Paragon Group Ltd v Burnell

The contention of the plaintiffs is that having regard to the possible delay of three months or more, it is "impractical" to serve the documents in the manner required by the Rules and therefore an order for substituted service ought to be made. Furthermore, because the solicitors act for Den Norske Bank in relation to claims against the fund arising from the sale of the "Martha II" there is said to be no doubt that if service is effected on the solicitors then the proceeding will immediately come to the notice of the fourth defendant. Therefore, as a practical matter, it is contended that it is unduly technical and inappropriate to require service of the process on the fourth defendant overseas in accordance with O8 r2. The trade practices claim against the fourth respondent, is not a claim in rem, but is purely in personam. It does not entitle the plaintiffs to claim against the fund even if they are ultimately successful. Accordingly, there is no urgency for service of process prior to 13 August 1996 which is the date fixed for determining competing priorities with respect to claims against the fund. It is further submitted for the solicitors that leave should not be granted under O7 r9 because O8 specifically provides for outside the jurisdiction. Order 8 r2 provides that service outside the Commonwealth of the originating process is not valid unless service is in accordance with prior leave of the Court, or unless the Court confirms service, or there is waiver by the entering of an appearance. The Court must, under subrule 2(2), be satisfied before granting leave that the proceeding is one in which the Court has jurisdiction and that the applicant has a prima facie case for the relief which is sought. It is therefore said that since O8 r2 requires a prima facie case, O7 r9 is not available to circumvent that requirement and that to order substituted service under O7 r9 would evade the conditions imposed with respect to service overseas by O8. There is force in this submission. Reliance was placed by the solicitors on the decision of Dawson J in Mondial Trading Pty Ltd v Interocean Marine Transport Inc. (1985) 65 ALR 155 where his Honour said at 157: "The plaintiff must, in the absence of an agreed mode of service upon the defendant, obtain leave for service outside the jurisdiction and must attempt to effect service by that mode. No such attempt has been made and there is insufficient evidence in the material that the plaintiff would be unable, by the exercise of reasonable effort, to effect service on the defendant outside the jurisdiction. The inquiries made by the plaintiff so far are limited to an examination of Lloyd's Register of Shipping, which does not contain the respondent's whereabouts. Whilst the plaintiff is at the moment unable to obtain an order for substituted service, it does not follow that, should the plaintiff obtain an order for service out of the jurisdiction and then, having made reasonable efforts to do so, be unable to effect service, an order for substituted service within the jurisdiction cannot be made: .... However, that is something which must await the outcome of the plaintiff's having taken the necessary steps to pursue its claim." (Emphasis added) His Honour referred to Laurie v Carroll (1958) 98 CLR 310. At 325 Dixon CJ, Williams and Webb JJ said: "In Fry v Moore (3) an eight-day writ of summons, that is to say a writ for service within the jurisdiction, was issued against a defendant who was not within the jurisdiction. An order for substituted service within the jurisdiction was obtained. It was held in the Court of Appeal that this was bad and the order and the proceedings under it were, but for waiver on the part of the defendant, liable to be set aside. This decision was placed specifically upon the ground that there cannot be substituted service of a writ which could not at the time it was issued be served personally. Were it otherwise the strict conditions regulating and limiting service out of the jurisdiction upon defendants abroad would be ineffective; for they could be avoided by obtaining an order for substituted service within the jurisdiction." (Emphasis added) In the present case, no attempt has been made to obtain leave for service outside the jurisdiction and there has been no attempt to effect such service. Having regard to the above considerations I am not satisfied that a sufficient case has been made out to warrant an order for substituted service. Nor am I persuaded that I should exercise my discretion to allow substituted service in this matter.

Preliminary Discovery The relevant provision is O15A r6 of the Federal Court Rules which provides: "Discovery from Prospective Respondent (6) Where - (a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained; (b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and (c) there is reasonable cause to believe that the person has or ... has had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision - the Court may order that that person shall make discovery to the applicant ...." (Emphasis added) The solicitors contend that the time has now passed for the bringing of any application for preliminary discovery under O15A. That provision, they say, is confined to circumstances prior to the commencement of a proceeding. Comparison is made with O15A r3 which concerns circumstances where an applicant has made reasonable inquiries but is unable to ascertain the description of a person sufficiently in order to commence proceedings against that person. The Court in such a case has a discretion to order preliminary discovery. Order 15A, r6 was considered by Burchett J in Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728. His Honour considered that the rule should be given the full scope which its language would reasonably allow and that it was no answer to an application under the rule to say that the proceeding is in the nature of a "fishing" expedition. Moreover, he considered that the rule was one of a beneficial kind and that: " ... it would be unfortunate if a rule designed to amplify the court's power to penetrate obscurities and uncertainties in the interests of justice were to be weakened by restrictive and unnecessary glosses". Notwithstanding the liberal approach which should be adopted, full weight must nevertheless be given to the language used to formulate the rule. Sheppard J considered the operation of Order O15A, r3 in Survival & Industrial Equipment (Newcastle) Pty Ltd v Owners of the Vessel "Alley Cat" (1992) 36 FCR 129. At 136 his Honour said:

