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[2005] VSCA 213
Court of Appeal (Vic)
2005-08-29
ORMISTON and BUCHANAN, JJ.A. and, GILLARD, A.J.A.
Original judgment source is linked above.
COURTS - Practice and Procedure - Writ - Extension of time for service - Order made by Master - Alleged misrepresentation and lack of candour in supporting affidavit - Whether order and service of writ should be set aside - Effect of entry of unconditional appearance and subsequent delay - Relevance of non-expiry of limitation periods at time of extension order - Factors affecting discretion to set aside.
1 In this appeal I have had the benefit of reading the judgment to be delivered by Gillard, A.J.A. and, for the careful and detailed reasons he gives, I would allow the appeal and make the orders he proposes. I would add only these few observations.
2 The task before the learned judge was by no means easy, for the affidavit (see para.[48] of the judgment of Gillard, A.J.A.) was in no way comprehensive in its description of the relevant surrounding circumstances. If there had been any question that the affidavit was designed deliberately to misinform the Master on the application for extension of time within which to serve the writ, then the outcome of this appeal might well have been different. I would not, therefore, wish to imply by the present decision that those responsible for putting forward affidavits seeking such extensions of time should be any less candid than has been previously expected. The Court has a power and a duty to bring to an end proceedings which involve a deliberate abuse of its process. If it had been shown that there was an intention to defeat the relevant principal limitation periods, then the outcome would almost certainly have been different.
3 Secondly, it is preferable that a defendant entitled to object to service "out of time" should do so promptly, ordinarily before it is taken to accept the Court's jurisdiction by entering an appearance. This does not mean that fraud or the like cannot be the basis of a later application to set aside service of the writ, more particularly if it is not discovered until later. In general, however, it is desirable that practitioners acting for defendants seemingly served out of time should make prompt enquiries before entering an appearance, in particular by reading any supporting affidavit. It should not be difficult to compare the date of the writ and its apparent service and, if that period exceeds the ordinary time prescribed by the rules, then it is the practitioner's duty to make enquiries and to seek instructions from the client as to whether this is the kind of point which the client wishes to take. Whatever was the reason in the present case, relevant prejudice resulted from the
action being allowed to take its normal course for a not insignificant period.
4 These important matters are but a number of factors which were relevant to the proper determination of the respondent's application, bearing in mind that plaintiffs are ordinarily entitled to submit for decision according to law and the due course of procedure any claim which they honestly believe they can make out.[1]
6 This is an appeal from orders made by a judge of the Trial Division who, on application by the first defendant, ordered that an order made by a Master extending the period of validity of a writ be discharged. The judge also ordered that service of the writ on the first defendant be set aside and that its costs of the proceeding, including the costs of the application, be paid by the plaintiff. The plaintiff appeals those orders.
7 I propose to briefly summarise the background, and state, in chronological form the relevant facts.
Background Facts
8 The plaintiff, Savcor Pty Ltd ("Savcor") carried on the business of construction engineering. In July 1995, it entered into a contract with Roads Corporation to carry out works to the Phillip Island bridge at San Remo. The works included the design, supply and installation of a cathodic protection system to the piers of the bridge. The first defendant, Cathodic Protection International APS ("Cathodic") is a Danish company. It designed and supplied the system pursuant to a number of agreements with Savcor entered into during the period 23 August 1995 to 4 October 1996. The system involves, inter alia, the application of a protective electric current to the steel reinforcement in the bridge, thereby minimising the effect of rust of the bridge. Savcor and Cathodic had a commercial relationship which went back to September 1991. Problems arose during the course of the works, mainly due to the failure of the protection system, resulting in delays. Savcor made a delay claim on Roads Corporation which was rejected and the dispute was referred to arbitration. Roads Corporation served a counterclaim seeking damages for delay. It alleged that the protection system design and system itself were defective.
9 Savcor approached Dr Paul Chess, who was the managing director and sole employee of Cathodic in August 1998 to give evidence for it in the arbitration. Dr Chess was retained as an expert witness who was paid his expenses and fees for his services as a witness. He provided information and technical assistance concerning the protection system. During the following year he provided a witness statement which went through some 11 drafts. He spent time considering the drafts, often in consultation with Savcor's lawyers. On 22 October 1999, witness statements were filed in the arbitration and it seems most likely one of them was a statement of Dr Chess. Central to the issues in the arbitration was the suitability of the Cathodic protection system and whether it was defective. It could not have been lost on Dr Chess that his system was under the microscope and success in the arbitration depended upon proof of the suitability and soundness of his system. If fault was to be found against Savcor in the arbitration some of it would be laid at the door of Cathodic. Dr Chess could not have failed to understand this when providing information for, and settling, his witness statement.
