Tolcher v Gordon - [2005] NSWCA 135

No judgment structure available for this case.

Reported Decision:
53 ACSR 442
(2005) 23 ACLC 798

Court of Appeal

CITATION:
Tolcher v Gordon [2005] NSWCA 135
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S):
30 March 2005

JUDGMENT DATE:

3 May 2005

JUDGMENT OF:
Hodgson JA at 1; Ipp JA at 8; Tobias JA at 9

DECISION:
(1) Leave to appeal granted upon condition that Notice of Appeal be filed and served within 7 days of the date of these orders; (2) Appeal allowed; (3) Set aside Order 1 made by Armitage DCJ on 13 May 2004; (4) Pursuant to Part 3 rule 2(2) of the District Court Rules, order that the time specified in Part 18 rule 9 be extended to nunc pro tunc up to and including a date being 60 days after the date of these orders; (5) Pursuant to Part 3 rule 2(2) of the District Court Rules, order that the time for service of the Statement of Liquidated Claim upon the opponent be extended nunc pro tunc up to and including the date of these orders; (6) Pursuant to Part 18 rule 5(2) of the District Court Rules, direct that the service of the Statement of Liquidated Claim be deemed to have been effected on the opponent as at the date of these orders; (7) Order that the claimants' costs of the summons for leave to appeal and of the appeal be paid by the opponent but with respect to such costs to have a certificate under the Suitor's Fund Act 1951, if otherwise qualified

CATCHWORDS:
CIVIL PROCEDURE - Delay in prosecution of proceedings - Action commenced within, but towards end of, limitation period (imposed by s 588FF(3)(a) Corporations Act 2001 (Cth)) - Service not effected within time limit provided by court rules - Action taken to be dismissed by operation of case management rule contained in court rules - Application to extend time limit for service and time on expiry of which action taken to be dismissed - Correct approach to exercise of discretion to allow renewal of writ after period allowed for service has expired where, if allowed, renewal would have effect of depriving party of benefit of an expired limitation period - Whether approach is same where action taken to be dismissed after expiry of limitation period - Whether public policy considerations behind relevant limitation provision relevant to discretion to extend time limits in question - Whether delay in commencement of action until just before end of limitation period relevant to discretion to extend time limits in question - Whether claimants should have sought extension of limitation period (under s 588FF(3)(b)) rather than instituting proceedings within, but towards the end of, limitation period - Whether it was the claimants or their solicitor who was primarily to blame for delay in prosecution of action

LEGISLATION CITED:
Corporations Act 2001 (Cth)
District Court Act 1973
Supreme Court Act 1970
Limitation Act 1969
District Court Rules 1973

CASES CITED:
Itek Graphix Pty Limited v Elliott (2001) 54 NSWLR 207
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
Chappell v Cooper [1980] 1 WLR 958
BP Australia Limited v Brown (2003) 58 NSWLR 322
House v The King (1936) 55 CLR 499
Irving v Carbines [1982] VR 861
Rossiter v Bishop [1985] Tas R 107
Heaven v Road & Rail Wagons Limited [1965] 2 QB 355
Victa Limited v Johnson (1975) 10 SASR 496
Pontin v Wood [1962] 1 QB 594
Rust v Barnes [1980] 2 NSWLR 726
Jones v Jebras [1968] Qd R 13
Licul v Corney (1976) 180 CLR 213
Brown v DML Resources Pty Limited (No 6) (2002) 166 FLR 393
Birkett v James [1978] AC 297
Lewandowski v Lovell (1994) 11 WAR 124
Ulowski v Miller [1968] SASR 277
Re McGrath; HIH Insurance Limited (2004) 205 ALR 643
Tolcher v Capital Finance Australia Limited [2005] FCA 108
McGrath v National Indemnity Company (2004) 49 ACSR 403
Stollznow v Calvert [1980] 2 NSWLR 749

PARTIES:
Raymond George Tolcher
Charles Stuart Gordon

FILE NUMBER(S):
CA 40418/04

COUNSEL:
Cl: Mr M Cashion SC / Mr R Scruby
Opp: Mr C R C Newlinds SC / Mr D Allen

SOLICITORS:
Cl: Kemp & Strang, Sydney
Opp: Brooks & Co, Newcastle

LOWER COURT JURISDICTION:
District Court

LOWER COURT FILE NUMBER(S):
DC 1868/03

LOWER COURT JUDICIAL OFFICER:
Armitage DCJ

CA 40418/04

HODGSON JA
IPP JA
TOBIAS JA
Tuesday 3 May 2005

RAYMOND GEORGE TOLCHER v CHARLES STUART GORDON

Judgment

1 HODGSON JA: I agree with the orders proposed by Tobias JA, and, subject to what I say below, with his reasons.

2 I agree that it cannot be said that it was in itself dilatory conduct for the liquidator not to commence proceedings until three days before expiry of the limitation period. However, I do not agree that this was not a relevant consideration in the context of the subject application to set aside the dismissal under Part18 rule 9, or that it was irrelevant for the primary judge to take into consideration the public policy behind the three-year limitation period.

3 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.

4 In those circumstances, even the first extension of time granted on 1 August 2003 required justification by a reasonable explanation of why it was required. I do not doubt that this extension was justified in this case, but I make this point because it shows that the unexplained delay between 1 September 2003 and 13 January 2004 is a very serious matter.

5 It also makes all the more unsatisfactory the absence of any explanation for this delay: the solicitor’s ignorance of Part18 rule 9 is not an explanation for the delay in seeking a further extension of time for service, and in pursuing service after 1 September 2003.

6 When an application is made to the Court for relief from the consequences of delay, an explanation should always be given as to why the delay occurred, even if it is only that the matter was overlooked. In the absence of an explanation, such an application would ordinarily be dismissed. Alternatively, if the Court considers that the fault is with a legal adviser of the party and that the party itself is not at fault and should not be penalised, it may be appropriate to require an affidavit from the legal adviser and to order that he or she pay the costs involved in any delay arising from the need to provide that affidavit.

7 In the present case, I agree with Tobias JA that it is to be inferred that there is no explanation that would exculpate the solicitor and the liquidator; but that nevertheless, the primary judge erred and this Court should exercise its discretion in favour of the claimants. My reasons are the same as those of Tobias JA, apart from the matters set out above. Had I been dealing with this application at first instance, I believe I would not have granted it without first requiring an affidavit explaining the delay; but on balance, I do not think that the absence of such an affidavit justifies dismissal of the application on appeal, or the incurring of further costs by having the matter sent back and requiring such an affidavit to be provided to the District Court.

8 IPP JA: I agree with Tobias JA.

9 TOBIAS JA: By order of the Supreme Court of 5 June 2000, Raymond George Tolcher (the liquidator) was appointed liquidator of Senafield Pty Limited (Senafield). At all material times Charles Stuart Gordon (the opponent) was the father of Hugh Charles Gordon (H C Gordon) who was the sole director and shareholder of Senafield.

10 On 2 May 2003 the liquidator and Senafield (the claimants) instituted proceedings in the District Court (the action) by way of statement of liquidated claim (the SLC) against the opponent in which they sought various declarations and orders including an order that pursuant to s 588FF(1) of the Corporations Act 2001 (Cth) (the Act) the opponent pay to the claimants the sum of $522,504.07. Whether an application under s 588FF(1) may be made by the lodging of a statement of liquidated claim and/or whether the relief claimed in the SLC is the kind of relief which can properly be the subject of that form of initiating process may be doubtful: though see District Court Act 1973, s 159(2). However, no point has been taken with respect to these possible issues and I therefore disregard them.

11 As a consequence of the operation of Part 18 rule 9 of the District Court Rules 1973 (the Rules), the action was taken to be dismissed on 1 December 2003. On 19 January 2004 the claimants filed a notice of motion in the District Court in which, inter alia, they claimed pursuant to Part 3 rule 2(2) of the Rules an extension of the time referred to in Part 18 rule 9 on the expiry of which the action was taken to have been dismissed. The practical effect of any such extension, if granted, would be that the dismissal of the action would be rescinded.

12 His Honour Judge Armitage heard the notice of motion on 13 May 2004. At the conclusion of argument, his Honour delivered an ex tempore judgment whereby he ordered that the notice of motion be dismissed and that the claimants pay the opponent's costs of the motion. It is from those orders that the claimants apply to this Court for leave to appeal. The appeal itself has been heard concurrently with that application.

The relevant statutory provisions and rules

13 The action was instituted pursuant to the provisions of Division 2 of Part 5.7B of the Act. The SLC alleged a number of transactions in 1999 between H C Gordon and his father, the opponent, involving property belonging to Senafield. In particular, it alleged that moneys received by the opponent as a consequence of these transactions and amounting to $522,504 involved "insolvent transactions", "uncommercial transactions" and "voidable transactions" within the meaning of those provisions.

14 Section 588FF(3) of the Act applied to the making of an application under s 588FF(1) and was in these terms:

"(3) An application under sub-section (1) may only be made:

(a) within 3 years after the relation-back day; or

(b) within such longer period as the Court orders on an application under this paragraph made by the liquidator within those 3 years."

15 The relation-back day was 5 May 2000 as a consequence whereof the action was required to be made on or before 5 May 2003. It was in fact made on 2 May 2003 by the filing of the SLC.

16 The action having been instituted by the filing of a statement of liquidated claim, Part 5 rule 5 of the Rules relevantly provided as follows:

"(1) For the purpose of service an originating process shall be valid:

(c) if it is a statement of liquidated claim, for 1 month from the date on which it is filed or such further period as the Court may direct."

