Plaintiff v Defendant [2007] VSC 93 | Case summary

18 Smith also deposed in his affidavit that as WMC was at that time about to file an amended counterclaim, he decided, following discussions with his solicitor, not to pursue any contribution proceeding against Steuler until after consideration of WMC's amended counterclaim. Smith deposed that in order to protect Protec's position, the writ in the present proceeding was filed on 30 April 2004.

19 As mentioned, the general indorsement on the writ alleges, in essence, that Steuler is liable to pay damages to Protec for loss caused as a result of negligent misstatements made to Protec as to the suitability of Bekaplast for the operating conditions of the WMC plant. Smith deposed that it was intended that Protec's claim against Steuler in the writ be finally formulated once the basis of WMC's claim against Protec and Steuler was clarified by WMC's final amended pleading. On 28 July 2004, WMC duly filed a fifth amended counterclaim against Steuler.

20 In 2005 the parties obtained further expert reports. An expert briefed by Steuler, Dr Glueck, wrote a report dated 24 January 2005 and provided to Protec on 15 April 2005, which concluded that "there are no doubts as to the suitability of BEKAPLAST PE-HD sheets to protect concrete as a lining for concrete containers to store the SHELLSOL kerosene types commonly used in solvent extraction plants". As to this, Dr Glueck stated that, according to test results obtained at Steuler's laboratory in January 2004, the chemical resistance of PE-HD to SHELLSOL kerosene types was judged as "resistant" under the Section 9 of the relevant German standard. After amending its pleadings again in July 2005, WMC also provided further expert reports.

21 Pursuant to an order made on 7 October 2005 by the Judge in the Building Cases List, a joint conference of experts was held over several days in late January and early February 2006, with experts from each of the three parties in attendance. On 7 February 2006 the facilitator Dr Charrett filed and served a joint report as to that conference. The report contained the responses of the individual experts to a draft list of agreed questions and, in addition, joint responses where agreement was reached. Relevantly, as to the causes of the lining not performing its intended purpose (if that were the case), Dr Glueck's response was that "the reasons and causes for the liner not performing its intended purpose are poor design and welding failures. Different service conditions from the Bid Request could also contribute to failures". Steuler's other expert, Mr Rohringer stated that the cause of the lining failure was "Probably deviation from the specified service conditions and consequent welding failure. According to my experience the most probable explanation could be seen in a combination of overheating and chemical influences. According to my experience temperature was for a longer service period exceeding the specified service temperature by far".

22 Smith deposed that Steuler had changed its position in the joint report. That is, while Steuler had previously (in common with Protec) sought to defend the counterclaim by WMC on the basis that the cause of the problems was the solvent Shellsol 2046 used by WMC, it now asserted that the cause of the problems was poor design and installation and that Bekaplast was suitable for the application. I interpolate that there was some dispute in the affidavits as to when Protec became aware that Steuler was no longer attributing the problems to aromatic solvents. Michael Steuler asserted in his affidavit that Protec was aware of this matter in April 2005 upon receiving Dr Glueck's report. Smith responded in his affidavit by deposing that he did not understand Dr Glueck's report as leading to the conclusion that Steuler was abandoning the aromatic solvent defence. It is unnecessary to resolve this conflict in the evidence. I note the assertion of Michael Steuler as to what Smith understood by the report of Dr Glueck but that assertion is inadmissible. That said, the reports speak for themselves. In my view, there was enough in the report of Dr Glueck to at least put Smith and Protec on notice that Steuler may abandon, or at the least place less reliance on, the aromatic solvent defence. I do not overlook Smith's evidence that it took he and Protec's solicitors and his expert months to read and understand the experts' reports, but, in the circumstances, Protec must be taken to have appreciated, at a time before the joint experts conference, the possibility that Steuler might depart from the apparently common defence previously adopted.

23 Smith deposed that Steuler's "change of position" made it "far more difficult" for Protec to defend the WMC claim, as Protec had been relying on Steuler to assist it with running the aromatic solvent defence and Protec did not have the resources to attempt to resolve the conflicts in the expert evidence by itself. Primarily for this reason, Protec sought to reach agreement with WMC. Negotiations led to the execution of a Deed of Settlement between Protec and WMC in March 2006.

