Ebner & Anor v Clayton Utz

2 The history of this matter is as follows. The applicants filed a writ on 19 February 2010 in which they were the plaintiffs and the present respondent was the defendant. The writ contained an indorsement of claim which read as follows:

(1) The defendant is a firm of solicitors.

(2) The plaintiffs were at all material times clients of the defendant.

(3) The plaintiffs claim damages for breach of the terms of the retainer between the plaintiffs and the defendant.

(4) Further and in the alternative the plaintiffs claim equitable compensation for breach of the fiduciary duties owed by the defendant to the plaintiffs.

3 The applicants did not serve the writ within the one-year period during which a writ is valid for service.[1] In May 2011, the applicants had the court file produced to Randall AsJ. The applicants filed an affidavit sworn by the first-named applicant on 29 April 2011 in which the first-named applicant deposed that since the writ had been filed, he and his wife (the second-named applicant) had been endeavouring to negotiate a settlement with the defendant in order to avoid the necessity of having the matter dealt with by the court but their efforts had not been successful. The first-named applicant further deposed that the applicants believed that the writ was effective until early May 2011 but had subsequently realised that the expiry date was 19 February 2011 and that they sought an extension of the expiry date 'in order to preserve our interests under the statutes of limitations'. The second-named applicant swore a substantially identical affidavit. Randall AsJ then made an ex parte order on 1 June 2011 pursuant to r. 5.12(2) and (3) of the Rules extending time for service of the writ to 19 October 2011. In other matters, the following was recorded:

(1) The limitation period has expired.

(2) The plaintiffs have made continuing efforts to negotiate the claim over the last year.

(3) The plaintiffs have engaged Maurice Blackburn who intend to come on to the record.

4 The respondent, having been served with the writ, filed a summons dated 24 October 2011 seeking an order that the orders made by Randall AsJ be set aside, alternatively, an order that the proceeding be set aside or that the indorsement of claim on the writ be set aside. The summons was supported by an affidavit of Richard Douglas Murphy sworn 7 November 2011. Mr Murphy deposed that he was a member of the firm of Minter Ellison, the solicitors for the respondent. He deposed that the respondent was a firm of solicitors and that he was informed by a partner thereof that the applicants had been clients of the respondent for some years up to March 2004 and that during that time legal work for the applicants had been performed and/or supervised by Mr Christopher Dale, a former partner of the respondent. Mr Murphy's affidavit then referred to a number of communications between the applicants and the respondent from about 27 August 2010 to 20 September 2010. Various copy letters and emails were exhibited to the affidavit.

5 The respondent's summons was heard by Lansdowne AsJ on 9 November 2011 and her Honour ordered that the order of Randall AsJ be set aside but that the application for extension of time to serve the writ be refused. From this order the applicants appealed, by way of rehearing, to the Practice Court and the judge dismissed the appeal on 15 December 2011.

6 In his reasons for judgment handed down 15 December 2011, the judge said that an extension of time for service should not in the circumstances of the case be permitted. He said that, despite changes in wording to the Rules, the applicants were still required to show that either reasonable efforts were made to serve the writ within one year or that there was some other good reason to grant an extension.[2] He said that the plaintiffs admitted that they did not attempt to serve the writ within 12 months of its issue.

7 His Honour said that the first matter relied upon by the applicants was that they were engaged in negotiations with the defendant but that even if that was the case, continuing negotiations between the parties did not constitute 'a good reason'.[3] The judge said that in any event the evidence did not establish continuing negotiations because the correspondence passing between the applicants and the respondent could not on any view be characterised as negotiations in respect of the proceeding but that the correspondence evidenced continuing requests by the applicants and others on their behalf to the respondent to the effect that the respondent commence acting for the applicants once again, which requests were refused in September 2010. His Honour said that the applicants had not provided any explanation for the delay between September 2010 and February 2011.

8 The judge said that the second matter relied upon by the applicants was an oversight caused by their inadvertent belief that the writ expired in early May 2011 but that there was no proper explanation for such belief. His Honour added that inadvertence was not a sufficient reason for extension of time because if it was, there would never be any basis for opposing any application for extension where inadvertence was relied upon.

9 Next, the judge said that the expiry of the limitation period was an insufficient basis to justify an extension.

10 The judge also referred to the indorsement on the writ stating that the respondent had not been adequately put on notice as to the nature of the applicants' claim. His Honour said that, within r 5.04(2)(b) of the Rules the indorsement did not meet the standard of giving 'with reasonable particularity notice of the nature of the claim and the cause thereof ...'. His Honour added that even if he was wrong about that aspect, he would not extend the time for service because the applicants had had ample time in which to formulate a properly particularised claim and that the indorsement caused prejudice to the respondent and the long delay supported an inference of general prejudice to the respondent. He said that it was now more than seven years since the respondent ceased acting for the applicants and the alleged breach of retainer occurred many years before that and that the uncertainty surrounding the nature of the applicants' claim compounded the general prejudice to the respondent.

