt with by Rein J and they had no definitive status in relation to those proceedings: Issue 3.

235. In any event, even if the limitation period might have expired before the order by Rein J was made, it was conceded by counsel for the Defendants that the limitation period had not expired in relation to more than half of the value of the claims made by the Plaintiffs.

236. In addition, whilst it is true that there may be some points of pleading in respect of the Statement of Claim, to which counsel for the Defendants referred, which may have some merit, those points may be overcome by amendment. No doubt, when the pleading complaints made are considered, an opportunity will be taken by the Plaintiffs to recalibrate the claims made.

237. I have not put aside the merits of the Plaintiffs’ claims as having no possible relevance, and have considered the arguments on this topic advanced on behalf of the Defendants. These are merely factors in this particular case that ought to be considered before the discretionary judgment is exercised. In the circumstances, I do not think it is appropriate to determine these issues on the applications presently before the Court. The parties are not in a position to address a full argument on that issue and the Court simply cannot make any meaningful assessment of the Defendants’ prospects of success in successfully raising any defences.

238. In the present case, by the time of the rehearing, each of the Defendants had acknowledged that the Statement of Claim had been “delivered” to him in late October 2018. However, 8 months later, each is still maintaining that Rein J should not have made the order extending time.

239. In my opinion, when regard is had to all of the factors in the case, including ss 56 to 59 of the Civil Procedure Act to which reference has been made, the cogency of the case in favour of not discharging his Honour’s order is far stronger than the cogency of the case for discharging his Honour’s order extending the time for service of the Statement of Claim in the 2018 proceedings. Indeed, the pursuit of all of the satellite interlocutory proceedings of the kind here in question does not fulfil the overriding purpose of the Civil Procedure Act. To the contrary, it is the very kind of conduct which should be avoided if those purposes are to be achieved: Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46, at [59].

240. In all the circumstances of this case, and in the interests of justice, I do not propose to make an order discharging the order made by Rein J on 26 September 2018 extending the validity for service of the Statement of Claim in the 2018 proceedings.

241. Finally, I am satisfied that each of the Defendants has been served with the Statement of Claim in the 2018 proceedings on the dates that the Statement of Claim was delivered to him in October 2018. Even if they had not been served, it is clear beyond all doubt that the Statement of Claim in the 2018 proceedings has come to the attention of the Defendants and they have had this document for a lengthy period of time. This Court should not hesitate, now, to deem service to have been effective. The approach of the Defendants, at least in part, has delayed, and frustrated, the progress of the 2018 proceeding.

242. In the circumstances, I am also not prepared to set aside the service of the Statement of Claim in the 2018 proceedings at that time: Issue 4.

243. Should it be required, or perhaps, for abundant caution, I am prepared to make a declaration in terms of Paragraphs 1 and 2 of the Plaintiffs’ notice of motion filed 23 October 2018: Issue 5.

244. As stated, it is not possible to deal with what consequential orders should be made as to the costs of the 2017 proceedings and in respect of the 2018 proceedings: Issue 6.

245. It may be, bearing in mind, the substantial time and costs involved, and my concern, expressed more than once, that the parties and their lawyers have not complied with their obligations to facilitate the just, quick and cheap resolution of the real issues, that a special costs order will be warranted. However, I leave this for further argument if the parties are unable to agree on how the costs should be determined.

246. I do not propose to make any orders, at this stage, to give effect to these reasons for judgment. Instead, Counsel are invited to agree a form of orders to give effect to these reasons and are directed to provide to my Associate, within 14 days, in hard and soft copy, short minutes of order, for the Court’s consideration.

247. When these reasons are delivered, the matter of the costs of the two notices of motion, and any argument about the form of orders reflecting these reasons, will be listed for hearing.

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Decision last updated: 01 August 2019