17 It followed from this rule that the SLC ceased to be valid for the purpose of service on 2 June 2003 subject to the time for service being extended pursuant to Part 3 rule 2. That rule relevantly was in the following terms:

"(1) The Court may by order extend or abridge any time fixed by the rules or by any judgment or order.

(2) The Court may extend time under subrule (1) as well after as before the time expires, whether or not an application for the extension is made before the time expires or at all."

18 Part 18 of the Rules is entitled "Withdrawal and discontinuance". It provides for the discontinuance of proceedings and the withdrawal of defences and subsequent pleadings. It also empowers the court to dismiss proceedings for want of prosecution: rule 3(1). Relevant for present purposes is Part 18 rule 9 which is headed "Dismissal of dormant actions commenced by lodging statements of liquidated claims". It provides as follows:

"If an action is commenced by the lodging of a statement of liquidated claim and, on the expiry of the period of 6 months and 28 days from the date of the commencement of the action:

(a) a notice of grounds of defence has not been filed, and

(b) default judgment has not been entered or the action otherwise disposed of by judgment or final order,

the action is taken to be dismissed on the day following the day on which that period expires."

The relevant facts

19 The facts relevant to the issues debated were not in dispute. The claimants' notice of motion was supported by two affidavits of Gino Luigi Pignone, their solicitor, sworn 19 January 2004 and 5 May 2004 respectively. Mr Pignone was not cross-examined on the contents of those affidavits. The facts are therefore taken from those affidavits.

20 The liquidator was, as I have observed, appointed by order of the Court on 5 June 2000. As the SLC alleges, H C Gordon was at all material times the sole director and shareholder of Senafield, the issued share capital of which was one ordinary $1 fully paid share. In 1999, so it is alleged, Senafield gave to the opponent, for no consideration, mortgages over various properties owned by it and a fixed and floating charge over all its assets. The mortgages and charge conferred no benefit on Senafield. The claimants seek to recover $522,504 being the net amount received by the opponent from the sale of the mortgaged and charged properties.

21 In March and April 2001 H C Gordon and the opponent were examined pursuant to Division 1 of Part 5.9 of the Act. The evidence given by them at that examination is, by virtue of s 597(14) of the Act, admissible in any legal proceedings against the examinees. It would be fair to say that the action was instituted as a consequence of the information obtained on that examination.

22 It would appear that there were three unsecured creditors of Senafield. The first is a company called Mt Station Cattle Company Pty Limited whose debt is $116,279. The second is Energy Australia whose debt is only $41.60 and can be disregarded for present purposes. The third is H C Gordon who, in his examination by the liquidator, alleged that Senafield was indebted to him for approximately $1 million. He was made bankrupt on 31 October 2001 and was undischarged as at 3 May 2004. Accordingly, any amount he recovers in the liquidation of Senafield will pass to his trustee in bankruptcy for the benefit of his creditors.

23 According to Mr Pignone, prior to the commencement of the action on 2 May 2003, a creditor of Senafield had agreed to fund the liquidator to institute and prosecute the proceedings. However, on or about 8 April 2003, Mr Pignone was advised by representatives of that creditor that it was no longer willing to provide that funding. Mr Pignone was aware that the claims of the claimants against the opponent would be statute barred if proceedings were not instituted on or before 5 May 2003. Accordingly, on 10 April 2003 he wrote to Litigation Lending Services (LLS) requesting that it consider funding the action.

24 On or about 5 May 2003 LLS wrote to Mr Pignone confirming that it was prepared to fund the liquidator and enclosing a draft funding agreement for approval. The letter noted that Mr Pignone would be attending to the filing of the proceedings before 3 May 2003.

25 According to Mr Pignone, service of the SLC on the opponent was not attempted before 2 July 2003 due to difficulties in obtaining funding for the litigation. It may be that that date is in error and should read 2 August 2003. This is because the liquidator required the authorisation of the creditors of Senafield to enter into the funding agreement with LLS. That authorisation was obtained at a meeting of creditors on 21 July 2003. The funding agreement was duly entered into on 31 July 2003. On the following day, 1 August 2003, application was made to the Duty Registrar of the District Court pursuant to Part 3 rule 2 for an extension of time for service of the SLC pursuant to Part 5 rule 5(1)(c). This extension was granted for one month expiring on 1 September 2003.

26 On 4 August 2003 Mr Pignone forwarded the relevant documents to process servers to effect service upon the opponent. The process server attempted service at the opponent's rural property known as "Glenrowan" at Newbridge, New South Wales on 8, 18, 26 and 31 August. On each occasion the opponent was absent. On the last occasion the process server spoke to a neighbour who indicated that the opponent would not be returning home until the end of September. His efforts in effecting service were the subject of a report to Mr Pignone dated 9 September 2003.

27 It is apparent from the affidavit evidence that nothing further was done by Mr Pignone until 13 January 2004 when a solicitor in his employ approached the Duty Registrar of the District Court and applied for a further extension of time to serve the SLC. The Duty Registrar informed that solicitor that the application could not be granted as the action was dismissed under Part 18 rule 9 of the Rules, that dismissal having taken effect on 1 December 2003. It is pertinent to observe (for much reliance was placed upon the fact by the opponent both before the primary judge and before this Court) that no explanation was proffered as to the delay in further attempting service between 9 September 2003 and 13 January 2004.

28 According to Mr Pignone he was ignorant of the provisions of Part 18 rule 9 until advised thereof by his employee on 13 January 2004. He deposed that

"had I been aware of this provision I would have sought a further extension of time for service of the statement of liquidated claim soon after I received the report from [the process servers] on 9 September … Furthermore, if compliance with Part 18 rule 9 became impossible because service could not be effected, I would have sought an extension of time for compliance with Part 18 rule 9 as soon as practicable."

29 On becoming aware on 13 January 2004 that the action was taken to be dismissed pursuant to Part 18 rule 9, Mr Pignone sought and obtained instructions from the liquidator to file a notice of motion seeking appropriate extensions of time. That notice of motion was, as I have indicated, filed on 19 January 2004.

The decision of the primary judge

30 After summarising the evidence of Mr Pignone to which I have referred above including his admission that he was ignorant of Part 18 rule 9 and the steps that he would have taken had he been aware of the rule, the primary judge observed:

"Be that as it may, one would have thought that this would have been a prudent precaution in any event, as would instructing the process server to continue his efforts. Neither of these things was done before 13 January 2004, and all that happened on that day was that Mr Pignone sought and obtained instructions from his clients to prepare this application: hence, no doubt, the filing of the present Notice of Motion on 19 January 2004, which I may add is itself six days after 13 January 2004 when the plaintiffs, through their solicitor, became aware of the application of Part 18 rule 9 to the present proceedings."

31 His Honour then referred to the examination of the opponent and his son in March and April 2001 and to the concession by counsel for the liquidator that since the date of those examinations, the liquidator has known of the existence of the causes of action in the subject of the SLC. Much is made of the fact that no explanation has been forthcoming from the liquidator as to why a further two years expired before the action was instituted and then only three days before the limitation period expired. No doubt it could be inferred that part of the delay was due to the necessity to obtain litigation funding, but that would not itself explain the full extent of the delay.

32 The primary judge then set out the submissions of the parties, which have been repeated before this Court. He acknowledged the claimants' submission that the prejudice to them and those they represented in the event of the notice of motion being dismissed was greater than that which would accrue to the opponent in the event of the application being granted. Reference was made to, and his Honour accepted the relevance of, the principles expounded by this Court in Itek Graphix Pty Limited v Elliott (2001) 54 NSWLR 207 and in particular the statement of Ipp A-JA, with whom Spigelman CJ and Sheller JA agreed, that

"where a broad discretion is conferred to grant leave to sue after expiry of a limitation period, the general question that has to be asked is what is fair and just or what does the justice of the case require."

33 The primary judge then considered that what was just and fair in the circumstances involved a consideration of any explanation of the default of the claimants, the seriousness of that default, the prejudice suffered by the opponent as a result of that default and the prejudice that would be suffered by the claimants if the order for extension of time was refused. I shall return to this aspect of the matter later in these reasons but it is to be noted that in Itek Graphix, Ipp A-JA considered (at 224 [87]) that in the context of a discretion to extend the time in which to sue after the expiry of a limitation period, the justice of the case must be evaluated by reference to the rationales of the limitation period that has barred the action including, in particular, the following four rationales identified by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 552, namely,

(a) As time goes by relevant evidence is likely to be lost;

(b) It is oppressive to a defendant to allow an action to be brought long after the circumstances that gave rise to it have passed;

(c) It is desirable for people in the community to be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Many in the community have a significant interest in knowing that they have no liabilities beyond a definite period;

(d) The public interest requires that disputes be settled as quickly as possible.

34 With respect to a submission on behalf of the claimants that they should not suffer as a result of Mr Pignone's unawareness of Part 18 rule 9, the primary judge observed:

"That unawareness is by itself of course not sufficient reason to exercise the discretion in Part 3 rule 2 in [the liquidator's] favour. But one asks rhetorically why was it that even in ignorance of the application of this rule, nothing was done promptly when efforts to serve the defendant failed … It seems that no effort was made to extend the time for service of the statement of liquidated claim until 13 January 2004 when Mr King, Mr Pignone's employed solicitor, approached a duty registrar of this Court and found that Part 18 rule 9 had resulted in a dismissal of the present proceedings being deemed to take effect from 1 December 2003."

35 After referring to a submission by the liquidator that it was perfectly reasonable for him to put the proceedings on hold whilst litigation funding was sought and obtained, his Honour considered that

"even assuming this is so, that amounts to a commercial decision by the [liquidator] which must be placed alongside the right, to which I will refer in more detail in a moment, for the defendant at least on a prima facie basis to have the benefit of the expiry of the limitation period."

