Re APCH Ltd (in liquidation) (No 3) [2014] VSC 456 (17 September 2014)

2 In this matter I have before me several summonses filed in the 2014 proceeding and in proceeding number 1341 of 2013 (the 2013 proceeding). In the 2013 proceeding, the plaintiff brings proceedings against the defendants on what is called the management rights claim. In the 2014 proceeding, the plaintiff applied for orders under r 5.12 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) (the Rules) extending the time for service of the writ and general endorsement in the 2013 proceeding. The reason for the two proceedings is that in the 2014 proceeding the liquidators also sought directions as to whether they were justified in having the plaintiff seek to extend the time for service.

3 In the 2014 proceeding I extended the time for service of the writ and general endorsement in the 2013 proceeding by orders on 17 March 2014 until 19 April 2014, by orders on 15 April 2014 until 30 June 2014 and by orders on 26 June 2014 until 21 July 2014.

4 The plaintiff in the 2013 proceeding is Australian Property Custodian Holdings Ltd (liquidators appointed) (receivers and managers appointed) (controllers appointed) (APCHL). Stirling Lindley Horne and Peter Vrsecky are the joint and several liquidators of the plaintiff.

5 Throughout these reasons, unless otherwise stated, 'the defendants' refers to the served defendants; the first and sixth to seventeenth defendants. The first defendant is Mr William Lewski. The seventh to fourteenth defendants are Mrs Roslyn Lewski (the wife of Mr Lewski), their two sons (Joshua and Matthew Lewski) and what are called the Lewski companies. The sixth, fifteenth and sixteenth defendants are known as the Kidder Williams Parties. The seventeenth defendant is the firm of solicitors, Madgwicks.

6 In the 2014 proceeding, the defendants seek, inter alia, orders setting aside my orders of 17 March 2014, 15 April 2014 and 26 June 2014 that extended time for service of the writ and general endorsement in the 2013 proceeding. In the 2013 proceeding, the defendants seek, inter alia, orders setting aside service of the writ and general endorsement in the 2013 proceeding.

7 Essentially, the matter before me involves a rehearing of the plaintiff's application for an extension of time for service of a writ, pursuant to r 5.12 of the Rules. The writ was filed on 19 March 2013 by the receivers and managers, Craig Shepard and Mark Korda. As mentioned, the writ was filed in respect of the plaintiff's management rights breach of duties claim against the defendants. Ferguson J had ordered on 4 April 2012 that the management rights breach of duties claim had been charged to the receivers, and that the receivers were entitled to have carriage of the claim rather than the liquidators.[2]

8 The liquidators filed an appeal in respect of the decision of Ferguson J on 4 April 2012, but settled the matter with the receivers by deed of settlement executed in late January or early February 2013. Under the deed the liquidators ceded the management rights breach of duties claim to the receivers. The deed also stated that unless the receivers gave written notice to the liquidators of their election to pursue the claim, the receivers released the claim to the liquidators. By letter dated 15 May 2013 the receivers gave written notice of their election to pursue the claim. At or about the end of February 2014, the receivers informed the liquidators that the receivers no longer intended to pursue the claim, but the receivers did not relinquish the claim or authorise the liquidators to pursue the claim. On 17 March 2014 the receivers and the liquidators reached an agreement that the liquidators would take over the carriage of the claim. On the same day, the application for extension was heard. On 19 March 2014, the receivers and the liquidators entered into a deed of variation under which the liquidators took over carriage of the claim.

9 By originating process dated 13 March 2014 the plaintiff sought an order under r 5.12 of the Rules extending the validity for service of the writ. The last day for service of the writ was 18 March 2014. The application for extension came on for hearing on 17 March 2014. On 17 March 2014, the Court was not satisfied on the material and submissions before it that it should exercise its discretion to extend time under r 5.12. In the circumstances, the Court ordered that time for service be extended to 17 April 2014, so that further material and submissions could be put before the Court in support of the application. The one month extension was given in order to preserve the subject matter of the application. That is, to preserve the plaintiff's application for extension as an 'in time' application.

10 The application again came on for hearing on 2 April 2014. The Court delivered its decision on 15 April 2014. The Court ordered that time for service be extended to 30 June 2014. On 26 June 2014 the Court granted a further extension to 21 July 2014 on the basis of a summons dated 25 June 2014 supported by affidavits sworn by Paul Buitendag of Johnson Winter & Slattery and by Mr Horne. The Court also ordered substituted service on Joshua and Matthew Lewski.

11 Subsequently, the plaintiff served the writ on the defendants. On various dates in July 2014 the defendants applied to have service of the writ set aside. The defendants applied as follows:**

(a) first defendant - by summons dated 15 July 2014, supported by an affidavit affirmed by Samuel Bond. He applied for service of the writ to be set aside, and orders under r 46.08(b) setting aside the extensions granted on 17 March 2014 and 15 April 2014;

(b) seventh to fourteenth defendants - by summons dated 15 July 2014, supported by an affidavit sworn by Andrew Joseph. They applied for service of the writ to be set aside, and orders under r 46.08(b) setting aside the extensions granted on 17 March 2014, 15 April 2014, and 26 June 2014;

(c) sixth, fifteenth and sixteenth defendants - by summons dated 22 July 2014, supported by an affidavit sworn by Cain Jackson. They applied for service of the writ to be set aside, and orders under r 46.08(b) setting aside the extensions granted on 17 March 2014 and 15 April 2014; and

(d) seventeenth defendant - by summons dated 31 July 2014, supported by an affidavit sworn by Nigel Watson. It applied for service of the writ to be set aside, and orders under r 46.08(b) setting aside the extensions granted on 17 March 2014 and 15 April 2014.

**12 On 7 August 2014 the plaintiff filed a summons seeking an order under r 5.12 of the Rules for retrospective extension of the period for service of the writ to 21 July 2014, in the event that the existing extensions are set aside.

13 In the application to set aside the extensions, the defendants do not argue that there was a material non-disclosure of a material matter by the plaintiff. Rather, they argue that on the material before it on 2 April 2014, the Court should not have granted the extension. The plaintiff's submissions on material non-disclosure need not be considered.

14 The defendants have made submissions to the Court and provided several affidavits. The plaintiff relies on its submissions made to the Court on 2 April 2014, further submissions in response to the defendants' submissions, and several affidavits.

15 Each of the defendants has agreed not to insist on compliance with r 14.02 of the Rules until such time as the Court determines the set aside applications.**

16 The defendants apply under r 46.08(b) of the Rules to set aside the extensions granted on 17 March 2014, 15 April 2014 and 26 June 2014. Rule 46.08 provides:

The Court may set aside or vary an order which affects a person where the application for the order -

(a) was made on notice to that person, but the person did not attend the hearing of the application; or

(b) was not made on notice to that person.

17 The defendants' application to set aside the extensions is a rehearing, not an appeal. The nature of the application under the court's inherent power or the rule was described in Savcor v Cathodic Protection International APS[3] by Gillard AJA (with whom Ormiston and Buchanan JJA agreed), as follows:

Because the order was made ex parte without notice to Cathodic, it had a right ex debito justitiae to approach the court and have the application reheard. The application may be brought pursuant to the inherent jurisdiction of the court. Mason J said in Taylor v Taylor:

... A jurisdiction to set aside its orders is inherent in every court unless displaced by statute.

His Honour's observations were made in the context of orders made without notice to another party. The Rules of Court also give the right to a party to apply to the court for an order to set aside an order made without notice. See r 46.08(b). If an application is made to the court pursuant to the inherent power or the rule, the court rehears the original application. In those circumstances, the general practice is to refer the matter back to the judicial officer who made the order but it is not fatal if that is not done. It is a rehearing of the whole application. However, at the rehearing the judicial officer has the benefit of submissions and any material the opposing party wishes to place before the court.

I do not accept the statement made by the Full Court of Western Australia in Bell Group NV v Aspinall where the court seemed to be of the view that an application to set aside in those circumstances could only proceed if new material evidence was placed before the court. In my opinion, the jurisdiction is much wider and gives the right to the party affected by the order to appear before the court and put submissions as to why the order should not be made on the materials which were before the judge who made the first order. It is a rehearing and the court may reach a different decision after hearing submissions. Sir John Donaldson MR in WEA Records Ltd v Visions Channel 4 Ltd wrote concerning ex parte orders:

... He [the judge] expects at a later stage to be given an opportunity to review his provisional order in the light of evidence and argument adduced by the other side and, in so doing, he is not hearing an appeal from himself and in no way feels inhibited from discharging or varying his original order.[4]

18 The plaintiff submitted that the defendants had not established any new factual material and that there was therefore no basis to review the decision. The plaintiff relied on the judgment of the Full Court in Bell Group NV v Aspinall,[5] referred to by Gillard AJA, where the Full Court recognised limitations that apply to the jurisdiction to review an ex parte order. The Full Court said that:

There is no doubt that the power to review an ex parte order exists. That is the plain wording of the rule. However, it seems to us that the power must be exercised judicially. In these circumstances a proper exercise of the power should be reserved for those cases in which it can be demonstrated that there was material non-disclosure or that, on the basis of new material, the full facts and circumstances had not been appreciated.[6]

19 The Full Court cited as authority for this limitation on the exercise of the power to review and ex parte decision the Full Court decision of the Supreme Court of New South Wales in Farrell v Delaney[7] where the Court said:

It is of course trite law to say that an order made on an ex parte application may be reconsidered or reviewed, either by the judge who made the original order, or in some cases by another judge with co-ordinate powers, but in all circumstances the application to review is not an application to merely reconsider the correctness of the original decision on the materials then placed before the judge. The application rests in every case upon the production of further materials not before the judge who heard the ex parte application and which throw a new and different light upon the situation of the parties involved.[8]

**20 This view has been rejected by our Court of Appeal in Savcor insofar as it applies to an ex parte decision to extend the period in which a writ of summons must be served and I am bound by that decision. I proceed, therefore, on the basis that in this case the parties affected by the order may put submissions as to why the order should not be made on the materials that were before the me when I made the orders sought to be set aside. I reject the plaintiff's reliance on Bell Group insofar as it applies to the applications before me in this case.

21 The plaintiff claims that the defendants have not specified the basis for seeking orders setting aside the extensions. This is misguided. The extension orders affect the defendants, and they were made without notice being given to the defendants. This is enough for the defendants to seek a rehearing under r 46.08(b).

