Buzzle Operations Pty Ltd v Breirl & Ors

Supreme Court of NSW|2007-08-22|Before: Malpass J

CITATION : Buzzle Operations Pty Ltd v Breirl & Ors [2007] NSWSC 922

DECISION : 1.The Statement of Claim is valid for service up to and including 22 October 2007; 2.No order is made as to the costs of the application; 3.The Exhibits may be returned.

CATCHWORDS : Service of Statement of Claim by company in liquidation - validity of service - application to extend time - heard ex parte - discretionary considerations

Fair Trading Act 1987 (NSW) LEGISLATION CITED : Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 2005 (NSW)

Buzzle Operations Pty Ltd (In Liquidation) (Pl) Steven Breirl and the persons who traded as Arthur Andersen as set out in Annexure A to the Statement of Claim dated 15 May 2006 (1st def) Arthur Andersen Corporate Finance Pty Limited (2nd Def) PARTIES : Neil Martin McDermott (3rd def) Stewart Bright (4th Def)

COUNSEL : Mr T.E.F.Hughes QC / Mr M.B.J.Lee (Pl)

6 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20177/06 Buzzle Operations Pty Ltd v Steven Breirl and the persons who traded as Arthur Andersen as set out in Annexure A & Ors

JUDGMENT 1 HIS HONOUR: The plaintiff is a company in liquidation and Mr Wiley is the liquidator thereof. It commenced these proceedings by Statement of Claim filed on 15 May 2006. This process pleads causes of action founded on breach of contract, negligence and contraventions of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW). 2 Save for the relief sought in respect of the Fair Trading Act, all causes of action have been brought within the relevant limitation period. The company does not propose to proceed with the relief sought under the Fair Trading Act. 3 This litigation is externally funded. The plaintiff has also brought two other externally funded proceedings (one has been referred to as the Deloitte Proceeding and the other has been referred to as the Apple Proceeding). 4 The proceeding was brought with the expiry of the relevant limitation periods in mind. No attempt was made to effect service within the prescribed six-month period for validity of service. 5 On 21 March 2007, without notice, the plaintiff made application to the Court for an extension of time for service of the Statement of Claim. At that time, the liquidator was unable to ascertain whether he would continue with the proceedings. The reasons for that position are set forth in paragraphs 8 and 9 of Mr Wiley's affidavit sworn on 23 July 2007. 6 An order (the order) was made ex-parte extending the time for service to 15 June 2007. At the time of the making of the order, Mr Wiley had given instructions concerning amendment of the Statement of Claim and for further investigation of it. 7 On 15 June 2007, steps were taken to effect service on the second defendant, Mr Madden (a partner of the dissolved partnership sued as the first defendant) and the third defendant (who was also a partner of that partnership). Messrs Madden and Robertson are Administration Partners under the dissolution arrangements. Subject to any entitlement that they may have to have this service set aside, these entities (the entities served) accept that service has taken place on them. 8 The entities served have retained solicitors (Baker & McKenzie). The solicitors have said that they receive their instructions from Mr Robertson, who was described by them as "one of the administration partners of Andersen at the date of dissolution". A Notice of Motion brought on their behalf was filed on 2 July 2007. It contains seven prayers for relief (including prayers to have both the order and the service pursuant thereto set aside). The consequences of taking such a step in the proceedings has not been debated The basis of the application is alleged non-disclosure by the plaintiff, which was said to bring about the obtaining of the ex-parte order. 9 Shortly thereafter, the plaintiff also brought a Notice of Motion. It now proceeds on an Amended Notice of Motion filed in Court on 3 August 2007. For present purposes, the relevant relief sought therein is as follows-: "2. An order pursuant to Rule 10.14(3) Uniform Civil Procedure Rules that the Statement of Claim be taken to have been served on 15 June 2007 on all defendants (other than Arthur Andersen Corporate Finance Pty Limited, Mr Madden and Mr McDermott). 3. In the alternative to prayer 2 above, an order pursuant to Rule 1.12 Uniform Civil Procedure Rules or otherwise that validity for the purpose of service of the Statement of Claim filed on 15 May 2006 be extended to a date 60 days after the making of this order." 10 The Notices of Motion were allocated a hearing date to take place on 20 August 2007. 11 On that day, the plaintiff asked the Court to first hear, ex-parte, the relief sought in paragraph three of the Amended Notice of Motion. 12 This course of action was opposed and the Court heard argument on the question. Following that argument, the decision was made to first hear that prayer for relief on an ex-parte basis. Counsel for the entities served had sought participation in that hearing. Whilst the participation that was sought was somewhat vaguely expressed, it appeared to be in the nature of leave to put submissions in opposition to the application (initially the stance taken by his instructing solicitors was that they did not act in respect of the Motion and that it would be dealt with ex-parte). During the argument, the Court was informed that the served entities did not intend to place themselves in the position of appearing in respect of the plaintiff's application for relief or the proceedings. They did not otherwise satisfy me of an entitlement to the leave sought. This opposed leave application was not granted. 13 The Court has ample jurisdiction to grant the relief sought (see, inter alia, Rule 1.12 of the Uniform Civil Procedure Rules 2005 (NSW)). The rule confers a discretion. There are no expressed threshold requirements. It is silent as to what needs to be shown to justify its exercise. In my view, it is exercisable having regard to the relevant circumstances of the case and so that the dictates of justice are best served. The applicant for relief bears the onus of satisfying the Court of entitlement to that relief. 14 An abundance of material has been placed before the Court. Mr Wiley has sworn two affidavits. Amanda Kim Banton (a partner in the firm of solicitors for the plaintiff) has also sworn two affidavits. There are three exhibits. Exhibit A contains correspondence passing between the parties and relevant documentation. Exhibit B is a Schedule of Documents produced by Mr Madden annexed to an affidavit sworn by Stephanie Bronk. Exhibit C is written submissions prepared by counsel for the served entities (which contain, inter alia, the submissions intended to be put before the Court in respect of the plaintiff's present application).