10 In September 2000, Savcor's solicitors enquired of Dr Chess his availability to attend an expert witnesses' conclave in December 2000. He agreed to attend the conclave which was to take place in the first two weeks of December 2000. As things transpired it did not take place.
11 On 6 December 1999, Savcor issued a writ in this Court against Cathodic which contained a general endorsement seeking damages for breaches of contract, negligence and misleading and deceptive conduct. The writ was valid for service for one year. See Rule 5.12(1) of the Rules of Court. The writ was not served. Application was made to a Master on 5 December 2000 pursuant to Rule 5.12(2) to extend the period of validity. The application was made ex parte. This is the usual procedure - see Rule 5.12(4), but the Master may require the plaintiff to give notice to the defendant. The Master did not. The application was granted extending the time to serve the writ to 29 June 2001. Cathodic and Dr Chess were unaware of the existence of the writ, the application to extend its validity and the order made. The writ was served on Cathodic in Denmark on 29 June 2001. Cathodic applied to set aside the ex parte order on the ground that Savcor had failed to place all relevant material before the Master and hence was in breach of its obligation of good faith to the Court. The application was made by summons dated 26 April 2002, by which time Cathodic's conditional appearance had become unconditional.
Facts Concerning Applications
12 The important relevant facts can be chronologically summarised as follows -
application made ex parte to Master for order extending period of validity of writ for service. Order made extending the time to 29 June 2001.
date for meeting of experts involved in arbitration to discuss and hopefully agree on issues. Dr Chess was to attend. Conclave did not take place.
Savcor served copy of writ on Cathodic in Denmark. Translated into Danish. Copy of Master's order attached to writ.
Cathodic contacted its insurance brokers and the insurer engaged a Melbourne firm of solicitors, Peter Black and Associates, specialising in insurance work to act on behalf of Cathodic.
Savcor solicitors filed a conditional appearance.
Solicitors advised Dr Chess there was no basis for attacking the service of the writ.
Savcor's solicitors wrote to Dr Chess seeking his assistance in the arbitration process, the latter's solicitors objected to the direct contact and observed in their letter that Savcor had not revealed to Cathodic the existence of the writ whilst seeking Dr Chess's assistance in the arbitration.
Cathodic's solicitors sought to amend a proposed timetable for interlocutory steps in the proceeding which were agreed.
Savcor issued another writ against three other defendants including Roads Corporation. (No. 8081/2001)
Cathodic's solicitors ceased to act and the firm Ponte Earle Harrick solicitors was engaged to act on its behalf.
Cathodic's solicitors sought extension of the interlocutory timetable.
Cathodic's solicitors wrote to Savcor's solicitors alleging writ was invalid as being contrary to a 1991 agreement between the parties.
Byrne, J. in Building List consolidated the two proceedings, namely, the proceeding against Cathodic and the new proceeding. (No. 8081 of 2001) His Honour gave directions in respect of the interlocutory steps.
Savcor delivered a 163 page statement of claim drafted and settled by senior and junior counsel.
Cathodic's solicitors sought opportunity to inspect and take copies of documents referred to in statement of claim.
Cathodic solicitors delivered request for further and better particulars of Statement of Claim in the consolidated proceeding.
Savcor's solicitors confirmed appointment to inspect documents.
At request of Cathodic's solicitors, Savcor's solicitors provided certain documents referred to in statement of claim.
Cathodic's solicitors wrote stating experiencing difficulties preparing defence within time frame.
Cathodic's solicitors delivered its defence to the statement of claim.
Savcor's solicitors served further and better particulars.
Savcor's solicitors served request for further particulars of Cathodic's defence.
Cathodic's solicitors searched the Court file and formed the opinion that the order made by the Master had been obtained as a result of non-disclosure and/or misrepresentation.
Cathodic's solicitors informed Savcor's solicitors that an application would be made to set aside the Master's order extending validity of writ.
Cathodic filed a summons seeking to discharge the order.
Judge published reasons holding that the order had been obtained by a material non-disclosure and should be set aside. He ordered that it be discharged, the service of the writ be set aside and that Cathodic's costs of the proceeding be paid by Savcor.
Limitation Periods
13 It is necessary at this stage to note the limitation periods in respect of each of Savcor's causes of action pleaded in the general endorsement on the writ. Savcor pleaded three general causes of action against Cathodic, namely:
(i) breaches of contracts;
(ii) negligence; and
(iii) misleading and deceptive conduct.
14 The endorsement is indeed very general but it is possible to determine the circumstances out of which each cause of action is alleged to have arisen by reference to the concluding words which are -
"In and about agreements for the sale and supply by the defendant to the plaintiff of goods and services relating to the Cathodic protection system at the San Remo Bridge in Victoria in or about October 1995."
