Timbercorp Finance Pty Ltd (In Liq) v Allan

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S ECI 2015 000121

TIMBERCORP FINANCE PTY LTD (IN LIQUIDATION) (ACN 054 581 190)	Plaintiff
v
GRANT ROBERT ALLAN	Defendant

---

JUDGE:	DERHAM AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	3 August 2016
DATE OF JUDGMENT:	26 August 2016
CASE MAY BE CITED AS:	Timbercorp Finance Pty Ltd (In Liq) v Allan
MEDIUM NEUTRAL CITATION:	[2016] VSC 481 First Revision: 29 August 2016

---

PRACTICE AND PROCEDURE – Service of originating process by agreement – Service interstate – Whether notice under Service and Execution of Process Act 1992 (Cth) (‘SEPA’) required – Whether writ validly served – Whether agreement for service constitutes a waiver of SEPA notice requirement – Service not effective.

PRACTICE AND PROCEDURE – Extending validity of writ – Whether good reason shown to extend validity of writ for service – Technical deficiency due to oversight in omitting SEPA notice – Plaintiff made reasonable but unsuccessful efforts to serve the Defendant –Good reason to extend writ shown.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J P Moore QC with Mr C R Brown	Mills Oakley Lawyers
For the Defendant	Mr D H Denton QC with Ms P Djohan	HopgoodGanim

HIS HONOUR:

Introduction

There are two applications before the Court as follows:

(a) an application by the defendant that service of the originating process on him be set aside as ineffective pursuant to s 16 of the Service and Execution of Process Act 1992 (Cth) (‘SEPA’).[1] The defendant also applies for the originating process to be permanently stayed and for costs on an indemnity basis; and

(b) an application by the plaintiff under r 5.12(2) and 5.12(3) of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) that the period of validity for service of the originating process be extended.[2]

[1]Summons for directions filed 21 April 2016.

[2]Summons filed 29 April 2016.

By order of Judd J made on 29 April 2016, both applications were referred to me for final hearing on a date to be fixed and directions were made for the filing by both parties of affidavits and outlines of submissions. Affidavits were duly filed by both parties[3] together with outlines of submission.[4]
[3]Affidavits of Jamie William Guy Grant sworn 7 April and 29 April 2016, and Paul Wilson sworn 19 February 2016 for the plaintiff. Affidavits of Jonathan Ivanisevic sworn 21 April and 13 May 2016 for the defendant.
[4]Defendant’s outline of submissions dated 27 July 2016. Plaintiff’s outline of submissions dated 28 July 2016.

Summary of Conclusions

In respect of the defendant’s application, my conclusion is that the service of the writ is not effective because it did not include the notice prescribed under the SEPA. Service of the writ, statement of claim and summons for directions will therefore be set aside. The proceeding should not, however, be permanently stayed because in this case it is appropriate to extend the validity of the writ for service under r 5.12 of the Rules.

Affidavits

The plaintiff has filed affidavits of Paul Wilson sworn 19 February 2016 (‘Wilson Affidavit’), Jamie William Guy Grant sworn 7 April 2016 (‘first Grant affidavit’) and 29 April 2016 (‘second Grant affidavit’) and Stuart Andrew Lewin sworn 1 August 2016 (‘Lewin affidavit’).[5] The defendant objected to certain facts and matters deposed to in the two Grant affidavits. The grounds of those objections and my ruling is set out in the Annexure attached to these reasons.
[5]The defendant objected to the plaintiff relying on the Wilson and Lewin affidavits as they were filed after the time allowed by the order of Judd J. I overruled the objection and allowed the affidavit to be relied on in the interests of the just efficient, timely and cost effective resolution of the applications before the Court.

The defendant has filed the affidavits of Jonathan Ivanisevic sworn 21 April 2016 (‘first Ivanisevic affidavit’) and 13 May 2016 (‘second Ivanisevic affidavit’).

Background
The Timbercorp Group

The plaintiff was a member of the Timbercorp group of companies, the ultimate holding company of which was Timbercorp Limited (‘Timbercorp’). That company was listed on the Australian Stock Exchange. Another company in the Timbercorp group was Timbercorp Securities Limited (‘TSL’).[6]
[6]Lewin affidavit [4].

Between about January 2004 and April 2009, TSL held an Australian Financial Services Licence that authorised it to operate registered managed investment schemes (‘MIS’). TSL was the responsible entity of many schemes, including schemes registered with the Australian Securities and Investments Commission (‘ASIC’). TSL offered interests in the schemes to the public.[7]
[7]Lewin affidavit [5].

The plaintiff’s function was to lend monies with which investors in the schemes could finance their investments. Typically, investors applied for finance from the plaintiff at the same time that they applied for interests in the relevant scheme.[8]
[8]Lewin affidavit [6].

The Proceeding

This proceeding was commenced by Originating Process–RedCrest on 8 April 2015. It is a generally endorsement writ. When the writ was issued, the plaintiff did not have available the key documents to enable a statement of claim to be prepared and filed, for reasons advanced on behalf of the plaintiff and referred to below.[9]
[9]Second Grant affidavit [7]; Lewin affidavit [24].

The statement of claim followed reasonably promptly after the documents became available and was filed on 2 February 2016. The claim relates to two loan agreements between the plaintiff as lender and the defendant as borrower. The loans were made to fund part of the cost of an initial investment by the defendant in the 2008 Olive Early Project, a registered managed investment scheme operated by TSL and to fund the payment of loan fees, management costs, rent and other amounts owing by the defendant to TSL relating to that investment. The total amounts alleged to be due and owing at the date of issue of the originating process was $286,416.27, plus interest. In the statement of claim, the plaintiff alleges that it defaulted under the loan agreements on or about 1 May 2009, and on 30 October 2009 the plaintiff made demand for the total amounts owing under the loan agreements in consequence of the default.

Earlier Correspondence

After the default by the defendant and demand by the plaintiff for the total amount owing, there was correspondence between the parties. The defendant addresses the correspondence at considerable length in his affidavits and outlines of submission. It is not necessary to go into that detail for the purposes of these reasons. It is sufficient to say that the defendant maintained through his solicitors in Brisbane, HopgoodGanim Lawyers, that there was no money owing by the defendant under the loan agreements by reason of, amongst other things, misleading or deceptive conduct engaged in by representatives of the plaintiff and TSL which induced the entry into the loan agreements. But for this conduct, the defendant would not have entered into the loan agreements. The defendant does not consider himself to be in default and will not be paying any moneys to the plaintiff. The correspondence also raises the issue of the appropriate forum for the commencement of any proceeding, and maintains that if proceedings are commenced they ought to be commenced in the State of Queensland where the representations were made, the loan agreements were entered into and each parties’ witnesses are situated.[10]
[10]Letter from HopgoodGanim to Mills Oakley Lawyers Pty Ltd, 29 June 2009, exhibit JXI-02 to the first Ivanisevic affidavit.

The correspondence between the parties’ solicitors relating to the liability of the defendant under the loan agreements culminated on 17 November 2009 with advice from the defendant’s solicitors that they held instructions to accept service of proceedings on his behalf.[11]
[11]Letter HopgoodGanim to Mills Oakley Lawyers Pty Ltd, 17 November 2009, exhibit JXI-09 to the first Ivanisevic affidavit.

The Liquidation of the Group

Timbercorp, TSL and the plaintiff were placed into voluntary administration in April 2009[12] and in June 2009 the creditors of those companies resolved that they should be wound up.[13]
[12]Pursuant to s 436A of the Corporations Act 2001 (Cth) (‘Corporations Act’); Lewin affidavit [7].
[13]Pursuant to s 439C(c) of the Corporations Act; Lewin affidavit [7].

The liquidation of the Timbercorp group has been complex and has involved many court proceedings, in various courts, raising difficult issues. The plaintiff’s solicitors in this proceeding, Mills Oakley, have acted as solicitors for the liquidators of the companies in the Timbercorp group in relation to those proceedings. The liquidators have had to deal with a large number of borrowers including those who have participated in a hardship program set up by the plaintiff for borrowers unable to meet their obligations due to changes in their personal financial circumstances. The plaintiff’s loan book is about $500 million spread over about 14,500 loans.[14]
[14]Lewin affidavit [8],[9] and [10].

In early July 2009, the plaintiff, through Mills Oakley, commenced the first tranche of proceedings against borrowers in default under their loan agreements in the Supreme Court of Victoria. Each of those proceedings was managed by Judd J. It was not feasible to commence all claims simultaneously, for several reasons, including the need for the liquidators to locate relevant documents and ongoing settlement discussions with some borrowers.[15]
[15]Lewin affidavit [10]-[11].

The Group Proceeding

On about 27 October 2009 a group proceeding (pursuant to Part 4A of the Supreme Court Act 1986 (Vic)) was commenced in this Court against the plaintiff and TSL (amongst others) by Rodney Woodcroft-Brown, as the representative plaintiff. In that proceeding, Mr Woodcroft-Brown argued that had certain matters been disclosed in Product Disclosure Statements, he would not have invested in the Schemes he had invested in, or borrowed money from the plaintiff, and sought declaratory relief, damages and/or compensatory orders, including an order that he and the group members were not liable for repayment of the loans from the plaintiff.[16]
[16]See Lewin affidavit [12]; Woodcroft-Brown v Timbercorp Securities Ltd & Ors [2013] VSCA 284 [4].

Whilst the group proceeding was on foot and being tried, the proceedings previously commenced for the recovery of monies due under loan agreements were adjourned sine die. This was because the outcome of the group proceeding may have determined whether the plaintiff could seek to recover against not only members of the group proceeding, but also borrowers who had opted out of it and borrowers who had opted out and then withdrawn their opt out notices. Proceedings against other borrowers, such as the defendant in this proceeding, were put on hold pending the outcome of the group proceeding for the same reasons.[17]
[17]Lewin affidavit [13]-[14].

Stage one of the trial of the group proceeding commenced on 23 May 2011 before Judd J and was heard over about 23 sitting days in May, June and early July 2011.[18] On 1 September 2011, Judd J delivered reasons in the group proceeding for rejecting the group member’s claims.[19] There was an appeal which was dismissed by the Court of Appeal on 10 October 2013.[20] On 11 April 2014 an application for special leave to appeal to the High Court of Australia was dismissed.[21]
[18]Lewin affidavit [15].
[19]Woodcroft-Brown v Timbercorp Securities Limited (In Liq) [2011] VSC 427; 85 ACSR 354.
[20]Woodcroft-Brown v Timbercorp Securities Limited (In Liq) [2013] VSCA 284.
[21]Woodcroft-Brown v Timbercorp Securities Limited (In Liq) [2014] HCATrans 85.