The Deed of Settlement

24 The Deed begins with a background section reciting in summary form the nature of the litigation, including the nature of the proceeding commenced by Protec against Steuler. Then, cl 1 states that all terms of the Deed are subject to and conditional upon Protec being successful in its application for leave to serve the writ on Steuler. Clause 2 provides for mutual releases from liability, and cl 3 provides that Protec shall instruct its solicitors to file a notice of discontinuance in relation to the WMC proceeding. By cl 4 Protec agrees to consent to the entry of judgment against it in favour of WMC for $15M in respect of the counterclaim. By cl 6, Protec agrees that in further partial satisfaction of the judgment sum, Protec will seek leave to serve the writ against Steuler and will prosecute the proceeding against Steuler. By cl 7, WMC agrees to pay Protec's costs incurred in bringing the proceeding against Steuler and indemnify Protec against any costs orders made therein. By cl 8, Protec agrees that any sum it recovers from Steuler will be applied to the judgment sum payable to WMC.

25 It is thus seen that the application to extend the time in which to file the writ is a condition precedent to Protec's settling the WMC proceeding on the terms contained in the Deed of Settlement.

Summons filed by Protec

26 Ultimately, on 30 June 2006, Protec filed a summons, returnable before a Master, seeking an order extending the time in which to serve the writ. It appears that Steuler objected to the summons not being returnable before the Judge in the Building Cases List and, after appearances before a Master and the Judge in the Building Cases List, a fresh summons was issued on 25 July 2006, returnable before the Judge in the Building Cases List on 13 September 2006.

Cross-summons filed by Steuler

27 On 16 August 2006 Steuler filed a summons returnable before the Judge in the Building Cases List on 13 September 2006, seeking an order that the proceeding be stayed pursuant to s 7 of the International Arbitration Act 1974 (Cth) or s 53 of the Commercial Arbitration Act 1984 (Vic). It appears that Steuler sought such relief on the basis of the arbitration clause contained in the 1997 cooperation agreement referred to above. On 7 September 2006 Steuler filed an amended summons, still seeking the orders previously sought and adding, as an alternative, that the proceeding be stayed generally or that there be judgment for Steuler pursuant to r 23.01.

28 The summonses ultimately came on before me on 1 March 2007. Then, at the outset of the hearing, Steuler sought, and I granted, leave to file a further amended summons. The amendment deleted the initial application for a stay under the International Arbitration Act 1974 (Cth) or the Commercial Arbitration Act 1984 (Vic), retained the application pursuant to r 23.01, and added the application pursuant to r 23.02 (a), (c) and (d) that the indorsement on the writ be struck out.

29 The above being sufficient information by way of background, it is now convenient to refer to the submissions made by counsel on the two applications. Although not commenced first in time, it is convenient to deal with Steuler's application first.

Submissions on Steuler's application

Steuler

30 Counsel for Steuler submitted that the proceeding commenced by Protec by writ was bound to fail because the incorrect plaintiff was named in the writ. The party which entered into the relevant contracts with WMC and Steuler was Protec (NSW), not Protec. And while the agreements between Smith and Steuler may have rearranged the affairs of Protec prospectively, they could not undo past events, namely the contracts between Protec (NSW) and WMC, without there being a novation of the contracts with the consent of the relevant third party. As to the fact that the claim in the writ is framed in negligence, even assuming that Steuler owed a duty of care to Protec (rather than to Protec (NSW) to whom it ostensibly made the relevant representations), the fundamental problem lies in Protec's contention that breach of the duty not to make negligent misstatements to one entity (Protec) caused another entity (Protec (NSW)) to enter into contracts with WMC.