15 This was the state of the claims known up to September 2001 when Savcor delivered a statement of claim. Later in the consolidated proceeding Savcor delivered a consolidated statement of claim dated 7 December 2001.
16 The limitation periods for any common law claim in contract and negligence in 2001 were six years. See s.5 of the Limitation of Actions Act 1958. The claim in respect of misleading and deceptive conduct, whether it be under the Trade Practices Act 1974, or the Fair Trading Act 1985, had to be instituted within three years after the cause of action accrued. See s.82(2) of the Commonwealth Act and s.37(2) of the Victorian Act.
17 On the face of the endorsement, there appeared to be limitation of action defences available from October 1998 for the alleged breaches of the Trade Practices Act and Fair Trading Act, and October 2001 for the common law claims. Reference to the consolidated statement of claim shows that Savcor claimed loss and damage in respect of breaches of a series of supply agreements and also a design certification agreement, a claim for damages for Cathodic's negligence in supplying the Cathodic protection system, a claim for damages for negligent misrepresentations, and claims for damages for misleading and deceptive conduct. It is noted in its defence delivered 14 February 2002 Cathodic did not rely upon any limitation defence and that is not surprising because the writ was issued on 6 December 1999. However, if Savcor had issued another writ on 14 June 2002, being the date when the orders appealed from were made, Savcor would have been met with a limitation defence to any cause of action which accrued prior to 14 June 1996. Some of the supply agreements for the titanium wire connecting the internal anodes in the bridge were supplied from October 1995 to August 1996. Insofar as there were claims in relation to the supply prior to 14 June 1996, such claims would be statute barred. In addition, it was pleaded that there were breaches of the design verification agreement which allegedly occurred between 20 October 1995 to 8 March 1996. These claims would also be statute barred.
Duration and Renewal of Writ
18 Rule 5.12 provides, inter alia:
"(1) A writ ... shall be valid for service for one year after the day it is filed.
(2) Where a writ ... 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."
19 By reason of paragraph 4 of that sub-rule, application may be made ex parte but the Court does have the power if it thinks that the defendant ought to be heard, to require that the defendant be informed and be given an opportunity to be heard. The Master did not require the attendance of the defendant and made the order ex parte on 5 December 2000.
Renewal and Setting Aside Order
20 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 re-heard. The application may be brought pursuant to the inherent jurisdiction of the Court. Mason, J. said in Taylor v. Taylor[2] -
"A jurisdiction to set aside its orders is inherent in every court unless displaced by statute."
21 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 Rule 46.08(b). If an application is made to the court pursuant to the inherent power or the Rule, the court re-hears 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 re-hearing of the whole application. However, at the re-hearing the judicial officer has the benefit of submissions and any material the opposing party wishes to place before the court.[3] I do not accept the statement made by the Full Court of Western Australia in Bellgroup NV (in liq) v. Aspinall[4] 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 re-hearing and the court may reach a different decision after hearing submissions. Sir John Donaldson MR in WEA Records Ltd v. Visions Channel 4 Ltd[5] 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."
22 See also observations of Sir Leo Cussen in Zinc Corporation Limited v. Hirsch,[6] to the same effect. In my opinion, this jurisdiction is different to the situation when an order made ex parte is set aside because there was a material non-disclosure of a material matter by the party who obtained the order. The order is set aside because of some irregularity and not on the merits. When this jurisdiction is enlivened, the court's function is to determine on the material that was placed before the judicial officer at first instance, whether a party has failed to discharge the obligation which rests upon any party seeking an order ex parte, namely, making a full and fair disclosure of all matters within its knowledge and which are material, to the court. The court is not concerned whether the order should have been made on the material before the court. Whether or not the court will set aside the order upon proof of the failure to discharge the obligation depends upon the particular circumstances.
23 Cathodic made application to set aside the order on the ground of non-disclosure of material facts. Cathodic did not seek a re-hearing.
Obligation of Good Faith
24 An applicant for an ex parte order has an obligation to the court of the utmost good faith, "uberrimae fidei". The principles were discussed by the Court of Appeal in R v. Kensington Income Tax Commissioners, ex parte Princess Edmond de Polignac.[7] In that case Princess Edmond de Polignac made application to the Court for an order nisi for a writ of prohibition, calling upon the Commissioners, who had assessed a sum of taxation payable by the princess, to show cause why their assessment should not be the subject of a writ of prohibition. The application was made ex parte and an order nisi was made. It was later revealed that the affidavit in support contained material misstatements of fact. Scrutton L.J. expressed the principles as follows -
"Now that rule giving a day to the Commissioners to show cause was obtained upon an ex parte application; and it has been for many years the rule of the Court, and one which is of the greatest importance to maintain, that when an applicant comes to the Court to obtain relief on an ex parte statement he should make a full and fair disclosure of all the material facts - facts, not law. He must not misstate the law if he can help it - the Court is supposed to know the law. But it knows nothing about the facts, and the applicant must state fully and fairly the facts, and the penalty by which the Court enforces that obligation is that if it finds out that the facts have not been fully and fairly stated to it, the Court will set aside any action which it has taken on the faith of the imperfect statement. This rule applies in various classes of procedure."[8]
(Emphases added).