The defendant opted out of the group proceedings by notice under s 33J(2) of the Supreme Court Act1986 (Vic) dated 9 December 2010.[22]
[22]First Ivanisevic affidavit [17], Exhibit JX1-11.

The Recovery Proceedings Generally

Since the dismissal of the special leave application, between about June 2014 and April 2016, the plaintiff has commenced about 1,487 proceedings for the recovery of monies including:[23]
[23]Lewin affidavit [19].

(a) 834 proceedings in this Court;

(b) 352 proceedings in the County Court of Victoria; and

(c) 301 proceedings in the Magistrates’ Court of Victoria.

It was not possible to issue all of these proceedings immediately after the conclusion of the special leave application because of –

(a) the large number of borrowers in default;

(b) some of the loan documents were not contained on the files of the relevant borrowers readily available to Mills Oakley and needed to be retrieved; and

(c) priority needed to be given to a significant number of matters in order to avoid defendants to those proceedings raising a defence under the Limitation of Actions Act 1958 (Vic).[24]

[24]Lewin affidavit [20].

During 2010-2011, the plaintiff’s staff scanned the original loan documents of thousands of borrowers still indebted to the plaintiff. At the same time, the plaintiff’s staff made hard copies of the original loan documents to keep at the plaintiff’s office. That original loan documentation was archived and moved to a location offsite. The scanning and copying of the original loan documents sometimes missed documents, scanned and copied documents upside down and scanned and copied only every second page. When Mills Oakley asked the plaintiff for loan documents that were missing, the usual practice was for the original documents to be retrieved from the archives located offsite. The defendant’s loan documents were amongst those that were not scanned or copied by the plaintiff’s staff and had to be retrieved from archives. It took some time for that process to occur and for the defendant’s loan documents to be obtained.[25]
[25]Lewin affidavit [24].

Where a writ generally endorsed has been filed commencing a proceeding, it is Mills Oakley preferred practice not to serve that writ until a statement of claim has been prepared and filed. This is because rule 14.02 of the Rules requires a plaintiff to file and serve a statement of claim within 30 days after the filing of a notice of appearance by a defendant to a generally endorsed writ, unless the Court otherwise orders. This is why the defendant was not served with the generally endorsed writ in this case until February 2016.[26]
[26]Lewin affidavit [25].

Service on the Defendant

On 18 February 2016, a process server attended at the home address of the defendant in order to serve the originating process on him personally. He was engaged to serve the originating process, the statement of claim and a notice under s 15 of the SEPA. He attended the address at 7.40am and spoke to a person who identified herself as Mrs Georgia Allan, the defendant’s wife. She told the process server that the defendant had left for work, but gave him the defendant’s mobile telephone number. The process server later called that number and spoke to the defendant, who informed the process server that he was not interested in accepting any documents as his solicitor was handling the matter and told him that the plaintiff’s liquidators had his solicitor’s details.[27] Thus, this attempt at service was unsuccessful.
[27]Wilson affidavit.

In consequence of the attempted service on 18 February 2016, on 22 February 2016 the plaintiff’s solicitor sent an email to the defendant’s solicitor informing him that the plaintiff had commenced proceedings against the defendant in the Supreme Court of Victoria, that the plaintiff’s records indicated that he previously had instructions to act for the defendant in relation to the plaintiff’s claims and would he advise whether he remained instructed and is authorised to accept service and, if so, how he wish service to be effected.[28]
[28]Second Grant affidavit [10], exhibit JWGG-3.

On 24 February 2016, the defendant’s solicitor responded as follows:

Subject: Re Timbercorp Finance Pty Ltd (in liq) v Grant Robert Allan {5332758}
Dear Colleague,
I refer to your below email.
I confirm that I remain instructed by Mr Allan and that I am authorised to accept service of the above proceedings on his behalf.
The pleadings can be sent to me by email.
My client’s rights in respect of this matter are otherwise reserved.
Yours faithfully,
Jonathan
Jonathan Ivanisevic, Partner/Litigation and Dispute Resolution.

On 25 February 2016, the originating process, statement of claim and a summons for directions were sent by email to the defendant’s solicitor ‘by way of service pursuant to r 6.14’ of the Rules. The email stated:

Dear Jonathan,
We refer to your email below, and attach the following documents by way of service pursuant to rule 6.14 Supreme Court (General Civil Procedure) Rules 2015:
a)        Originating Process–RedCrest filed 8 April 2015;
b)        Statement of Claim filed 2 February 2016; and
c)        Summons for directions filed 15 February 2016.
We would be grateful if you could confirm receipt.

The form prescribed under the SEPA was not included in the documents sent with this email. This was due to an oversight by the responsible solicitor.[29]
[29]Lewin affidavit [27].

Notwithstanding the request for the defendant’s solicitor to acknowledge receipt, he did not do so, nor did he file an appearance within the 21 days allowed in respect of interstate service, that is, by 17 March 2016. The plaintiff’s solicitor emailed the defendant’s solicitor on 6 April 2016 informing the defendant’s solicitor that the defendant was required to file a notice of appearance by 14 March 2016[30] pursuant to r 8.04(b) of the Rules and had failed to do so. He informed the defendant’s solicitor that the plaintiff is at liberty to apply for judgment to be entered against him in default of appearance pursuant to r 21.01 of the Rules. The email concluded:

We hereby place you on notice that in the event Mr Allan fails to file a Notice of Appearance by 4.00pm this Friday 8 April 2016 our client will take steps to enter judgment against him in default of appearance without further notice to you.

[30]A date which is acknowledged to be the wrong date.

On 8 April 2016, the defendant filed a notice of conditional appearance – RedCrest.[31] The plaintiff received the notice from the defendant on 10 April 2016. The writ remained valid for service for one year after 8 April 2015, namely until 8 April 2016.[32] Thus, on the day the appearance was filed the writ became stale and if there was a need for it to be served again its validity for service of the writ would have to be extended under rr 5.12(2) and (3) of the Rules. Having regard to the notice of conditional appearance and the defendant’s application to set aside the service of the writ, the plaintiff has been prompted to apply to extend the validity of the writ for service.
[31]The appearance was in form 8AC, Notice of Conditional Appearance –RedCrest, as prescribed by Rule 8.08(2)(b) of the Rules.
[32]Rule 5.12(1) of the Rules.

Submissions – In Summary

Briefly put, the defendant submits that the service of the originating process and other documents sent by email on 25 February 2016 is not effective service because the form required by the SEPA did not accompany the documents. He submits that by virtue of s 16 of the SEPA, the legal consequence is there has been no service effected of the writ. The SEPA contains no provision permitting waiver of its requirements, and there is in any event, no evidence that the defendant has agreed to waive the requirements under that Act.

In relation to the plaintiff’s application to extend the validity of the writ, the defendant submits that the plaintiff has not taken reasonable steps to serve the writ and there is no other good reason for extending the time for service.

The plaintiff submits that there was an agreement between the parties as to the mode of service and that pursuant to r 6.14 of the Rules the service in fact made is sufficient notwithstanding the failure to comply with the SEPA provisions, which do not apply. In the alternative, the Court should exercise its discretion to extend the validity of the writ for service pursuant to r 5.12 of the Rules. It submits that there were reasonable efforts made to serve the defendant and that informal service occurred many weeks before the expiry of the originating process. The defendant knew that a claim would be made against him as long ago as 2009 and that a claim had been made against him as early as 22 February 2016. Further:

(a) the defendant would not be prejudiced by the extension and a denial of the extension would effectively shut out the plaintiff from pursuing its claim because of the expiry of the limitation period in the intervening period; and

(b) the defendant’s solicitor waited, as he is entitled to do, until 8 April 2016 before filing a conditional appearance and raising the issue of defective service. That is the day the originating process expired for service.

Has the Writ been Validly Served?

The valid service of originating process out of Victoria requires the authority of statute or of rules of court made pursuant to statute, as at common law originating process does not run beyond the territorial limits of the state.[33]
[33]JE Lindley & Co v Pratt [1911] VLR 444 at 448; Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd (1957) 98 CLR 93 at 107; Laurie v Carroll (1958) 98 CLR 310 at 322; Flaherty v Girgis (1987) 162 CLR 574 at 590; Schmidt v Won [1998] 3 VR 435 at 451-2.

Except in circumstances of urgency, when it may be necessary to grant interim relief to preserve the subject matter of dispute or avoid other irreparable injury, the exercise of jurisdiction by this Court, in the sense of authority to adjudicate the dispute,[34] depends, in the case of proceedings in personam, upon service of originating process on the defendant. Personal service or its equivalent (substituted service) is the foundation of the Court’s jurisdiction.[35] In Laurie v Carroll[36] Dixon CJ, Williams and Webb JJ said the common law doctrine is that the writ does not run beyond the limits of the State and save for the extensions allowed under the then Service and Execution of Process Act 1901 (Cth) and the Rules of the Supreme Court 1957(Vic), that principle remained true, and quoted Dicey that:

The service of the writ, or something equivalent thereto, is absolutely essential as the foundation of the Court’s jurisdiction. Where a writ cannot be legally served upon a defendant the court can exercise no jurisdiction over him. In an action in personam the converse of this statement holds good, and wherever a defendant can be legally served with a writ, there the court, on service being effected has jurisdiction to entertain an action against him. Hence, in an action in personam, the rules as to the legal service of a writ define the limits of the court’s jurisdiction.[37]

[34]See Lipohar v the Queen (1999) 200 CLR 485 at [79]-[80]; John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 521 [25]; Monteleone v The Owners of the Old Soap Factory [2007] WASCA 79 at [23].

[35]Laurie v Carroll (1958) 98 CLR 310 at 323-4; Williams, Civil Procedure Victoria [6.02.5].

[36](1958) 98 CLR 310 at 323-324.

[37]Dicey – Conflict of Laws, 6^th Ed 1949, p. 172, cited with approval by Dixon CJ, Williams and Webb JJ in Laurie v Carroll (1958) 98 CLR 310 at 323-324.

I should mention out of completeness that in Schmidt v Won[38] Ormiston JA (with whom Charles and Batt JJA agreed), noted (albeit in an entirely different context to the present case) that at the time Laurie v Carroll was decided the personal jurisdiction of each State’s Supreme Court did not extend beyond the boundaries of that State, subject only to the rights given to serve out of the jurisdiction by Rules of Court and by the provisions of the Service and Execution of Process Act1901 (Cth). Now the territorial limitations imposed on the jurisdiction of each State within the Commonwealth of Australia must be considered as having little, if any, practical continued application. The State courts are now a part of an integrated system of State and federal courts and organs for the exercise of federal judicial power as well as State judicial power.[39] The legislative scheme represented by the cross-vesting legislation in the Commonwealth and each State and Territory which purported both to grant and to receive the jurisdiction of each other's courts and the SEPA have extended the jurisdiction of each State Supreme Court to the boundaries of the Commonwealth.[40]
[38][1998] 3 VR 435 at 451-2.
[39]Kable v Director of Public Prosecutions (N.S.W.) (1996) 189 CLR 51, at 114-5 per McHugh J.
[40]Schmidt v Won [1998] 3 VR 435 at 451-2.