Protec

31 Counsel for Protec submitted that the identity of the contracting party was irrelevant as the indorsement on Protec's writ alleges negligence against Steuler. It was evident from the Protec letterhead that there was more than one company in the "Protec group" and any of these companies must have been within the purview of those to whom a duty of care was owed by Steuler in making its representations as to fitness for purpose. The fact that Protec (NSW) may also have a claim in contract against Steuler is irrelevant to the claim in negligence brought by Protec. Also, the effect of the share-sale agreement and shareholders agreement was to collapse the business of Protec (NSW) into that of Protec, which counsel characterised as effectively a joint venture between Steuler and Smith. Further, the issue as to Protec (NSW) being the appropriate party was only raised in the third affidavit of Michael Steuler, sworn on 7 September 2006, and before that the parties in the WMC proceeding took no issue with the fact that the named party was Protec (rather than Protec (NSW)).

Submissions on Protec's application

Protec

32 Counsel for Protec submitted that, while Protec had demonstrated good reason for the period for service of the writ to be extended, such an order was unnecessary as Steuler had effectively taken a step in the proceeding, and thereby submitted to the jurisdiction of the Court or otherwise waived any objection it might have had to jurisdiction. This, said counsel, was the short point on which the application case could be resolved in favour of Protec.

33 Counsel referred to authorities for the proposition that service of a stale writ is a mere irregularity which the defendant may waive by entering an unconditional appearance to it[5], including Fry v Moore[6] where the English Court of Appeal held that an irregularity in service of a writ had been waived by the defendant issuing a summons seeking an order that the plaintiff deliver a statement of claim. Counsel referred to the statement by Lopes LJ in Fry that the defendant's summons in that case was "utterly inconsistent with the theory that, by reason of the non-service of the writ, no action was in existence"[7]. Counsel then referred to Brealey v Board of Management of Royal Perth Hospital[8] where Ipp J said that "a step that is not consistent with or relevant to the challenge to the jurisdiction, will usually be a submission to that jurisdiction". As to the application of these principles in the present case, counsel contended that Steuler had submitted to the jurisdiction of the Court by taking three pre-meditated steps in the action (namely the filing of the three summonses referred to above) which were "utterly inconsistent" with Steuler's position of opposition to Protec's application to extend the time for service of the writ. On the contrary, he submitted, Steuler invokes the Court's jurisdiction to determine the proceeding under r 23.01. Alternatively, none of the steps taken by Steuler were relevant to its opposition to Protec's application. And contrary to the suggestion by counsel for Steuler, the application was brought and maintained as a principal application, not as an application conditional upon Steuler failing in its opposition to Protec's application.

34 Counsel then submitted, in the alternative, that Protec had demonstrated good reason to justify extending the time to serve the writ, and that there was no prejudice to Steuler if leave to serve the writ was granted. Counsel contended that the claim in the writ was not much different from the notice of contribution which, he frankly conceded, should have been served in the WMC proceeding, meaning that an extension of time would not expose Steuler to a risk it was not already exposed to in the WMC proceeding. As to Protec's reasons for not serving the writ, counsel emphasised the co-operation between Protec and Steuler in mounting a "common absolute defence" to WMC's counterclaim, and submitted that service of the writ might have seriously undermined that co-operative relationship. It was only in February 2006, following the joint conference of experts, that Protec realised that it was no longer supported by Steuler in relation to the common defence, and in these circumstances of realising the extent of its exposure to WMC and its inability to contest the technical issues raised by WMC, it promptly sought to settle the proceeding with WMC and seek leave to serve the writ against Steuler.

35 Counsel accepted that Protec should have filed a notice of contribution in the WMC proceeding, but emphasised that Protec was reluctant then to sue what was effectively its joint venture partner. Further, there were ongoing negotiations to settle the WMC proceeding, and Protec was waiting for WMC to deliver amended pleadings. Counsel also acknowledged the tactical advantage Protec perceived in not serving a notice of contribution on Steuler. He also referred to WMC's threat in March 2004 to sue Smith and Michael Steuler personally for breach of directors' duties if they failed to cause Protec to issue contribution proceedings against Steuler, and submitted that this formed a substantial part of Protec's decision to issue the writ.