25 His Lordship identified the common cases, by way of example an ex parte injunction and an ex parte order to serve a writ out of the jurisdiction. In my opinion the rule applies whenever an order is made ex parte.[9] The obligation requiring full disclosure must be complied with on pain of a penalty that the order will be set aside. It applied to an order nisi as in the Kensington Income Tax case, and an order for service out of the jurisdiction - see Lazard Brothers & Co v. Midland Bank; [10] The Hagen[11] and an order for substituted service - see Wiseman v. Wiseman.[12] The principles have been much discussed in cases involving interim injunctions. The cases go back over a long time. See Dalglish v. Jarvie.[13] Modern examples are Brink's Mat Ltd v. Elcombe[14] and Memory Corporation Plc v. Sidhu (No. 2).[15]
26 The principles were stated by Isaacs, J. in Thomas A. Edison Ltd v. Bullock[16] where his Honour said -
"Dalglish v. Jarvie (2 Mac. and G., 231), a case of high authority, establishes that it is the duty of a party asking for an injunction ex parte to bring under the notice of the Court all facts material to the determination of his right to that injunction, and it is no excuse for him to say he was not aware of their importance. Uberrima fides is required, and the party inducing the Court to act in the absence of the other party, fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application. Unless that is done, the implied condition upon which the Court acts in forming its judgment is unfulfilled and the order so obtained must almost invariably fall. I add the word 'almost' in deference to such an exceptional case as Holden v. Waterlow 15 W.R. 139."
(Emphases added).
"The Court has discretion to set aside an order made ex parte when the applicant has failed to make sufficient or candid disclosure."
28 Modern cases have recognised that the Court does have a discretion whether or not to set aside an order where there has been a failure to disclose material facts. In Victoria Teachers Credit Union Ltd v. K.P.M.G (a firm) & Anor [19] Tadgell, JA. referred to the cases which recognised a dispensation from the strict application of the rule in circumstances that warranted it and went on to observe -
"If driven to the point, I should hesitate to say that the rule of practice such as that now in question is utterly wanting in adaptability; cf. Spry, Equitable Remedies, 5th ed. (1997) pp.497-8. This case, however, does not in my view call for either endorsement or rejection of the notion that an order obtained in contravention of the general rule might be salvaged in particular circumstances, for I cannot agree with the learned judge that the rule was contravened."
29 In Spry_, Equitable Remedies_, 6th ed. at p.497-8, the learned author opined that it was not an inflexible rule that the order should be set aside as a matter of course and noted "Courts of equity have here a discretion, especially since matters that are material in the sense that has been discussed here may vary greatly in their importance or weight and the hardship that will be caused to the plaintiff if he is refused relief may vary likewise." I respectfully agree. In my view it is not an inflexible rule that a non-disclosure of a material fact in an ex parte application invariably leads to the order being set aside. Of course if there is a high degree of culpability in the sense that a party has set out to mislead a court, a court in most if not all cases would be reluctant to excuse the intentional misconduct. Each case will depend upon its own circumstances. Justice is the determinant. I respectfully agree with Balcombe LJ in Brink's Mat Ltd v. Elcombe[20] where his Lordship said in relation to an ex parte injunction:
"But it also serves as a deterrent to ensure that persons who make ex parte applications realise that they have this duty of disclosure and of the consequences (which may include a liability in costs) if they fail in that duty. Nevertheless, this judge-made rule cannot be allowed itself to become an instrument of injustice. It is for this reason that there must be a discretion in the court to continue the injunction, or to grant a fresh injunction in its place, notwithstanding that there may have been non-disclosure when the original ex parte injunction was obtained."
(Emphasis added).
30 In the same case, Ralph-Gibson L.J. said:[21]
"Finally, it 'is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded' per Lord Denning M.R. in Bank Mellat v. Nikpour.[22] The court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms."