That observation does not, however, change the fact that the jurisdiction of this Court in this proceeding, or at least the exercise of that jurisdiction, depends on the valid and effective service of the originating process pursuant to the SEPA.

SEPA is concerned generally with the service of process throughout the Commonwealth of Australia. The provisions of SEPA are the only provisions prescribed by statute, or by rule of court, permitting service of initiating process issued out of this Court on a defendant in another State or Territory. The rules of this Court which formerly provided for service out of this State but within the Commonwealth of Australia were repealed in 1993.[41]
[41]SR 71 of 1993, r 8; Williams, Civil Procedure Victoria [7.01.0]; Elan Copra Trading Pty Ltd v JK International Pty Ltd [2005] SASC 501 [28]; (2005) 226 ALR 349 (‘Elan Copra’).

Sub-section 8(4) of SEPA provides that, subject to the Act, SEPA applies to the exclusion of the law of the State with respect to service of process in another State. Sections 15 and 16 of SEPA provide for the manner in which service of process must be effected, in this case, on an individual. Sub-section 15(1) provides that an initiating process[42] issued in a State may be served in another State. Sub-section 15(2) provides:

Service on an individual must be effected in the same way as service of such an initiating process in the place of issue. [emphasis added]

[42]Initiating process means, so far as presently relevant, process by which a proceeding is commenced: s 3 of SEPA.

Section 16 of SEPA provides that:

Service is effective only if copies of such notices as are prescribed are attached to the process, or the copy of the process, served. [emphasis added]

The form of the SEPA notice is prescribed by s 4 of Service and Execution of Process Regulations1993 (Cth) (‘SEPR’). The prescribed form is Form 1 in Schedule 1 of SEPR. That form contains, amongst other things, information regarding the right of the defendant to apply to have the proceeding transferred to another Supreme Court or superior court (in the case of proceedings issued out of a Supreme Court) and a notice about the time within which the defendant is required to enter an appearance (‘SEPA notice’).

The filing of the notice of conditional appearance in accordance with r 8.08(2)(b) of the Rules enables the defendant to apply, within 14 days after the day the conditional appearance was filed, to set aside the writ or its service or to stay the proceeding. Rule 8.08 provides:

(1)       A defendant may file a conditional appearance.
(2)       A notice of conditional appearance shall be –
(a)   in Form 8B; or
(b)   if the proceeding has been commenced by filing an originating process in RedCrest under Order 28A, in Form 8AC.
(3)A conditional appearance shall have effect for all purposes as an unconditional appearance, unless, on application by the defendant, the Court otherwise orders.
(4)Application under paragraph (3) shall be made by summons within 14 days after the day the conditional appearance is filed.

The defendant’s summons filed on 21 April 2016 was filed within the time prescribed[43] and seeks, amongst other orders, the setting aside of the service of the originating process as ineffective pursuant to s 16 of SEPA. This procedure allows the defendant to challenge jurisdiction of the Court or the validity of service or other procedure, in effect, under protest and until determination of the defendant's objection in accordance with the rule, it prevents the plaintiff entering judgment in default of appearance. The defendant can attend before the court to press the challenge and, by so attending, does not submit to the jurisdiction or waive any procedural objection or forfeit the right to argue the matter. But unless under the rule the court ‘otherwise orders’ the appearance has effect as an unconditional appearance.[44]
[43]By r 46.02(2) of the Rules an application by summons is made when the summons is filed.
[44]Williams, Civil Procedure Victoria [I8.08.10].

The defendant does not dispute that his solicitors received the email dated 25 February 2016 from the plaintiff’s solicitors which had attached to it the writ, statement of claim and the summons for directions. He does dispute, however, that the delivery by email of those documents was ‘by way of service pursuant to r 6.14’ of the Rules. His complaint is, first, that the agreement did not extend to emailing all the documents, only the pleadings; and, second, that because there was no SEPA notice attached to the writ, service was not effective by virtue of s 16 of SEPA.

I agree with the submissions of the defendant that:

(a) the question whether or not service has been effected in compliance with s 16 of SEPA is a question of law;[45]
[45]Defendant’s outline [35], referring to Re 8D Pty Ltd [2013] NSWSC 1297 per Black J [1] and [5]; State of Tasmania v Bennett [2004] TASSC 15 [11] per Slicer J. The defendant also objected to evidence given on behalf of the plaintiff by Mr Grant to the extent that it expressed legal conclusions as to service. In the Schedule to these reasons, I set out my rulings on the defendant’s objections generally.

(b) it is tolerably clear that the SEPA provisions cannot be waived;[46]

(c) there is no evidence that at any time the defendant agreed to waive the requirements of s 16 of the SEPA (so that there has been no informed waiver); and

(d) the legal consequence is that there has been no effective service of the writ.[47]

[46]Elan Copra at [33] and [38] per White J with whom Doyle CJ and Perry J agreed.

[47]Re Marlan Financial Services Pty Ltd [1999] VSC 435; (1999) 33 ACSR 259; Energy Conservation Systems Pty Ltd v Downer EDI Engineering Electrical Pty Ltd [2008] NSWSC 1139; 221 FLR 393 at 396 [23] following Johns v Johns [2012] SASC 147 [13]; Re 8D Pty Ltd (2013) 279 FLR 98 at [9]-[10].

All of the cases submitted as authority for the proposition that the absence of the SEPA notice rendered the service ineffective and thus deprived the Court of jurisdiction in the matter are applications to set aside statutory demands under s 459G of the Corporations Act. The strict time limit applying to those applications,[48] and the necessity to comply with the provisions of the SEPA in some instances, has led to unfortunate and apparently incongruous results.
[48]In David Grant & Co Pty Ltd v Westpac Banking Corp, it was held that both the filing and service of the application and supporting affidavit within the 21 day period specified in s 459G(2) of the Corporations Act is an essential condition of the exercise by a court of the jurisdiction vested by s 459G(1) of the Corporations Act to set aside the statutory demand.

An instance of such a result is the decision of the South Australian Full Court in Elan Copra Trading Pty Ltd v JK International Pty Ltd.[49] That case was an appeal from the Master of the South Australian Supreme Court dismissing an application to set aside a statutory demand. In that case, the statutory demand served on the debtor did not, as required, specify an address in South Australia for service on the creditor (a company). Instead, the demand nominated the address of the creditor’s solicitor in New South Wales.[50] The registered office of the creditor was in Queensland. The debtor’s solicitor sent an application to set aside the statutory demand under s 459G of the Corporations Act to the creditor’s solicitor by facsimile at the number given in the demand ‘as a matter of courtesy’ stating that if nothing was heard the application would be served at the creditor’s registered office, having previously asked whether the solicitor had instructions to accept service. The creditor’s solicitor acknowledged receipt and informed the debtor’s solicitor that they had brought the debtor’s application to the attention of the creditor and expected to obtain instructions to accept service in the near future. No attempt was made to serve the creditor at its registered office. The creditor’s solicitor obtained instructions to accept service and informed the debtor’s solicitor after the expiry of the 21 day period for service.
[49]Elan Copra.
[50]This did not invalidate the demand: Elan Copra, [19].

White J, with whom Doyle CJ and Perry J agreed, found that there were three respects in which the delivery of the debtor’s application to set aside the statutory demand was not effective service:

(a) the delivery was to the office of the creditor’s solicitors and not to the registered office of the creditor as required by s 9 of SEPA;

(b) the delivery was by way of facsimile transmission but ss 9 and 15(3) of SEPA required service by leaving it at, or sending it by post to, the creditors registered office or by delivering a copy personally to a director resident in Australia; and

(c) the documents sent by facsimile transmission did not include the notice prescribed by s 16 of SEPA.

In these circumstances, the debtor sought to rely on what it said was an agreement for service or, in the alternative, a waiver or election by the creditor. The debtor contended that it was open to the parties to agree on a manner of service otherwise than in accordance with the provisions of SEPA, and submitted that that is what had occurred. White J concluded that there was no such agreement and also that even if there was an agreement with respect to service at the Sydney office of the creditor’s solicitors, it is far from clear that any term could be implied to the effect that compliance with s 16 of SEPA with respect to that service was not required. He noted:[51]

That conclusion makes it unnecessary to consider the further question of whether service in accordance with an agreement could be regarded as effective, having regard to the provisions of SEPA, that is, whether the effect of SEPA is to deprive such an agreement of any efficacy, at least where the jurisdiction of the court over the subject matter is contingent upon an application having been issued within the prescribed time.

[51]Elan Copra, [33].

White J also considered an argument that the statement by the creditor’s solicitors, after the expiry of the 21 day period under s 459G of the Corporations Act, that they had instructions to accept service of the proceedings was a waiver by the creditor of any requirement for it to be served at its registered office and in accordance with the provisions of SEPA. There were a number of reasons why this argument failed, but importantly to this case, one of them was that it is not open to the parties to waive a statutory condition necessary for the exercise of a court's jurisdiction.[52] His Honour went on to say:[53]

It is doubtful in any event that the requirements of SEPA with respect to service are capable of being waived. SEPA represents an enactment, substantially, of the recommendations contained in the ALRC Report No 40 “Service and Execution of Process”. The ALRC Report did recommend that the requirement for service of a notice (to which effect is given in s 16) should be capable of being waived.[54] However, SEPA does not contain any provision permitting waiver by the parties of its requirements. This makes it difficult to construe SEPA as impliedly authorising the waiver of its requirements with respect to service or, at least, the requirement for service of a s 16 notice. …

[52]Commonwealth v Verwayen (1990) 170 CLR 394 at 404 per Mason CJ (‘a condition precedent to a court’s jurisdiction’); at 425 per Brennan J (‘a condition precedent to the jurisdiction of a court to grant relief cannot be waived’); Highfield Woods Pty Ltd v Bayview Crane Hire Pty Ltd (1996) 19 ACSR 429 ; 130 FLR 238.

[53]Elan Copra, [38].

[54]Australian Law Reform Commission Report No 40 [205].

White J concluded that the appeal in Elan Copra should be dismissed, but he concluded his reasons with the following regret:

I do not regard this decision as producing a result which is satisfactory. This is a case in which despite the deficiencies in the method of service adopted, the application and supporting affidavit were received by the respondent's solicitors within the prescribed 21-day period and furthermore, were brought to the attention of the respondent itself within that same period. There is no suggestion that the absence of the notice prescribed by s 16 of SEPA prejudiced the respondent in any way. Furthermore, the respondent was itself non-compliant with the obligation to nominate an address for service in this state.