22 The Court must now decide whether, based on the original materials and any additional material provided by the defendants and liquidators, the time for service should have been extended.**

23 Applications for an extension of validity for service of a writ are made under r 5.12 of the Rules, which provides as follows:

Duration and renewal of originating process

(1) A writ or an originating motion shall be valid for service for one year after the day it is filed.

(2) Where a writ or originating motion has not been served on a defendant, the Court may from time to time by order extend the period of validity for such period from the day of the order as the Court directs, being not more than one year from that day.

(3) An order may be made under paragraph (2) before or after expiry.

(4) The plaintiff may apply under paragraph (2) without notice to the defendant, but if the Court considers that the defendant ought to be heard, the Court shall adjourn the further hearing and direct the plaintiff to give notice to the defendant by summons or otherwise.

(5) Where an order is made under paragraph (2), the Prothonotary shall stamp any sealed copy originating process for service with the date of the order and the extended date of validity.

24 Although r 5.12(2) does not expressly require a good reason for extension, the Full Court of the Supreme Court in Ramsay v Madgwicks[9] has held that a good reason is required nevertheless. This means cases considering the requirement under the old rules to show "good reason" are relevant to the application of r 5.12(2). In Zappelli v Falkiner,[10] O'Bryan J described his task under the new rule as follows:

In exercising a discretion it is fair to observe that the new rule is less rigid in its requirements than the old rule. I ask myself the question is there good reason to extend the validity of the Writ herein, having regard to the relative hardship to the plaintiffs were an extension to be refused against the hardship to the defendants were an extension to be granted.[11]

**25 Subject to what is added below in light of the arguments on the rehearing, the principles to be applied on an application for extension under r 5.12 are set out in paragraphs [100]-[169] of the Reasons.

26 The parties relied on several additional cases on the rehearing. In Muirhead v The Uniting Church in Australia Property Trust (Q),[12] on which the plaintiff relied, the Queensland Court of Appeal allowed an appeal by the defendants and set aside the renewal of the writ. The relevant legislation required plaintiffs to show good reason to renew the claim. The good reason accepted by the District Court judge was that without renewal, the plaintiff would be denied the ability to pursue her action. The Court of Appeal said that reason alone could never constitute good reason.

27 The plaintiff in that case was suing in relation to a back injury sustained at work. She said that she was awaiting conclusive medical assessments before serving the writ. From the judgments of Pincus JA and Williams J it seems that in certain circumstances, that could have amounted to a good reason to renew. However, the Court of Appeal said due to the severe prejudice caused to the defendant by the delay (no knowledge of the claim before the expiry of the limitation period, essential witnesses no longer available, loss of medical reports relating to incidents throughout the plaintiff's employment, lessening of accurate recollection), awaiting medical reports was not a good reason for renewal.

28 The plaintiff relies on the following statement by Pincus JA:**

Authorities on rules of a similar sort were discussed by Stephen J in Van Leer Australia Pty Ltd v Palace Shipping KK [1981] HCA 11; (1981) 180 CLR 337. There Stephen J adopted statements of principle from South Australia and Canada (343, 344, 345, 346) in dealing with such an application. In summary, the views which his Honour applied were:

(1) There is a tendency to relax rigid time limits where that is legally possible and where it can be done without prejudice or injustice to other parties.

(2) The discretion may be exercised although the statutory limitation period has expired.

(3) Matters to be considered include the length of delay, the reasons for it, the conduct of the parties and the hardship or prejudice caused to the plaintiff by refusing renewal or to the defendant by granting it.

(4) There is a wide and unfettered discretion and there is "no better reason for granting relief than to see that justice is done".[13]

**29 Statements that there is a tendency to relax rigid time limits, and that seeing that justice is done is a good reason for granting an extension, must be read in light of the requirement to show a good reason for granting the extension. The cases show that good reason is not merely that no prejudice will be occasioned to the defendant if the extension is granted, or that the plaintiff will suffer more prejudice if the extension were denied than the defendant would suffer if the extension were granted. Rather, even if the defendant has been on notice of the claim since the day the writ was filed and will have no difficulty in preparing its defence, the plaintiff must nevertheless establish a good reason why the court should grant an indulgence in extending time for service.

30 The plaintiff relies on Major v Australian Sports Commission,[14] where the Supreme Court of Queensland upheld an extension order. The plaintiffs sued the Australian Sports Commission and several other defendants, in relation to suffering from anorexia nervosa while in the care of the Australian Institute of Sport. A 12 month extension had been granted, and service was effected at the end of that extended period. The good reasons relied upon by the plaintiffs for an extension were:

(a) they encountered difficulties in obtaining documents relevant to their claim, most of which were under the control of the defendants;**

(b) they encountered difficulties in arranging medical appointments and obtaining medical reports due to the nature of the condition (sufferers tend not to think that they have anything wrong with them). The plaintiffs' mother was the instigating force behind the proceedings; and

(c) delay in obtaining counsel's advice, which was necessary because of the complex nature of the claim.[15]

**31 In considering whether to set aside the extension, the approach of Mullins J was to identify all factors relevant to the exercise of the discretion as to whether or not the originating process should be renewed, assess the weight to be given to them in the circumstances and then determine whether, on balance, there was good reason to renew.[16] Factors against included that the defendants were not aware of the issue of the writ until they were served. However, the defendants knew that litigation had been threatened against them, and had engaged solicitors to deal with the plaintiffs' solicitors. Another factor against renewal was the effect of delay on the accuracy of recollections, but the weight of this factor was diminished by the defendants not taking steps to take statements from all relevant witnesses once they were alerted to the prospect of proceedings. A factor in favour of renewal was that the plaintiffs were attempting to obtain information to assist in the investigation of their claims, and at the same time negotiating with the first defendant in respect of treatment proposals and a programme for the plaintiffs that would minimise their future damages. Other factors in favour of renewal have been listed above. The fact that the plaintiffs had some prospects of success also supported renewal.[17] Her Honour also considered as a factor in favour of renewal the fact that if renewal were refused, a new writ would be outside the limitation period.[18] Mullins J held that the factors against renewal were outweighed by the factors in favour of renewal, and on balance, there was a good reason for renewal.

32 Mullins J noted that despite the overarching obligations in the Uniform Civil Procedure Rules 1999 (Qld), a plaintiff is not bound to serve an originating process on its issue, and it is a legitimate reason to defer service pending investigation of the claim, subject to the issue of prejudice caused to the defendant.[19] In that case a major consideration was that investigations were delayed due to the conduct of the defendants.

33 The plaintiff also relies on Hunter v Hanson,[20] a decision handed down after the Reasons. In Hunter, the respondent had obtained an extension of time to serve an originating process for a defamation claim. The applicant challenged the extension before the judge who granted it. The judge refused to set the extension aside. The applicant then unsuccessfully appealed to the Court of Appeal. The respondent and applicant were unhappy neighbours. The respondent had obtained an intervention order against the applicant and his wife, based on several instances of intimidating, antagonistic and harassing behaviour. The respondent filed defamation proceedings in relation to two letters sent by the applicant. The respondent did not serve the writ because he was awaiting the outcome of a Court of Appeal decision in another case. If the Court of Appeal dismissed the appeal in the other case, the respondent's action would fail. The second reason for seeking the extension was that the respondent did not wish to aggravate existing hostilities with his neighbour by serving process when he did not have a cause of action. In the appeal, those two reasons for not serving the writ on time were considered to outweigh the expeditious procedure principles stated in the civil procedure legislation. This was due to the unusual circumstances of the applicant's antagonistic behaviour.[21]

34 McColl JA, with whom MacFarlan JA agreed, said:**

...it is accepted that the court should determine the question of extending the time for service of the originating process by reference, at least, to whether the plaintiff had "good reason" for not serving the originating process within time:[22] see Buzzle, Kirk Weston; see also Kleinwort Benson Ltd v Barbrak Ltd.

Whether there is or is not good reason depends on all the circumstances of the particular case: Kleinwort Benson Ltd; Buzzle. Thus "the selection of the factors constituting or relevant to 'good reason' is a matter of discretion, as is also the relative significance to be given to the selected matters": Soper v Matsukawa per Lush J (Gray J agreeing).

...

I accept the force of Keane JA's statement which turned on the duty imposed upon a party (and I would add their legal representatives) to proceed in an expeditious way (see s 56(3) and (4), Civil Procedure Act 2005 (NSW)): see Weston. However his Honour's statement cannot be treated as an immutable proposition which militates in favour of a set side order whenever the circumstances there stated arise. As the respondent submits, that proposition is gainsaid by a number of decisions (see [52] above). Each case must depend upon the facts as Tobias JA concluded in Kirk in distinguishing IMB.[23]

**35 Hunter did not involve a rehearing, as this case does. In the appeal, the Court of Appeal was required to consider whether the judge made an error. Indeed, McColl JA, with whom MacFarlan JA agreed, adopted the principle that an applicant for leave to appeal from an interlocutory decision concerning the application of discretion on a matter of practice and procedure, is normally required to establish a clear case of material error in the decision at first instance. The Court of Appeal found that no such material error was shown. Had the Court of Appeal been conducting a rehearing, the decision may have been different, especially given that Emmett JA dissented, and MacFarlan JA agreed with McColl JA 'with some hesitation' and said that the Court should be reluctant to interfere with an interlocutory decision concerned with a matter of practice and procedure.

37 The plaintiff also relies on Agricultural and Rural Finance Pty Ltd v Kirk.[24] There, the plaintiffs obtained an order extending time for service, and subsequently served a summons on the defendants. The defendants successfully applied to set aside the extension. The Court of Appeal then reinstated the extension. In that case, the Court of Appeal was tasked with re-exercising the discretion to extend time for service, as this Court is now required to do.

38 In Kirk, the plaintiff was suing a group of 216 defendants. In August 2003, a judge had ordered by consent that the defendants in the group nominate a test case defendant, and that a test case proceed in respect of all common issues. This was done to save costs of the parties and make best use of the court's limited resources. By late 2003, the other defendants in the group were aware of the test case and agreed, subject to being served with the summons, to be bound by its determination. The plaintiff's claim against all remaining defendants was effectively stayed by the court. The plaintiff waited until the test case had been decided and then sought an extension of time for service. When the defendants were served in late 2008, there was nothing about the claim that they had not already learnt. The application for extension was made and service effected within the limitation period.

39 Given the de facto court-endorsed stay of proceedings against the remaining defendants, which arose from the consent orders, it was held that the plaintiff had not 'unilaterally arrogated to itself the equivalent of a stay of proceedings'. Further, although not served with the summons, the defendants knew they had been joined to the summons.