31 Whether a court will set aside an order will depend upon many factors. The court should not overlook the practical effect of such a step. What would be achieved by setting aside the order? Absent deliberate and intentional non-disclosure or misleading information, (which usually leads to a discharge) the court must weigh all relevant material. An important matter is that the setting aside of the order will not necessarily preclude another application being made. See Fitch v. Rochfort[23] and The Hagen.[24] The practical effect would be a waste of time and costs. The point was made by Morton, J. in Ellinger v. Guinness Mahon & Co.[25] His Lordship said:
"Counsel for the applicants ... argues that, if there has been non-disclosure of any material fact on the ex parte application, the ex parte order ought to be set aside, even if the judge, on being fully informed of the facts, thinks that the case is a proper one for allowing service of the notice of the writ out of the jurisdiction. In my judgment that argument cannot succeed. In the absence of any attempt to deceive the court I do not think it would be right for a judge to take this course. The only result would be to put the applicant to the expense of making a further application under R.S.C.Ord. 11, r.1 which would be bound to succeed."
32 It cannot be overlooked as was stated in Wiseman v. Wiseman[26] that an order made where the material facts have not been fully disclosed, is not void but is irregular and therefore voidable. It stands until it is set aside.
33 In my opinion a court does have a discretion to not set aside an order despite a material non-disclosure or misrepresentation of law or fact. Setting aside does not follow as a matter of course. Relevant to the discretion is whether the material non-disclosure was serious or otherwise the importance or weight that should be attached to the omitted fact in the decision making process and also any hardship if the order was set aside. The approach is different if the plaintiff has acted culpably in the sense that the omission to disclose relevant matters was done deliberately to mislead the court. The most likely result in those circumstances would be that the order would be vacated.
34 Other relevant matters are delay in moving to have the order set aside resulting in prejudice which cannot be overcome, acquiescence under an order and, depending upon the particular order in question, the irregularity may be waived.
35 The obligation is to disclose all material facts. What is a material fact is a matter which is relevant to the court's determination. To be material, it would have to be a matter of substance in the decision making process.
36 In Brink's Mat Ltd v. Elcombe,[27] Ralph Gibson LJ conveniently summarised the principles. His Lordship noted that "the material facts are those which it is material for the judge to know in dealing with the application as made: materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers." His Lordship observed that the applicant must make proper enquiries before making an application. If a material non-disclosure is established the court would be astute to ensure that the plaintiff obtaining an ex parte order without full disclosure is deprived of any advantage he may have derived, and further that whether a fact not disclosed "is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the facts to the issues which were to be decided by the judge on the application." His Lordship pointed out that the innocence or otherwise of the non-disclosure and the failure to understand its relevance are important factors to take into account.
The Application
37 The course adopted by Cathodic was on the basis that the Master had been misled by material non-disclosures and the order should be discharged.
38 The issue is a fairly narrow one. The application to set aside involves the Court placing itself in the shoes of the Master and considering all matters placed before him to determine whether or not he was induced to make an order in the absence of some material fact which was not disclosed. It is necessary to identify the alleged non-disclosure and determine whether it was a matter material to the decision. Would it have made any difference to the outcome? The application is not concerned with whether the Master should have made the order on the material before him. Speaking for myself, I doubt whether there were good grounds for extending the validity.
39 Savcor submits that in any event Cathodic has waived the irregularity, and, further, by reason of the delay by Cathodic in bringing the application, Savcor has materially altered its position to its prejudice. It has incurred legal costs in the order of $65,000 from 24 August 2001 to 26 March 2002. If it was to issue another writ, it would now be met with limitation defences. Savcor submits that in the circumstances justice demands that the order should not be set aside.
Extending Validity of Writ
40 One looks in the Rules in vain for an expression of the relevant criteria which guide a court on an application to extend the period of validity of a writ. The rule is different to the previous rule which specified that the court may "for good reason" order that a writ be renewed for six months. The omission is of no consequence. The applicant must establish a good reason. This is made clear by the Full Court decision of Ramsay v. Madgwicks (a firm)[28] where Young, C.J. said:
"That rule (ie the new rule) is expressed much more succinctly and simply than the old rule which it replaced. It does not in terms refer to 'good reason', but as with the new English Rules, so I conceive with our new rules, there should be implied as a matter of construction a condition that the power to extend a writ or other originating process should only be exercised for good reason, and I draw support for that proposition from the speech of Lord Brandon of Oakbrook in Kleinwort Benson Ltd v. Barbrak Ltd, [1987] A.C. 597 at 662."
41 The principles which guide a court on an application to extend the period for service have been discussed in Van Leer Australia Pty Ltd v. Palace Shipping K.K. and Simsmetal Pty Ltd,[29] Irving v. Carbines[30] especially at p.865, Ramsay v. Madgwicks (a firm) and the Kleinwort Benson case. Those cases establish the following general propositions:
(i) It is the duty of the plaintiff to serve the writ promptly.
(ii) There must be a good reason for the grant of an extension and if the application is made after the period has expired the reason must be one of substance.
(iii) It is not possible and indeed is unwise to attempt to define the circumstances which amount to a good reason. It is trite observation but not very helpful that whether or not it is a good reason must depend upon all the circumstances of the particular case. As a general proposition difficulties serving the writ within the 12 months' period will usually establish a good reason. By way of example where the defendant is evading service, his whereabouts are unknown or some other difficulty is experienced in serving the defendant.