As is evident from the terms of the email from the plaintiff’s solicitor of 25 February 2016, the plaintiff relies on r 6.14 of the Rules. That rule provides:

Where the parties to any proceeding have, before or after the commencement of the proceeding, agreed that originating process or any other document in the proceeding may be served on a party or on a person on behalf of a party in a manner or at a place (whether within or outside Victoria) specified in the agreement, service in accordance with the agreement shall be sufficient service.

The evidence shows that the parties have agreed to the non-exclusive jurisdiction of the courts of Victoria. Clause 9 of the Terms and Conditions of each Loan Agreement provides that the agreements are governed by the law of the State of Victoria and both the plaintiff and defendant submit to the non-exclusive jurisdiction of the Supreme Court of Victoria[55] and that as a result of those Terms and Conditions and the defendant’s solicitor’s email of 24 February 2016, the plaintiff submits there is an agreement between the parties within the meaning of r 6.14 of the Rules.
[55]The Terms and Conditions of each Loan Agreement are exhibited to the Affidavit of Stuart Andrew Lewin sworn 1 August 2016. See also Statement of claim [9(s)] and [22(s)].

It is clear and well established that by the filing of an unconditional appearance a defendant submits to the jurisdiction of the court and waives any irregularity, for example, in the manner of service of the process.[56] The plaintiff goes further and contends that a defendant can ‘waive’ a defect under SEPA, including a failure to attach the SEPA notice, by his or her appearance,[57] and that an agreement to accept service in a particular manner has the same effect.
[56]Caltex Oil (Australia) Pty Ltd v The Dredge ‘Willemstad’ (1976) 136 CLR 529 at 539, per Gibbs J;
[57]Lindgran v Lindgran [1956] VLR 215 at 219-20 per Smith J; Portelli v Seltsam Ltd [1988] VR 337 at 345 to 346; C & P Trading Pty Ltd v Roladuct Spiral Tubing Pty Ltd [1994] 2 Qd R 247 (CA); Re Marlan Financial Services Pty Ltd [1999] VSC 435 at [30].

The plaintiff relies on Bass Metals Ltd v Liongold Corp Ltd.[58] That case involved a proceeding instituted in Western Australia by a seller, the plaintiff, under a share sale agreement with the buyer, the defendant. The defendant was a company incorporated in Bermuda. It was a public company listed on the Singapore Stock Exchange. It was not a company incorporated or taken to be incorporated under the Corporations Act nor was it a registered body within the meaning of that expression in s 601CX of the Corporations Act. It had no office, business, or address in Australia. It held shares in certain companies incorporated in and carrying on business in Australia. It was an investment company that invested in various mining companies with operations in various parts of the world. It carried out its investment activities from an office in Singapore.
[58][2013] WASC 168.

Under SEPA, service on such a company was required to be effected at either the place specified by a law of the State in which service is to be effected, or if there was no such law, at the company’s head office, registered office, or principle place of business in the Commonwealth. The share sale agreement contained a clause by which the laws of Western Australia (‘WA’) were the governing laws, by which the parties submitted to the non-exclusive jurisdiction of the courts of WA and by which the buyer appointed a firm of solicitors in Sydney as its agent to receive service of process of any proceeding in connection with the agreement.

The seller served the initiating process in three ways, first by delivering it to the registered office of an associated service company in Victoria, with a SEPA notice, second by delivering to the buyer’s solicitors at the address in Sydney nominated in the share sale agreement, but without the SEPA notice, and third to the buyer’s chief operations officer personally with the SEPA notice.

The buyer entered a conditional appearance and applied to set aside the service of the writ on the basis that that there had been no valid service in accordance with the requirements of ss 10, 15(4) and 16 of SEPA.

The Rules of the Supreme Court1971 (WA) included as Order 9 r 3(1) the following:

(1)Where -
(a)a contract contains a term to the effect that the Supreme Court shall have jurisdiction to hear and determine any action in respect of a contract or, apart from any such term, the Supreme Court has jurisdiction to hear and determine any such action; and
(b)the contract provides that, in the event of any action in respect of the contract being begun, the process by which it is begun may be served on the defendant, or on such other person on his behalf as may be specified in the contract, in such manner or at such place (whether within or out of the jurisdiction), as may be so specified,

then if an action in respect of the contract is begun in the Supreme Court and the writ by which it is begun is served in accordance with the contract the writ shall, subject to subrule (2), be deemed to have been duly served on the defendant.

The defendant had submitted that the relevant rule and the clause in the share sale agreement had no application because s 8 of the SEPA provides that, subject to the Act, SEPA applies to the exclusion of the law of a State with respect to service in another State of process. Sections 10, 15(4) and 16 of SEPA provide for the manner in which service of process must be effected on a body corporate that is not a company or registered body. The defendant also submitted that there is no provision in SEPA that allows for service to be effected pursuant to an agreement between the parties, that service pursuant to the agreement is inconsistent with the provisions of the SEPA and the WA rule is invalid under s 109 of the Commonwealth Constitution.

Master Sanderson held that service on the solicitors in Sydney was sufficient, notwithstanding the absence of the SEPA notice. The basis of the decision was that the rules provided for deemed service where the parties had agreed to mode of service and service is made pursuant to such agreement. He said:

It may well be service on solicitors in New South Wales was ineffective. But that is not what O 9 r 3 of the Rules is saying. What it is saying is if the parties agree to a regime and regime is followed then service is ‘deemed’ effective. It does not mean that service in the sense of complying with any statute actually occurred.

The Full Court of the Supreme Court of South Australia in Elan Copra did not need to deal with the question of whether the agreement of the parties could overcome the operation of the SEPA. However, in Energy Conservation Systems Pty Ltd v Downer EDI Engineering Electrical Pty Ltd,[59] Barrett J said (obiter):

My own view is that if there is no compliance with s 16 (which presupposes also compliance with s 15), the conclusion must be that there is no service; and that this is so whether or not the document has actually come into the possession of the defendant. The opening words of s 16 are, ”Service is effective only if”. It must follow that if the condition then stated is not satisfied, there is no effective service and that this is so whatever the position may be about agreement of the parties, actual receipt and actual notice. The terms of the section are strict rather than facultative.

[59][2008] NSWSC 1139, [23].

In my view, the decision of Master Sanderson in Bass Metals should be distinguished. It turns on different facts and involves a different rule to that under consideration in this case. Whatever might be said about the operation of the rule referred to in that case in connection with service interstate, it is significantly different from r 6.14 in the Victorian Rules. The WA rule purports to attract jurisdiction where the contract so provides.[60] It is a rule that applies only where the action in question is one in respect of the contract which provides for the mode of service. And most importantly, it creates a statutory fiction by deeming service to have been validly effected if done in accordance with the contract.
[60]Order 9, r 3(1)(a).

The Victorian Rule (r 6.14) is not of that character. It is not a rule that purports to give jurisdiction to the Court by reference to a contract between the parties and to confine its operation to disputes under that contract, as does the WA rule. The Victorian rule is of general application. Relevantly to the facts of this case, it provides that where the parties have agreed originating process may be served on a person on behalf of a party in a manner or at a place (whether within or outside Victoria) specified in the agreement, service in accordance with the agreement shall be sufficient service. It does not deem service to be effective like the WA rule.

Given the requirements of the SEPA and the reference in the rule to service within or outside Victoria, it should be construed consistently with the provisions of the SEPA. This is because the provisions of SEPA are the only provisions prescribed by statute, or by rules of court, permitting service of initiating process issued out of this Court on a defendant in another State or Territory.

Therefore, where parties agree that a writ can be served on the solicitor for the defendant at an address in Queensland, by the rule, that service must comply with the provisions of the SEPA and have attached the SEPA notice. If not, then s 16 of SEPA has the result that the service is not effective. I note that under s 15 of SEPA, service on an individual must be effected in the same way as service of such process in the place of issue. If, as here, service is effected pursuant to an agreement under r 6.14 of the Rules, then so far as compliance with s 15 of SEPA is concerned, that service is in conformity with s 15(2) of SEPA. Whether r 6.14 of the Rules can operate effectively where the party to be served is a company or registered body, service on which by s 15(3) of SEPA must be effected in accordance with s 9 of SEPA, is seriously to be doubted, but need not be decided here.

There is a further reason why service pursuant to the agreement set out in the email of 25 February 2016 must include the SEPA notice. That is because in its terms, the email said nothing about the presence or absence of such a notice. Even if it is possible for a defendant to waive compliance with the requirement of s 15 of SEPA, there is no indication in the correspondence between the solicitors that the defendant did so.

It will be noticed that in the email from the defendant’s solicitor of 24 February 2016 by which he confirmed that he was authorised to accept service of the proceedings on behalf of the defendant, he stated ‘[t]he pleadings can be sent to me by email’, and ‘[m]y client’s rights in respect of this matter are otherwise reserved’. Senior Counsel for the defendant, submitted that this meant what it stated, namely that only the pleadings (the statement of claim) could be transmitted by email.[61] The writ and any other process had to be delivered or perhaps posted, it is not clear.
[61]Transcript, 3 August 2016, p 14-15.

I reject this submission. Even before the introduction of the Civil Procedure Act 2010 (Vic) (‘CPA’) practitioners were obliged to act co-operatively with a view to the cost effective and timely conduct of litigation. They have always been obliged to act honestly and not to mislead or deceive clients, the Court or other members of the profession. Why, I ask rhetorically, would a fair minded solicitor, seeking to represent his client according to the high professional standards of an Australian lawyer, agree to accept just a part of the documentation comprising the originating process to be served (the pleadings) by email and not the rest of it? I am not prepared to find against Mr Ivanisevic that he is not that hypothetical fair minded practitioner. The only reasonable interpretation of the email in its context (both the email read as a whole and the exchange of emails) is that all the process to be served could be sent to him by email. Any other interpretation is both unreasonable and attributes to Mr Ivanisevic a mischievous intent.

Notwithstanding this conclusion as to the scope of the agreement, my finding is that the service of the writ by the email of 25 February 2016 is not effective because it did not include the SEPA notice. Service of the writ, statement of claim and summons for directions will therefore be set aside. Whether the proceeding should be permanently stayed is another question, and turns in the first instance on whether this is an appropriate case to extend the validity of the writ for service under r 5.12 of the Rules, to which I now turn.

Extension of Validity of the Writ for Service

The plaintiff contends that if, as I have held, the defendant’s application to set aside service of the writ should succeed, then there should be an order extending the validity of the writ for service so that service of the on the plaintiff can be effected. The defendant quite naturally resists any extension of the validity of the writ.