36 This "right" of the opponent was further explained by the primary judge by reference to the decision of the English Court of Appeal in Chappell v Cooper [1980] 1 WLR 958 where Roskill LJ, with whom Ormrod LJ and Sir David Cairns agreed, said (at 965):

Heaven v Road & Rail Wagons Ltd

37 The opponent submitted, and his Honour agreed, that that principle applied to the present case. He said:

"That decision is not strictly binding upon me, but it seems to me to provide considerable assistance in the exercise of my discretion. It certainly indicates that I should be reluctant to exercise the discretion in Part 3 rule 2 in the plaintiff's favour."

38 Having referred to the fact that a major creditor of Senafield was the opponent's son so that those with a real interest in his entitlement to be paid any debt owed to him by Senafield were his creditors, the primary judge noted that neither those creditors nor Mt Station Cattle Co Pty Limited had apparently been prepared to fund the action. He therefore considered that that was a matter relevant to the prejudice to the claimants in the event of the application being refused.

39 The primary judge then referred to a submission that the liquidator could have made an application to the Supreme Court or Federal Court under s 588FF(3)(b) of the Act to extend the time within which to institute the action and so avoid the expiry of the limitation period referred to in s 588FF(3)(a). Instead, the liquidator chose to commence the action without taking any immediate steps to serve the opponent pending the obtaining of funding to enable him to prosecute the litigation. Whether that decision was reasonable or otherwise, his Honour considered that it was proper to characterise it as a "commercial one".

40 However, his Honour acknowledged that the liquidator was entitled to commence proceedings at any time before the limitation period expired so that the period of nearly two years between the time of the examination of the opponent and his son on the one hand and the commencement of the action on the other was

"… one factor that must be weighed in assessing the prejudice likely to be suffered by [the claimants] in the event of the present application failing."

41 Reference was then made to the unexplained delay between 9 September 2003 (when Mr Pignone became aware that service had not been effected) and December 2003. His Honour observed:

"He [counsel for the opponent] does not point particularly to Mr Pignone's ignorance of Part 18 rule 3 and rightly so, because I think in fact Mr Pignone's actions were being taken on instructions from the [liquidator], and the delays which have occurred in fact lie at the feet of the [liquidator] rather than the solicitor, because of the decisions the [liquidator] has made about pursuing proceedings, or rather not doing so, at various times owing to the lack of litigation funding. I do not therefore attach any personal blame to Mr Pignone at all in what has occurred."

42 As will appear, the claimants submitted that the foregoing passage contained a significant error of fact and was inconsistent with the not too veiled criticism of Mr Pignone by the primary judge in the passages from his judgment which I have recorded in [30] and [34] above.

43 Reference was then made to the judgment of Spigelman CJ in BP Australia Limited v Brown (2003) 58 NSWLR 322 especially at 343 [102] and 345 [114]-[115]. In the last mentioned reference, the Chief Justice said:

"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."

44 It is to be noted that BP Australia did not involve an application for an extension of time under the relevant rules of court as in the present case. The issue there was whether s 588FF(3)(b) of the Act was intended to cover the field of extensions of time with respect to applications concerning voidable transactions under s 588FF(1) to the exclusion of the general power of extension in s 1322(4)(d) of the Act. It was held that it did. Nevertheless, the primary judge considered that the passages referred to, as well as other passages in the Chief Justice's judgment, indicated

"to some degree the public policy with which I should approach the present application."

45 It was submitted to the primary judge by the opponent that the liquidator was the author of the claimants' misfortune as a result of his reluctance to prosecute the action with proper diligence because of the absence of litigation funding. According to his Honour, this was relevant to the fact that medical evidence tendered on behalf of the opponent indicated that, although he had been suffering from a number of disabilities over a long period and which would have been present had the action been prosecuted with appropriate diligence, there had been a dramatic deterioration of his condition since May 2003 and, in particular, in December 2003 when he suffered a stroke. Accordingly, the primary judge considered that

"as a result of a commercial decision not to prosecute the present proceedings owing to lack of litigation funding, the opponent Mr Gordon is now in a situation of having to provide instructions when his life expectancy is very limited."

46 His Honour's conclusion was, therefore, as follows:

"I think [the opponent's] prejudice is considerable as against that occurring to the [claimants] in the event of the present application being dismissed, and I think in fact that it outweighs the prejudice likely to be suffered by the [claimants] in those circumstances, when considered alongside the dilatory conduct of the [claimants] in prosecuting these proceedings, and in particular their failure either to make an application to the Supreme Court under s 588FF(3)(b) to extend time for commencement of proceedings, or to apply to extend time for service of the statement of claim before Part 18 rule 9 applied. Hence the result is that I should refuse to exercise the discretion in Part 3 rule 2(1) in the [claimants'] favour."

The submissions on the appeal

47 The claimants accepted that, in order to succeed, they were required to establish that the primary judge committed some error in the exercise of his discretion. For error to be demonstrated, his Honour must have acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect him, mistaken the facts or failed to take into account some material consideration. If any of those circumstances were proven, then his determination might be reviewed and this Court could exercise its own discretion in substitution for his. Furthermore, if upon the facts the primary judge's decision was unreasonable or plainly unjust, an appellate court may infer that in some way there has been failure to exercise properly the discretion which had been reposed in him: House v The King (1936) 55 CLR 499 at 505.

48 The claimants submitted that the primary judge acted upon a wrong principle, took irrelevant matters into account and made a number of egregious errors of fact. As to the first of those alleged errors, it was submitted that by holding that the opponent had a prima facie right to have the benefit of the expiry of the limitation period imposed by s 588FF(3)(a), and by accepting that the effect of the decision of the Court of Appeal in Chappell v Cooper was that he should be reluctant to exercise the discretion vested in him under Part 3 rule 2 of the Rules in the claimants' favour, his Honour adopted an approach to the exercise of that discretion under that rule which was, as a matter of principle, impermissible.

49 As to the second error, it was submitted that the primary judge took into account an extraneous or irrelevant matter being the policy considerations which underpinned the limitation period provided by s 588FF(3)(a) as articulated by this Court in BP Australia. With respect to the third error, it was submitted that the primary judge had made a number of material factual mistakes including his finding that, firstly, the claimants would suffer little or no prejudice if the dismissal of the action stood because of the failure of Senafield's creditors to fund the litigation and, secondly the real cause of the default in the failure to serve the SLC prior to 1 December 2003 should be attributed to the liquidator and not to his solicitor.

Did the primary judge act upon a wrong principle?

50 The primary judge concluded that the opponent would, if the application for extension of time were granted, suffer greater prejudice than that which would be sustained by the claimants if the application were refused: see [40]. Although this conclusion came immediately after his Honour's consideration of the difficulty which the opponent would have (due to his various illnesses) in providing instructions to defend the action, I think there can be little doubt, and the opponent did not contend to the contrary, that his Honour was very conscious of the prejudice which the opponent would sustain, if the application were granted, of being deprived of the benefit of the limitation period in s 588FF(3)(a) which had allegedly accrued to him.

51 The claimants submitted that the approach in England to the exercise of a discretion to permit the renewal of a writ after the period allowed for service had expired and which, if granted, would have the effect of depriving a party of the benefit of the limitation period which had then accrued, had been rejected by the Full Court of the Supreme Court of Victoria in Irving v Carbines [1982] VR 861 and by Green CJ in Rossiter v Bishop [1985] Tas R 107.

52 In Irving, the Full Court (in a joint judgment) referred (at 864) to the "principle or general rule" adumbrated by Megaw J in Heaven v Road & Rail Wagons Limited and to his Lordship's observation that to justify the exercise of the discretion in a manner inconsistent with the application of that principle required "exceptional circumstances" to be established. The Court (at 865) then referred to the course of authority in England since 1965 which had accepted Megaw J's decision as correct although "a less rigid rule" had been applied in a number of cases particularly in South Australia.

53 The Full Court noted, however, that under the relevant rule with which it was concerned, an extension of time could be granted "for other good reason" as a consequence whereof it was inappropriate to require, as had Megaw J, "exceptional circumstances". In this context the Court (at 865) considered the following observation of Bray CJ in Victa Limited v Johnson (1975) 10 SASR 496 at 502 to be pertinent:

"I think too that there is discernible in this, as in cognate branches of the procedural law, a tendency to relax rigid time limits where that is legally possible and where it can be done without prejudice or injustice to other parties."

"The relaxation of which Bray CJ spoke can only be where there is no undue prejudice or injustice to other parties but there is also discernible, or so it seems to us, a tendency to minimise the injustice caused to defendants by enlarging time limits, particularly when the defendant is an insurance company or entitled to be indemnified by an insurance company."

54 It is to be noted that the appellant in Irving contended that the trial judge had erred in principle by failing to follow Megaw J's approach to the exercise of the discretion in Heaven and, therefore, he should not have enlarged the time unless he found "exceptional circumstances". To this the Court responded (at 866)

"that there is no authority binding upon us which requires us to hold that there is such a principle and we decline to do so. The power is to enlarge the time for 'other good reason'. "

55 It is not entirely clear whether the "principle" to which the Full Court was referring in the passage last cited was the "principle, or the general rule" referred to by Megaw J in Heaven that leave will not be given to extend the validity of a writ if the effect of so doing would be to deprive the opponent of the defence which he would have had under the relevant statute of limitations if leave were not given or the requirement that, in view of that principle or general rule, the discretion would only be exercised in favour of granting a renewal of the writ which had the effect referred to if "exceptional circumstances" were found or both. Certainly, as appears from the reasons of the trial judge in Irving referred to by the Full Court at 863-4, he set out nine considerations in favour of extending time and seven against of which one was that the opponent would lose the right to plead the statute if the time were extended to enable the plaintiff to issue a fresh summons. Importantly, the trial judge in that case did not refer to that factor in terms of a "principle or general rule" in the manner adopted by Megaw J.