40 The Court noted that the plaintiffs should have pursued service even though the litigation was proceeding by way of test case. It was not pursued because service would have been pointless if the test case was lost. Tobias JA noted that although the plaintiffs should have effected service, non-service may also have favoured the defendants.[25] This is because once served the defendants begin to incur legal costs for advice and the filing of an appearance. Had they been served, and the test case then failed, they would have wasted those costs. As to prejudice to the defendants, Tobias JA accepted the principle of presumptive prejudice but did not think it carried much weight in balancing the factors the court was required to consider in re-exercising the discretion.[26] It was held that the delay in service had not caused the defendants any relevant prejudice in their defence.

41 Further to the discussion in the Reasons, in my opinion, the above cases add that a good reason for extension may be difficulty in investigating the factual basis for a claim where such difficulty arises from conduct of the defendants, or where service is delayed due to a de facto court-ordered stay.

42 In this rehearing, the Court must consider whether in all the circumstances of the case there is a good reason for extending the time for service under r 5.12 of the Rules. The Court's discretion is wide and unfettered, but is guided by the principles established by the cases.**

(b) Plaintiff's Outline of Submissions, dated 11 August 2014;

(c) Plaintiff's Outline of Submissions in Response to the First Defendant's Submissions on 12 August 2014, dated 26 August 2014;

(f) The oral evidence given by Jason Stone on 2 April 2014. Mr Stone is a partner in the liquidators' firm PKF Lawler.

44 The submissions dated 1 April 2014 were dealt with in the Reasons. In their submissions dated 11 August 2014, the plaintiff submits that the Court properly and correctly exercised its discretion in granting the extensions on 15 April 2014 and 26 June 2014. Further, they submit that several of the defendants were aware of the management rights breach of duties claim before the extensions were granted, and that this is a factor in favour of granting an extension. They submit that none of the defendants has alleged that he/she/it suffers or will suffer prejudice by reason of the extensions.

(a) Outline of Submissions on behalf of Mr Lewski, dated August 2014;

(b) Outline of Submissions on behalf of Madgwicks, dated 26 August 2014;

(c) Outline of Submissions of the Seventh to Fourteenth Defendants, dated 26 August 2014; and

(d) Affidavits of solicitors acting for the defendants.

46 Mr Lewski, relying on Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq),[27] submits that:

Although the discretion to extend time is "wholly discretionary", the discretion is not at large and must be exercised in the context of, and by reference to the statute by which it is conferred (and any other statute that is relevant to the legislative context) and in accordance with principle developed by judicial decisions.

**47 He submits that the relevant legislative context includes the Civil Procedure Act 2010 (Vic) and the overarching purpose and overarching obligations.

48 Another factor to be considered in the exercise of the Court's discretion in circumstances where an extension would deprive the defendant of a limitations defence, Mr Lewski submits, is the policy behind the limitation statute. He relies on Arthur Andersen where Ipp JA stated that where delay in service occurs after the expiration of the limitations period, the plaintiff should be especially diligent in pursuing prompt service.

49 Mr Lewski submits that the first step is to ask whether reasonable efforts were made to serve the defendants within the period of validity for service. He says that the answer to that question is no, which leads to the second step of considering whether there is otherwise good reason for extending the period for service.

50 Mr Lewski contends that the following do not amount to good reasons for extending the period for service:**

(a) a deliberate decision to refrain from serving the writ;

(b) the mere wish of a party to await the outcome of other proceedings; and

(c) inability to pursue an apparently worthwhile action if extension is refused.

**51 He argues that the plaintiff (which is APCHL rather than the receivers or liquidators) deliberately chose to prosecute the listing fee proceeding first, and planned to utilise the proceeds of that action to fund the management rights breach of duty claim. Mr Lewski submits that extensions on account of good reason are available to relieve the plaintiff from injustice arising otherwise than from the plaintiff's own deliberate acts. He contends that where the writ is issued just prior to expiration of the limitations period and there is then delay in service, the prejudice to the defendant is obvious and the defendant need not adduce additional specific evidence of prejudice.

52 Mr Lewski submits that the following factors militate against granting an extension:**

(a) the plaintiff have other proceedings on foot in relation to the management rights restructure, in which the writs remain valid for service. Those proceedings were initiated in case the receivers did not proceed with the management rights breach of duties claim;

(b) the receivers did not identify any further investigations carried out after 28 March 2013. The receivers in effect sat on their hands;

(c) to the extent that it is relevant to look at the separate positions of the receivers and plaintiff (and Mr Lewski says it is not):

(i) the appointers of the receivers had the means to fund the investigations but not the inclination. The receivers deliberately chose to prosecute the listing fee proceeding first, and to use the proceeds from that to fund the management rights breach of duties claim;

(ii) the receivers and liquidators reached a commercial accommodation in February 2013 by which they agreed that the receivers would have a first right of refusal to conduct the management rights breach of duties claim. Between 19 March 2013 and 6 February 2014 the liquidators made no enquiries of the receivers as to the steps the receivers were taking to progress the prosecution;

(iii) the liquidators were likely entitled to seek information as to the receivers' intentions and were able to take on the action if the receivers chose not to prosecute it;

(iv) the liquidators may have had a commercial interest in the proceeds of the action, and failure to agree on how to share the proceeds was a reason for delaying resolution of ownership of the proceeding;

(v) there is no evidence that during 2013 or early 2014 the liquidators sought funding from the unsecured creditors, or made enquiries of their capacity to fund the action; and

(d) APCHL, the receivers and liquidators have all acted in contravention of the Civil Procedure Act, because the action was commenced without a proper basis certificate, and after commencing the action, APCHL and the receivers did not comply with the overarching purpose to facilitate the just, efficient and timely resolution of issues in dispute.

53 In the ex parte application before me the plaintiff relies on four good reasons why the period for service of the writ should be extended as follows:[28]

(1) The liquidators only had control of the management rights breach of duties claim since 17 March 2014;

(3) The plaintiff is pursuing another management rights claim against at least one of the defendants in the management rights breach of duties claim, and service in that proceeding must only be effected by 1 December 2014; and

(4) The management rights breach of duties claim is substantial and ought to be prudently pursued for the benefit of the unsecured creditors.

**54 In relation to the plaintiff's' first 'good reason', Mr Lewski submits that if APCHL or its creditors have suffered loss by virtue of the management rights breach of duties claim, then that is a matter for which the controllers are answerable.

55 In relation to the second good reason, he submits that the receivers' claim that they lacked funding is without substance, given the resources of the receivers' appointers. Rather, the reason was that the receivers wished to use the proceeds of the listing fee proceeding to fund the management rights breach of duties claim. So, the receivers were unwilling, not unable, to fund the claim.

56 In relation to the third good reason, he submits that there is no authority to support the proposition that the existence of other proceedings involving some of the same parties, is a good reason for extension. Further, there is no evidence that the management rights voidable transaction claim is being pursued. Mr Lewski contends that the existence of other proceedings, still valid for service, is a reason why an extension should not be granted.

57 In their submissions dated 11 August 2014 the plaintiff argued that Madgwicks was precluded from challenging the validity of service because it had filed an unconditional appearance. Madgwicks submitted that it is not precluded from applying to set aside the extensions and service of the writ, due to filing an unconditional appearance.

58 In the hearing before me on 27 August 2014, Mr Wyles for the plaintiff withdrew that argument.[29] Accordingly, Madgwicks' unconditional appearance is no longer in issue in this application, and Madgwicks will be treated as though it filed a conditional appearance.

59 Madgwicks argues that there was no good reason to extend on 17 March 2014, and seeks to have that order set aside. The plaintiff's failure to be prepared to argue the case was not a good reason. The plaintiff knew from 28 February 2014 that they were to have sole carriage of the management rights breach of duties claim, and they knew of the approaching expiry of the writ.

60 As to the plaintiff's first good reason (change in controllers of APCHL), Madgwicks says that the change in control does not explain the delay in service or why the liquidators did not assume control earlier. It contends that the receivers deliberately decided not to serve the writ because they were awaiting the outcome (and proceeds) of the listing fee claim.

61 As to the plaintiff's second reason, lack of funding, Madgwicks argues that a deliberate choice not to serve a writ while seeking funding may be a factor weighing against extension.

62 In relation to the third reason, related proceedings still being valid for service, Madgwicks argues that it is not a good reason to hold up proceedings to await some future development. Further, a later date for service in a related claim is not ordinarily a good reason.

63 The plaintiff's fourth reason was that the claim is substantial. Madgwicks argues there is no evidence as to the potential benefit of the claim to the unsecured creditors, and the expiration of a limitation period does not of itself constitute a good reason for extension. Rather, it may be a factor against the exercise of the discretion.

64 The seventh to fourteenth defendants submit that they did not know of the management rights breach of duties proceeding as at 15 April 2014. They claim they were not aware of the proceeding until they were served with the writ in late June or early July.**

**65 On the nature of the rehearing, the plaintiff submits that the defendants will not get very far if they do not dispute facts, but only put submissions before the Court to convince it to do something different. The plaintiff relies on Bell Group.[30] The plaintiff argue that the defendants have not shown that any facts relied on by the Court in granting the extensions were erroneous, or that the Court's findings were glaringly improbable or contrary to compelling inferences.

66 I do not accept these submissions by the plaintiff. As explained above, this is a rehearing de novo in which the plaintiff must again convince the Court to exercise its discretion in favour of granting an extension. The defendants need not show any error on the part of the Court when granting the extensions.

67 On the relevance of the Civil Procedure Act, the plaintiff relies on a passage of the judgement of McColl JA in Hunter, quoted above, where her Honour said each case must be determined on its own facts. I agree with McColl JA, and repeat paragraph [132] of the Reasons. The overarching purpose and overarching obligations in the Civil Procedure Act may not be raised as reasons not to grant an extension every time a plaintiff seeks an extension. The relevance of the Civil Procedure Act will vary in each case. This is discussed in further detail below.

68 In response to Mr Lewski's submission that given the delay in service occurred after the expiry of the limitation period, the plaintiff should have been especially diligent in pursuing prompt service, the plaintiff says that the limitation issue is relevant to the Court's discretion, but does not place any additional burden on the plaintiff. In this regard, the plaintiff relies on Victa Ltd v Johnson,[31] and Hunter.[32] I accept this submission, and refer to paragraph [104] of the Reasons. Further, the plaintiff says that had they not obtained the extensions, they could have taken other steps in an effort to preserve their rights against the defendants.