Rule 5.12 (1) of the Rules provides that a writ or originating motion shall be valid for service for one year after the day it is filed. The application is made under r 5.12(2), that rule provides:

Where a writ or originating motion has not been served on a defendant, the court may from time to time by order extend the period of validity for such period from the day of the order as the Court directs, being not more than one year from that day.

Rule 5.12(3) of the Rules provides that an order may be made under paragraph (2) before or after expiry [of the writ or originating motion].

In Howard v Power[62] I summarised the principals applicable to an application under the rule, as follows:[63]
[62][2013] VSC 198 [10]-[11].
[63]Cited with approval in Re APCH Ltd (in liquidation) [2014] VSC 190, per Robson J [100]; and in Re Australian Property Custodian Holdings Ltd (in liquidation) [2015] VSC 745, per Judd J [46] and Global Investments Ltd v Babcock & Brown LP & Ors [2016] VSC 107, [48].

The principles applicable are well settled. They derive in part from earlier Rules (Order 8 Rule 1), which provided that the court might order that a writ be renewed if satisfied that reasonable efforts had been made to serve the defendant, or for “other good reason”. Despite the change in language, however, the authorities make it clear that the court should determine the question of extending the validity of the Writ on the same basis as previously.[64] Amongst the differences between the old and new Rules is a change of terminology, from renewal of the writ to ‘extension of its validity. The principles applicable are, in summary, as follows:
[64]Kleinwort Benson Ltd v Barbrak Ltd & Ors [1987] AC 597, 622-3; Ramsay v Madgwicks [1989] VR 1.
(a)Although the power conferred by Rule 5.12 is wholly discretionary, a judge has to approach the exercise of the discretion in accordance with established principles: Dagnell v Freedman & Co [1993] 2 All ER 161 at 165 (“Dagnell”);
(b)The jurisdiction given by the rule ought to be exercised with caution: Battersby v Anglo-American Oil Co Ltd (“Battersby”);[65] Ramsay v Madgwicks[66] (“Madgwicks”);
[65][1945] KB 23, 32-3 per Lord Goddard.
[66][1989] VR 1, 5.5.

(c) It is the duty of a plaintiff to serve a writ promptly: Battersby at 32;
(d)An application to extend time for service is not granted as a matter of course: Battersby at 32; Madgwicks; Savcor Pty Ltd v Cathodic Protection International APS[67] (“Savcor”);
[67](2005) VR 639, 651.
(e)The first question to consider is whether the plaintiff has taken reasonable steps to serve the writ. If not, it then becomes necessary to consider whether there was “some other good reason” for making the order to extend time for service of the writ: Soper v Matsukawa[68] (“Soper”); Battersby;
[68][1982] VR 948 at 952.9.
(f)The plaintiff carries the onus of showing that there is a good reason for extending the time to serve the writ (Soper at 952; Madgwicks at 6; Savcor at [41]); the applicant’s burden is no greater if the limitation period has expired between the date of issue of the writ and the date on which the application is made: Findlay at 187.
(g)Whether there is good reason depends on all the circumstances of the case: Dagnell at 165; Kleinwort Benson Ltd v Barbrak Ltd & Ors [1987] AC 597 at 622-3 (“Kleinwort”); and it is not possible to define or circumscribe the scope of the expression “good reason”: Kleinwort;
(h)Where the application is made after the period for service has expired, the reason must be one of substance (Savcor at [41]);
(i)The selection of relevant factors to establish that there is a good reason for making the order, and the significance to be given to each of the factors, are matters of discretion (Soper at 954);
(j)The fact that the plaintiff decides not to serve the writ whilst some other case is tried, or to await some future development, is generally not a good reason to justify extending time for service. Madgwicks at 4 and 5; Savcor at [42]); Dagnell at 165-168. It is for the Court and not for one of the litigants to decide whether there should be a stay, and it is not right that people should be left in ignorance that proceedings have been commenced against them if they are there to be served: Battersby at 32;[69]
[69]But there are cases where to await the outcome of a test case is a good reason: see Kleinwort, above n 64, 619-624.
(k)It is a relevant factor against the exercise of the discretion that the renewal of the writ might deprive the defendant of a limitation defence where the plaintiff has been aware that the passage of time might be dangerous: Battersby at 31–2; Madgwicks at 7; Soper at 953; see also Finlay v Littler [1992] 2 VR 181 at 187 (“Finlay”).
(l)It is a relevant factor against the exercise of the discretion that the defendant was unaware of and had no reason to expect that a writ had been issued against them: Madgwicks at 7; Kleinwort at 623–4).[70]
(m)The lapse of time is itself generally to be regarded as prejudicial to the defendant (Madgwicks at 7; Finlay at 188). In this contest, the relevant delay is to be measured from the time at which the plaintiff’s cause of action arose (Tyson v Morgan [200] 1 Qd R 100 at 104.50);
(n)Any delay in making the application to extend the time for service of the writ is a relevant factor against the exercise of the discretion (Finlay at 187); delay preceding (as well as following) the issue of the writ is material (Soper at 953);
(o)The expiration of the limitation period will not in itself constitute a good reason for extending the validity of the writ (Finlay at 187), although it is relevant (Soper at 952); and
(p)It may be appropriate to have regard to the balance of hardship: Kleinwort at 622; Van Leer Australia Pty Ltd v Palace Shipping KK (1981) 180 CLR 337 at 343 and 346 (‘Van Leer’) (adopting the approach of Bray CJ in Victa Ltd v Johnson (1975) 10 SASR 496 at 502 (‘Victa’).

The Australian cases differ from the English cases as to the effect of a limitation defence arising after the issue of a writ but before the application to extend the validity of the writ. The difference is traced by Stephen J in Van Leer at 341–6. His Honour preferred the approach of the Australian and Canadian courts. He quoted with approval what Bray CJ said in Victa.[71] Bray CJ stated that there was no rule that a defendant acquired an absolute right to immunity when a writ issued within the limitation period is not served and in the meantime the period expires. The English cases had stated a test that if the limitation period had expired it was only in exceptional circumstances that the writ would be renewed. This is not the Australian position.[72]

[70]It seems that this factor may be based in part on what Lord Goddard said in Battersby, above n 65, 32 that it is not right that people should be left in ignorance that proceedings have been taken against them if they are available to be served.

[71](1975) 10 SASR 496.

[72]Savcor (2005) VR 639, [41].

The plaintiff points to the fact that the power is a discretionary one where each case depends on an assessment of its circumstances.[73] The plaintiff points to the most relevant factors as being:
[73]Savcor Pty Ltd v Cathodic Protection International APS (2005) 12 VR 639 (CA) at [41] per Gillard AJA, with whom Ormiston and Buchanan JJA agreed.

(a) that there were reasonable efforts to serve the defendant, and informal service occurred many weeks before the originating process expired;

(b) the defendant knew that a claim would be made against him, as evidenced by the correspondence that took place in 2009,[74] and would not be prejudiced by the extension;

(c) denial of the application would effectively shut out the plaintiff from pursuing the defendant in relation to the claim made in the proceeding, given the expiry of the limitation period in the intervening period; and

(d) that it is relevant that the defendant’s solicitor waited until the originating process had expired (for service) before filing and later serving a conditional appearance and raising the issue of defective service.

[74]JXI-01 to JXI-09 of the first Ivanisevic Affidavit.

Crockett J observed in Finlay v Littler[75] that in showing good reason why the validity of a writ should be extended (then called a renewal), that having regard to the purpose of the rule in seeking to ensure that process is served promptly, proof of reasonable efforts to serve the defendant should be treated as a matter of considerable importance.
[75][1992] 2 VR 181 at 186.

In this case, the plaintiff says service was attempted on the defendant personally on 18 February 2016,[76] some seven weeks prior to expiry of the period for service of the originating process. This ‘attempt’ at service included the SEPA notice. Senior Counsel for the defendant described the evidence in the Wilson affidavit as constituting no attempt at service at all because when Mr Wilson went to the defendant’s home address he was not at home. There was therefore no attempt at service.
[76]Wilson affidavit.

I disagree with this submission. Mr Wilson telephoned the defendant at the telephone number given and was told by the defendant that he was not interested in accepting any documents as his solicitor was handling the matter and told him that the liquidators of the plaintiff had details of the solicitor. I cannot see how this is not an attempt to serve the defendant for present purposes. In my view it is. Equally, there is no avoidance of service by the defendant. Indeed, the correspondence in 2009 makes clear that even then the defendant’s solicitors had instructions to accept service. But the liquidators of the plaintiff, and their solicitors, with over ten thousand claims can be forgiven for failing to consult the old correspondence.

Then there was the exchange of emails on 22 and 24 February 2016, to which I have referred above, leading to the email on 25 February 2016 by which the plaintiff purported to serve the process on the defendant in accordance with the agreement of the defendant’s solicitor to accept service. Notwithstanding that the documents sent did not include the SEPA notice and for that reason the service is ineffective, it still constitutes an attempt at service for the purpose of showing good reason why the validity of the writ should be extended.

The defendant contends that he will suffer prejudice should the validity of the writ be extended and it is served on him. The alleged general prejudice is referred to in the second Ivanisevic affidavit,[77] namely that the defendant would be exposed to the claims in the proceeding, would incur costs in defending those claims and would have his business and personal life disrupted by them. These claims are no more than the usual prejudice suffered by all defendants who have a proceeding brought against them. The prejudice caused by the effluxion of time, namely the loss of evidence of non‑parties, is at best presumptive prejudice.[78] There is no particular person identified whose evidence is lost to the defendant for any reason. His solicitor’s correspondence in 2009 indicates, as one might expect from a practicing barrister, that his instructions to his solicitor were fulsome and detailed in both matters of fact and law.
[77]At para [21].
[78]Re Australian Property Custodian Holdings Ltd (No 3) [2014] VSC 456 [140].

The detailed defence to the plaintiff’s claims set out in the 2009 correspondence leads me to conclude that it is highly probable that defendant and his solicitor have taken steps to prepare the defendant’s case in answer to the plaintiff’s claims and perhaps to obtain information from relevant witnesses. If the defendant has not taken steps to collect together the relevant evidence, documentary and otherwise, the weight to be attributed to the prejudice thereby suffered will rightly be diminished, because it is at least partly his fault that he suffers that prejudice.[79]
[79]Re APCH Ltd (No 3) [2014] VSC 456 at [31].

Thus, in my view, apart from presumptive prejudice, the defendant has not identified any prejudice, apart from losing the ability to plead the statute of limitations, in the event that the validity of the writ is extended for service.

