Zhang v Citigroup Pty Limited - [2014] WASC 307

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: ZHANG -v- CITIGROUP PTY LIMITED [2014] WASC 307

CORAM: MASTER SANDERSON

HEARD: 26 AUGUST 2014

DELIVERED : 28 AUGUST 2014

PUBLISHED : 3 SEPTEMBER 2014

FILE NO/S: CIV 1865 of 2013

BETWEEN: BING ZHENG ZHANG
Plaintiff
AND
CITIGROUP PTY LIMITED
Defendant

Catchwords:

Practice and procedure - Application by plaintiff to renew stale writ - Application by defendant after entry of conditional appearance to set aside service of writ - Turns on own facts

Legislation:

Nil

Result:

Writ renewed

Category: B

Representation:

Counsel:

Plaintiff: Mr M Holler
Defendant: Mr D A Jenaway

Solicitors:

Plaintiff: G A Lacerenza & Associates
Defendant: Allen & Overy

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

Brealey v Board of Management of Royal Perth Hospital (1999) 21 WAR 79
Chalmers and Partners v Kensit [2008] WASCA 122
Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514

MASTER SANDERSON: This was the return of two chamber summonses. The first in time was the plaintiff's summons seeking to cure the irregularity of service of a stale writ or for an extension of validity of the writ. The defendant, having filed a conditional appearance, sought to have service of the writ set aside. The two applications were two sides of the same coin. The same issues were common to both. I heard both summonses at the same time.
The facts are not in dispute. They emerge from an affidavit of Giuseppe Antonio Lacerenza sworn 1 July 2014. Mr Lacerenza is the solicitor for the plaintiff. He says on 6 March 2013 he received instructions from the plaintiff. The plaintiff has Australian residency but, at the time, was residing mainly in China. The plaintiff does not speak or read English and his instructions were given to Mr Lacerenza by the plaintiff's wife. She is Chinese and speaks both Chinese and English.
Mr Lacerenza was instructed the plaintiff's dispute with the defendant involved approximately $500,000 and was unresolved since the middle of 2007. Although the taking of instructions was difficult, Mr Lacerenza understood the dispute involved banking transactions involving Lehman Brothers 'Notes'. Precisely how the dispute arose does not emerge from Mr Lacerenza's affidavit. However, what is clear is the plaintiff alleges he was given advice by the defendant in relation to the Lehman Brothers Notes which was negligent. As a result of following that advice, the plaintiff suffered significant losses.
Mr Lacerenza says when he was instructed he was aware the plaintiff's claim might become statute barred around the middle of 2013. He therefore decided to issue a writ with an endorsement of claim. He accepts as at the date the writ was issued, he did not have full instructions and he was not in a position to evaluate the plaintiff's claim. In the six months following the issue of the writ Mr Lacerenza did obtain full instructions. Mr Lacerenza says the taking of instructions was a lengthy process because of the language difficulties and the fact the plaintiff was difficult to contact because he was residing in China and travelling between China and Australia.
By the end of 2013 Mr Lacerenza had sufficient information to allow him to prepare a brief for senior counsel. This was done. On 23 January 2014 the papers were forwarded to counsel for advice. Counsel's advice was received on or about 11 April 2014. Mr Lacerenza immediately forwarded this advice to the plaintiff's Perth address. He was subsequently advised by the plaintiff's wife that the plaintiff was, at that time, residing in China. Further, the plaintiff and his wife were estranged and separated and the plaintiff's wife was living at a different address. It was not until 1 May 2014 Mr Lacerenza was satisfied the plaintiff had received counsel's written advice, understood that advice and provided instructions to effect service of the writ of summons.
On 8 May 2014 armed with his client's instructions to proceed, Mr Lacerenza sent an email to the defendant attaching a copy of the amended writ of summons. The writ of summons had originally been filed on 30 May 2013. It was amended on 6 May 2014. There is no suggestion the amendment was improper or itself had any effect upon the validity of the writ.
When the writ was issued, the address of the defendant was shown as 37 St Georges Terrace, Perth. In fact, that is not the registered office of the defendant. The registered office is in Sydney. Mr Lacerenza was concerned about the proper address of the defendant so on 8 May 2014 he sent a letter, by facsimile, to the Citibank Customer Advocacy Unit. The facsimile number had been obtained by telephoning the defendant so that there is no question but that the facsimile was sent to a division of the defendant.
Mr Lacerenza did not get a response either to his email or to the letter. He was aware the time for service of the writ was running out. (In his affidavit, Mr Lacerenza says he was aware 'that the 12 month expiration time on the writ was 30 May 2014' (par 19). In fact, he is mistaken. The writ had to be served by 29 May 2014 or it was stale.) With the deadline in mind Mr Lacerenza sent another facsimile to the same Sydney number on 15 May 2014. Thus, the plaintiff's solicitor had been in touch with the defendant on three occasions - twice on 8 May (once by email and once by facsimile) and once on 15 May (by facsimile).
On 22 May 2014 Mr Lacerenza's office was contacted by Mr David Jenaway, a solicitor acting for the defendant. Mr Jenaway left a message as Mr Lacerenza was not in the office. Mr Lacerenza contacted Mr Jenaway later in the day and they had a telephone conversation. Mr Jenaway indicated his firm, Allen & Overy, was acting for the defendant and it would accept service of the writ.
Mr Lacerenza then resolved he would not post the writ to the defendant's solicitors. Rather, when he was next in Perth (he practices in Midland) he would see Mr Jenaway and deliver the writ personally. He was of the view establishing personal contact would be important in what was potentially complex litigation. Mr Lacerenza was next in Perth on 5 June 2014. He attended the offices of Allen & Overy. He attempted to speak to Mr Jenaway but he was not available. Mr Lacerenza left the writ with the receptionist. There is no dispute between the parties the writ was received by Allen & Overy on 5 June 2014. Of course, by that time it was stale.
Resolution of this matter depends upon whether or not the validity of the writ is extended under r 7.1(2) of the Rules of the Supreme Court 1971 (WA) (the Rules). If it is not, then a stale writ has been served and the defendant's summons must succeed. The starting point for this application is O 2 r 1(1) of the RSC. That rule is in the following terms:
Where in beginning or purporting to begin any proceedings or at any stage in the course of or in connection with any proceedings, there has, by reason of anything done or left undone, been a failure to comply with the requirements of these rules, whether in respect of time, place, manner, form or content or in any other respect, the failure shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein.
Power to renew a writ is found in O 7 r 1(2), that rule is in the following terms:
Where a writ has not been served on a defendant, the Court may by order extend the validity of the writ from time to time for such period, not exceeding 12 months at any one time, beginning with the day next following that on which it would otherwise expire, as may be specified in the order, if an application is made to the Court before that day or such later day (if any) as the Court may allow.
There was no dispute between the parties it is possible to renew the validity of a writ after the date upon which it becomes stale. Further, both parties agreed O 7 r 1(2) embodies a discretion. Where the parties disagreed was whether, in the circumstances of this case, the discretion ought be exercised in favour of the plaintiff.
There are two cases which are of particular relevance. The first is the decision of the Full Court in Brealey v Board of Management of Royal Perth Hospital (1999) 21 WAR 79. The court concluded that the policy of the Rules that writs should be served within 12 months of their being issued, must be brought to account in deciding applications to remedy an irregularity in connection with the extension, renewal or service of a writ. Such application should only be granted where the justice of the case required a departure from the policy. Ipp J put the position as follows:
In my view … O 2, r 1 enables the court to prevent manifest unfairness arising from the need to adhere rigidly to the time limits laid down by O 7, r 1(2). But before power under O 2, r 1 may be so exercised, it must be established that, without such remedial relief, injustice will occur. The application should only be granted when the justice of the case requires a departure from the policy underlying O 7, r 1.
…
In Van Leer Australia Pty Ltd v Palace Shipping KK it was held that the discretion to renew a writ after a limitation period has expired should be exercised by reference to the general justice of the case taking into account all the relevant circumstances. These would include not only the provisions of any limitation statute applicable but also the relative hardships which a grant or refusal of renewal would impose upon the parties. Relevant factors include the length of the delay, whether the delay was caused by mistake and whether such mistake is excusable, the nature of attempts made at service, and the hardship or prejudice caused to the plaintiff by refusing the renewal or to the defendant by granting it. This approach was adopted in Bell Group NV (In liq) v Aspinall (1998) 19 WAR 561, the court observing (at 575) that, under O 7, r 1(2), it has a wide and unfettered discretion to see that justice is done (91).
It is clear then the touchstone of the discretion is whether or not injustice will be done if the extension is granted or refused. That, in turn, requires a detailed examination of the facts of the particular case - that much is made clear by the detailed analysis of the facts undertaken in Brealey. The matters mentioned by Ipp J in the passage I have quoted above are not intended to be an exhaustive list of the matters to be taken into account. But they do provide some guide as to what matters should be considered in the exercise of discretion.
The second case of importance is the decision of the Court of Appeal in Chalmers and Partners v Kensit [2008] WASCA 122. This was a successful appeal against my granting an extension of the validity of the writ. Buss JA (with whom Murray AJA agreed) determined there was an error in the approach I adopted which would justify the grant of leave to appeal: see [30]. The court then went on to consider the factors which, in that case, were relevant to the grant or refusal of the extension. Buss JA put the position as follows:
The factors which are in favour of an extension of the validity of the writ are these:
(a)The statutory limitation period applicable to one or, perhaps, more of the alleged causes of action which the respondents wish to litigate against the appellants may have expired as at the date when the writ became stale.
(b)By the letter dated 17 April 2003, the appellants were given some particulars of the respondents' claim.
(c)The purported service of the writ was effected only one day after it became stale.
(d)The respondents applied promptly for an extension of the validity of the writ.
The factors which are against an extension of the validity of the writ are as follows:
(a)No statutory limitation period applies to the alleged causes of action for breach of fiduciary duty or breach of duty of trust and confidence, and equity would not apply a limitation period by analogy in respect of those alleged causes of action.
(b)Neither the indorsement of claim (which is plainly defective), nor the affidavit material filed by the respondents, enables this court to assess reliably whether the statutory limitation period which is applicable to the alleged causes of action for negligence, breach of statutory duty and breach of contract had expired as at the date on which the writ became stale. A minute of amended or substituted indorsement of claim was not produced to the learned master or this court. The respondents are therefore responsible for the uncertainty which attends this important issue.
(c)The respondents, in deciding not to serve the writ until the last moment, chose to live by technicalities, and therefore must be taken to have accepted the risk of dying by them if they failed to observe the time limits imposed by O 7 r 1(2).
(d)The respondents, having decided not to serve the writ until the last moment for the purpose of enabling them to investigate whether they had reasonable causes of action against the appellants, did not make productive use of the 12 month period for that purpose. Rather, as the learned master found, the respondents' solicitor 'took little or no steps in the 12 months after the issue of the writ to advance the [respondents'] claim' [10].
(e)As the learned master concluded, there was no satisfactory explanation for the respondents' delay in serving the writ. Mr Lindsay's apparent belief that 26 May 2006 (and not 25 May 2006) was the last day on which the writ was valid may be an explanation but it is not, in the circumstances, satisfactory.