69 The plaintiff submits that the defendants have not pointed to any specific prejudice resulting from the extension of the writ. Rather, they invoke the general prejudice presumed to flow from the lapse of time. I accept this and discuss the matter further below.

70 The plaintiff also responds to the defendants' argument that the failure to serve the writ on time is the failure of APCHL, the plaintiff, regardless of whether it was the receivers or liquidators who had control of the matter. The plaintiff says that the roles of receivers and liquidators are different. The plaintiff accepts that it is trite law that a receiver has power to take possession of, collect and get in the charged property, and for that purpose take legal proceedings in the name of the company, and that this power continues after a commencement of winding up. This issue is discussed further below.

71 Finally, the plaintiff submits that there is a tendency to relax rigid time limits where that is legally possible and where it can be done without prejudice or injustice to other parties, and that good reason should be given a broad and liberal interpretation. As discussed in paragraph [29] above, although the general justice of the case is considered when deciding whether to grant an extension, a plaintiff must still establish a good reason for granting an extension.**

**72 The affidavit of Mr Horne sworn 13 March 2014 was outlined in paragraphs [9]-[77] in the Reasons. I repeat those paragraphs. The affidavit of Mr Shepard sworn 1 April 2014 was outlined in paragraphs [78]-[91] in the Reasons. I repeat those paragraphs. The oral evidence of Mr Stone was outlined in paragraphs [92]-[96] in the Reasons. I repeat those paragraphs.

73 Mr Horne swore his second affidavit on 25 June 2014 in support of the plaintiff's application for a further extension of time for service. Cornwall Stodart no longer act for the liquidators. They acted for the plaintiff in the initial application for extension. The plaintiff has changed solicitors as it was a condition of obtaining funding for the proceeding that new solicitors be retained. The plaintiff is now represented by Johnson Winter & Slattery.

74 Mr Horne deposed to the difficult and protracted negotiations between the liquidators and the litigation funders, LCM Litigation Fund Pty Ltd (LCM). Mr Horne deposed that after a lengthy exchange of drafts and amendments, the liquidators and LCM executed the funding agreement in counterparts on 3 and 6 June 2014 respectively. Under the funding agreement, LCM was only obliged to fund the costs of the proceeding and adverse costs once LCM provided a notice in accordance with the funding agreement. Further, pursuant to the funding agreement, LCM would only provide a notice once a written opinion as to the prospects of the claim had been given by an independent senior counsel. Mr Horne deposed that the funding agreement is commercially sensitive, confidential, and subject to legal professional privilege.

75 With LCM's approval, Mr Horne instructed the liquidators' solicitors to brief senior counsel. The brief was sent to Peter Murdoch QC on 4 June 2014, who informed the solicitors on 10 June 2014 that he would not be able to provide advice on an urgent basis. New senior counsel, Garry Bigmore QC, was briefed on 11 June 2014. Mr Bigmore was requested to give a short advice prior to a more substantive advice, given the impending expiry of the writ's time for service. Mr Bigmore provided the short advice on 20 June 2014.

76 On 19 June 2014, LCM confirmed that it would cover the costs of service (and potential adverse costs exposure) limited to Mr Lewski, his wife and sons, and related entities. This was done before receipt of the advice, in order to expedite the process of service. Mr Horne deposed that service was effected on:**

(a) Mr and Mrs Lewski (first and twelfth defendants) on 22 June 2014;

(b) The seventh to eleventh defendants by letters dated 23 June 2014; and

(c) Madgwicks (seventeenth defendant) by letter dated 24 June 2014, after LCM confirmed it would cover the costs of service and potential adverse costs exposure in respect of Madgwicks.

**77 Mr Horne deposed that LCM informed him that it would confirm its position in respect of the second to sixth defendants, and fifteenth and sixteenth defendants by 27 June 2014. Mr Horne deposed that he was concerned that if LCM gave confirmation for service in respect of any or all of those defendants, there would not be sufficient time in which to effect service. Mr Horne deposed that he had no intention of proceeding with the claims against those defendants unless LCM approved and provided funding and indemnity for adverse costs in respect of those defendants.

78 As to the thirteenth and fourteenth defendants, Mr Lewski's sons, Mr Horne deposed that he received an email on 23 June 2014 which provided further information on their possible location. Process servers had been instructed to serve process on the thirteenth and fourteenth defendants, but service had not been achieved at the time of swearing the affidavit.

79 On the basis of that affidavit, the plaintiff was granted a further extension to 21 July 2014, and obtained orders for substituted service in respect of the thirteenth and fourteenth defendants.

80 Mr Horne swore his third affidavit on 7 August 2014, in opposition to the defendants' applications for orders under r 46.08(b) setting aside the extensions, and in support of a conditional counter application under r 5.12 to retrospectively extend the time for service to 21 July 2014.

81 Mr Horne deposes that he was first made aware that the management rights breach of duties claim would be released to the liquidators on 28 February 2014. The liquidation was without funds from April 2012, and remained without funds when the claim reverted to the liquidators on 19 March 2014. The terms of release of the claim were not finally agreed until 19 March 2014. He deposes that when the receivers agreed to relinquish the claim they did not provide any analysis or consideration of the claim, or a draft statement of claim save for the general indorsement of claim dated 19 March 2013. I note that a writ may be served with a general indorsement of claim instead of a statement of claim.

82 As a result, the claim was not in a position to be pursued immediately, and the liquidation was without funds to prepare instructions to their lawyers to urgently draft a statement of claim. Mr Horne deposes that so as not to lose the benefit of a valuable asset, he instructed Cornwall Stodart Lawyers to seek an extension of time for service of the writ.

83 Between 2 April 2014 and 3 June 2014 Mr Horne engaged Johnson Winter & Slattery to negotiate a funding agreement with LCM.

84 The thirteenth and fourteenth defendants were served by letters dated 27 June 2014 in accordance with the order for substituted service. The fifteenth defendant was served on 27 June 2014. The sixth and sixteenth defendants were served by letter dated 18 July 2014. The sixth and sixteenth defendants were also served by personal service on 20 and 21 July 2014 respectively. The plaintiff does not press its claims against the second to fifth defendants.

(a) seventh to twelfth defendants (Mrs Lewski, and the Lewski companies) - notice of conditional appearance dated 1 July 2014;

(b) first defendant (Mr Lewski) - notice of conditional appearance dated 2 July 2014;

(c) seventeenth defendant (Madgwicks) - notice of appearance dated 4 July 2014;

(d) sixth, fifteenth and sixteenth defendants (the Kidder Williams parties) - notice of conditional appearance dated 8 July 2014; and

(e) thirteenth and fourteenth defendants (Joshua and Matthew Lewski) - notice of conditional appearance dated 9 July 2014.

86 As indicated above, the defendants have sought to have the extensions set aside. To this end they served summonses supported by affidavits. Mr Horne responds to the affidavits in support of the defendants' summonses as follows:

(a) Mr Lewski and the sixth defendant would have been aware of the management rights breach of duties claim from 29 June 2011 at the latest, when the liquidators' solicitors of the time sent letters of demand to Mr Lewski and other current and former directors. The liquidators sent further letters of demand after 29 June 2011;

(b) The seventh defendant would have been aware of the claim from 12 March 2012 at the latest, when a letter of demand was sent to it;

(c) The remaining corporate defendants have Mr Lewski as a director or sole director;

(d) Various other documents that were sent to corporate defendants referred to the claim;

(e) Mr Horne was at the Daytree Proceeding mediation on 27 November 2013. The liquidators are party to that proceeding. Mr Horne could not have proposed that the mediation include the management rights breach of duties claim, because he did not have carriage of the claim. Mr Horne doubts that a joint mediation would have been helpful because the writ had not been served and a statement of claim had not been drafted or served. Further, the two claims were separate proceedings. In the Daytree Proceeding APCHL is defendant in its personal capacity, whereas in the management rights breach of duties claim APCHL is the plaintiff in its capacity as responsible entity of the Prime Trust;

(f) Mr Bond was aware of the claim since about 27 March 2013, and at that time he was acting for Mrs Lewski and the Lewski sons, Joshua and Matthew;

(g) The liquidators had conducted sufficient investigations resulting in the letters of demand being sent on 9 March 2012, but then they lost carriage of the claim on 4 April 2012. It was always Mr Horne's intention to continue his investigations into the claim after the demands were sent on 9 March 2012 and to issue and serve the claim once those investigations were complete;

(h) When the liquidators attained carriage of the claim on 19 March 2014, they had already obtained an extension of time for service;

(i) The receivers had carriage of the listing fee proceeding, and the liquidators have not been privy to or involved with correspondence between the parties to that proceeding;

(j) Mr Jackson, who acts for the sixth, fifteenth and sixteenth defendants, states that he has been aware of the claim since about 27 March 2013. Further, he has been in possession of a copy of the writ and indorsement since about 16 July 2013;

(k) The fifteenth and seventeenth defendants were sent copies of reports in 2011 which referred to the claim, and said that various advisers, including the fifteenth and seventeenth defendants, were likely to have claims made against them. They also received the annual report dated 22 February 2013 which stated that if the receivers did not proceed with the claim it would be released to the liquidators;

(l) Mr Horne was not aware of any discussions that the claim and the listing fee proceeding would be mediated together, except that he was aware that the receivers believed that some defendants in the listing fee proceeding may have demanded releases in respect of the claim as part of a settlement; and

(m) Mr Watson, who acts for the seventeenth defendant Madgwicks, has been in possession of the writ and indorsement since about 10 May 2013.

**87 Mr Bond, who acts for Mr Lewski, affirmed two affidavits. In his first affidavit Mr Bond deposes that on 24 July 2012 the solicitors acting for the receivers notified him that the receivers were investigating a cause of action, which is now the management rights breach of duties claim. Mr Lewski provided an affidavit and exhibits to the receivers' solicitors on or about 3 August 2012, in order to assist with the examinations in relation to the management rights claims. On 4 March 2013 the receivers requested further information from Mr Lewski, to be provided by 15 March 2013. Mr Bond deposes that this request did not foreshadow the receivers' intention to file a writ in respect of the claim. Mr Bond responded to the request for further information on 19 March 2013 by saying Mr Lewski would assist the receivers in their investigations and provide certain documents. Mr Bond deposes that on 19 March 2013 he was unaware that the plaintiff had filed the writ, and that had he known, Mr Lewski would not have offered to continue to assist the receivers or provide documents.