11 At the outset, counsel for the applicants raised the question whether leave to appeal was required, suggesting that the order below was final rather than interlocutory because, in effect it determined the rights of the parties by putting an end to the proceeding. The respondent submitted, on the contrary, that the order below was interlocutory and that leave to appeal was required.

12 The question having been raised, it seems to me that it must be answered because if the order below is final, this application is unnecessary. In my opinion, the order was clearly interlocutory and leave to appeal is required. It is well established by a number of decisions of this Court that, although s 17A(4) of the Supreme Court Act 1986 refers to a 'judgment or order in an interlocutory application', no change was intended by the use of that language to the issue under earlier legislation, namely, whether the order (rather than the application) sought to be appealed from was final or interlocutory.

13 There does not appear to be a decision deciding whether an order refusing to extend the period for service of a writ is final or interlocutory but in my opinion such an order is interlocutory because it does not finally determine the rights of the parties in the proceeding. There are at least two reasons why that is so. The first reason is that such an order does not prevent a plaintiff from issuing a fresh proceeding based on the same causes of action and it is not relevant for this purpose that there may be additional defences available in such a second proceeding (such as the statute of limitations). The second reason is that such an order does not prevent a plaintiff from making a further application for an extension of the period for service of the writ and it is irrelevant that such a further application would be very unlikely to succeed. A similar issue was dealt with by the High Court in Carr v Finance Corporation of Australia Ltd.[4] In that case, an order was made in the Supreme Court of New South Wales refusing to set aside a judgment entered in default of defence. The High Court[5] held that this was an interlocutory order and that special leave to appeal was required. Gibbs CJ said[6] that an order refusing to set aside a default judgment did not finally determine the rights of the parties because it was open to the disappointed defendant to apply again to have the judgment set aside. His Honour said:

In practice, in some cases a second application of that kind might be successful, for example, when the first application had been dismissed on a technicality. In other cases, however, the second application would be doomed to failure because the issues of substance which it raised would have been decided adversely to the defendant in the first application. The appellants here submit that their right to make a further application is purely theoretical, since any such application must necessarily fail, and urge that in these circumstances the judgment should be regarded as a final one.

In my opinion, the test in Licul v Corney[7] requires the Court to have regard to the legal rather than the practical effect of the judgment. If this were not so, the question whether a judgment is final or interlocutory would be even more uncertain than it is at present.

14 Mason J, after considering prior cases, agreed with Gibbs CJ, stating:

The choice for the Court is whether it should continue to adopt the traditional classification of orders of this kind as interlocutory because there is the right to make another application and because the order does not deal directly with the rights in context in the action or whether it should now classify such orders as final when their practical effect is to shut out the defendant from contesting the default judgment.

Although the second alternative has some attractions, it has the disadvantage that the character (whether it be final or interlocutory) could not be determined on its face ...

15 Both Gibbs CJ and Mason J said that the stringency of the rule was mitigated by the fact that the Court was empowered to grant leave in an appropriate case. Murphy J agreed that the order was interlocutory.

16 In my opinion, the above reasoning is equally applicable to an order refusing an extension of the period for service of a writ. The applicants were correct to apply for leave to appeal as leave to appeal was required.

1. The decision and findings were wrong in law and against the evidence or the weight of the evidence.
2. The learned trial judge was in error in finding or deciding that Order of Associate Justice Lansdowne made 9 November 2011 should not have been overturned on appeal.
3. The learned trial judge was in error in finding or deciding that the extension of the writ should never have been granted.
4. The learned trial judge was in error in finding or deciding that the general indorsement was defective or irregular.
5. The learned trial judge was in error in finding or deciding the general indorsement was sufficient to warrant a refusal to extend the time for the service of the writ.
6. Even if the general indorsement was not adequately particularised, it would only have constituted an irregularity and:
   1. therefore capable of correction or amendment to the general indorsement;
   2. therefore capable of cure by the filing and service of a properly pleaded statement of claim.

18 It was common ground that the onus had been on the applicants to satisfy the court that there was 'good reason' to extend the period for service of the writ.[8] The applicants submitted that the decision below was attended with sufficient doubt as to warrant a grant of leave to appeal and that it would cause substantial injustice to the applicants if the decision was allowed to stand.

19 The applicants accepted that the judge below was correct insofar as he had rejected the relevance of 'negotiations' with the respondent as capable of constituting 'good reason'. The applicants submitted that the judge was in error in the way that he had dealt with the applicants' explanation for delay in service of the writ based on 'inadvertence'. The applicants had deposed that they were labouring under the mistaken belief that the writ was valid for service until May 2011. They were unable to proffer a reason for their mistaken belief but they were not cross-examined on their affidavits and there was no contrary evidence before the Court. The applicants submitted that allowance should have been made for the fact that at the time of making their affidavits they were self-represented but, further, even if they were represented, it was doubtful that they would have needed to provide any further evidence explaining their inadvertence.