Steuler

36 As to the contention that Steuler had, by filing its summonses, submitted to the jurisdiction of the Court, counsel submitted that Fry and Laurie were distinguishable from the present case in that they dealt with substituted service issues in respect of process served within time, whereas the present case concerned a writ sought to be served out of time. Nevertheless, counsel contended that what Steuler had done here was akin to what the defendant did in Laurie, namely insist upon an objection to jurisdiction but carry that objection further than was open. That could not be construed as inconsistent with, or as a waiver of, the objection. Counsel emphasised Steuler's "substantive opposition" to Protec's application to extend time for service. He submitted that, like the defendant in Laurie, "we've gone further as well and effectively we're saying ... in the event that Protec is allowed to renew the writ, then there are these other difficulties under Order 23". He submitted that this was a proper way to make use of court time to try and deal with all applications at once.

37 As to the discretion to extend time for service, counsel submitted that Protec had not established good reason for not serving the writ within time. This was not a case where Protec had difficulty in effecting service because, for example, Steuler was evading service. Rather, Protec pursued a deliberate tactic of not serving the writ, and ordinarily a deliberate decision by a plaintiff not to serve the writ until collateral litigation has been disposed of or until some future development in that litigation occurs, will not be a good reason for extending the time for service; see Ramsay v Madgwicks[9]. Counsel urged the Court to rely on the material in Smith's affidavit as to the real reasons for Protec not serving a notice of contribution, or writ, on Steuler, and as to Smith's state of mind at the time, which counsel described as being concerned with achieving the most favourable outcome possible in a settlement with WMC. As to this, counsel submitted that Protec was aware of the relevant time limits, indeed Smith was aware that the relevant limitation period was set to expire when the writ was issued in April 2004, and the decision not to serve was made deliberately to enhance Protec's bargaining position with WMC.

38 Counsel submitted that although there was a commercial relationship between Protec and Steuler and they worked together in defending the WMC counterclaim, that did not justify the decision to not serve the writ. Although Michael Steuler was a director of Protec, there was no joint venture between Smith and Steuler. As the holder of only 12.5 percent of the shares in Protec, Steuler had no power to bind Smith and it exercised no control over Protec. On the contrary, Smith exercised his powers in a way to achieve the best tactical outcome in his dealings with WMC. He did not inform Michael Steuler that the writ had been issued, nor did he consult with him in relation to the negotiations leading to the Deed of Settlement. It was not until March 2006 that Protec advised Steuler of the Deed of Settlement, the existence of the writ and its intention to seek an extension of time for service.

39 It was not inconsistent with the ongoing commercial relationship between Protec and Steuler that Protec would seek legal redress against Steuler. Counsel referred to instances, from as early as June 1999, where Protec told Steuler that it would issue a notice of contribution, and referred to the formal step of Protec seeking leave to file and serve a notice of contribution by 30 April 2004. He submitted that the relationship was not something which had deterred Protec from seeking legal redress against Steuler.

40 Further, Protec became aware of Steuler's change of position in relation to the aromatic solvent defence on 15 April 2005, rather than in February 2006. In support of this, counsel referred to Smith's first affidavit where Smith deposed that Steuler provided the expert report of Dr Glueck in April 2005 and that Dr Glueck concluded in that report that, on the basis of tests performed by Steuler, that Bekaplast HDPE was suitable for use with Shellsol. But even if Protec did only became aware of the change of position in February 2006, that would not excuse the failure to serve the writ, because the general indorsement on the writ was conditional in nature, para 11 alleging that "if in fact" the material proposed by Steuler was unsuitable, then certain statements made by Steuler (referred to earlier in the indorsement) were made negligently. That is, the issuing and service of the writ was not dependent upon any final view as to causation. The general indorsement was more in the nature of a notice of contribution, Protec denying liability to WMC but seeking contribution from Steuler in the event that WMC made out is claims against Protec.

41 Finally, counsel submitted that the question of balancing the prejudice likely to be caused to Protec and Steuler respectively if the application was granted did not arise because Protec had failed at a threshold level to show good reason for not serving the writ within time. But even if the balance of prejudice were to be considered, there would be little prejudice to Protec as it could rely on all the matters set out in the writ in the WMC Proceeding, in the sense that under the apportionment legislation, WMC would only be able to recover form Protec such amount as may be just and equitable having regard to its acts or defaults. That is, if for example Steuler were held to be 30 percent responsible for WMC's loss, WMC could only recover 70 percent of the loss against Protec.