56 In my opinion, the better view is that the Full Court in Irving was rejecting any such principle or general rule although accepting that the deprivation to the opponent of a defence under the statute if an extension of time was granted was a relevant factor to be weighed up in the balance with all other factors.

57 In Rossiter, Green CJ expressly refused to follow Heaven. He said (at 109):

Heaven v Road & Rail Wagons Limited.

Victa Limited v Johnson

Irving

58 However, the Chief Justice (at 110) considered that in Irving (at 866) the Full Court had

"expressly held that it was proper for the trial judge to take into account as a reason for not granting such an extension the fact that an extension of the time for serving a summons would result in the opponent losing the right to plead a statute of limitations. It thus follows as an obvious corollary that the Court was accepting that in some cases the running out of the statute of limitations is capable of increasing the burden of proof resting upon the applicant for renewal … I am unable to accept that, other things being equal, the fact that a plaintiff's application is made after the expiration of the statutory period of limitation is not capable of casting upon him a heavier burden of persuasion than that which he would have had had the application been made before the expiration of that period. The expiration of the period of limitation will not have that effect in every case, but it cannot be said that it can never do so."

59 The opponent in the present case submitted that Irving and Rossiter did not detract from the principle or general rule adumbrated by Megaw J in Heaven and accepted by the primary judge but merely held that the applicant needed to show "good reason" rather than "exceptional circumstances" to justify departure from that principle or rule.

60 In my opinion the two authorities referred to went further than that. In particular, they involved a rejection of the "principle or general rule" articulated by Megaw J in Heaven insofar as his Lordship considered it to be the starting point of any consideration as to the manner of exercise of the relevant discretion. However, in both cases their Honours considered that it was a relevant consideration that the effect of exercising the discretion in favour of the plaintiff would be to deprive the defendant of the benefit of an expired limitation period. Ultimately, of course, it may in the particular circumstances be a consideration that is given determinative weight when measured against all other considerations in determining where the justice of the case ultimately reposes.

61 A not dissimilar issue to that which arose in Heaven also arose in Pontin v Wood [1962] 1 QB 594. In that case the Court of Appeal rejected an application by the defendant to set aside a statement of claim which had been filed by the plaintiff in accordance with the relevant rule of court in order to cure a defect in the writ. The writ had been filed within the limitation period but the statement of claim had not. It was contended by the defendant that, because the limitation period had expired before the statement of claim had been filed, a benefit or right had accrued to the defendant of which he should not be deprived by the rejection of his application to set it aside.

62 Holroyd Pearce LJ (at 609) acknowledged that the court would not, except in special circumstances, allow amendments that would take away a defence that a cause of action was statute barred. He then continued:

"But I do not accept that [the courts] should therefore refuse any normal aid which would be given as of course under Order 70 if no question of limitation arose – aid which is directed not to setting up a new cause of action, but to regularising the procedure of a known genuine case commenced before the time limit expired but containing technical defects. …

To contend in this case that the defendant has an existing right which would be prejudiced by the amendment is to argue in a circle, since he only has an existing right if one presupposes that the Court will not use its power to amend under Order 70."

63 Davies LJ distinguished the authorities relied upon by the defendant to support the proposition that, to allow the plaintiff to cure the defective writ by the delivery of a statement of claim after the expiry of the relevant limitation period, would be to destroy a right which has accrued to the defendant on the basis that in those cases the plaintiff was seeking the leave of the court to do something to the detriment of the defendant which, without such leave, the plaintiff had no right to do. His Lordship agreed with the plaintiff's submission that the position was quite different where, as was there the case, the plaintiff had a right without any leave of the court to take a step (the filing of the statement of claim) which would cure the defect in his proceedings.

64 The authorities relied on by the defendant in Pontin were different to those referred to by Megaw J in Heaven. Nevertheless, the principle appears to have been the same, namely, that where the rules of court provide a time limit within which a writ is to be served but the court may by leave extend the validity of the writ, the discretion to grant that leave will not be exercised in favour of the plaintiff if to do so would be to deprive the defendant of a defence under a statue of limitations. In Heaven, the relevant rule provided for the writ to be served within 12 months. Megaw J (at 366) observed:

"The rules of court provide 12 months … within which the plaintiff can hold up proceedings by not serving his writ. Surely, beyond that period, the same public policy requires that the Court should ensure that it is only in really exceptional cases that the effective start of litigation should be yet further delayed; especially were the 12 months allowed for service extends beyond the end of the limitation period … "

65 Pontin was referred to by Master Allen in Rust v Barnes [1980] 2 NSWLR 726. In that case a statement of claim was filed within the limitation period but not served within the two year period required by the Rules. Under the relevant provision of the Supreme Court Act 1970, that failure constituted an irregularity: cf District Court Act s 159 to the same effect.

66 The rule the Master was dealing with was in terms essentially the same as Order 70 with which the Court of Appeal was concerned in Chappell. In both that case and Rust, the defendant moved to have the service of statement of claim set aside upon the basis that, as it had ceased to be valid with the expiry of the two year period within which it was required to be served, for the court to permit the late service of the statement of claim to stand would be to deprive the defendant of a defence under the Limitation Act particularly as he was only served with the statement of claim after the expiry of that period.

67 After referring to what was said by Holroyd Pearce LJ in Pontin and by Megaw J in Heaven, the Master said (at 738 [33]):

Limitation Act

68 After referring to the policy mentioned by Megaw J in Heaven that:

"defendants are entitled to know definitely, at the expiry of some defined time, whether or not they are pursued in the courts",

"That time it may be argued, must be, at the latest, the statutory limitation period plus the period for which originating process is valid for service. The extent to which such a policy should guide, or perhaps even control, the exercise of a discretionary power has been considered extensively in connection with the exercise of the discretionary power to renew for service a writ of summons (in those jurisdictions, of which this State is not one, which permit renewal of originating process). Should the court make an order of renewal for service where the statutory limitation period has already expired? Such an order is not prohibited by the statutes of limitation. Such statutes are directed only to the time within which proceedings must be commenced. They make no provision as to the time within which the originating process, in proceedings commenced within time, is to be served. Nevertheless, the courts, in England, took the view that, where the statutory period had expired, the court, as a general rule, should not renew a writ for service save in exceptional circumstances … Some positive reason why justice required that the writ be renewed was considered necessary. It was not enough that the failure to serve within time was a mere oversight, a blunder, and that no significant prejudice had been caused to the defendant by the delay whereas, unless the order was made, the plaintiff's claim would be defeated without any trial on the merits."

69 The Master then referred to the fact that in England exceptional circumstances were no longer required and that

"the discretion to renew should not be constrictively construed in favour of certainty as to when the defendant is to be freed from risk."

Victa Limited v Johnson

70 An appeal from the Master to Yeldham J was dismissed: [1980] 2 NSWLR 726 at 742. On the present issue his Honour contented himself by adding to the cases cited by the Master a reference to Jones v Jebras [1968] Qd R 13 and Licul v Corney (1976) 180 CLR 213.

71 Both those cases involved the renewal of a writ that had expired. In Jones, Gibbs J held that there was a discretion to renew the writ notwithstanding that at the time of the application the relevant limitation period had expired. However, his Honour considered it unnecessary to define the circumstances which would, and those which would not, amount to good reason for allowing the writ to be renewed where the limitation period had expired.

72 In Licul, Gibbs J, with whom Mason J agreed, was in dissent on the issue as to whether the appeal in that case was competent. He therefore considered the merits of the appeal. His Honour referred (at 228) to the argument that the court should not exercise its discretion in favour of the renewal of the writ after the period for service had expired if the effect of doing so would be to deprive the defendant of the benefit of a limitation defence which had then accrued. However, he considered that such a view was "too extreme" although he accepted that there was a general rule to that effect which was subject to exceptions.

73 In the present case the claimants seek an extension of time with respect to both the service of the SLC as well as the operation of Part 18 rule 9. The authorities to which I have referred and, in particular, that of Master Allen in Rust, support the proposition that the failure to serve the SLC within one month from the date on which it was filed as required by Part 5 rule 5(1)(c) of the Rules was only an irregularity within the meaning of s 159(1)(a) of the District Court Act 1973. Consequently, that irregularity did not have the effect that the opponent acquired a defence under s 588FF(3)(a) of the Act. To adopt and adapt what Holroyd Pearce LJ said in Pontin (at 609), the contention of the opponent that he would be deprived of an existing right if an extension of time was granted, would be to argue in a circle since he would only have an existing right if one presupposed that the court will not use its power under Part 3 rule 2 to extend the time for service.

74 The more difficult question is whether an application to extend the time for the operation of Part 18 rule 9 involves different considerations. That rule operates automatically on the expiry of the time referred to therein whereupon the action is taken to be dismissed. On one view, it could be argued that on the occurrence of that event the defendant to the relevant proceedings is no longer at risk. It is true that there is no bar to fresh proceedings being instituted but the defendant would then have available defences which would, in a case such as the present, include the relevant statute of limitations.