The defendant has known of the prospect of proceedings against him since mid-2009. His solicitors ended the 2009 correspondence by informing the plaintiff’s solicitors that they had instructions to accept service. The defendant and his solicitors may well have watched the progress of the group proceedings with interest. They cannot have failed to learn of the failure of the group proceeding. The prior notice of the plaintiff’s intention to litigate diminishes the impact of any prejudice that the defendant might suffer by the extension of the validity.[80]
[80]Savcor Pty Ltd v Cathodic Protection International APS [2002] VSC 201 at [25] per Byrne J. Irving v Carbines [1982] VR 861 at 867; Re APCH Ltd [2014] VSC 190 at [140]; and Re APCH Ltd (No 3)[2014] VSC 456 at [141].

The defendant relies on the proposition that a liquidator who does not commence proceedings until just before the expiry of the limitation period (which on its own material, the plaintiff believed as at 8 April 2015 was 1 May 2015)[81] is required to be ’… especially diligent in pursuing prompt service of the proceedings.’[82]
[81]Second Grant affidavit [6(a)].
[82]Tolcher v Gordon [2005] NSWCA 135; (2005) 53 ACSR 442 [3] per Hodgson JA cited with approval in Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104 [37] and in Re Australian Property Custodian Holdings (in liquidation) [2015] VSC 745 at [48] per Judd J.

In Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq),[83] Ipp JA said, in relation to an application to enlarge the time within which to serve a statement of claim, that regard must be had to the policy behind the applicable limitation statute. His Honour made reference to Tolcher v Gordon,[84] where Hodgson JA said:

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

[83][2009] NSWCA 104, [37].

[84][2005] NSWCA 135, [3].

These observations of Hodgson JA in Tolcher v Gordon were made in the context of proceedings brought by a liquidator for orders under s 588FF of the Corporations Act that certain transactions were voidable. Section 588FF(3) of the Corporations Act provides for a limitation on the time within which applications may be made under s 588FF(1). Generally speaking, the limitation period is 3 years after the relation back day or 12 months after the liquidator is appointed, whichever is the later. In Tolcher v Gordon, the NSW Court of Appeal allowed the appeal and extended the time for the liquidator to commence the proceeding notwithstanding the caution given by Hodgson JA and the acceptance of the relevance of the observation of Spigelman CJ in in BP Australia Limited v Brown[85] that:

A creditor or other person who has received the benefit of a voidable transaction is at risk of having to surrender it. The time limit in s 588FF(3) has the effect that at the end of the period of three years, such a person will know whether s/he remains at risk. In a legislative scheme which seeks to balance conflicting commercial interests of this character that appears to me to be a perfectly reasonable requirement. Those who have an interest, or who represent those who have an interest, to disturb transactions must indicate, within three years, whether they wish to keep open the option of doing so. In this, as in other areas, legal policy favours certainty.

[85](2003) 58 NSWLR 322, [114]-[115]; Tolcher v Gordon [2005] NSWCA 135, per Tobias JA [43].

Indeed Tobias JA, with whose reasons Hodgson and Ipp JJA generally agreed, said:

As I have already observed, the policy lying behind the limitation period set by s 588FF(3)(a), as explained by Spigelman CJ in BP Australia, has been observed in the present case as the action was in fact instituted within the three-year limitation period. True the SLC [statement of liquidated claim] was not served, but then the statutory provision does not require service either within the three-year period or within any other period. It is left at large. This may be an oversight given what the Chief Justice said in BP Australia at 345 [115] but that notwithstanding, no time limit for service of process has been imposed. No doubt the legislature may have assumed that the relevant rules of court may have provided for time limits within which valid service was to be effected but it would also have assumed that under the same rules, an extension of time for service could be sought and obtained. Accordingly, I do not consider that to grant an extension of time in the present case would run counter to the policy behind the statutory limitation period. It would follow that to refuse the application for extension of time so as to enable the opponent to retain the benefit of what in truth would be a windfall due to the default of the liquidator's solicitor, should not carry determinative weight given the other considerations in favour of the grant of the application to which I have referred.

I note, as Judd J noted in Re Australian Property Custodian Holdings Ltd (in liquidation),[86] that the ‘rule’ under consideration in Arthur Andersen was pt 18 r 9 of the District Court Rules (NSW), not the Corporations Rules. While the proceeding in Tolcher v Gordon was an application made under s 588FF of the Corporations Act, it did not comply with the Corporations Rules. Tobias JA, with whom Ipp JA agreed, doubted that the proceeding could be commenced in the District Court, however, no point had been taken on the issue, so the irregularity was disregarded for the purpose of the application for an extension of time under pt 3 r 2 of the District Court Rules.
[86][2015] VSC 745 at [49].

In Re Australian Property Custodian Holdings Ltd (in liquidation),[87] Judd J quoted the summary of the applicable law from my decision in Howard v Power (referred to above). He noted that the nature of the proceeding and its legislative context will provide guidance on the exercise of discretion. He observed that the matter before him was a proceeding commenced under s 588FF of the Corporations Act and that gave rise to different considerations to those arising in a proceeding of a different nature commenced under the General Civil Procedure Rules. The CPA also provides important legislative context.[88]
[87][2015] VSC 745 at [46]–[47].
[88]Ebner v Clayton Utz (2012) 36 VR 25, [21].

It is undoubted that it is the duty of a plaintiff to serve a writ promptly. That has been a requirement since at least 1944 when Lord Goddard delivered the decision of the Court of Appeal in Battersby.[89]It is also now true that this Court must seek to give effect to the overarching purpose of the CPA in the exercise of any of its powers, or in the interpretation of those powers.[90] That overarching purpose is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[91] Further, s 25 of the CPA provides:

Overarching obligation to minimise delay
For the purpose of ensuring the prompt conduct of a civil proceeding, a person to whom the overarching obligations apply must use reasonable endeavours in connection with the civil proceeding to –
(a) act promptly; and
(b) minimise delay.

[89][1945] KB 23, 32-3.

[90]CPA s 8(1).

[91]CPA s 7(1).

That duty to act promptly is, however, just one of the many factors to be taken into account and weighed in the balance in order to arrive at a fair and just decision whether to extend the time in any particular case. As Judd J recognised, a proceeding commenced under s 588FF of the Corporations Act gives rise to different considerations to those arising in a proceeding of a different nature commenced under the Rules. This proceeding is of a different nature, it has a different limitation period applicable and, importantly, it is a proceeding where the plaintiff is entitled to serve the proceeding up to 12 months after the issue of the writ. Under the Corporations Rules,[92] the originating process must be served as soon as practicable after it is filed.
[92]Supreme Court (Corporations) Rules 2013, r 2.7.

The defendant submitted that no reasonable steps were taken by the plaintiff to serve the writ, and in this connection submitted that there is no satisfactory explanation provided in the plaintiff’s affidavit material as to why the plaintiff and/or its solicitor, Mills Oakley did not:[93]
[93]Defendant’s submissions [79].

(a) email Mr Ivanisevic at HopgoodGanim immediately after filing the writ on 8 April 2015 to confirm, (after the lapse of a period of some 5 years 5 months since their last communication on 23 November 2009)[94] whether Mr Ivanisevic remained instructed by Mr Allan and whether he still held instructions to accept service;
[94]Affidavit of Mr Ivanisevic sworn 21 April 2016, at paragraph [13]; Affidavit of Mr Ivanisevic sworn 21 April 2016, at paragraph [12].

(b) on or after 8 April 2015, inform Mr Ivanisevic and/or HopgoodGanim and/or Mr Allan by email or by any other mode of communication until 22 February 2016 that proceedings had been commenced by the plaintiff against Mr Allan, some 10 months earlier on 8 April 2015;[95]
[95]Affidavit of Mr Ivanisevic sworn 13 May 2016, at paragraphs [8] – [14].

(c) seek to effect service of the writ during the 6.5 month period between 8 April 2015 and 30 October 2015, the date when the 6 year limitation period expired;

(d) seek to effect service on Mr Allan (via HopgoodGanim) until 25 February 2016, some 10 months after the writ had been filed;

(e) on 18 March 2016, immediately make an application for default judgment when Mr Allan failed to enter an appearance to the writ within the time prescribed under r 8.04 (b) of the Rules, namely by Thursday, 17 March 2016;[96]

(f) in the alternative, inform Mr Ivanisevic in writing on or immediately after Thursday, 17 March 2016 that unless Mr Allan filed a Notice of Appearance forthwith or on or before Friday, 8 April 2016, that the plaintiff would take steps to enter default judgment against Mr Allan, instead of writing to Mr Ivanisevic on 6 April 2016 (only 2 days prior to the expiration of the 12 month period for the service of the writ); and

(g) on 7 April 2016, the date when Mr Grant swore and filed his affidavit of service, at that time (which was still one day before the writ went stale) identify that the SEPA notice had not been attached to the writ in circumstances where Mills Oakley knew and had always known that service was to be effected in accordance with the requirements of SEPA.

[96]Rule 8.04(b) of the Rules prescribes that unless the Court otherwise orders… the time stated in the writ for the defendant to file an appearance shall be 21 days after service. The time period of ’within 21 days after service’ was endorsed on page 5 of the writ: first Grant Affidavit, Exhibit JWG-1. The date of 14 March 2016 which is deposed to by Mr Grant in the second Grant Affidavit at pg15 as the date by which Mr Allan was required to enter a Notice of Appearance is incorrect. The correct date was 17 March 2016.

These submissions were made before the Lewin affidavit was filed. They therefore do not take into account much relevant evidence. In relation to paragraphs (a) to (d) of that submission, the answer lies in the evidence regarding the number of borrowers against whom it has been necessary to issue proceedings (1,487), the document management issues referred to, the need to prioritise the issue of proceedings to avoid limitation of actions defences, the inference that it is also necessary to prioritise the progress of proceedings because of the large numbers to be dealt with, and the preference of the plaintiff’s solicitors to issue a generally endorsed writ (to commence the claim within the limitation period) and not serve it until the statement of claim has been prepared and filed because of the operation of r 14.02 of the Rules.

The defendant submitted that even if it is accepted that the plaintiff’s inability to locate all the loan documents prevented it from issuing the statement of claim, that does not constitute a valid reason for the 10 month delay by the plaintiff in serving the writ. That is because in order to effect service, the plaintiff only needed to serve the generally indorsed writ. The defendant points to the reasoning of Randall AsJ in Global Investments Ltd v Babcock & Brown LP & Others[97] where his Honour commented, in the context of that case, that:

The plaintiff made a conscious decision not to serve the writ promptly. The preparation of the statement of claim does not constitute good reason to justify extending the time. There is no explanation as to why the writ could not have been served with the general endorsement and a statement of claim served subsequently;

[97][2016] VSC 107 at [62].