(f)Any prejudice suffered by the respondents if the validity of the writ were not to be extended would be self-inflicted.
(g)Although the appellants are able to point only to general, as distinct from particular, prejudice, this may well be attributable, in part, to the respondents' failure properly to draw their claim. The letter dated 17 April 2003 provides some particulars in relation to the respondents' alleged cause of action against the first appellant in negligence, but it does not mention the second appellant. Nor does it mention any claim for breach of statutory duty, breach of contract, breach of fiduciary duty or breach of duty of trust and confidence against the first appellant [32] ‑ [33].
It is important to note, as emerges from Buss JA's judgment, the solicitor in Chalmers made a deliberate decision not to serve the writ until the last possible day. Unfortunately, he got the day wrong. Moreover, during the 12 month period between the issue of the writ and its service, despite what was said in the affidavit in support of the application for extension of the writ, the solicitor did nothing to advance the claim. In my decision at first instance I had assumed the respondent's claims were not statute barred. Buss JA saw a failure to analyse more closely whether or not the claims were statute barred as a significant factor in determining whether or not the discretion I exercised miscarried.
As I have indicated above, the writ served on the defendant's solicitors had an endorsement of claim. That endorsement is in the following terms:
C1Further and in the alternative the Defendant at all material times owed a fiduciary duty to the Plaintiff when carrying out purchases or transactions with third parties (Lehman) that at all times it should act in the Plaintiff's interest as the Defendant's customer when exercising investment decisions and discretions utilising the Plaintiff's funds.
C2The Defendant breached its fiduciary due to the Plaintiff inter‑alia in failing to and/or keeping the Plaintiff at all material times informed of the nature of the investment, the vagaries, sophistications and risks involved in such investments made, receiving undisclosed fees with the transactions, and acting without due regard to the interests of the Plaintiff.
DFurther and in the alternative the Plaintiff claims damages and costs as against the Defendant for misleading and deceptive conduct contrary to inter‑alia Section 12DA(1) of the ASIC Act 2001 and inter‑alia contrary to s 1041H of the Corporation[s] Act 2001 (WA) by the Defendants misrepresentations regarding the Lehman Notes and in particular the nature of the said investment capital risk and suitability of the said investment and Purchase Contracts made and lack of disclosure, and further failing to take into account the Plaintiff's relative unsophistication with respect to such Purchase Notes.
EFurther and in the alternative, the Plaintiff claims damages and costs against the Defendant for inter‑alia unconcionable [sic] conduct in connection with financial services provided by the Defendant to the Plaintiff pursuant to s 12cB of the ASIC Act 2001 and/or failing to provide any or any sufficient disclosure pursuant to the Corporation[s] Act 2001.
In opposition to this application the defendant relied on two affidavits, one sworn by David Ashley Jenaway on 2 July 2014, and the other sworn by Ryan Edmond Carloss on 25 July 2014.
In his affidavit, Mr Carloss says the banking officer who dealt with the plaintiff was Ms Nicole Chandra. Ms Chandra left the defendant's employment on or about 25 May 2011. She now resides in Singapore. Mr Carloss says the defendant may be prejudiced in the conduct of its defence by the fact Ms Chandra has left its employment. There is nothing in Mr Carloss' affidavit about any attempts made to contact Ms Chandra, nor is there any suggestion if contact was made she would not cooperate. It must be inferred, however, the defendant is of the view difficulties in obtaining evidence from Ms Chandra may prejudice its defence to the claim.
Against that the plaintiff refers to a detailed letter written by the defendant direct to the plaintiff on 19 April 2012. A copy of that letter appears as annexure E to Mr Lacerenza's affidavit. It seems the plaintiff wrote to the defendant complaining about the investment advice he received. That letter was written on 18 October 2011. The defendant replied some six months later. The response is comprehensive. That would indicate the defendant has records and perhaps some tape recordings of conversations on which to base its defence.
In written submissions handed up during the course of his oral submissions, counsel for the plaintiff, no doubt mindful of the approach taken by Buss JA in Chalmers, set out what he referred to as 'list of relevant factors'. He put the position as follows:
7.The factors which are in favour of an extension are:
7.1the statutory limitation period is likely to have expired as at the date when the writ became stale (as noted by the Defendant in its submissions 25 July 2014 at [22]);
7.2by letter dated 18 October 2011 referred to in the Citibank letter of 19 April 2012 the Defendant was given some particulars of the Plaintiff's claim;
7.3the purported service of the writ was effected only 5 days after it became stale;
7.4the Plaintiff applied promptly for an extension of the validity of the writ;
7.5actual notice of the writ was given twice by facsimile to the Defendant prior to the writ becoming stale;
7.6later purported service was not deliberately late but an error or oversight on the part of the solicitor for the Plaintiff.
8.The factors which are against an extension are:
8.1Hypothetically there may be some prejudice because Nicole Chandra is no longer employed by the Defendant and lives in Singapore.
A number of these paragraphs require comment. Although the defendant appeared to concede in written submissions the relevant limitation period may have expired, that is by no means clear. Paragraphs A, C1 and C2 appear to be claims based in equity. The limitation periods may or may not mirror those imposed by the Limitation Act 2005 (WA). In relation to other pars in the endorsement, it may be the cause of action arose when the plaintiff sustained damage and that may be the date upon which Lehman Brothers collapsed. In Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 the High Court warned against the dangers of attempting to determine questions of limitation on an interlocutory basis. Where all that is available is an endorsement of claim - even if, as here, the endorsement is in a proper form - it is unwise to attempt to determine whether or not a claim will be statute barred. Perhaps all that can be said is there is a risk the claim may be statute barred.