(iv) By reference to decided cases it is possible to compile a list of the circumstances which constitute a good reason. The cases also provide examples where the circumstances have not been a good reason to extend the period of validity. For example, it is not a good reason that negotiations are continuing between the parties, or legal aid has not been granted and the plaintiff is waiting for the grant. There are cases which say that the latter proposition is not a good reason. But in Waddon v. Whitecroft-Scovill Ltd[31] it was said delay caused by the authorities to grant aid may be a good reason. Other examples which have not found favour are difficulty tracing witnesses or obtaining evidence.
(v) The Australian cases differ from the English cases as to the effect of a limitation defence arising after the issue of a wait but before the application to extend the validity of the writ. The difference is traced by Stephen J in Van Leek Australia Pty Ltd v. Palace Shipping K.K., supra at pp.245-247. His Honour preferred the approach of the Australian and Canadian courts. He quoted with approval what Bray, C.J. said in Victa Ltd v. Johnson.[32] Bray, C.J. stated that there was no rule that a defendant acquired an absolute right to immunity when a writ issued within the limitation period is not served and in the meantime the period expires. The English cases had stated a test that if the limitation period had expired it was only in exceptional circumstances that the writ would be renewed. This is not the Australian position.[33]
42 It was open in the present matter for Savcor to make application to the Master to re-hear the application. That course was not followed. Instead, nine months after it was served with the writ, Cathodic applied to set aside the order on the ground of material non-disclosure. The issue was not whether the Master should have made the order on the evidence before him. That issue was, and is, irrelevant. In the light of the decisions in Ramsay v. Madgwicks[34] and Dagnell v. J.L. Freedman and Co[35] it is doubtful that the Master should have made the order. The general rule that the mere wish of a party to await the outcome of some other proceeding is not a good reason for extending the validity of the writ. However, that is not the issue here. The questions are, was the Master misled by a misstatement or failure to disclose a material fact in reaching his decision to make the order and if so, should the Court set aside the order? The judge at first instance answered both questions in the affirmative.
The Alleged Non-Disclosure
43 In considering this issue, the first step is to identify what was not disclosed to the Master. Having identified that, the question is, what effect if any did it have on the decision? Was the non-disclosure material to the Master's decision?
44 Six grounds of appeal were pleaded concerning the material non-disclosure. In substance it is alleged that the learned trial judge erred in fact and law in finding that the failure to disclose to the Master the degree of technical assistance provided by Dr Chess was a material non-disclosure. It was submitted the Master was told exactly why Savcor decided not to serve the writ and the degree of assistance obtained was quite obvious from the affidavit before the Master. It was submitted in the alternative that to the extent there was any non-disclosure it was not material.
45 Turning to the question of the alleged material non-disclosure, it is necessary to go to the learned judge's reasons. His Honour noted that Cathodic relied upon the following non-disclosures -
(i) the degree of assistance sought by Savcor and obtained from Dr Chess in the period before the 1999 writ was filed and in the period which followed its filing;
(ii) the existence and terms of the agreement of 23 September 1991 between Savcor and Cathodic which governed their dealings;
(iii) the fact that Cathodic was unaware of the writ.
46 Cathodic abandoned its reliance upon the second ground. So far as the third ground was concerned, it was clear to the Master that Cathodic was unaware of the existence of the writ. Further, it was clear to the Master that Savcor had obtained assistance from Dr Chess. The first ground highlights "the degree of assistance". Despite this apparently being the issue, the learned trial judge took a dim view of the conduct of Savcor and its solicitors. His Honour stigmatised the conduct as "double dealing". Presumably what his Honour meant was that it was wrong to seek the assistance of a party as an expert witness in an arbitration without telling him that in the event of being held liable in the arbitration, the witness or his employer would be sued. The material before the Master did disclose that the witness was not told about the writ when he was providing assistance. The "double dealing" was disclosed to the Master. He made the order with that knowledge.
47 When the application came on before the Master, he had the writ which contained a general endorsement and an affidavit sworn by Stephen Francis Grant, a solicitor in the employ of Savcor's solicitors. The general endorsement was in these terms -
"The plaintiff sues the defendant for damages in respect of loss and damage suffered by the plaintiff as a result of breaches of contract, negligence and misleading and deceptive conduct of the defendant in and about agreements for the sale and supply by the defendant to the plaintiff of goods and services relating to the Cathodic protection system at the San Remo Bridge in Victoria in or about October 1995."