75 In my opinion, the approach to an extension of time with respect to the operation of Part 18 rule 9 should not be regarded as different to that which should be taken to an extension of time for service of an initiating process under Part 5 rule 5(1)(c). At the expiration of the time for service provided by the latter rule, the initiating process becomes stale in that it can no longer be validly served unless an extension of time is granted. In the case of the former, the proceedings are taken to be dismissed unless an extension of time for the operation of any such dismissal is granted. In each case, the defendant to the proceedings is still at risk unless and until any applications for extension of the time limit under each rule are refused.

76 I can see no reason in principle why the approach adopted by Master Allen in Rust should not apply to any application for extension of time under Part 3 rule 2 irrespective of the rule in respect of which the extension is sought. The reasoning of Holroyd Pearce LJ in Pontin is applicable in both cases with which the present proceedings are concerned: the opponent would only acquire a defence under the relevant limitation statute (s 588FF(3)(a)) if the court refused to accede to the application by the claimants to exercise its discretion under Part 3 rule 2 to extend the time limits referred to in the two rules under consideration.

77 As this is not a case where the breach in respect of which a cure is sought is one which truly involves the deprivation of a right to plead the statute of limitations which has in fact accrued, but rather a case where that right only accrues if and when the court refuses to accede to the application by the claimants to extend the time limits referred to, it follows that the principle or general rule referred to in Heaven had no application to the exercise of the primary judge's discretion.

78 Finally, on this aspect of the matter, although it was contended that the primary judge was merely giving determinative weight to the fact that, if he exercised his discretion in favour of the claimants, the opponent would be deprived of the benefit of the limitation period, in my opinion he went significantly further. His finding that the opponent had a prima facie right to retain the benefit of the expiry of the limitation period, as a consequence whereof he should be reluctant to exercise the discretion in the claimants' favour, indicates that he intended to approach the exercise of his discretion from a position of reluctance to favour the claimants. In my opinion, that approach amounted to an unjustified fetter upon what was an otherwise unfettered discretion. It constituted the application of a wrong principle and was thus demonstrative of error in the exercise of his discretion.

Did the primary judge take into account an irrelevant consideration?

79 The basis of the clamaints' contentions with respect to this issue was that the primary judge considered that he should approach their application keeping in mind the public policy considerations referred to by Spigelman CJ in BP Australia to the effect that the time limit imposed by s 588FF(3)(a) provided for a reasonable period for the taking of action by a liquidator under the voidable transaction provisions of the Act so that at the end of that period those persons who had received the benefit of such a transaction will know whether he or she remained at risk.

80 On one view, the primary judge's reference to the policy considerations behind the imposition of the three-year limitation period in s 588FF(3)(a) overlaps with, and assists in explaining his Honour's adoption of, the principle stated by Megaw J in Heaven. However, the claimants submitted that those policy considerations were entirely irrelevant in the present case as the SLC had been filed within the three-year limitation period as a consequence whereof those considerations had been satisfied.

81 An allied ground of complaint was a submission by the claimants that the primary judge took into account an irrelevant consideration when he held that the liquidator's failure to make an application for an extension of time under s 588FF(3)(b) of the Act amounted to "dilatory conduct". The opponent submitted before his Honour that the liquidator could have made such an application had he so wished at any time before the three-year limitation period expired. However, as the primary judge observed, the liquidator chose to commence the action within the limitation period but without taking any immediate steps to serve the opponent until he had obtained litigation funding to enable the action to be prosecuted. In his conclusions, his Honour relied upon the "dilatory conduct" of the claimants generally in prosecuting the proceedings including the failure to make an application under s 588FF(3)(b) to extend time for the commencement of the action until litigation funding was in place.

82 I note in passing that it was not until this Court handed down its decision in BP Australia on 8 August 2003 that it became authoritatively settled that s 588FF(3)(b) covered the field with respect to extensions of time to commence an application to set aside voidable transactions under s 588FF(1) to the exclusion of the general power of extension of time in s 1322(4)(d). Accordingly, any application under the former section had to be made within the three year limitation period. In so holding, this Court reversed the decision of Austin J in Brown v DML Resources Pty Limited (No 6) (2002) 166 FLR 393 which was to the opposite effect although there were a number of single judge decisions to the contrary of that decision. By the time this Court delivered its judgment in BP Australia, the three-year limitation period in the present case had expired.

83 In my respectful opinion it would be unfair to categorise the liquidator's choice in commencing the action within the limitation period (albeit by only three days) as "dilatory conduct", the implicit suggestion being that the proper conduct required him to make an application pursuant to s 588FF(3)(b) to extend time for the action to be commenced. It is obvious that the liquidator and his solicitor, Mr Pignone, were conscious of the fact that the limitation period was about to expire and that on 8 April 2003 the creditor who had been prepared to fund the proceedings, was no longer willing to do so. Although it was not until on or about 5 May 2003 that Mr Pignone received a letter from LLS confirming that it would fund the proceedings, he nevertheless took steps to commence the action on 3 May, no doubt upon the reasonable assumption that he would receive that confirmation.

84 I would also infer that at that time both the liquidator and Mr Pignone had reason to believe that, firstly, a litigation funding agreement would be entered into within a reasonable time of the filing of the SLC and, secondly and more importantly, that there would be no particular difficulty in serving process upon the opponent. Although unaware of Part 18 rule 9 of the Rules, subject to obtaining an extension of the time for service pursuant to Part 5 rule 5(1)(c) which Mr Pignone had successfully achieved on 1 August 2003, the claimants had until 1 December 2003 within which to serve the opponent and ensure that a defence was filed or otherwise default judgment entered.

85 A further factor taken into account by the primary judge but asserted by the claimants to be irrelevant was the fact that a period of nearly two years expired from the time the Gordons were examined to the commencement of the action. His Honour considered that that was one factor that must be weighed in assessing the prejudice likely to be suffered by the claimants in the event of the application failing. As I understand it, the prejudice referred to was that if the claimants' application was declined, it would be too late for fresh proceedings to be instituted as the limitation period had expired. The other side of this coin is that that was a problem of the liquidator's own making (as the opponent submitted) and, therefore, should not weigh in favour of the exercise of the discretion in the claimants' favour given that such an exercise would work to the prejudice of the opponent who then had the benefit of a limitation defence to any such fresh proceedings.

86 The claimants thus submitted that the primary judge had taken this factor into account as exacerbating their "default" in the filing of the SLC only three days before the expiry of the limitation period rather than at some earlier date. They further submitted that the timing of the commencement of the action was irrelevant to the default that actually occurred which was the failure of the claimants' solicitor to seek an extension of time prior to 1 December 2003 for service of the SLC and, if necessary, for the operation of Part 18 rule 9.

87 In my opinion, delaying the institution of the action until three days before the expiry of the limitation period cannot be a relevant consideration in the context of an application to set aside the dismissal of the action under Part 18 rule 9, a rule which is, to a limited degree only, akin to dismissal for want of prosecution rule. Certainly it is not a limitation provision; rather, it is a case management rule. Thus in Birkett v James [1978] AC 297 (a want of prosecution case) Lord Diplock (at 320) makes the point that in such a case,

"time elapsed before issue of the writ which does not extend beyond the limitation period cannot be treated as inordinate delay; the statute itself permits it."

88 His Lordship made the same point at 322 in a passage adopted by Murray J, with whom Kennedy and White JJ agreed, in Lewandowski v Lovell (1994) 11 WAR 124 at 134. This was notwithstanding an observation by Bray CJ in Ulowski v Miller [1968] SASR 277 at 281, that he thought it appropriate to consider the lapse of time, not only after the issue of the writ, but also between the accrual of the cause of action and the issue of the writ.

89 However, the position appears to be different in cases involving an application to extend a limitation period. Thus in the leading case of Brisbane South Regional Health Authority, it was held by Toohey and Gummow JJ (at 548) and by McHugh J (at 554) that in addressing the question of prejudice to the defendant by reason of the delay in instituting proceedings, it was not the correct approach to ask whether an order extending time would place the defendant in any worse position than he or she would have been in if the action had been commenced within, but towards the end of, the limitation period. This suggests that, at least in cases involving an extension of the limitation period, it is not merely the lapse of time from the expiry of the limitation period that is relevant: the lapse of time from the accrual of the cause of action is also relevant.

90 The question is whether there is some difference in principle between limitation period cases and want of prosecution cases that warrants this apparent distinction with respect to the particular period of delay that is relevant. In my opinion there is. A crucial difference between the two types of cases lies in the particular moment from which time begins to run.

91 In limitation period cases, the relevant time limit begins to run from the accrual of the cause of action. In want of prosecution cases, on the other hand, the relevant time period begins to run from the time proceedings are instituted. This difference reflects the period of delay that is relevant to the exercise of the court’s discretion in each case. In the case of the former, the court is being asked to exercise its discretion to extend the time within which a plaintiff is entitled to initiate proceedings. Thus, it is the delay in instituting the proceedings that is relevant. Such delay is to be measured from the time at which the plaintiff could first have instituted proceedings (that is, the time of the accrual of the cause of action). In the case of the latter, by contrast, the court is being asked to exercise its discretion to strike out proceedings on the grounds of inaction in prosecuting proceedings already commenced within the limitation period. Thus it is the delay in prosecuting the proceedings that is relevant. This delay is to be measured from the time at which the action was instituted (that is, the time of the filing of the statement of claim).

92 McHugh J particularly recognised this distinction in Brisbane South Regional Health Authority. His Honour had earlier in his judgment (at 552) set out the four rationales of limitation periods (see [33] above). The second, third and fourth rationales reflect the fact that the defendant's potential liability expired at the end of the limitation period so that (at 555)

"to extend the period may result in the imposition of a new legal liability on the defendant."