88 Mr Bond deposes that on or about 27 March 2013 he became aware of a Herald Sun article of the previous day which reported that Mr Lewski, among others, was being sued in the management rights breach of duties claim. On 27 March 2013 Mr Bond wrote to the solicitors for the receivers asking for confirmation that the proceeding had been filed. The receivers' solicitors provided confirmation on 9 April 2013. On 10 April 2013 Mr Bond asked the receivers' solicitors when they would serve the writ, and an explanation as to why the writ had not been served. The receivers' solicitors responded on 15 April 2013 saying that the receivers would comply with the Rules. Mr Bond deposes that until service was effected, neither he nor Mr Lewski received further communication from the plaintiff, the receivers, the liquidators or their solicitors in relation to the claim.

89 Mr Bond deposes that he is not aware of any further investigations carried out by the receivers or liquidators in relation to the claim, despite the receivers deposing that they intended to conduct further investigations and serve the writ thereafter. Mr Bond deposes to the toing and froing between the solicitors representing the parties to the listing fee proceeding in the period 15 May 2013 to 28 March 2014. He says that at no time in this correspondence was it ever proposed that the management rights breach of duties claim be mediated at the same time as the listing fee proceeding.

90 In his second affidavit Mr Bond deposes that on 17 October 2013 the liquidators commenced the management rights voidable transaction claim. On 5 April 2012 the Daytree Proceeding was commenced against APCHL. Mr Lewski and his wife are among the plaintiffs in the Daytree Proceeding. The liquidators filed a defence and counterclaim to the Daytree Proceeding on 25 May 2012, but the counterclaim was subsequently discontinued. Orders for mediation of the Daytree Proceeding were made on 9 August 2013.

91 Mr Joseph acts for the seventh to fourteenth defendants, and has sworn two affidavits. Mr Joseph deposes that his corporate clients (seventh to eleventh defendants) were not made aware of the management rights breach of duties proceeding until they were served (my emphasis). Mr Joseph deposes that he understands that Mr Lewski, the first defendant, is a director of each of the corporate clients, and became aware of the issue of the writ at an earlier point in time. Mr Joseph does not depose to his corporate clients' knowledge of the claim.

92 Mr Joseph says that Mrs Lewski, the twelfth defendant, became aware of the management rights breach of duties proceeding only upon service of the writ on her. He deposes that the thirteenth and fourteenth defendants became aware of the management rights breach of duties proceeding in late June or early July 2014 (my emphasis). Mr Joseph does not depose to the twelfth to fourteenth defendants' knowledge of the claim.

93 Mr Joseph deposes that he attended a mediation in relation to the Daytree Proceeding. He has no recollection of any proposals by the receivers' solicitors that the management rights breach of duties claim be mediated at the same time as the Daytree Proceeding, or that the receivers should attend the Daytree Proceeding mediation. Finally, Mr Joseph deposes that the receivers did not attend the Daytree Proceeding mediation.

94 Mr Watson acts for the seventeenth defendant, Madgwicks, in the management rights breach of duties claim and the listing fee proceeding. Mr Watson deposes that he was provided with a copy of the writ in the management rights breach of duties claim on 10 May 2013, by Madgwicks' insurer. On 19 June 2014 the liquidators' firm informed Madgwicks that it would be served prior to 30 June 2014.

95 Mr Watson deposes that until 10 May 2013 neither he nor Madgwicks was contacted by the receivers or liquidators in relation to the management rights breach of duties claim. He further deposes, in response to Mr Shepard's affidavit, that he has not been involved in or aware of any discussions that the listing fee proceeding and management rights breach of duties claim would be mediated together.

96 Mr Jackson acts for the sixth, fifteenth and sixteenth defendants. In his affidavit affirmed 22 July 2014, Mr Jackson deposes that on or around 27 March 2013 he read the Herald Sun article that reported the commencement of the claim against 17 defendants. Mr Jackson deposes that the article did not identify his clients as defendants. On 16 July 2013 Mr Jackson arranged for the Court's file to be inspected in order to identify the proceedings referred to in the Herald Sun article. Mr Jackson obtained a copy of the writ through this process. Mr Jackson deposes that until service, neither he nor his clients were contacted by the receivers or liquidators in relation to the management rights breach of duties claim.

97 In response to Mr Shepard's affidavit, Mr Jackson deposes that he has not been involved in or made aware of any discussions that the claim would be mediated with the listing fee proceeding.**

Relationship between company, liquidator and receiver

**98 The defendants argue that for the purposes of an application for extension, no distinction should be drawn between the conduct of the receivers and that of the liquidators, as both were acting for the company, which is the plaintiff in the management rights breach of duties proceedings. They say that the conduct of the receivers should be taken into account when deciding whether to grant an extension. The defendants could not point the Court to any cases on extensions where there had been a change in control of the company. The defendants submit that looking at the conduct of the receivers, this case is an example of service not being effected due to the mere wish of the plaintiff, and that, therefore, there is no good reason for extension.

99 In oral submissions Mr Masters also argued that as a matter of policy, plaintiffs should not be able to circumvent the one year period for service simply because control of litigation has passed from one person to another. If such circumvention were possible, so it was argued, plaintiffs would have an incentive to cede control of claims, and cede control as close as possible to the expiry of the period for service.

100 The plaintiff argues that the receivers had only a limited agency in respect of the plaintiff, and once a company goes into liquidation, a receiver's agency becomes even more limited. After commencement of winding up, the receiver can no longer incur liabilities on behalf of the company. The plaintiff argues that to attribute to APCHL the conduct of the receivers in prosecuting the claim would be to 'in fact allow the receiver to make the company liable for debts which the receiver might incur in conducting the business',[33] which a receiver may not do after winding up has commenced.

101 The plaintiff says that where the receiver is not responsible to the unsecured creditors, it cannot be that the receivers' conduct operates on or impairs the conduct of the liquidators. The plaintiff questioned whether 'agency' was the correct word to describe the relationship between the receivers and the company. It was submitted on behalf of the plaintiff that in this case the liquidators could not access the chose in action, and could not dictate how the receivers dealt with the chose in action. The plaintiff says that the conduct of the receivers is not determinative of the application for extension. They accept, however, that the conduct is relevant.

102 The plaintiff refutes the defendants' argument that by the deed of settlement the liquidators took an interest in the conduct of the proceeding. I have not placed any weight on this argument by the defendants, so it is unnecessary to deal with the plaintiff's arguments on this point. Nor have I given any weight to the defendants' argument that the liquidators have a safety net in the management rights voidable transaction claim.

103 I accept the plaintiff's submission that the receivers' 'agency' is a limited one, and is further limited after the company goes into liquidation. However, if a matter falls within the limited agency of the receiver, and the receiver deals with an asset of the company within the terms of the agency, it appears irrelevant whether the receiver's agency is narrower than the liquidator's. In my opinion, the question that must be answered is whether a receiver's actions fall within the boundaries of their agency, and whether the company is thereby bound. If, as the plaintiff argues, the receivers' failure to serve the writ is akin to incurring a debt, it falls outside the receivers' limited agency and the company is not bound.

104 The plaintiff relies on the High Court's decision in Sheahan v Carrier Air Conditioning Pty Ltd.[34] There, the majority (Dawson, Gaudron and Gummow JJ) said:**

It is common ground that, upon the making of the winding-up order in respect of TOC, this agency ceased. That is to say, the receiver "could no longer pledge the credit of the company". Moreover, even when the agency was operative, it was one with "some peculiar incidents", the "control exercisable by the company as principal [being] circumscribed by the duty which the receiver owes to the debenture holders". In Visbord v FCT, Williams J, after observing that the receiver as agent of the mortgagor "occupies a very special position" continued:

He is appointed to and may be removed from office by the mortgagee. He can demand and recover all the income of which he is appointed receiver by action distress or otherwise in the name either of the mortgagor (M Wheeler & Co v Warren), or of the mortgagee. If the mortgagor has attorned tenant to the mortgagee, the receiver can therefore sue the mortgagor for the rent in the name of the mortgagee. He can only insure or do necessary or proper repairs to the mortgaged property to the extent to which he is directed to insure or do such repairs by the mortgagee in writing. The mortgagor is unable to instruct him to do anything contrary to his statutory duties or to dismiss him. If the mortgagor dies the appointment of the receiver is not terminated (Re Hale; Lilley v Foad). The compulsory winding up of a company operates as a dismissal of all the company's servants and agents. The company cannot authorise the receiver to do any act which it is unable to do itself, so that it cannot empower the receiver, after the date of the liquidation, to carry on its business so as to create debts provable against the unmortgaged assets of the company (Gosling v Gaskell; Thomas v Todd); but the receiver can still continue to exercise his powers in the name of the company although the company is no longer liable for any debts which he may incur in doing so (Gough's Garages Ltd v Pugsley). See also Re Courts (Emergency Powers) Act 1939 and S Brown & Son (General Warehousemen) Ltd; Re Wood's Application.[35]

**105 In Elcos Australia Pty Ltd v James Hardie Building Services and Technology Ltd,[36] the plaintiff company was in liquidation, and a receiver had been appointed. The mortgage debenture under which the receiver was appointed stated that the receiver had 'power to take, defend, compromise or appeal and to give any undertaking or security and incur costs and expenses relating to any proceedings in the name of the [company] or otherwise, including proceedings for the winding-up of the [company] by a court'.

106 Chesterman J considered whether the receiver would bind the company if he mediated a dispute with the defendant and reached a compromise. It was held that under the mortgage debenture, the receiver had such power. That power survived the appointment of liquidators. After the appointment of liquidators, however, the receiver could no longer 'act as agent for the company for the purpose of incurring debts, which would be a liability of the company and therefore diminish the land available to pay the unsecured creditors'. His Honour also said:**

With that exception, it seems to me that the receiver may continue as before, though being personally liable for the debts he incurs in the conduct of the receivership or of the business of the company in receivership. Those debts will become part of the secured debt which can be paid from the proceeds of the realisation of the secured property.

107 His Honour considered several cases on the effect of the appointment of liquidators on a receiver's authority, then said:

That seems to be a complete answer to the question about the receiver's authority. He has power to deal with the property comprised in the mortgage debenture, including the chose in action the subject of the suit against the defendant. A disposition of that property by compromise of the action is within the express power conferred by the mortgagor, the company, or the receiver. This authority survives the appointment of a liquidator. Any disposition of the property by the receiver is binding on the company.