Decision

42 Dealing with Protec's application, it is convenient to begin with the relevant rules of court. Rule 5.11(1) provides that a proceeding shall be commenced by filing the originating process. Rule 5.12 then provides that:

I mention this because although counsel for Steuler did not state his position explicitly, it seemed to me that Steuler's contention as to the lack of merit in the plaintiff's claim was raised not only as the basis of Steuler's applications under rr 23.01 and 23.02 in particular that the proceeding be dismissed, but also as a relevant consideration against allowing Protec's application to extend time for service. Apprehending that to be the case, in accordance with Ramsay I do not take into account Steuler's argument as to lack of merits in considering whether there is good reason to extend the time for service of the writ.

44 Before dealing with the exercise of the discretion, it is convenient to deal with the threshold argument raised by counsel for Protec, namely that Steuler has taken a step in the proceeding and thereby waived its right to object to the writ not being served within the time provided for by the rules.

45 The starting point is the established principle that when a proceeding is commenced by filing a writ but the writ is not served on the defendant within the prescribed time, the proceeding is not a nullity. Rather, the failure to serve the writ is a procedural irregularity only, which will usually be waived if the defendant files an unconditional appearance or otherwise takes a step in the proceeding inconsistent with the maintenance of the objection to the irregularity; see Sheldon v Brown Bayley's Steel Works and Dawnays Ltd[13]. Steuler has not filed an unconditional appearance, nor any appearance for that matter, in the present case. But has Steuler, by filing and prosecuting its summons waived the procedural irregularity?

46 Guidance is found in numerous cases. In Rein v Stein[14] Cave J said that "in order to establish waiver, you must show that the party alleged to have waived his objection has taken some step which is only necessary or useful if the objection has actually been waived, or if the objection has never been entertained at all". In Schweitzer v Kroner[15] Chernov J referred to Rein with approval and also referred to the decision in National Commercial Bank v Wimborne[16]. In rejecting a submission that the defendants had waived their objection by pursuing a summons for dismissal of the proceeding, his Honour concluded that the defendants' act "did not constitute a voluntary act on their part unequivocally evincing an intention to abandon their objection to this jurisdiction". In Hadley and Company v Henry[17] Madden CJ stated that this principle of waiver does not apply where there was a manifest intention on the defendant's part not to waive the irregularity. His Honour considered that, in the case before him, the defendant came in "under protest" and thus gave the plaintiff express warning that he did not intend to waive the irregularity.

47 Both counsel referred to the decision of the High Court in Laurie v Carroll[18] which concerned a proceeding in which substituted service of a writ had been ordered and certain ex parte injunctions were made in respect of a defendant ordinarily resident in England who had been in Victoria for several days but had left before the writ was issued. Order XII, r. 17 of the Rules of the Supreme Court of Victoria relating to Civil Proceedings 1957 provided that a defendant before appearing shall be at liberty without obtaining an order to enter or entering a conditional appearance to serve notice of motion to set aside the service upon him of the writ or of notice of the writ or to discharge the order authorising such service. By notice of motion, the defendant applied to the judge to discharge the injunctions and the orders made for substituted service, and set aside any service or purported service on the defendant's solicitors pursuant to the earlier orders, on the grounds that the Court had no jurisdiction to make an order for substituted service and, among other things, that on the evidence there was no cause of action disclosed against any person in the jurisdiction. The judge refused the application, and the defendant appealed from that decision. The High Court held[19] that although the relief sought in the defendant's notice of motion went beyond Order XII, r. 17, the defendant had not waived his objection to jurisdiction. The notice of motion carried on its face the objection to the jurisdiction and to the order and sought to have service set aside. Their Honours observed that unlike Fry where the act of the defendant in issuing the summons had treated the action as a competent proceeding to be answered by a defence on the merits, the defendant here insisted on his objection to jurisdiction and substituted service but carried his objection to what had been done further than was open to him. That could not be construed as a waiver of the objections upon which he was insisting nor could it be considered as in any way inconsistent with those objections. As the order for substituted service was made incorrectly, their Honours allowed the appeal and set aside the relevant orders.