"... Here the case is one in which the identity of the defendant was sufficiently known to enable a proceeding to be commenced. It is true that that is so only because the proceeding may be commenced against the owners of a vessel without identifying them. But the proceeding has been commenced and regularly commenced. In my opinion once that has occurred, the rule ceases to be applicable. The case is not one where the plaintiff is 'unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the Court against that person.' The proceeding is pending. The plaintiff does not seek information to enable the proceeding to be commenced. It needs information as to the whereabouts of the vessel so that the writ may be served and a warrant of arrest executed. But that is not what the rule provides for." (Emphasis added) In my opinion, these words are apposite to the present case. Order 15A is relevantly concerned with preliminary discovery and subrule 6(b) empowers the Court to order such discovery only if after making all reasonable enquiries there is not sufficient information to enable a decision to be made whether to commence a proceeding. The language is unambiguous. After proceedings have been commenced the rule ceases to apply. After commencement, of course, in the ordinary process of discovery, additional facts may come to light which would provide a basis for other relief and it would then be open to the plaintiffs to seek leave to amend the pleadings so as to claim such relief.

The plaintiffs say that r6 can be applied in circumstances where proceedings to obtain relief have been commenced and subsequently the plaintiffs wish to make a decision as to whether additional or further relief should be sought, such as for example, a remedy in restitution in addition or as an alternative to damages. In my view this is not so. Order 15 r6(b) refers to "that relief". I consider these words do not disclose an intention to refer to some additional or different form of relief which might be considered appropriate after the proceedings has been commenced. I am not persuaded in these circumstances that any order for preliminary discovery should be made. Urgency and Joinder As the plaintiffs' action against the fourth respondent is in personam, it is neither necessary nor appropriate for this proceeding to be heard together with the proceeding in rem (No. VG 70/96) which concerns competing priorities as between claimants on the fund arising from the sale of the ship. That proceeding is listed for hearing on 13 August 1996. This proceeding is not, in my view, sufficiently related to that proceeding to warrant joinder nor is it at an advanced stage of readiness. It is likely that such joinder at this late stage would lead to an adjournment of the hearing of the priority claims and I am of the view that this should not occur. There is no evidence to justify a suggestion of any urgency in the determination of this proceeding nor of any inability of the Den Norske Bank to meet any judgment. The lack of urgency bears both on the joinder question and also on the need for substituted service. Costs Under s43(2) of the Federal Court of Australia Act 1976, the Court has a very wide power in relation to costs which includes the power to award costs against a person who is not a "party" to the proceedings. See Knight v F P Special Assets Ltd (1992) 174 CLR 178 at 193. In the present case neither the fourth defendant nor the solicitors are parties, although the solicitors are aware of the Motion and have appeared to contest the grant of leave. In Knight's case (supra) Mason CJ and Deane J at 192, point out that the prima facie general principle is that an order for costs is only made against a "party" to the litigation. However, their Honours considered that the wide words of O91 r1 of the Rules of the Supreme Court of Queensland, (which are substantially the same as s43(2) of the Federal Court Rules), should not be read down so as to preclude jurisdiction to make an order for costs against a non-party. This does not mean that there is an unfettered discretion. The wide discretion must be exercised judicially and in accordance with general principles pertaining to the law of costs, one of which is that normally costs follow the outcome. In the present case, I am satisfied that the Court has power under s43(2) to award costs in favour of or against the solicitors. They have performed a useful role as a contradictor to the case presented on behalf of the plaintiffs. Their contentions have been successful and in my view they should be awarded the costs of this Motion on a party-party basis. The solicitors are not strangers to the litigation. They were notified of the proceedings and they are the persons sought to be made recipients of process by way of substituted service on behalf of the fourth respondent. In addition, in my view, the attempt to obtain substituted service on a party outside the jurisdiction without following the requirements of O8 was misconceived, as was the application for preliminary discovery after the proceeding had commenced. The Orders of the Court are that the Notice of Motion be dismissed and that the plaintiffs pay the costs of the solicitors with respect to the Notice of Motion. I certify that this and the preceding twelve (12) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Tamberlin. Associate: Date: 31 July 1996 Counsel for Plaintiffs: Mr L Aitken Solicitor for Plaintiffs: Levingstons Solicitors Counsel for Malleson Stephen Jaques: Mr M Thompson Date of Hearing: 25 and 29 July 1996 Date Judgment Delivered: 31 July 1996