15 The application being heard has to be seen in the context that there are disputed questions concerning service. The approach taken by the plaintiff has the potential to enable the Court to save valuable hearing time concerning what may be unproductive disputes relating, inter alia, to questions of service. 16 The affidavit sworn by Mr Wiley on 17 August 2007 discloses that he remains of the view that he may seek to discontinue the proceedings. It contains, inter alia, the following:- "4. The only prospect of these proceedings realistically being maintained is if the litigation funder provides security for costs for the defendants and also provides funds for the legal costs of the plaintiff. 5. The available funds or "war chest" for the prosecution of this proceeding is confidential. It is, however, limited to the amount the funder will provide to this proceeding in addition to the competing priorities and demands of the Deliotte Proceeding and the Apple Proceeding. I expect that my ability to source funds is one which will involve a decision being made as to the likelihood of recovery for the funder arising from these proceedings. 6. It is necessary to investigate fully the prospects of recovery before it is commercially realistic for substantial funds to be allocated to this litigation or for substantial liability of adverse costs orders to be created. 7. As at 21 March 2007 I had given instructions that the statement of claim be amended and for the claim to be investigated further while preserving the entitlement of the plaintiff to proceed with the litigation. Although I had given no final instruction as to whether the statement of claim as amended would be served, I expected that subject to legal advice and obtaining funding I would give such instructions. 8. I am told by my solicitor Ms Banton and believe that within 60 days the pleading can be amended and that advice as to the prospects of recovery can be obtained from junior and senior counsel. I also expect that within 60 days a decision can be made as to funding the proceeding and making funds available for security for costs if the litigation is to proceed. If these steps are not taken within 60 days I do not propose to make further application to extend the time for service."

17 What has been placed before this Court provides material that explains past delay. The evidence does not suggest that the plaintiff does not have a viable cause of action. If the relief sought is not granted, the plaintiff may be deprived of prosecuting a large claim for damages (in which creditors of the failed plaintiff have an interest). There is nothing in the material that suggests the defendants have suffered actual prejudice. Indeed, submissions were made that suggested that the stance adopted by the served entities was taken because they may be put to considerable expense in defending the proceedings. 18 I have had regard to the content of Exhibit C and other material which the entities served have sought to have placed before the Court (including what appears in Exhibit A). In particular, I have had regard to the submission that the discretion should only be exercised where "good reason" has been shown. It is the contention of the entities served that there is an absence of "good reason". In having such regard, I have looked at the authorities relied on by the entities served and identified in the submission. In my view, whilst these authorities provide guidance they do not govern the discretion with which the Court is presently concerned. 19 In my view, the plaintiff has demonstrated an entitlement to the relief sought. I may add that if a different view were taken on the question of the need to demonstrate "good reason", I consider that there is "good reason" in the circumstances of this case to justify the extension of time. 20 The relief granted is as follows:-

The Statement of Claim is valid for service up to and including 22 October 2007;

No order is made as to the costs of the application;

The Exhibits may be returned. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Trade Practices Act 1974(Cth)

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