93 However, as his Honour then observed,

"[i]f the action had been brought within time, it would have been irrelevant that, by reason of the delay in commencing the action, Dr Chang [a witness for the defendant] might have had little independent recollection of his conversation with the applicant and that the defendant might have had difficulty in fairly defending itself."

94 In other words, the law permits proceedings to be instituted at any time within the limitation period. If at that time the delay between the time the cause of action arose and the filing of the initiating process makes it difficult for the defendant to obtain a fair trial, then that is irrelevant. This is because that difficulty is a product of the defendant having a potential liability until the limitation period expires in respect of which it may, if it sees fit, take precautions such as seeking out evidence when the possibility of a claim becomes known.

95 On the other hand, once the limitation period expires without proceedings being instituted, the defendant becomes freed of that potential liability. It then becomes, as it were, a whole new ball game. If a new potential liability is to be imposed upon the defendant by an extension of time in which to commence proceedings, the central issue revolves around the capacity of the defendant then to obtain a fair trial. The answer to this question logically requires a consideration of the effect of the delay from the time the cause of action arose. As McHugh J points out at 554-5, to refer in such a case to only the marginal prejudice created by the delay would downplay and overlook the second, third and fourth rationales for the imposition of a rigid time limit in the first place. But those rationales are satisfied once the proceedings are commenced within the relevant time limit.

96 Of course, the present case is neither a limitation period case nor a want of prosecution case, but a case involving a service of process rule and a case management rule. What then is the position in such a case? In my view, the position is the same as that in want of prosecution matters. In the case of both Part 5 rule 5(1)(c) and Part 18 rule 9, time begins to run from the filing of the statement of claim. The court in the present case is being asked to extend these time limits in order that the action, already commenced within the relevant limitation period, may be prosecuted. Thus, as in the case of want of prosecution matters, it is only the delay in prosecuting the action that is relevant to the exercise of the court’s discretion. That delay is to be measured from the time the action was commenced.

97 In light of the foregoing, if, as the claimants submitted, his Honour did take into account the delay in the institution of the proceedings until three days before the expiry of the limitation period, then this would have been an irrelevant consideration in the circumstances. However, the opponent submitted that there was no express finding by the primary judge to the effect that the late institution of the action exacerbated the liquidator's default. In my view, there is substance in that submission. His Honour did hold that the delays which had occurred lay at the feet of the liquidator due, in particular, to his "commercial decision" not to prosecute the action until litigation funding was available and, in his conclusion (see [46] above), his Honour referred to the "dilatory conduct" of the claimants in prosecuting the action. However, it seems that this was more a reference to delay in the prosecution of the action after it had been commenced (something which, in light of the foregoing, was certainly a relevant consideration) rather than delay in the commencement of the proceedings. Therefore, I am not prepared to make a positive finding that delay in the institution of proceedings was a consideration that his Honour took into account against the interests of the claimants. I would thus not accede to the claimants' submissions with respect thereto.

98 However, I do consider that it was irrelevant for the primary judge to take into consideration the public policy behind the three-year limitation period imposed by s 588FF(3)(a) and the failure of the liquidator to seek an extension of time pursuant to s 588FF(3)(b).

99 As to the latter, there was no legal requirement to make such an application as the identity of the party against whom the action was to be instituted and the facts necessary to support the relevant causes of the action were known, so that there was no impediment to the commencement of the action within the three years: cf BP Australia at 346 [118] and [120]. The prudent course in the circumstances was to institute the action within the limitation period as in fact occurred: cf Re McGrath; HIH Insurance Limited (2004) 205 ALR 643 where, applying what Spigelman CJ said in BP Australia, Barrett J granted an extension in general terms without notice or reference to any particular or identified defendant or to any particular s 588FF(1) transaction. See also Tolcher v Capital Finance Australia Limited (2005) 52 ACSR at 333 [328].

100 With respect to the public policy considerations, they do no more than require action to be instituted within the three years on the basis that that is a reasonable period within which a person who has taken the benefit of the impugned transaction may be at risk but no longer. There is no requirement in s 588FF(3)(a) that the nominated defendant be served with process within the three years. Thus, in McGrath v National Indemnity Company (2004) 49 ACSR 403, Barrett J, after citing from Spigelman CJ's judgment in BP Australia including [115] and [118] thereof, observed (at 410 [17]) that clearly implicit in the Chief Justice's statement was

"a construction [of s 588FF(3)(b)] requiring no more than that the application be initiated within the three year period."

101 Although this case related to the making of an application for an extension of time under s 588FF(3)(b), the point made by Barrett J was that the policy which underpinned the provision was satisfied if the application for an extension was made (by the filing of the appropriate initiating process) within the three-year limit, not that it was served or otherwise determined within that period. Thus his Honour observed (at 410 [18]):

"Much more consonant with reality is a legislative intention of requiring the liquidator to initiate proceedings within the specified time …, with those proceedings then taking their ordinary course within the court system."

102 In my opinion, this reasoning with respect to s 588FF(3)(b) is equally applicable to s 588FF(3)(a). What is required to satisfy the public policy in question is that the application under s 588FF(1) be made (by filing the appropriate initiating process) within the three-year limitation period. If it is, no question of the proceedings being statute barred can arise. The proceedings then take their ordinary course within the relevant court system in accordance with the rules of that system.

103 It was thus irrelevant for the primary judge to take into account the public policy considerations (such as McHugh J's four rationales) underpinning the limitation period in s 588FF(3)(b) where the action had been instituted within that period. It would also have been irrelevant for the primary judge to take into account any delay prior to 2 May 2003 including for the purpose of supporting a finding of "dilatory conduct” on the part of the claimants and, in particular, the liquidator. However, as I said in [97] above, I am not prepared to make a finding that his Honour did take such delay into account.

Did the primary judge make material errors of fact?

104 The primary judge found that the delays which had occurred lay at the feet of the liquidator rather than his solicitor, Mr Pignone, because of the decisions the liquidator made about pursuing the action or, rather, not doing so at various times owing to the lack of litigation funding. The claimant submitted that this finding was not open to his Honour; the opponent submitted to the contrary.

105 The opponent submitted that it was the liquidator who decided to wait until two days before the expiry of the limitation period to institute the action. Further, it was he who decided not to serve the SLC within one month of its filing as required by Part 5 rule 5(1)(c) of the Rules. Again, it was the liquidator who did not seek from the Supreme Court or Federal Court an extension of time pursuant to s 588FF(3)(b). The primary judge accepted these submissions.

106 I can accept for present purposes that it was the decision of the liquidator to delay the institution of the action until such time as litigation funding to enable the proceedings to be properly prosecuted had been put in place. As I have already observed ([31]) above), that may explain at least part of the delay between March/April 2001 when the opponent and his son were examined and 2 May 2003 when the SLC was filed. The primary judge described this decision as a commercial one: this is in part true, but I would also designate it as a responsible decision.

107 The SLC alleges and the liquidator obviously genuinely believed, that, firstly, the paid up capital of Senafield was only $1 and, secondly, the opponent's son had stripped the company of its assets. Senafield was not a trading company but a rural landholding company. It had granted the opponent mortgages over various properties owned by it and a fixed and floating charge over all its assets. The opponent sold those assets and retained the net proceeds being the sum of $522,504 (being the amount the claimants seek to recover in the action). In these circumstances it would have been both imprudent and irresponsible for the claimants to institute the proceedings without having litigation funding in place.

108 Furthermore, it seems to me that it would have been irresponsible for the SLC to have been served upon the opponent before that litigation funding was in place and which provided for any costs order in favour of the opponent to be met. Otherwise once the opponent had been served, he would have commenced to incur legal costs in preparation of a defence to the allegations contained in the SLC which would not have been recoverable from Senafield (as it had no assets), although such costs would have been recoverable against the liquidator personally but in circumstances where there were no assets of the company from which he could be reimbursed.

109 In my opinion, there can be no doubt that the relevant and critical defaults which directly led to the application to the primary judge for extension of time and which were visited by his Honour upon the liquidator were due substantially to the inaction of Mr Pignone or those employees for whom he was responsible. Firstly, it is apparent from the fact that Mr Pignone applied on 1 August 2003 for an extension of time to enable service of the SLC, that he was aware of the effect of Part 5 rule 5(1)(c). Secondly, he was aware as of 9 September 2003 that the attempts by the process server to serve the opponent at his property at Newbridge had been unsuccessful. Yet he was also aware that the neighbour had said that he would be back after the end of September. It is apparent that he took no action otherwise to ascertain the whereabouts of the opponent, to have the process server return at the end of September or early October to Newbridge and/or to take steps to obtain a further extension of time under Part 5 rule 5(1)(c) within which service could be validly effected. Finally, and critically, he was ignorant of Part 18 rule 9. As he himself conceded in his affidavit, had he been aware of that rule he would have taken steps to have had the time referred to therein extended no doubt so as to ensure that there was no deemed dismissal of the proceedings at a point when the limitation period for the institution of fresh proceedings had expired.

110 As will be appreciated, I do not regard the liquidator as blameless in this saga. Having instructed Mr Pignone on or about 31 July 2003 to effect service (litigation funding then being in place), he apparently did nothing by way of following up with this solicitor to ascertain whether the SLC had been served. Whether any such follow up would have made any difference one does not know. However, it cannot be discounted that it may have led to the service of SLC before 1 December 2003 when Part 18 rule 9 took effect. However, the forgoing does not distract from what I regard to be significant personal defaults on the part of the solicitor.