108 In Kelaw Pty Ltd v Catco Developments Pty Ltd,[37] Brownie J considered a receiver's continuing power to conduct litigation in the name of and as agent for the company after the company goes into liquidation. His Honour held that after commencement of winding up, the receiver can continue to prosecute proceedings, but cannot do so in such a way as to create liabilities provable in the winding up.[38] Further, Brownie J said:

I conclude that if, upon the proper construction of the relevant debenture, a receiver has power to conduct litigation in the name of and as agent for the company, then upon the making of a winding up order, the receiver might continue the conduct of the litigation in the name of the company, but no longer as agent for the company. In the circumstances of the present case, it seems plain that the receiver does so as agent for the mortgagee.[39]

**109 Brownie J was there considering which party had responsibility for the costs of the litigation. It may be that in terms of incurring costs in prosecuting proceedings a receiver does so as agent for the mortgagee, and the unsecured creditors cannot be liable for those costs. Brownie J should not be taken to mean that in terms of the way the cause of action is disposed of, the receiver's actions are not binding on the company. Rather, in terms of the disposal of the claim, the receiver's actions bind the company and the unsecured creditors. In terms of incurring costs in pursuing the claim, the receiver's actions do not bind the company or the unsecured creditors.

110 In Wily v Commonwealth of Australia,[40] the Full Federal Court (Sheppard, Lindgren and Sackville JJ) held that a winding up order ends a receiver's authority to incur debts or liabilities provable in the winding up, but that it does not affect the receiver's authority as agent of the company to dispose of company property. Lindgren J, with whom Sheppard J was in substantial agreement, said:**

It must now be considered how, if at all, the intervention of a winding up affects a chargee's equitable interest and, in particular, how it affects the power of a receiver and manager to dispose of property of the company. The learned trial judge addressed this question at some length by reference to authorities and academic commentary. The view which has come to be accepted is that a winding-up order brings about a termination of a receiver's authority to act as agent of the company only to a limited extent: his authority to incur debts or liabilities provable in the winding up is at an end but not his authority, as the company's agent, to dispose of company property: Visbord v FCT (Visbord) (Williams J); Sowman v David Samuel Trust Ltd (Goulding J_) Re Obie Pty Ltd (No 2)_ Thomas J) Re Leslie Homes (Aust) Pty Ltd, McLelland J) Dale Park Pty Ltd (rec & mgr apptd) v Roads Corp (Gobbo J). Statements in some of the cases that liquidation terminates the authority of a receiver and manager as agent of the company to carry on its business should be treated with caution and as being directed against a carrying on of the company's business "so as to create debts provable against the unmortgaged assets of the company": Visbord, at 382.

It is important to distinguish between the proprietary and in personam aspects of the relationship between the receiver and manager on the one hand and the liquidator and unsecured creditors on the other hand. Whatever the nature of any obligation owed by the former to the latter and whatever the concomitant rights of the latter against the former, they do not detract from the position that the proprietary interest of the chargee lies outside the winding up (Re Landmark Corp Ltd (in liq) and the Companies Act (Street J)) and that the bundle of rights constituting the chargee's interest remains intact...[41]

111 In Graeme Webb Investments Pty Ltd v St George Partnership Banking Ltd,[42] the New South Wales Court of Appeal considered the nature of a receiver's agency. In that case, a receiver was appointed to a company that later went into liquidation. The instrument by which the receiver was appointed stated that upon a winding up, to the extent that the receiver's agency in respect of the company was restricted, the receiver would become the agent of the secured creditor. Fitzgerald JA, with whom Sheller JA and Ipp AJA agreed, said:

Compulsory winding-up affects both the powers of a receiver and the agency relationship between the receiver and the corporation in receivership. After compulsory winding-up, a receiver continues to have powers, including powers which can be exercised in the name of the corporation in receivership and liquidation. Although a receiver cannot incur liabilities which are enforceable against the company in liquidation or its assets, recent decisions in this country: eg Re Leslie Homes (Aust) Pty Ltd; Dale Park Pty Ltd (rec and mgr apptd) v Roads Corp; New Imperial Pty Ltd v Beveridge: see also South Australian Management Corp v Sheahan, including decisions of this court Atkins v Mercantile Credits Ltd and the Full Federal Court, Wiley as liq of United Telecasters Sydney Ltd (recs and mgrs apptd) (in liq) v Commonwealth establish that a receiver's powers after compulsory liquidation include power to carry on the company's business incidentally to the beneficial disposal of its assets and that a receiver continues to have a limited agency on behalf of the company in so far as such an agency is compatible with the statutory winding-up scheme.

Mr McDonald carried on AGTA's business incidentally to the beneficial disposal of its assets, and, in particular, in an effort to sell its business as a "going concern". That was consistent with his continuing as AGTA's agent in accordance with its charge to St George. GWI's argument that Mr McDonald ceased to be AGTA's agent and became St George's agent for the purpose of realising AGTA's assets and continuing its business for that purpose when its compulsory winding up commenced should be rejected.[43]

**112 In Perpetual Trustees Australia Ltd v Bank of Western Australia,[44] the company leased premises from Perpetual. Receivers were appointed to the company, and they purported to surrender a gaming machine licence held in respect of the leased premises. Perpetual argued that the bank's charge (pursuant to which the receivers were appointed) did not attach to the licence, and sought declarations accordingly. The receivers wished to surrender the licence because that enhanced their ability to dispose of the gaming machines.[45] Muir J dismissed Perpetual's application.

113 His Honour held that the gaming machine licence was a right included in the definition of secured property. Under the charge, the receivers were authorised to manage the secured property, and to exercise the rights, powers and remedies of the company in connection with the secured property. Accordingly, the receivers were authorised not only to realise the secured property, but also to surrender secured property. His Honour said 'dealings with the licence, such as its surrender, constitute the exercise of a right "in connection with" the secured property'.[46]

114 His Honour then considered whether, if the receivers had power to surrender the licence, that power ceased on the commencement of the voluntary winding up. Muir J discussed the authorities that say that upon winding up a receiver loses their power to bind the company by creating liabilities in the winding up, but retains their ability as agent to deal with secured property. Perpetual relied on these cases to say that upon winding up, the receivers' only power was to realise secured property. In response, Muir J said:**

But where the authorities state that a receiver has power to deal with charged property in particular circumstances they do so because that is the issue for determination or a necessary step in the process of reasoning supporting the ultimate conclusion. In none of the authorities relied on by the applicant was the court required to determine the point under consideration.

The respective rights and obligations of the chargee (and any receivers appointed by it) on the one hand, and of the chargor, on the other, are to be found in the instrument of charge, unless supplemented, diminished or qualified by statute. Those rights and obligations survive the winding-up except to the extent that the Corporations Act provides to the contrary. I can see no basis for concluding that on a winding up all such rights, which do not concern directly the disposition of the property charged, cease to have effect. Such a conclusion would be inconsistent with the entitlement of the secured creditor to "stand outside the winding-up and to rely upon his security".

The conclusion would be inconsistent also with the authorities which acknowledge the ability of receivers, after winding up, to exercise powers conferred on them by the instrument of charge including the power to carry on the company's business and to conduct legal proceedings (but not so as to incur liabilities enforceable against the company).[47]

**115 His Honour accepted that the receivers' argument that surrendering the licence was part of a process of creating an asset, cash, which would be property subject to the charge once it came into existence. Surrendering the licence fell within the receivers' authority, even after the commencement of the winding up.

116 As Ferguson J found, the relevant charges gave the chargee broad rights in respect of the secured property once there is a default, and also the right to perform, observe, carry out, enforce, vary, or rescind any deeds, contracts, obligations, or rights of APCHL.[48] The relevant terms of the charge under which the receivers were appointed were not tendered in evidence in this rehearing.

117 The cases establish that a receiver's agency in respect of the company is limited, and that upon winding up, the agency is even more limited. When the company is in liquidation, the receiver is unable to incur debts on the company's behalf, but he/she may dispose of charged property and exercise other powers under the relevant instrument so long as those powers are not inconsistent with the Corporations Act 2001 (Cth). Ferguson J held that under the relevant charge the receivers were entitled to run the management rights breach of duties claim. If they settled that claim, such action would bind the plaintiff. If they litigated it to completion and won, that action would bind the plaintiff. If they litigated it to completion and lost, that action would bind the plaintiff. If they surrendered the claim as part of an overall strategy to convert the asset into cash, the company would be bound. So too, in my opinion, if the receivers failed to file the writ before the expiration of the limitation period, the plaintiff would be bound.

118 In this case the receivers sat on their hands and failed to serve the writ within the prescribed time for service. The day after the last day for service, carriage of the proceeding was formally handed over to the liquidators. The receivers' conduct in allowing the writ to go unserved binds the company. It is more akin to disposing of an asset than to incurring a debt. In my opinion, the plaintiff's argument that failing to serve the writ is analogous to incurring a debt (which the receivers cannot do) fails.

119 This left the plaintiff and liquidators with an unserved writ that carried with it the deficiencies, if any, that arose by reason of the conduct of the receivers whilst they had control of the cause of action and the writ that sought to pursue that cause of action.

120 Had the receivers come to Court on 17 March 2014 to seek an extension, instead of the liquidators, they would have been met with arguments that their reasons for not serving the writ were all deliberate choices; a Ramsay type argument. After the claim changed hands, the receivers' conduct is still relevant in determining whether the plaintiff has good cause for an extension of time for service so that, in my opinion, the arguments that could have been raised against the plaintiff when under the control of the receivers may be made against the plaintiff when under the control of the liquidators.

121 This is not to say that there are not circumstances where a change in control of the company may amount to a good reason for an extension to be granted. For instance, a good reason may be that towards the end of the period for service, an appellate court held that the cause of action belonged in fact to the liquidators, and that the receivers should never have had carriage of the proceeding. If this were the case, the company may not be bound by the actions of the receiver, with the effect that the company was for most of the service period without a proper agent to prosecute the proceedings. This is not the case here, however.**

Civil Procedure Act

**122 The defendants relied on the Civil Procedure Act and the overarching obligations and overarching purpose. Before setting out the provisions of the Civil Procedure Act, it must be noted that despite the overarching purpose and overarching obligations, parties remain entitled to file a writ on the last day of the limitation period, and to apply for an extension of time to serve the writ on the basis of a good reason. Depending on the reasons for the delay in service, the overarching purpose and obligations may be a factor weighing for or against extension or a neutral factor in the balancing process.