In my view, the decision made not to serve the generally endorsed writ until the material was available to plead a statement of claim is reasonable in the context of the very large number of claims that the plaintiff has on foot against borrowers and which are all issued by Mills Oakley. The situation with which Randall AsJ was faced was entirely different from the circumstances before me. There was a failure to inform the Court of relevant material and a failure to make full disclosure of all material facts and reasons for the need for an extension of the validity of the writ in that case. Further, there is an explanation in the matter before me for not serving the generally endorsed writ before obtaining the documents necessary to plead properly.

The defendant also submitted that there was no reason why the plaintiff could not engage multiple firms of solicitors, and so overcome the delays which were experienced by the plaintiff’s employment of just one firm. The plaintiff contended that it would not have been in the interests of the creditors of the plaintiff to engage, for example, 10 firms of solicitors. That would have been prohibitively expensive and to the detriment of creditors. Even if there were multiple firms of solicitors engaged to undertake the recovery of the loans through the courts, it is still necessary for the liquidators and their staff to give instructions for each case and to manage the conduct of the proceedings both from a practical and an evidentiary perspective. I agree with those propositions and add that the engagement of multiple firms of solicitors is not in the interests of the borrowers because it is likely to increase the costs to them (in the event the plaintiff is successful).

The defendant also pointed to the observation by Judd J in Re Australian Property Custodian Holdings Ltd (In Liq)[98] that:

Modern case management principles, reinforced by the Civil Procedure Act, require that a proceeding not be commenced before the plaintiff is in a position to verify that, on the factual and legal material available, each allegation of fact in a document has a proper basis. A proceeding may not be commenced in the hope that evidence will emerge to support allegations.

[98][2015] VSC 745 at [64].

The defendant then submitted that the very thing the plaintiff was required to do was not done at the time of the issue of the writ, namely to have the factual and legal material available to enable the plaintiff’s solicitor properly to certify that each allegation of fact in the writ has a proper basis. This proposition was advanced because the reason for not serving the writ was to await the full documentation relating to the defendant’s loans and that without it, presumably, the solicitor could not certify to the proper basis.

The generally endorsed writ in fact has attached to it a proper basis certificate under s 42 of the CPA. The endorsement on the writ is fairly extensive, in that it identifies the parties, the loan agreements and their dates, amounts and numbers, the advances of moneys under the loan agreements, the default and the unsatisfied demands for payment. But it is done in short form without the necessary detail or particulars. I have no doubt that the accounting entries (or loan summaries) maintained by the plaintiff and the knowledge of the system employed by the plaintiff in entering into the loan agreements and advancing funds was sufficient to enable the proper basis certification.

It is clear that had the writ been served shortly after issue, there would have been a requirement for the plaintiff to serve a statement of claim within 30 days after the filing of an appearance. The question arises whether that is a good reason in the circumstances for not serving the writ whilst the original documents were retrieved? An alternative might have been to serve the writ and apply to extend the time within which to serve a statement of claim, advancing such appropriate evidence in support of that extension of time as necessary. The time taken to retrieve the original loan documents is explained solely by the necessity to get them from archival storage. That accounts for a large portion of the time between the issue of proceedings and the preparation of the statement of claim. Why that took so long is not expressly exposed in the affidavit material. However, there is a pretty clear inference that it was at least partly because of the volume of matters being dealt with by the plaintiff and by its solicitors. Moreover, under the Rules, the plaintiff is expressly allowed a period of 12 months within which to serve the writ. Notwithstanding the duty to serve promptly and the overarching obligations, the plaintiff is entitled to wait and serve within the 12 month period. It is not bound to serve the writ on its issue.[99] Thus, the focus of what is and what is not a good reason in this case must be on why the service in fact attempted was not effective.
[99]Major v Australian Sports Commission [2001] QSC 320 per Mullins J at [71]; Re APCH Ltd (In Liq)(No 3)[2014] VSC 456 [32].

It is clear that had the service been validly effected pursuant to the agreement to serve by email that service would have been effected well within the period that the writ was valid for service. It is the technical deficiency brought about by the oversight of the plaintiff’s solicitor in omitting the SEPA notice, leading to the setting aside of service, that is the true and central reason for the application to extend the validity of the writ for service. I consider that is a good reason to extend the validity of the writ.

The defendant submits that there is no explanation why the plaintiff did not enter (or more appropriately in my view, attempt to enter) judgment in default of appearance immediately after expiry of the 21 days fixed for appearance. The last day was 17 March 2016. That hardly seems relevant to whether reasonable efforts had been made to serve the defendant or the plaintiff has shown good reason for the extension of validity of the writ. But if it is, the answer is clear. The plaintiff and defendant had been in communication about the proceeding and an agreement was reached as to service of the process on the solicitor. Moreover, that agreement was entered into against the background of the correspondence ending in 2009, which showed clearly that the defendant desired to defend the proceeding. Had the plaintiff, being unaware of the defect in service, successfully entered default judgment in those circumstances, the plaintiff’s solicitor would know that it would be set aside. That is because there was, and is, an arguable defence on the merits and the plaintiff would have entered default judgment knowing that the defendant desired to defend the proceeding and did so hastily. It would have been a case of ‘snapping-on’ a default judgment, as it was described in Hogg v J Isherwood-Hicks[100] by Kearney J:

I should add that I consider that where, as here, a solicitor has entered an appearance, the practice of “snapping-on” a default judgment, without notice, immediately upon the expiration of a period prescribed by the rules, should be strongly deprecated. It serves no useful purpose. It increases the costs of litigation unnecessarily.

[100](1992) 108 FLR 262, 264; Total Peripherals Pty Ltd v Kaplan [1998] VSC 49; see also Gunns Finance Pty Ltd v Storey [2014] VSC 260 at [13].

The defendant then complains that the plaintiff’s solicitor could have warned the defendant at some time shortly after 17 March 2016 that an appearance should be filed instead of writing to the defendant’s solicitor on 6 April 2016 (only 2 days prior to the expiration of the 12 month period for the service of the writ). No doubt this would have been appropriate, but it has nothing to do with whether reasonable efforts had been made to serve the defendant or the existence of a good reason why the validity of the writ should be extended.

The plaintiff complains that the defendant’s solicitor waited until the last day of the period of validity of the writ before filing the conditional appearance. Counsel for the plaintiff initially contended that this was evidence of sharp practice. Objection was rightly taken to this suggestion as it suggested the defendant’s solicitor acted dishonestly or unscrupulously.[101] The suggestion of sharp practice was withdrawn. Nevertheless, the plaintiff contended that the timing of the filing of the conditional appearance was deliberately, but properly, delayed until the date of expiry of the writ.[102] The defendant, however, pointed to the fact that he filed his conditional appearance on the very day that the plaintiff had warned the defendant in the email of 6 April 2016[103] was the last day that would be allowed, after which judgment in default would be entered.
[101]See Apple Computer Australia Ltd v George Mekrizis & Ors [2002] NSWSC 982 at [45].
[102]Transcript, 3 August 2016, p. 5-6.
[103]See above at paragraph 29.

There is no direct evidence that the defendant’s solicitor knew of the defect in service and deliberately delayed entering an appearance until the last possible moment. The entry of the conditional appearance on 8 April 2016, however, shows that at least then it is probable that the defect in service had been identified. Had the defect not previously been identified, however, there is no evident reason why the defendant did not enter an appearance. The correspondence in 2009 between the solicitors for the parties shows that the defendant maintained on reasonable grounds that he had been misled by representatives of TSL and, allegedly, the plaintiff. Why would the defendant not enter an appearance promptly after service by email as agreed? The only possible explanation is that at an early point the defect in service had been identified and because the expiry of the period for service was approaching, the defendant determined to wait and see what the plaintiff would do. If there was a successful attempt to enter judgment in default of appearance it would have been set aside ex debito justitiae because of the defect in service. If the attempt to enter judgment in default failed, as it should, the defendant would be in no worse a position by waiting to see what the plaintiff did.

For these reasons, there is, as the plaintiff submitted, a reasonable basis for the contention that the defendant deliberately waited as long as possible before entering a conditional appearance. As it happened, the timing fell the defendant’s way and the email from the plaintiff’s solicitor sent on 6 April 2016 gave the defendant until the very day of the expiry of the writ for service to enter an appearance. From the defendant’s perspective that was ‘manna from heaven’. It was chance falling the defendant’s way, but it could only fall in favour of the defendant as a result of a deliberate strategy of not entering an appearance until the last possible time.

The defendant submitted that if there is any prejudice to the plaintiff by a refusal to extend the validity of the writ, prejudice, that is, by the plaintiff being left without a remedy against the defendant because of the expiry of the limitation period, then any loss arising from that prejudice may be pursued in an action against its solicitors.[104] In answer, the plaintiff referred to the observations of the Full Court of the Supreme Court of Victoria in Soper v Matsukawa[105] where Young CJ (with whom Lush and Gray JJ agreed)[106] said:

If the question whether the plaintiff has an alternative remedy against his solicitor is not a relevant consideration in the ordinary want of prosecution case where the plaintiff carries the onus of satisfying the court that his action should not be dismissed for want of prosecution, it is a fortiori irrelevant in a case such as the present where the appellant plaintiff has to persuade the Court of the conditions specified in the precise language of O. 8, r. 1. If it were to come in at all, it could only come in, so it seems to me, as a consideration bearing upon the appropriate order to make when the scales as between the plaintiff and defendant are otherwise evenly balanced. Such a case would be exceedingly rare, and in my opinion the question should ordinarily be regarded as irrelevant in cases where he plaintiff has to show he has made reasonable efforts to serve the defendant or that for other good reason the writ should be renewed.

[104]Defendant’s submissions [110].

[105][1982] VR 948 at 951.

[106]Lush J made his own comments on this question agreeing that excessive weight was attached to the right of action against the solicitor.

In Soper, there were unexplained periods of delay by the solicitor for the plaintiff which, to say the least, were perplexing. There were no suggestions of a multitude of cases by the one plaintiff or a solicitor with many cases to manage. In this case, whether there is negligence on the part of the plaintiff’s solicitors is less clear. Certainly the plaintiff’s solicitor admittedly failed to include the SEPA notice when serving the originating process by email on 25 February 2016. But is that clearly causative of the loss if the application to extend validity is refused? There are many other matters that impact on the prospect of liability of the solicitors, including the delay between the issue of the writ and the preparation of the statement of claim, and the foreseeability of the conduct of the defendant’s solicitor in not entering a conditional appearance until the very day that the validity of the writ for service expired. Given the volume of the proceedings now commenced by the plaintiff in this Court alone, and the management issues that are caused by that volume, it is a very strong inference that even greater and much more burdensome management issues arise in the management of the recovery actions against borrowers by the staff of the liquidators, not to mention the conduct of the matters by the plaintiff’s solicitors. For these reasons, the existence of an alternative remedy against the plaintiff’s solicitors is moot in any event.