111 The primary judge recognised the defaults of the solicitor to which I have referred in those paragraphs of his judgment which I have extracted in [30] and [34] above. That recognition is inconsistent with his conclusion that no blame should be visited upon Mr Pignone personally: see [41] above.

112 The opponent conceded that it would have been a relevant factor if the various delays identified and decisions taken were not the fault of the liquidator. Obviously, any personal default on his part is a relevant factor but then so is any default on the part of his solicitor. In this respect, there is no question of the defaults of the claimants' solicitor being attributed vicariously to the claimants. Such a proposition was rejected by this Court in Stollznow v Calvert [1980] 2 NSWLR 749 at 753F per Moffitt P, with whom Hope and Mahoney JJA agreed (a want of prosecution case).

113 In my opinion, a material factual error occurred when the primary judge found that, in all relevant respects, the delays and defaults which had occurred lay at the feet of the liquidator rather than his solicitor and that, therefore, no personal blame attached to Mr Pignone in relation to that which had occurred. That error clearly played a significant part in his Honour's conclusion that he should refuse to exercise his discretion in the claimants' favour when he determined that the prejudice likely to be suffered by the opponent was greater than that likely to be sustained by the claimants

"when considered alongside the dilatory conduct of [the claimants] in prosecuting these proceedings and in particular their failure … to apply to extend time for service of the statement of claim before Part 18 rule 9 applied."

114 In my opinion, therefore, the error of fact which I have identified was sufficiently material to result in a miscarriage of the primary judge's exercise of his discretion. The position is a fortiori when taken in conjunction with what I regard as an error of principle in his Honour's approach to the exercise of that discretion as well as his taking into account of what were, in my view, irrelevant considerations.

115 For the foregoing reasons, I am therefore of the opinion that it has been demonstrated that the primary judge erred in the exercise of his discretion, justifying this Court's intervention to exercise its own discretion in substitution for his.

How should this Court exercise its discretion?

116 Before turning to this issue, I need to deal in more detail with the primary judge's findings with respect to the prejudice which would be suffered by the opponent as a consequence of his medical condition. As I have already observed, his Honour accepted that many of the disabilities referred to in the report of the opponent's treating general practitioner, Dr K A Hazelton of Orange, had affected the opponent over a long period and would have been present had the action been prosecuted with greater diligence by the claimants.

117 However, it would appear that in December 2003 the opponent's medical problems increased and his health further deteriorated. When Dr Hazelton saw the opponent on 1 December 2003, he complained of the worsening of his breathlessness with the need for oxygen supplementation 24 hours a day during the preceding week. Dr Hazelton referred him to a cardiologist, Dr David Amos, who diagnosed congestive cardiac failure with the complication of worsening renal failure when treated with diuretics. An echocardiogram conducted by Dr Amos revealed major deterioration in cardiac function in comparison to a previous echocardiogram.

118 On 17 December 2003 the opponent suffered a right-sided parietal cerebrovascular accident: in layman terms, a stroke. Dr Hazelton opined that the opponent's cardiac and cerebrovascular circulatory problems would have existed as at January 2003 but that as at 3 May 2004 (being the date of his report), the opponent had serious threatening health issues to the point that his life expectancy would be measured realistically in a period of months to a few years. In these circumstances, Dr Hazelton's then observation of the opponent's mental faculties suggested that he was able to maintain a sensible conversation in a consultation setting although he was apparently somewhat sicker than he thought he was.

119 Accordingly, the primary judge considered that the opponent's mental faculties were such that he would have significantly greater difficulty providing instructions to those defending the action on his behalf if it were reinstated as compared to what would have been the situation "had [it] been prosecuted properly by" the claimants. Accordingly, as a result of the "commercial decision" not to prosecute the action owing to lack of litigation funding, the opponent was in a situation of having to provide instructions when his life expectancy was very limited.

120 A number of observations may be made with respect to his Honour's findings. Firstly, as the primary judge found, there was a dramatic deterioration in the opponent's medical condition in December 2003. Secondly, if service had been effected in, say, August 2003, although a defence may have been filed prior to December 2003 the proceedings would not have been heard prior to the deterioration in the opponent's condition at that time so that the limitations on his ability to provide instructions after December 2003 would have existed in any event.

121 Thirdly, there was no evidence to suggest that the claimants or their solicitor were aware of the opponent's medical condition. They may have had some idea of his approximate age but that is all. Fourthly, the attempts to serve the opponent at his place of residence were frustrated by virtue of his absence therefrom. There is no evidence that the liquidator or Mr Pignone were aware of any other address at which the opponent might have been found although it was suggested by the opponent in oral argument that, had enquiry been made, he may have been found to be in hospital. As to that submission, there was no evidence that he was in hospital in August/September 2003 and, as I have already observed, no basis for suggesting that either the liquidator or Mr Pignone were aware that the opponent had a serious medical condition that might require his hospitalisation.

122 Fifthly, any marked deterioration in the opponent's health could have occurred at any time. However, of this possibility both the liquidator and his solicitor were ignorant due to no fault on their part. Sixthly, and importantly, the nature of the allegations contained in the SLC are such as to dictate that the opponent's son, H C Gordon, would be the major witness for the defence. It was he who allegedly put in place the various transactions which are the subject of challenge. It was he who, as the sole director of Senafield, would have been aware of its state of solvency or lack thereof at the material times. It was he who could give evidence both as to the state of knowledge of his father as well as the extent to which his father participated in the transactions.

123 Seventhly, although there are a number of defences which may have been available to the opponent, relevantly for present purposes it would appear that those defences which would require personal input from him would be whether he had reasonable grounds for suspecting that Senafield was or would become insolvent at the time of the relevant transactions and whether he gave consideration or changed his position in reliance upon the transactions or any of them. It was submitted by the claimants (and not denied by the opponent) that both the opponent and his son had given evidence in their public examinations with respect to all the issues that might arise in the proceedings and, in particular, in relation to the two matters which I have identified. As the claimants point out, it would be difficult for the opponent to give sworn evidence at any hearing of the action which was inconsistent with the answers that he had given in his public examination.

124 In fact it is fair to say that, on the opponent's submissions, the primary prejudice which it was submitted he would sustain as a consequence of the granting of the application, would be that he would stand to lose the benefit of the expired limitation period. Although it is true that the opponent's health has dramatically deteriorated to the point that his life expectancy ranges from months to a few years, the fact remains that it was not suggested by the opponent that there was no record of the evidence which he would otherwise wish to give with respect to the issues arising in the action. The evidence given by him in March/April 2001 is a matter of record. In particular, it was not suggested that there were unanswered questions arising out of the examination of the opponent and his son, which the opponent could, if his health permitted, provide to his legal representatives.

125 I now seek to summarise what I see as the relevant considerations to be put into the balance on either side of the equation. Those favouring the exercise of the discretion for the benefit of the claimants are as follows:

(a) The action was instituted within the limitation period but, due to the failure validly to serve the opponent prior to 1 December 2003, it is now taken to have been dismissed.

(b) Unless time is extended, fresh proceedings cannot be instituted as the limitation period has expired. There is authority (if it were not otherwise obvious) that the consequent loss by the claimants of their cause of action would be a hardship: Ulowski at 283.

(c) Although attempts at service of the SLC upon the opponent did not first occur until August 2003, this was because a decision was taken by the liquidator (and no doubt supported by his solicitor) that it would not be appropriate to serve process until litigation funding was in place to enable the action to be duly prosecuted and the costs of doing so, including those of the opponent if successful, to be met.

(d) There was no evidence to suggest and no finding by the primary judge that the liquidator was dilatory in his attempts to obtain litigation funding.

(e) Once litigation funding was in place on 31 July 2003 (which was slightly less than three months after the proceedings were instituted) an extension of time under Part 5 rule 5(1)(c) was obtained by the solicitors and service attempted at the opponent's place of residence.

(f) Due to the absence of the opponent from his place of residence, service could not be effected and this was reported to the solicitor on 9 September 2003.

(g) The critical delay was between 9 September 2003 and 13 January 2004, a period of approximately four months. During this period the claimants' solicitor was at fault in:

(i) failing to take steps to ascertain the whereabouts of the opponent so that he could be served;

(ii) failing to seek a further extension of time to enable valid service pursuant to Part 5 rule 5(1)(c); and

(iii) being ignorant of the provisions of Part 18 rule 9 and, therefore, failing to ensure service prior to 1 December 2003 and/or failing to seek an extension of the time limit imposed by that rule so as to avoid the action being taken to be dismissed as a consequence of any further difficulty in effecting service upon the opponent.

Each of these defaults was that of the solicitor alone and cannot be attributed to the liquidator.

(h) The opponent's son has allegedly stripped Senafield of its assets and it is the opponent who, it is alleged, has benefited therefrom. The amount at issue (over $500,000) is not inconsiderable and would be sufficient, if recovered, to pay out the unsecured creditors of Senafield other than H C Gordon. If the latter is established to be a creditor of Senafield then, as he is an undischarged bankrupt, his creditors will benefit from the recovery of the proceeds of the sale of the company's assets.

(i) The creditors of Senafield would therefore be prejudiced in the event that the dismissal of the action is not set aside and the opponent will benefit from a side wind solely due to the failure of the claimants' solicitor to pursue the service of the SLC after 9 September 2003 and to appreciate the effect of Part 18 rule 9 if he failed to take steps to seek an extension of the time limit referred to therein.