48 Similarly, in Zwillinger v Schulof[20] Gowans J rejected a submission that the respondent, by seeking an order that the subject child cease to be a ward of court, had waived his protest to jurisdiction. His Honour said that it was made clear from the beginning that the respondent did not intend to waive his objection, and concluded that "this point must be dealt with as a similar point was dealt with in Laurie v Carroll"[21]. In Lindgran v Lindgran[22] Smith J rejected a submission that the defendant had waived his right to contend that there had been ineffective service. The circumstances were that the return date of the plaintiff's summons had been adjourned by consent, and when the matter came on for hearing on the adjourned date, the defendant's counsel raised the objection as to ineffective service, after both counsel had announced their appearances but before counsel for the plaintiff opened his case. Smith J observed that "in order to constitute a waiver in a case such as this, there must at least be words or conduct of such a nature that an inference can properly be drawn therefrom that the party alleged to have waived the objection does not intend to rely upon it"[23]. His Honour held that, on the facts, it was not open to conclude that the defendant did not intend to rely on the objection.

49 I also note the decision of the House of Lords in Williams & Glyn's Bank v Astro Dinamico[24] where their Lordships rejected the contention that, by applying for a stay of a proceeding, the foreign respondents had waived their objection to the jurisdiction. Their Lordships observed that the stay application was alternative relief in the very summons in which they applied for an order giving effect to their objection to jurisdiction. The summons made it abundantly clear that they were objecting, and the fact that they pressed the stay application and asked for a decision on their objection to be postponed until the outcome of foreign proceedings was known was not in any way inconsistent with maintaining their objection[25].

50 On the other hand, I note that there are numerous decisions where waiver has been held to arise. See for example Kingston Tyre Agency Pty Ltd v Blackmore[26] and Pico Holdings Inc v Dominion Capital Pty Ltd[27]. In Pico the defendant was refused leave to withdraw an unconditional appearance it alleged it had entered in ignorance of the fact that the appropriate jurisdiction was that of California, Bongiorno J holding that the defendant had defended an application for a Mareva injunction as though it was not pressing the jurisdiction objection.

51 In my view, in the circumstances Steuler has not waived its right to rely on Protec's failure to serve the writ and object to the extension application. No such intention is manifested by its action in filing and prosecuting the cross summons. I do not overlook that in neither the initial summons of Steuler nor the two amended summonses was it stated that they were to be taken as being without prejudice to Steuler's objection to the Court's jurisdiction, or that the applications were in any way conditional upon Protec first being granted an extension of time in which to serve the writ. In that sense, counsel for Protec was correct to say that what Steuler pressed was a "principal application". However, counsel for Steuler did ultimately suggest in oral argument that Steuler's application was conditional - "effectively we're saying ... in the event that Protec is allowed to renew the writ, then there are these other difficulties under Order 23". While this was the first time that Steuler expressly stated that the application was conditional - and no doubt Steuler could have put the matter beyond any doubt by informing Protec that it did not intend to waive its objection - in my view that is to take too technical a view of the situation. Regarding the matter overall it seems to me that throughout Steuler was maintaining its objection to lack of service, as its opposition to Protec's application to extend time for service was premised on the maintenance of that objection. The sense of its actions in opposing the extension application and filing its own summons, was not by the latter step to give away the right to make the former objection, but to bring both matters forward for adjudication at the one time but on the premise that the extension application be heard first.

52 In all the circumstances, I do not accept Protec's submission that Steuler has waived its objection to lack of service.

53 I turn now to consider the question of the extension of time. In my view, Protec has not established good reason for extending the time for service of the writ. The writ was filed on 30 April 2004, and the summons to extend time was not filed until 30 June 2006, which is 14 months after the original period of one year for service expired. That is a significant time delay in itself. But more importantly, I am not satisfied that Protec has advanced any cogent reason for not serving the writ on Steuler within time. Counsel frankly conceded that, in hindsight, Protec should have filed and served a notice of contribution against Steuler in the WMC proceeding, but that ultimately Protec chose not to do so, nor did it serve the writ in the present proceeding because, in effect, it did not want to take the formal step of suing its joint venture partner, and in circumstances where Smith hoped that the dispute could be settled. I have regard to all that counsel said, and I accept that parties seeking to maintain a close business relationship may often not want to formally sue their business partner until absolutely necessary, but in my view counsel's submission rests on the premise that service of a notice of contribution, or the writ, on Steuler would have adversely affected the parties' relationship to such an extent that Protec was justified in not serving the writ.