123 The overarching purpose is set out in s 7 of the Act in the following terms:**

(1) The overarching purpose of this Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.

(2) Without limiting how the overarching purpose is achieved, it may be achieved by -

(a) the determination of the proceeding by the court;

(b) agreement between the parties;

(c) any appropriate dispute resolution process -

(i) agreed to by the parties; or

(ii) ordered by the court.

124 There are several overarching obligations, including:

18. Overarching obligation - requirement of proper basis

A person to whom the overarching obligations apply must not make any claim or make a response to any claim in a civil proceeding that -

(a) is frivolous; or

(b) is vexatious; or

(c) is an abuse of process; or

(d) does not, on the factual and legal material available to the person at the time of making the claim or responding to the claim, as the case requires, have a proper basis.

19. Overarching obligation to only take steps to resolve or determine dispute

For the purpose of avoiding undue delay and expense, a person to whom the overarching obligations apply must not take any step in connection with any claim or response to any claim in a civil proceeding unless the person reasonably believes that the step is necessary to facilitate the resolution or determination of the proceeding.

22. Overarching obligation to use reasonable endeavours to resolve dispute

A person to whom the overarching obligations apply must use reasonable endeavours to resolve a dispute by agreement between the persons in dispute, including, if appropriate, by appropriate dispute resolution, unless -

(a) it is not in the interests of justice to do so; or

(b) the dispute is of such a nature that only judicial determination is appropriate.

23. Overarching obligation to narrow the issues in dispute

If a person to whom the overarching obligations apply cannot resolve a dispute wholly by agreement, the person must use reasonable endeavours to -

(a) resolve by agreement any issues in dispute which can be resolved in that way; and

(b) narrow the scope of the remaining issues in dispute -

unless -

(c) it is not in the interests of justice to do so; or

(d) the dispute is of such a nature that only judicial determination is appropriate.

24. Overarching obligation to ensure costs are reasonable and proportionate

A person to whom the overarching obligations apply must use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the civil proceeding are reasonable and proportionate to -

(a) the complexity or importance of the issues in dispute; and

(b) the amount in dispute.

25. Overarching obligation to minimise delay

For the purpose of ensuring the prompt conduct of a civil proceeding, a person to whom the overarching obligations apply must use reasonable endeavours in connection with the civil proceeding to -

(a) act promptly; and

(b) minimise delay.

**125 Mandie JA said in Ebner v Clayton Utz (a firm)[49] that the overarching purpose, and I add overarching obligations, cut both ways. This is supported by McColl JA in Hunter, quoted above, where her Honour said that each case must depend on its facts.

126 In this case delay in service is inconsistent with s 25 of the Civil Procedure Act. The Civil Procedure Act overarching obligation is therefore a factor against granting the extension.

127 On the other hand, Mr Shepard has given sworn evidence that he was initially hopeful that the claim would be able to be mediated along with the listing fee proceeding. He deposed that this was another reason for delay in service. Mr Shepard deposed that he considered this was the strategy that was most likely to achieve the maximum overall return in respect of the two claims. He says that mediation of the listing fee proceeding was delayed due to delays in the handing down of judgment in the ASIC proceeding. Since hand down of that judgment, the parties were unable to schedule a date for mediation of the listing fee proceeding before expiry of the time for service of the management rights breach of duties claim. Mr Shepard says that delays in mediating the listing fee proceeding caused delays in prosecution of the management rights breach of duties claim.

128 The defendants have not challenged Mr Shepard's sworn evidence. They could have called him for cross examination but chose not to. Instead, they rely on their solicitors' evidence to the effect that they were not aware of the receivers' strategy to mediate the proceedings together. As the mediation of the listing fee proceeding never occurred in the valid period for service of the management rights breach of duties writ, it is not unreasonable to accept that the receivers did not disclose this strategy to the defendants. Failure to disclose the strategy to the defendants does not necessarily imply that the receivers did not in fact wish to mediate the two claims together. In the circumstances, I am unwilling to reject Mr Shepard's evidence that the receivers chose to delay service of the writ due to delays in mediating the listing fee proceeding.

129 Delaying service in the hope that the claim would be resolved at mediation is in compliance with ss 22, 23 and possibly 24 of the Civil Procedure Act, and may weigh in favour of granting an extension. I accept that mediation may be assisted by the serving of a writ, because service of the writ may encourage the other party to come to the negotiating table. But it also results in the defendants incurring costs in engaging solicitors for advice and the preparation of notices of appearance. Aiming to save costs in the dispute resolution process is consistent with the overarching obligations.

130 Another reason identified by the receivers for delaying service was that the receivers wished to further investigate the claim. If when filing the writ the receivers did not, on the factual and legal material available to them, have a proper basis for making the claim, they would have been in breach of s 18 of the Civil Procedure Act. Subject to the effect of s 44 of the Civil Procedure Act, that would be a factor weighing against granting an extension of the writ. In this case, however, the defendants have not alleged that the receivers did not have a proper basis for filing the writ. Rather, the defendants point to the failure of the receivers to file a proper basis certificate at the time of filing the writ. Under s 42 of the Civil Procedure Act solicitors are required to file a proper basis certificate at the time of filing the writ. Failure to do so does not necessarily mean the receivers did not have a proper basis for filing the writ. In this case, in my opinion the absence of a proper basis certificate does not weigh against granting the extension.

131 Under s 41, parties are obliged to certify that they have read and understood the overarching obligations and the paramount duty. The receivers were required to file an overarching obligations certificate when filing the writ, but they failed to do so.

132 Section 44 of the Civil Procedure Act provides:**

Urgent filing of documents and certification

(1) Despite the requirements of this Part, if as a matter of urgency a document is required to be filed in a civil proceeding, a party to the proceeding or a legal practitioner acting for or on behalf of a party to the proceeding may file the document without complying with the applicable certification provision of this Part.

Examples

A document needs to be filed to comply with a limitation period which is about to expire and it is not possible for a party to the proceeding to give certification before the time limit expires. Other examples include applications for freezing orders or for search orders and urgent interlocutory applications.

(2) If subsection (1) applies, the person must file the relevant certification in compliance with the relevant section as soon as practicable after filing the document.

**133 This case resembles the first example given for s 44(1). Further, s 45 has the effect that the proceeding continues despite any failure to meet the certification requirement. However, a court may take into account failure to meet the certification requirements when making orders about the procedural obligations of parties, and in making other orders it considers appropriate.

134 In my opinion, mere failure to file certification documents does not itself amount to a factor against granting an extension. Parties may fail to file the certificate, but then go on to fulfil the substantive overarching obligations nevertheless. In this case, the receivers arguably did not comply with some overarching obligations, but their conduct is consistent with other overarching obligations.

135 When arguing the Civil Procedure Act point the defendants relied on IMB Group Pty Ltd (in liq) v ACCC.[50] In that case an extension of time for service was refused, and that decision was affirmed by the Queensland Court of Appeal, which placed particular emphasis on the overarching purpose and obligations. There, the ACCC brought proceedings against IMB in the Federal Court, and IMB initiated proceedings against ACCC in the Supreme Court. IMB alleged, among other things, that the ACCC's proceedings against it were unmeritorious and malicious. IMB planned to delay service of the writ until after the Federal Court decision was handed down, and then until the Full Court handed down its decision, and then until it had completed its investigations. Keane JA (with whom McMurdo P and Cullinane JA agreed) held that the decision not to serve was deliberate. His Honour said that 'a party who deliberately chooses to refrain from serving a claim will rarely be able to show good reason to warrant the renewal of the claim'.[51]

136 The Court of Appeal held that the Federal Court proceedings did not prevent IMB from formulating its case and serving process on the ACCC. The ACCC did not do anything or fail to do anything that constrained IMB to decide not to serve the claim. The Court also rejected IMB's claim that impecuniosity prevented it from serving process, as the costs involved in service would have been minimal. Finally, Keane JA said, in a much cited passage:**

...whether or not the plaintiffs should have been advised to serve their claim and then apply for appropriate directions from the court, what the plaintiffs were plainly not entitled to do was unilaterally to arrogate to themselves the benefit of a stay of proceedings in the Supreme Court in defiance of r 5(3) of the UCPR.[52]

137 In Queensland, the rules allowing for extension of time for service and the rules concerning overarching purpose and obligation are all contained in the Uniform Civil Procedure Rules 1999 (Qld). In Victoria, the extension rule is in the Rules, but the overarching purpose and obligations are in the Civil Procedure Act. This may mean that in Queensland, there is a closer connection between the granting of an extension, and the overarching purpose/obligations. Keane JA said:

Importantly for the present case, it must be borne in mind that the discretion [to grant an extension] conferred by r. 24(2) of the UCPR falls to be exercised in a context which includes r. 5 [overarching purpose] which states the philosophy of the UCPR...[53]

**138 For this reason, and the fact that IMB did not have as one of its reasons for delay in service the desire to mediate the case, the IMB case may be distinguished in respect of the weight it placed on the overarching purpose/obligations.

139 On balance, I find that in this case the overarching purpose and obligations are a neutral consideration in weighing the factors for and against granting the extension.**

**140 The essential factor weighing against the grant of an extension is prejudice to the defendant. Delay in service itself amounts to prejudice.[54] This is presumptive prejudice. In this rehearing the defendants have not given evidence of any actual or particular prejudice. Indeed, the defendants have not given any evidence at all. They have relied instead upon affidavits prepared by their solicitors, and on their submissions.

141 In the absence of any evidence of actual or particular prejudice, I find that the defendants will only suffer presumptive prejudice, in the event the extensions are granted. This prejudice is mitigated by the fact that the delay between the period for service expiring and service of the writ was three to four months, and that the first defendant, Mr Lewski, was likely on notice of the claim from late July 2012. Further, the following of the defendants were aware of the management rights breach of duties proceeding from:**

(a) in respect of the first defendant, 9 April 2013 at the latest;

(b) in respect of the seventeenth defendant, 10 May 2013; and

(c) in respect of the sixteenth defendant, 16 July 2013.

**142 Those defendants all discovered the existence of the writ during the original 12 month period for service of the writ.