20 The applicants submitted that to the extent that the judge relied on the inadequacy of the indorsement, he was in error because the merits of their case were not a relevant consideration, nor was the application in the nature of a pleading summons.[9]

21 The applicants also submitted that the overarching purpose referred to in the Civil Procedure Act 2010, namely, the 'just, efficient, timely and cost-effective resolution of the real issues in dispute' was a factor that weighed in favour of an order for renewal. I take it that, because the applicants were self-represented before the judge and did not raise this point, the foregoing submission was combined by counsel for the applicants before us with the submission that the applicants were in a position of 'grave disadvantage' below and that the judge below was therefore required to take into account a relevant matter of which the self-represented parties would have been unaware. I will say at once that I would reject that submission because, it seems to me, at least in the circumstances of this case, that the said overarching purpose cuts both ways. That is because the delay in serving the writ, the failure to particularise the cause of action and the general prejudice suffered by the respondent are all factors showing that the just, efficient, timely and cost-effective resolution of the real issues in dispute has been impeded by the conduct of the applicants.

22 The applicants submitted that substantial injustice would be done if the decision were to stand because 'the cause of action is lost' and, on the other hand, the respondent had provided no evidence of actual prejudice.

23 The respondent submitted that no good reason for extension of time was demonstrated by the applicants before the primary judge. There was no explanation for the applicants' alleged inadvertent belief that the writ expired in early May 2011 and inadvertence was not a sufficient reason in any event. There were no negotiations between the parties but, in any event, continuing negotiations did not constitute good reason and there was ample time to serve the writ after the correspondence, however characterised, had ceased. In addition, the applicants had not informed the respondent of the existence of the proceeding while continuing to ask the respondent to commence acting for them again.

24 The respondent supported what was said by the judge about prejudice. The respondent submitted that the judge was correct in taking into account the inadequate particularisation of the claim. The nature of the claim and the dates of the alleged loss are not disclosed. In any event, the decision below did not depend on this conclusion.

25 In order to obtain leave, the applicants must show that the decision below is clearly wrong or at least attended by sufficient doubt.[10] There is a clear legislative policy against interlocutory appeals and the requirements for a grant of leave are 'stringent'.[11]

26 In my opinion, the decision below is not attended by sufficient doubt as would justify a grant of leave to appeal. The decision was a discretionary decision in which the judge had to decide whether, in all the circumstances of the case, the applicants had demonstrated 'good reason' for extending the period for service of the writ. The applicants have failed to show that the judge made any error of law in the exercise of his discretion.

27 In my opinion, it was open to the judge to conclude, as he did, that the 'inadvertent belief' of the applicants was not properly or satisfactorily explained (whether or not inadvertence might, in a given case, be relied upon as part of the relevant circumstances). Further, the judge made it clear that his decision did not depend on his finding as to the irregularity of the indorsement on the writ. The judge was entitled to find or infer that there was general prejudice to the respondent, for the reasons he gave. It was not contended on behalf of the applicants, other than as set out and dealt with above, that the judge failed to take into account any relevant matter or took into account any irrelevant matter.

28 Turning to the six proposed grounds of appeal, I have dealt with the question of the general indorsement (see proposed grounds 4, 5 and 6). Proposed grounds 1, 2 and 3 contend that the judge was wrong in law or in error without specifying why and, accordingly, those grounds add nothing to what was expressly submitted by counsel for the applicants.

29 Having regard to my conclusion that the applicants have failed to show that the decision and order below is attended by sufficient doubt, it is unnecessary to decide whether substantial injustice flows from the order sought to be appealed. I am in some doubt, in the circumstances of this case, that the inability of the applicants to proceed with their action because the writ is not valid for service of itself constitutes substantial injustice. However, it is not necessary to decide that question.

30 For those reasons, I would dismiss the application.

[1] See r 5.12(1) of the Supreme Court (General Civil Procedure ) Rules 2005 ('the Rules').

[2] See Ramsey v Madgwicks [1989] VicRp 1; [1989] VR 1.

[3] He referred to Savcor Pty Ltd v Cathodic Protection International APS [2005] VSCA 213; (2005) 12 VR 639.

[4] [1981] HCA 20; (1981) 147 CLR 246.

[6] [1981] HCA 20; (1981) 147 CLR 246, 248.

[7] [1976] HCA 6; (1976) 50 ALJR 439, 444.

[8] See Savcor Pty Ltd v Cathodic Protection International APS [2005] VSCA 213; (2005) 12 VR 639, esp [40]-[41] (Gillard AJA) and cases therein cited; Van Leer Australia Pty Ltd v Palace Shipping KK and Anor [1981] HCA 11; (1981) 180 CLR 337.

[9] Citing Protec Pacific Pty Ltd v Steuler Industriewerke GmbH [2007] VSC 93.

[10] See Perry v Smith (1901) 27 VLR 66, 68; Darrel Lea (Vic) Pty Ltd v Union Assurance Society of Australia Ltd [1969] VicRp 50; [1969] VR 401, 408; Niemann v Electronic Industries Ltd [1978] VicRp 44; [1978] VR 431.

[11] See Livingspring Pty Ltd v Kliger Partners [2008] VSCA 93; (2008) 66 ACSR 455, 457 [35] (Maxwell P and Buchanan JA).