"I Stephen Francis Grant of 385 Bourke Street Melbourne, in the State of Victoria, solicitor, make oath and say as follows:
1. I am a solicitor in the sole and permanent employ of Herbert Geer and Rundle Lawyers, solicitors for the plaintiff. Subject to the supervision of my principals I have the care and conduct of this action on behalf of the plaintiff. I make this affidavit from my own knowledge, except where otherwise indicated.
2. The plaintiff is a party to a confidential arbitration under the Commercial Arbitration Act 1984 which is currently proceeding. Damages are sought by way of cross-claim in that arbitration from the plaintiff alleging that it has, inter alia, negligently designed a system for the provision of Cathodic protection to a structure.
3. The defendant is a corporation incorporated in Denmark. The defendant to this action was the independent certifier pursuant to the contract of works under which the plaintiff undertook works for the other party to the arbitration.
4. It is alleged by the plaintiff that it may maintain an action against the defendant for:
(a) breach of its retainer as certifier;
(b) breach of duty of care owed in negligence to the plaintiff in undertaking that certification; and
(c) claim pursuant to the Wrongs Act (Vic) (1958) on the basis that if the plaintiff is liable to the other party in the arbitration the defendant could also have been held liable pursuant to a duty owed to that party.
5. On 6 December 1999, in order to protect the plaintiff's position, I caused to be issued writ No. 7818/1999 which is filed in this honourable Court. While the arbitration is on going an employee of the defendant is a relevant witness to the matters in issue in the arbitration. Owing to the fact that the matter is an arbitration, the employee is not able to be compelled to attend by subpoena. It is anticipated that an experts' conclave will be held in the arbitration in the near future (January or February 2001) at which the attendance of the employee of the defendant is necessary. Accordingly, so as to not prejudice the plaintiff's ability to lead evidence at the conclave, my instructions have been not to serve the proceeding. The defendant has full knowledge of the circumstances of this matter and its retainer was in the period July 1995 to March 1996. Accordingly the extension of this period for service will not materially prejudice the defendant.
6. The 12 month period for serving the proceeding expires on 7 December 2000 and I accordingly seek a six months extension of time for service of that proceeding by this honourable Court."
49 It was sworn by Mr Grant on 5 December 2000 and filed with the Court.
50 It is observed that the reference in paragraph 6 to the proceeding expiring on 7 December 2000 was incorrect and the 12 month period expired at midnight on 6 December 2000. Secondly, the summary of the claims made in paragraph 4 does not cover all the claims asserted in the general endorsement. However, the Master was in a position to refer to the general endorsement to appreciate the claims made, albeit in a general manner, by Savcor. The endorsement alleged that Cathodic sold and supplied to Savcor goods and services relating to the Cathodic protection system at the San Remo bridge.
51 Referring back to the two non-disclosures relied upon, the last one was that Cathodic was unaware of the existence of the writ. However, it is clear on a fair reading of the affidavit that the Master was informed that Cathodic was not aware of the existence of the writ. Dealing with the first alleged non-disclosure the affidavit revealed that the existence of the writ was kept from Cathodic and the employee witness to ensure co-operation by its employee in the arbitration, that the employee was an expert witness in the arbitration and an important one, and that the claim in the arbitration against Savcor was based on the negligent design of the cathodic protection system. Reference to the general endorsement revealed that it was alleged Cathodic supplied the protection system for use in the bridge. Finally, the affidavit asserted that if Savcor was liable in the arbitration, Cathodic would be liable under the Wrongs Act 1958, namely, a claim for contribution to any damages payable by Savcor in the arbitration.[36] The Master would readily infer that the writ was issued to protect Savcor's interests in the event it was liable in the arbitration, that Cathodic's employee was a necessary witness in the arbitration, that he did not know about the writ and that the writ would proceed if Savcor was liable in the arbitration. If this was "double dealing" it was obvious to the Master. Despite it, he made the order. He formed the opinion on the material that there was good reason to extend the validity of the writ.
52 It is said on behalf of Cathodic that the affidavit should have gone into chapter and verse on the amount of assistance given to Savcor by Dr Chess prior to and subsequent to the issue of the writ. The affidavit did not disclose the quantity or extent of the assistance. The general endorsement and affidavit must be considered in a setting. The Master was experienced in litigation. He was a lawyer of many years standing and had been a Master for many years. He would have realised that the witness being an employee of Cathodic which had sold and supplied the cathodic protection system for installation in the bridge works was of importance to the issue in the arbitration and as an expert had provided assistance. He would have concluded the assistance was substantial because the real issues in the arbitration concerned the cathodic protection system. It was the main issue in the arbitration. To that extent he did know the degree of assistance. It would not have been lost on the Master that by providing assistance in a state of ignorance of the litigation he may have not been concentrating on his own interests.