143 Solicitors for Mrs Lewski, the Lewski sons, and the seventh to eleventh defendants depose that their clients did not know of the proceeding until they were served. In circumstances where Mr Lewski was likely on notice of the management rights breach of duties claim from July 2012 and of the proceeding from 9 April 2013, and where solicitors for Mrs Lewski and the Lewski sons gave evidence as to their clients' knowledge of the proceeding but did not give evidence on their clients' knowledge of the claim, it is open to the Court to find, as I do, that Mrs Lewski and her sons have not satisfied me that they were unaware of the claim before they were served.[55] This finding does not favour their application for the extensions to be set aside. The same conclusion may be drawn in respect of the seventh to eleventh defendants (the Lewski companies).

144 The defendants are entitled to rely upon the presumptive prejudice caused by the delay, albeit mitigated as discussed above, as a factor weighing against granting the extensions.**

Good reason and the circumstances of the case

145 The plaintiff must show that there is good reason in all the circumstances for extending the period for service of the writ. As set out earlier, the plaintiff relies on four good reasons:

(1) The liquidators only had control of the management rights breach of duties claim since 17 March 2014;

(3) The liquidators are pursuing another management rights claim against at least one of the defendants in the management rights breach of duties claim, and service in that proceeding must only be effected by 1 December 2014; and

(4) The management rights breach of duties claim is substantial and ought to be prudently pursued for the benefit of the unsecured creditors.

**146 The plaintiff has not argued as a good reason for extension any public interest in the proceedings going ahead. It has not argued that is case has strong merits and that that is a good reason for extension. If it had, the comments of Keane JA in IMB would have been relevant.[56]

147 I also note that the defendants have not delayed in seeking orders setting aside the extensions.

148 As noted above, the conduct of the receivers is also relevant. The receivers filed the writ to preserve the cause of action and ensure it did not become statute barred. I have accepted that one of the receivers' reasons for delaying service was that they hoped to mediate the management rights proceeding with the listing fee proceeding. Other reasons were that that the receivers wished to conduct further investigations and seek funding before serving.

149 The defendants argue that the true reason for the receivers failing to serve the writ was that they wished to conduct the listing fee proceeding and then use the proceeds of that action to fund the management rights breach of duties claim. The defendants rely on certain communications between the receivers and liquidators to establish this. However, the defendants did not challenge Mr Shepard's sworn evidence, so it is difficult to impute such reasoning to the receivers when they have given sworn evidence as to their reasons for not serving, which do not include the defendants' alleged reason.

150 Even without accepting the defendants' submissions on the receivers' alleged reasons for not serving, I find that the receivers' reasons for not serving do not provide the Court with a good reason for extending the time for service.

151 All the receivers' reasons for not serving involved deliberate choices by the receivers not to serve. The receivers did not give any evidence that 12 months was insufficient time to investigate the claim, or that the defendants controlled access to the relevant information and impeded the receivers' access to that information. The receivers did not give any evidence that the defendants induced or otherwise contributed to the delay. The decision to try to mediate the claim is laudable, but it was not made clear to the Court why the receivers could not have served the claim and then sought a stay on account of attempts to mediate the dispute.

152 As to funding, the receivers' appointers chose not to fund the action. About six months after filing the writ, the receivers sought funding elsewhere. Delaying service while waiting for litigation funders to agree to fund a proceeding is not in this case a good reason to extend time. In this regard I follow the case of Arthur Andersen and Noitaroproc Pty Ltd (in liq) v Price Waterhouse (a firm),[57] and in particular, the comment of Ipp JA in Arthur Andersen that "to do nothing about service while awaiting a decision from a litigation funder as to whether or not to provide the necessary funds" is not a good reason for an extension.[58]

153 I accept that from late February 2014 to 19 March 2014 there were negotiations between the receivers and the liquidators as to handing over control of the claim. But control over the claim in that period was not in limbo. The receivers had control during the period of negotiations. The liquidators, aware that the period for service was soon to expire, did not request the receivers to serve. Instead, they chose not to request the receivers to serve, to apply for an extension, and to rest the fate of service of the claim on the decision of litigation funders.

154 In my opinion, the plaintiff has not advanced a good reason for extension, after taking into account that their application was also hampered by the receivers' lack of a good reason for not serving.

155 Turning to the circumstances of the case, I find that if the extension is granted, the defendants will only suffer presumptive prejudice. This presumptive prejudice is mitigated by the level of the defendants' knowledge of the claim and the writ. Nevertheless it is a factor weighing against the granting of an extension.

156 As indicated above, I also find that the Civil Procedure Act is a neutral factor in this case. Further, the fact that the plaintiff will be barred from bringing the claim if the extension is refused is a neutral factor, because if the extension is granted, the defendants will suffer the corresponding prejudice of being denied a limitations defence. The fact that the claim is substantial is also a neutral factor, as the rules of procedure apply to all claims, large or small.**

**157 In granting the extension on 15 April 2014, significant weight was placed on the invidious position of the liquidators. That is, the fact that the liquidators have only had control of the proceeding formally since 19 March 2014, the day after the last day for valid service of the writ. The Court did not consider the defendants' argument that the claim was impaired by the receivers' conduct, and that the Court should pay close attention to the reasons for the receivers' failure to serve the writ. This is because the application for extension was made ex parte.

158 With the benefit of argument from both sides as to the relationship between receiver, liquidator and company, the position is understood differently. The liquidators' position is indeed invidious, however, the plaintiff in these proceedings is the company. The receivers had a limited agency with respect to the company, and disposing of the company's asset in the management rights breach of duties claim fell within that agency. When in control of that asset the receivers sat on their hands and chose deliberately not to serve so that they could seek funding, await the mediation of the listing fee proceeding, and conduct further investigations. The receivers failed to serve the writ within the valid time for service, and this is not due to any conduct on the part of the defendants. Accordingly, I find that there is no good reason for an extension, and the extensions granted on 17 March 2014, 15 April 2014 and 26 June 2014 should be set aside. This means the liquidators' conditional counter-application fails.

159 This outcome may be thought to be unreasonable for several reasons, including that the plaintiff obtained an extension, finalised investigations and effected service, only to have that extension set aside. Further, the plaintiff is likely statute barred from instituting a fresh proceeding. However, the words of Keane JA in IMB are apt here:**

There is, however, no reason, as a matter of public interest, to accord the claim by these plaintiffs against this defendant to recover monetary compensation a position of privilege over other categories of litigation. It is a fundamental aspect of the rule of law that all those who come before the courts are treated equally. The rules of procedure...of the UCPR, apply equally to all parties to proceedings.[59]

**160 The Rules provide a time for service and the receivers and liquidators failed to cause the plaintiff to serve process in that time. Where there is good reason, the Court may grant an extension of time for service. There are many authorities on the exercise of the discretion to extend time for service. It is a jurisdiction where there is broad discretion, but the authorities do provide some consistent principles, one being that the mere wish of a party not to serve process will rarely be a good reason for extension.

161 Here, the receivers deliberately chose not to serve the writ, and did so without good reason. The liquidators were on notice from late February 2014 that they may be taking over the carriage of the proceeding. The receivers had prepared a general indorsement, which along with the writ, could have been served. The liquidators also chose not to serve. They could have served the writ then applied to the Court for a stay, but they did not.

162 As the defendants' application for the three extensions to be set aside has been successful, the last day for service of the management rights breach of duties claim was 18 March 2014. The plaintiff did not effect service by 18 March 2014. If the plaintiff could have satisfied the Court that had the Court refused the application for extension on 17 March 2014, the plaintiff would have served process before 19 March 2014, then there may have been grounds for not setting aside the extensions and service of the writ. As it is Mr Horne says that he had no intention of proceeding with the claims against the second to sixth defendants and fifteenth and sixteenth defendants unless LCM had agreed to pay for the costs of service and any adverse costs consequences arising from service. There is no evidence before the court that plaintiff would have served the other defendants before LCM approved funding or that LCM had agreed to such funding before 19 March 2014.**

**163 I order that the orders of 17 March 2014, 15 April 2014 and 26 June 2014 in the 2014 proceeding extending time for service of the writ in the 2013 proceeding be set aside. I also order that service of the writ upon the first, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth, fifteenth, sixteenth and seventeenth defendants in the 2013 proceeding be set aside.

164 I direct that the plaintiff bring in minutes of orders giving effect to this judgement for the consideration of the Court. I will hear the parties on costs.**

[1] See Re APCH Ltd (in liquidation) [2014] VSC 190.

[2] See APCHL v Capital Finance Australia Ltd [2012] VSC 124.

[3] [2005] VSCA 213; (2005) 12 VR 639 (Gillard AJA with whom Ormiston and Buchanan agreed) (Savcor).

[4] Savcor, [20]-[21] (citations omitted).

[5] (1998) 19 WAR 561 (Bell Group).

[7] (1952) 52 SR NSW 236.

[8] Ibid, 238 (Street CJ, Owen and Dwyer JJ).

[9] [1989] VicRp 1; [1989] VR 1 (Ramsay).

[10] (Unreported, Supreme Court of Victoria, O'Bryan J, 21 September 1987).

[12] [1999] QCA 513.

[14] [2001] QSC 320.

[20] [2014] NSWCA 263 (Hunter).

[22] I note that in Victoria, the good reason must be for extending the period for service, rather than for the failure to serve on time.

[23] Hunter, [59]-[60], [63] (citations omitted).

[24] [2011] NSWCA 67; (2011) 82 ACSR 390 (Kirk).

[27] [2009] NSWCA 104 (Arthur Andersen).

[31] (1975) 10 SASR 496, 504.

[36] (Unreported, Supreme Court of Queensland, Chesterman J, 19 October 1998).

[37] (1989) 15 NSWLR 587.

[40] (1996) 66 FCR 206.

[42] [2001] NSWCA 93; (2001) 38 ACSR 282.

[43] Ibid, [57]-[58] (citations omitted).

[44] (2004) 50 ACSR 34.

[47] Ibid, [34]-[36] (emphasis added).

[48] APCHL v Capital Finance Australia Ltd [2012] VSC 124, [19].

[49] [2012] VSCA 56; (2012) 36 VR 25, 30.

[50] [2006] QCA 407; [2007] 1 Qd R 148 (IMB).

[55] Blatch v Archer [1774] EngR 2; (1774) 1 Cowp 63 at 65 [98 ER 969 at 970]; ASIC v Hellicar (2012) 247 CLR 345 per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ at 350, per Heydon J at 391-392; Swain v Waverely Municipal Council [2005] HCA 4; (2004) 220 CLR 517 per Gleeson CJ at 525-526.

[57] (Unreported, Supreme Court of Victoria, Byrne J, 26 March 1997).