54 In my view the premise is not established. I refer to the evidence as to Smith telling Michael Steuler that Protec intended to seek contribution from Steuler. Steuler had been aware since 2002 (and even earlier) that, as a matter of substance, Protec might seek contribution from it, so even without being served with a formal proceeding, Steuler was aware of Protec's position on contribution. Serving a notice of contribution, or the writ that was later filed, on Steuler would not have changed the substance of the situation as between Protec and Steuler.

55 I consider that the decision not to serve the notice of contribution, in the first instance, was, as Smith frankly deposed in his affidavit, for the tactical reason of keeping pressure on WMC in the sense that Protec hoped to obtain more favourable terms of settlement against WMC in consideration of Protec exercising its power to bring Steuler into the WMC proceeding directly. But Smith's affidavit also shows that he was keenly aware of the need to protect Protec's position and it seems that instead of filing and serving the notice of contribution, he filed the writ in the present proceeding on 30 April 2004. The writ had to be served by 30 April 2005 unless an extension of time was sought, but there has been no real explanation as to why the writ was not served and why an extension of time was not sought, apart from the mere assertion that Protec was relying on Steuler to help mount the common defence to WMC's counterclaim, and that serving the writ would have damaged this relationship.

56 As I have already mentioned in the context of the decision not to serve a notice of contribution, I do not accept that Protec's concern about damaging its relationship with Steuler was a valid reason for not serving the writ. If anything, serving the writ on Steuler would have been consistent with Protec's position previously advised to Steuler, namely that it would seek contribution in the event that it was liable to WMC. In this regard it should be recalled that the very purpose of the notice of contribution and the writ was to enable Protec to seek contribution from Steuler in the event that Protec was liable to WMC. If Protec and Steuler were successful in defending the WMC claim, Protec would presumably have no need or right to seek contribution from Steuler. Thus, the notice of contribution and writ were always a fallback position for Protec, which would only be necessary if the common defence to the WMC proceeding failed. It was an ordinary, prudent step to have taken, in case Protec was found liable to WMC. In these circumstances, it is not to the point for Protec to say that it did not serve the contribution proceeding on Steuler because it was cooperating with Steuler on a common defence. The very point of the contribution proceeding was the possibility that the common defence might not save Protec from liability to WMC.

57 Even assuming that Protec was justified in not serving the writ until the point at which it realised that it may not have a common defence with Stueler, in my view Protec should have served the writ shortly after receiving the report of Dr Glueck in April 2005, as the report indicated at the very least the possibility that Steuler might be backing away from the aromatic solvent defence.

58 In all the circumstances, Protec has not demonstrated good reason to extend the period for service of the writ and for these reasons its summons will be dismissed.

59 In these circumstances, it is not strictly necessary to deal with Steuler's summons, as the application to dismiss the proceeding was only relevant in the event that Protec was granted leave to serve the writ. Nevertheless, lest I be incorrect about Protec's application, I would deal with Steuler's application as follows.

60 In my view, the relief sought in the summons should be refused. I have regard to everything that counsel for Steuler said, but ultimately I am not satisfied that the proceeding brought by Protec is so lacking in tenability as to allow an order summarily dismissing it under r 23.01. Assuming, without deciding, that (a) the relevant contracting party was Protec (NSW); (b) that the alleged statements were made to either Protec (NSW) or Protec; (c) that in making such statements Steuler breached a duty of care to either Protec (NSW) or Protec; and (d) that the statements induced Protec (NSW) to enter into the relevant contracts, in my view it cannot be said that Protec's claim that it has suffered loss by reason of these premises is bound in law to fail.

61 The need for caution before exercising the power to summarily dismiss a plaintiff's claim was expressed by Kirby P in Wickstead v Browne[28] as follows:

Plaintiff v Defendant

At a glance

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