Counsel for the plaintiff skips lightly over why this writ was not served before it went stale. True it is there was no deliberate decision to wait until the last minute, as was the case in Chalmers. But the circumstances show a degree of carelessness on the part of Mr Lacerenza which is difficult to understand. His affidavit makes plain he had in mind problems of limitation - that is why he issued the writ when he did. He also seems to have had in mind the need to serve that writ in May. That appears to have motivated his email and facsimiles to the defendant. Then, with the knowledge the defendant's solicitors would accept service he did not forward the writ to the solicitors when he could easily have done so. That shows a remarkably cavalier attitude.
So far as the defendant is concerned, I would accept they will suffer the general prejudice referred to by Buss JA in Chalmers. But they did have notice of the claim in October 2011 when the plaintiff wrote to them. They were able to provide a detailed response - in other words, they were able to fully investigate the claim at that time. They had notice of the claim on two occasions in May 2014. No doubt it would assist in preparation of their defence if Ms Chandra was available. But she may well be contactable and may well be prepared to assist. It is difficult to see, in the circumstances of this case, they suffer anything more than the general prejudice occasioned by the delay in service of the writ.
Although the position is finally balanced, I am satisfied this is a case where the writ ought be extended. Counsel for the plaintiff has accurately summarised those factors in favour of the grant of the extension. With the reservations as to the limitation question and the actions of Mr Lacerenza in not serving the writ when he could have done so, I think the summary is accurate.
So far as the defendant is concerned, I would accept there is a general prejudice occasioned by the delay. There is uncertainty as to whether the limitation period has expired, but given the endorsement of claim is in a proper form the plaintiff is not to be criticised for that fact. This was not a case where the plaintiff chose to rely on technicalities - what can be said is Mr Lacerenza in wishing to meet Mr Jenaway was well‑intentioned. Between the issue of the writ and its service Mr Lacerenza did advance the plaintiff's case. He was hampered by language difficulties and the tyranny of distance, but he obtained counsel's advice which, presumably, required a full brief. This was not a case where he was idle.
Accordingly, I am prepared to make an order extending the validity of the writ. I will hear the parties as to the precise form of orders and as to costs.