The requirement to show reasonable efforts had been made to serve the defendant or ‘other good reason’ for an extension will not be satisfied by demonstrating that no prejudice will be occasioned to the defendant if an extension is granted.[107] But where the scales are evenly balanced, the relative prejudice may be taken into account. I consider the attempts at service are to be taken as being reasonable, but unsuccessful, efforts to serve the defendant. The significance of this is that the Court might order that a writ be renewed if satisfied that reasonable efforts had been made to serve the defendant, or for ’other good reason’. In my opinion it is also the case that an error in serving the writ by omitting the SEPA notice, and that without that error the service would have been effective (as in my opinion it would have been), constitutes an ‘other good reason’ to extend the validity of the writ.
[107]Re Australian Property Custodian Holdings Ltd (in liquidation)[2015] VSC 745 [50].

A factor in favour of extending the validity of the writ is that if renewal were refused, a new writ would be outside the limitation period. Similarly, a factor against an extension is the fact that the limitation period has expired and to grant an extension will deprive the defendant of a defence to the proceeding. In this regard, the scales are fairly evenly balanced. The prejudice to the defendant is, as I have said, presumptive prejudice. There is no evidence of prejudice arising from any specific loss of evidence. In fact, the correspondence between solicitors in 2009 shows that the defendant was even then well prepared to go into battle with the plaintiff. In my opinion, the absence of prejudice other than presumptive prejudice is, where the scales are evenly balanced, to be taken into account in favour of extending the validity of the writ.

Conclusion

This is a case where there were attempts to serve prior to the expiry of the period. The originating process came to the attention of the defendant and his solicitor well before the expiry of the period for service. The claim being made by the plaintiff, through its liquidators on behalf of creditors, was well-known to the defendant as long ago as 2009 when there was detailed correspondence between the solicitors about it. To the extent that is relevant, the deferral of commencing proceedings whilst awaiting the hearing and determination of the group proceeding, and its appeals, was clearly appropriate and properly justified. There were two attempts at service, once personally on 18 February 2016 at the defendant’s home in Brisbane and the second pursuant to the agreement of the solicitor for the defendant that I have held to be ineffective. The deferral of service of the writ was explained by the perceived need to obtain the original loan documents and the large number of recovery actions on foot.

The critical reason exposed in the material that, in my opinion, constitutes reasonable efforts having been made to serve the defendant, or another good reason to extend the validity of the writ, is the technical deficiency brought about by the oversight of the plaintiff’s solicitor in omitting the SEPA notice, leading to the setting aside of service. In my view, that is a proper basis to extend the validity of the writ especially where there is no evidence or prejudice to the defendant other than presumptive prejudice.

I do not consider that to grant an extension of time in the present case would run counter to the policy behind the statutory limitation period or the CPA. To refuse the application for extension of time would be to sanction what I have concluded was a deliberate strategy of the defendant and enable the defendant to retain the benefit of what in truth would be a windfall due to the default of the plaintiff’s solicitor.

There would be prejudice to the creditors of the plaintiff if time is not extended and the defendant were able to avoid liability by the expiry of the limitation period, especially where he does so by taking advantage of the technical deficiency of the solicitor failing to attach the SEPA notice to the documents served by email.

In the circumstances, there have been attempts to serve the defendant and there is good reason to extend the validity of the writ for service to enable the writ and other documents to be properly served.

ANNEXURE TO REASONS FOR DECISION IN TIMBERCORP FINANCE PTY LTD (IN LIQ) V ALLAN
*Affidavit of Jamie William Guy Grant sworn 7 April 2016*
Para	Facts and Matters Objected to		Grounds of Objection:		Ruling
2	“I effected service of the following documents:…”		(i) The statement deposes to a legal conclusion [that service of the documents was effected in accordance with the requirements of the SEPA, specifically s 16], or in the alternative, a conclusion, not fact. The facts to substantiate the conclusion [that the documents served included Form 1, Notice SEPR] are not in evidence.		The affidavit is an affidavit of service. In stating that he ‘effected service’ he is stating a conclusion from facts he purports then to set out. The statement cannot be taken as a legal opinion. The question whether service has been effected is in the circumstances a matter for the Court. Thus, although the objection is strictly correct, the para will not be struck out.
3	“The Documents were served [on] GRANT ROBERT ALLAN by an agreement under rule 6.14 [of the] Supreme Court (General Civil Procedure) Rules 2015…”		(i) The statement deposes to a legal conclusion [that service of the documents was effective in accordance with the requirements of the SEPA, specifically s 16], or in the alternative, a conclusion, not fact. The facts to substantiate the conclusion [that the document served included Form 1, SEPR] are not in evidence. (ii) argumentative, it purports to identify a conclusion that the Court should reach [that service was effective] because there was some form of agreement with the defendant to waive the requirement under s 16 SEPA that the Form 1 Notice SEPR be attached to the writ		See above
4	“At 2:47pm on 25 February 2016 I served the Documents on GRANT ROBERT ALLAN.”		(i) The statement deposes to a legal conclusion [that service of the documents was effective in accordance with the requirements of the SEPA, specifically s 16], or in the alternative, a conclusion, not fact. The facts to substantiate the conclusion [that the document served included Form 1, SEPR] are not in evidence.		See above.
*Affidavit of Jamie William Guy Grant filed 29 April 2016*
Para.		Facts and Matters Objected to:		Grounds of Objection:	Ruling
3, Exhibit JWGG-1		“Other Matters” under “General Form of Order”:’- “… and it appears to the Court that there is good reason in this case to extend the validity of the Writ for service as the Plaintiff has attempted to locate the Defendant many times, has made reasonable efforts to personally serve the Writ on the Defendant, without success.”		[A] “… as the Plaintiff has attempted to locate the defendant many times …”:- (i) assumes facts not in evidence; (ii) hearsay; (iii) misleading and oppressive, thus irrelevant; (iv) deposes to a conclusion and, the facts to support the conclusion are not in evidence; (v) argumentative, as it seeks to contend that the Court will conclude that the plaintiff has attempted to locate the defendant many times. [B] “… has made reasonable efforts to personally serve the writ on the defendant …” : (i) the statement is in the form of a submission, not facts, thus also irrelevant; (ii) deposes to a conclusion and, the facts to support the conclusion are not in evidence; (iii) argumentative, as it seeks to contend that the Court will conclude that the plaintiff has made reasonable efforts to personally serve the defendant; (iv) hearsay; (v) misleading and oppressive	With respect, this is a pointless objection. The draft minute of order was not put forward as a statement of fact or as evidence. It is a pro forma order, nothing more.
5		“The Originating Process seeks repayment from the Defendant of his indebtedness to the Plaintiff pursuant to two loan agreements ...”		(i) deposes to a legal conclusion, or in the alternative a conclusion [that the defendant is indebted to the plaintiff], not facts; (ii) assumes facts [in the form of documents containing an admission of indebtedness] not in evidence; (iii) argumentative, as it seeks to contend that the Court will conclude [based on the facts as alleged in the writ] that the defendant is indebted to the plaintiff under the two loan contracts; (iv) speculative, as it seeks to contend that the Court will conclude [based on the facts as alleged in the writ] that the defendant is indebted to the plaintiff under the two loan contracts; (v) irrelevant: the merits of the claim are not relevant to the relief sought in the plaintiff’s summons.	It is inevitable that in describing the nature of a claim in a proceeding that it is put in terms of legal conclusions. It is not for that reason, or any other reason given, objectionable.
6(a)		“the Originating Process was filed with a general indorsement of claim on 8 April 2015 where the plaintiff was at the time unable to locate all of the loan documents entered into by the Defendant.”		(i) hearsay; (ii) assumes facts not in evidence; (iii) speculative.	The implication from the reading of the affidavit as a whole is that the statement is made on information from the officers of the plaintiff which the deponent believes. It is therefore admissible on an interlocutory application.
12		“… I emailed the following documents to Mr Ivanisevic by way of service …”		(i) The statement deposes to a legal conclusion, or in the alternative, a conclusion, not fact; (ii) assumes facts [to substantiate the conclusion] not in evidence.	Read in context it is not a legal conclusion but a statement of fact. As a statement of fact, it is accurate. That is what he purported to do. To the extent that it assumes facts they are referred to in the exhibit. The question whether the service was legally effective is clearly one for the Court.
21		Ordinarily the Plaintiff would be able to rectify any ineffective service of the Originating Process by re-service of the same together with the requisite SEPA Act Notice ….		(i) irrelevant, has no probative value whereby it could assist the court in deciding the application; (ii) the matters deposed to are in the nature of a submission and not a deposition of facts, thus irrelevant; (iii) vague; (iv) speculation.	It is not uncommon on interlocutory applications for practitioners to insert in their affidavits matters of submission for convenience only. Although such matters are strictly objectionable and can be struck out, it is nevertheless clear what they are and they are not taken by the court as evidence.
22		The validity of the Originating Process for service having expired the Defendant if successful on its summons will achieve an outcome whereby the Plaintiff may be permanently prevented from pursuing recovery from the Defendant		(i) the statement deposed to is in the nature of a submission. It is not a deposition of facts; (ii) requires a legal conclusion, or in the alternative a conclusion, and, the conclusion is in respect of facts not in evidence; (iii) speculation.	See above.
23		That outcome [the plaintiff being permanently prevented from pursuing recovery from the Defendant] would be self-evidently prejudicial to the Plaintiff given that the originating process was served directly on the defendants solicitors who: (a) agreed to the method of service (by way of email) (b) were in a position to and evidently have advised the Defendants as to the requirements of the SEPA Act. (c) did not take steps to bring the alleged defect in service to the Plaintiff’s attention until after the Originating Process had expired for service (d) there is no suggestion that but for the requirements of the SEPA Act the Originating Process has been anything other than validly served both in accordance with rule 6.14 and 6.11 of the Rules		(i) in the nature of a submission. It is not a deposition of facts; (ii) requires a legal conclusion [that the if the period for service of the writ were not extended the plaintiff would, self-evidently, suffer prejudice] based on facts not in evidence; (iii) vague and misleading (does not identify the nature of the prejudice) and thus oppressive; (iv) as to “(a)” - vague and misleading (suggests that defendant agreed to waive any defect in service under s 16 SEPA because it agreed to accept service by email) and thus oppressive; (v) as to “(b)” – speculation and irrelevant, of no probative value; (vi) as to “(c)” – improper and thus oppressive as it suggests that there was some wrong doing or non-compliance with the law by the defendant’s solicitor; (vii) as to “(d)” – irrelevant – breach of s 16 SEPA renders service ineffective; (viii) speculation – as to prejudice, ignores prospect that plaintiff will not be able to recover any losses from its solicitor.	See above.

[2016] VSC 481

26 August 2016