126 The considerations which in my opinion favour the opponent and my comments thereon are as follows:

(a) The liquidator failed to seek an extension of time pursuant to s 588FF(3)(b) but instead chose to institute proceedings within the time limited by s 588FF(3)(a), thus putting the creditors at risk of the proceedings being dismissed and any fresh proceedings being statute barred in the event that an extension of time under the relevant Rules of Court was not obtained.

within

(b) The liquidator made a conscious decision not to attempt service of the SLC before 1 August 2003 as he wished the litigation funding to be in place before that occurred.

commercial decision

(c) Although up until 8 April 2003 it would appear that one of Senafield's creditors was prepared to fund the litigation, the fact that that creditor withdrew its funding (and no other creditors had agreed to fund the litigation) was indicative of their lack of real interest in the litigation so that they would not be unduly prejudiced if the litigation came to an end.

In my opinion, little weight should be given to this consideration if only because, apart from the creditors of H C Gordon in his bankruptcy, there is only one major creditor of Senafield. If one assumes, as is likely, that it was that creditor who initially was prepared to provide funding, there is no proper basis upon which it could be concluded that it no longer had a real interest in recovering the debt owed to it merely because it decided not to continue to fund the litigation. This is especially so where it is apparent, as in fact has occurred, that a professional litigation funder is prepared to fund the litigation in circumstances where, even after it is paid its due, there should be sufficient left to meet not only the costs and expenses of the liquidation but also the debt of Senafield's one major creditor. Certainly, the opponent did not suggest the contrary.

(d) The deterioration of the medical condition of the opponent in December 2003 will make it extremely difficult for him to give proper instructions to his legal representatives to defend the action and in all likelihood will make it impossible for him to enter the witness box.

For reasons to which I have referred above, in my opinion little weight should be given to this consideration given firstly, that even if the opponent had been served in, say, August 2003, the proceedings would not have been heard until after December 2003 when his medical condition took a dramatic turn for the worse. Secondly, the major defence witness would be the opponent's son and, thirdly, the opponent has given sworn evidence as to the issues arising in the litigation at his public examination in March/April 2001 and no submission has been made on his behalf to suggest that there are any gaps in that evidence or lack of information which he might now be able, but for the deterioration of his mental faculties, to provide in the event that the SLC had been served prior to 1 December 2003.

(e) No explanation has been forthcoming from either the liquidator or his solicitor explaining the inaction between 9 September 2003 and 13 January 2004.

This lack of explanation is obviously serious. The only inference that can be drawn is that there is no explanation or, at least, none which would exculpate the solicitor and the liquidator.

This would appear so as I recognised in [110] above. However, the delay is only four months which is not, in the scheme of things, inordinate. Further, unexplained delay in the context of an application to extend the time limited by a case management rule does not have the force of such delay in the context of an application to extend a limitation period.

127 In my opinion, this last-mentioned consideration is in truth the most significant prejudice that the opponent will sustain if the application is granted. It is that element of prejudice (which I do not underestimate) which must be weighed in the balance against the considerations which favour the exercise of the discretion for the benefit of Senafield's creditors. Had the liquidator been wholly responsible for the lack of activity between 9 September 2003 and 13 January 2004 then this factor may have carried the day. However, in my opinion, it is clear that the primary blame for the defaults during this critical period should be laid at the door of the solicitor.

128 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 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.

129 In my opinion a consideration of the matters in favour and against the granting of appropriate extensions of time lead me to the firm conclusion that, on balance, it would be just and fair in the circumstances of this case to exercise the discretion under Part 3 rule 2 to extend the time limits referred to in Part 5 rule 5(1)(c) and Part 18 rule 9.

Postscript

130 Since writing these reasons, I have had the benefit of reading in draft the judgment of Hodgson JA. I would endorse his Honour's remarks in [5] and [6] of his reasons.

Conclusion

131 It follows from the foregoing that in my opinion, leave to appeal should be granted and the appeal allowed. So far as questions of costs are concerned, as the claimants were seeking an indulgence from the District Court due to events which should not have occurred, it is appropriate that the order for costs made by the primary judge (that the claimants pay the opponent's costs of the motion before him) should remain undisturbed: see Part 39A rule 32 of the Rules. As to the costs of the appeal, those should be paid by the opponent in accordance with the usual rule.

132 In my opinion the following orders should be made:

(1) Leave to appeal granted upon condition that Notice of Appeal be filed and served within 7 days of the date of these orders.

(2) Appeal allowed.

(3) Set aside Order 1 made by Armitage DCJ on 13 May 2004.

(4) Pursuant to Part 3 rule 2(2) of the District Court Rules, order that the time specified in Part 18 rule 9 be extended to nunc pro tunc up to and including a date being 60 days after the date of these orders.

(5) Pursuant to Part 3 rule 2(2) of the District Court Rules, order that the time for service of the Statement of Liquidated Claim upon the opponent be extended nunc pro tunc up to and including the date of these orders.

(6) Pursuant to Part 18 rule 5(2) of the District Court Rules, direct that the service of the Statement of Liquidated Claim be deemed to have been effected on the opponent as at the date of these orders.

Suitor's Fund Act

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06/05/2005 - Amending opponent's instructing solicitors - Paragraph(s) N/A

Citations

Tolcher v Gordon [2005] NSWCA 135

Most Recent Citation

Cases Citing This Decision

63

Gordon v Tolcher [2006] HCA 62

Choy v Tiaro Coal Ltd (in liq) [2018] NSWCA 205

Cases Cited

11

Statutory Material Cited

5

Tolcher (as Liquidator of Lloyd Scott Enterprises Pty Ltd (In Liq)) v Capital Finance Australia Ltd [2005] FCA 108

Itek Graphix Pty Ltd v Elliott [2002] NSWCA 104

Brisbane South Regional Health Authority v Taylor [1996] HCA 25

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CITATION:	Tolcher v Gordon [2005] NSWCA 135 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	30 March 2005
JUDGMENT DATE:	3 May 2005
JUDGMENT OF:	Hodgson JA at 1; Ipp JA at 8; Tobias JA at 9
DECISION:	(1) Leave to appeal granted upon condition that Notice of Appeal be filed and served within 7 days of the date of these orders; (2) Appeal allowed; (3) Set aside Order 1 made by Armitage DCJ on 13 May 2004; (4) Pursuant to Part 3 rule 2(2) of the District Court Rules, order that the time specified in Part 18 rule 9 be extended to nunc pro tunc up to and including a date being 60 days after the date of these orders; (5) Pursuant to Part 3 rule 2(2) of the District Court Rules, order that the time for service of the Statement of Liquidated Claim upon the opponent be extended nunc pro tunc up to and including the date of these orders; (6) Pursuant to Part 18 rule 5(2) of the District Court Rules, direct that the service of the Statement of Liquidated Claim be deemed to have been effected on the opponent as at the date of these orders; (7) Order that the claimants' costs of the summons for leave to appeal and of the appeal be paid by the opponent but with respect to such costs to have a certificate under the Suitor's Fund Act 1951, if otherwise qualified

CATCHWORDS:	CIVIL PROCEDURE - Delay in prosecution of proceedings - Action commenced within, but towards end of, limitation period (imposed by s 588FF(3)(a) Corporations Act 2001 (Cth)) - Service not effected within time limit provided by court rules - Action taken to be dismissed by operation of case management rule contained in court rules - Application to extend time limit for service and time on expiry of which action taken to be dismissed - Correct approach to exercise of discretion to allow renewal of writ after period allowed for service has expired where, if allowed, renewal would have effect of depriving party of benefit of an expired limitation period - Whether approach is same where action taken to be dismissed after expiry of limitation period - Whether public policy considerations behind relevant limitation provision relevant to discretion to extend time limits in question - Whether delay in commencement of action until just before end of limitation period relevant to discretion to extend time limits in question - Whether claimants should have sought extension of limitation period (under s 588FF(3)(b)) rather than instituting proceedings within, but towards the end of, limitation period - Whether it was the claimants or their solicitor who was primarily to blame for delay in prosecution of action
LEGISLATION CITED:	Corporations Act 2001 (Cth) District Court Act 1973 Supreme Court Act 1970 Limitation Act 1969 District Court Rules 1973
CASES CITED:	Itek Graphix Pty Limited v Elliott (2001) 54 NSWLR 207 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Chappell v Cooper [1980] 1 WLR 958 BP Australia Limited v Brown (2003) 58 NSWLR 322 House v The King (1936) 55 CLR 499 Irving v Carbines [1982] VR 861 Rossiter v Bishop [1985] Tas R 107 Heaven v Road & Rail Wagons Limited [1965] 2 QB 355 Victa Limited v Johnson (1975) 10 SASR 496 Pontin v Wood [1962] 1 QB 594 Rust v Barnes [1980] 2 NSWLR 726 Jones v Jebras [1968] Qd R 13 Licul v Corney (1976) 180 CLR 213 Brown v DML Resources Pty Limited (No 6) (2002) 166 FLR 393 Birkett v James [1978] AC 297 Lewandowski v Lovell (1994) 11 WAR 124 Ulowski v Miller [1968] SASR 277 Re McGrath; HIH Insurance Limited (2004) 205 ALR 643 Tolcher v Capital Finance Australia Limited [2005] FCA 108 McGrath v National Indemnity Company (2004) 49 ACSR 403 Stollznow v Calvert [1980] 2 NSWLR 749
PARTIES:	Raymond George Tolcher Charles Stuart Gordon
FILE NUMBER(S):	CA 40418/04
COUNSEL:	Cl: Mr M Cashion SC / Mr R Scruby Opp: Mr C R C Newlinds SC / Mr D Allen
SOLICITORS:	Cl: Kemp & Strang, Sydney Opp: Brooks & Co, Newcastle

LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 1868/03
LOWER COURT JUDICIAL OFFICER:	Armitage DCJ