53 The judge's reasons identified the double dealing. It was obtaining the assistance of Dr Chess to provide a witness statement giving his version of the facts relevant to the design, supply and installation of the cathodic protection system and its suitability and fitness for the purpose, without telling him that a writ had been issued against his company claiming damages for the sale and supply of the system. The fact was, this "double dealing" was disclosed to the Master.
54 Whether or not it is double dealing is a moot question. Any lawyer advising the person seeking assistance would be neglecting his duty to his client if he did not advert to the question of bringing proceedings against the party responsible to protect his client. This situation could arise when there is no question of a limitation defence and no proceeding is issued until after the assistance has been provided. Is it double dealing not to tell the witness that if the party fails in the proceeding it will sue the witness or his employer? An important witness such as Dr Chess would be extremely naïve if it did not pass through his mind at the relevant time that he or his employer may be sued thereafter because of the failure of the system designed, sold and supplied by the employer.
55 In my opinion, on the evidence before the Master, it was open for him to infer that Dr Chess provided substantial assistance and the Master was not misled by any material non-disclosure of any fact.
Judge's Reasons
56 A number of affidavits were filed in the proceeding before the learned judge and these set out in some detail the circumstances relating to the contracts and works concerning the bridge construction, the involvement of Cathodic in the provision of the protection system, and the agreements between Savcor and Cathodic. The judge also had evidence relating to the arbitration, the issues and the progress of the arbitration. In addition, he had evidence of the involvement of Dr Chess in giving a witness statement, the number of conferences he had and the fact that his statement went through 11 drafts. Dr Chess did make changes to the statement from time to time. He may not have been looking after his interests, although I find that difficult to believe. Dr Chess was hardly likely to state anything which was prejudicial to his or Cathodic's interests. But that fact is irrelevant to the question of alleged material non-disclosure. It flowed from the double dealing which was known to the Master.
57 It was accepted by Savcor that his Honour's orders resulted from an exercise of discretion in a matter of practice and procedure and accordingly it was necessary for Savcor to persuade this Court that his Honour's discretion erred in accordance with the well-established principles. See House v. R[37] and Lovell v. Lovell.[38]
58 The learned judge referred to two sentences in paragraph 5 which he described as an "extraordinary statement". The words in question were:
"CPI has full knowledge of the circumstances of this matter and its retainer was in the period July 1995 to March 1996. Accordingly the extension of this period for service will not materially prejudice [CPI]."
59 His Honour stated that he made no finding "that Mr Grant intended to mislead the court when he swore his affidavit which included the first sentence of that quote". He went on to state:
"I will construe 'the matter' in the first sentence quoted in paragraph 33 ... as being a reference to the underlying facts which give rise to the dispute which was before the arbitrator. ... There is no misstatement in the first sentence."
60 His Honour then went on to consider what he said was the "puzzling second sentence regarding prejudice". His Honour concluded:
"It is difficult to make anything of this unless it was intended to convey that CPI has lived with this matter for many years and, without knowledge of the writ for the past 12 months, so that a further few months will not harm it. The assertion that the extension of the writ will not materially prejudice CPI appears to have been based on mere supposition."
61 His Honour did not conclude that Mr Grant intentionally did anything to mislead the Master. There is evidence to suggest sloppiness and a degree of ignorance in the approach by Savcor's then solicitors including Mr Grant. The general endorsement was general and badly drafted, the affidavit suffers from bad drafting and ambiguity and has all the hallmarks of being drafted in a hurry.
62 The learned judge first of all discussed the non-disclosure concerning the degree of assistance. He referred to Mr Grant's affidavit noting that the Master was told that an employee of Cathodic referred to as CPI was a relevant witness in the arbitration and his Honour then stated -
"The Master would have seen that the involvement of CPI was that of certifier. As a certifier he may have thought that the employee or its employer was in neither camp in the arbitration. He knew that Savcor was keen to have the employee attend 'an experts' conclave' and that the employee might be reluctant to come voluntarily if the existence of the writ were brought to his attention by its service. It is not suggested on behalf of Savcor that the Master was told anything of the degree of assistance which had been given by this employee who must be Dr Chess. The Master would have known that the causes of action mentioned in paragraph 4 of the affidavit of Mr Grant expired six years after they arose. Since the retainer of CPI was 'in the period July 1995 to March 1996' there was no urgent reason for concern on this matter. If he looked again at the general endorsement he would have seen the claims for misleading and deceptive conduct which are not mentioned in Mr Grant's affidavit. He would have perhaps thought that time might have expired with respect to those claims prior to the date of the application before him."
63 In my respectful opinion, the learned judge was wrong in observing that the Master may have thought that Cathodic and Dr Chess were in neither camp in the arbitration. What the Master thought at the relevant time was not the subject of any evidence. But what is clear from the tenor of the affidavit when read in conjunction with the general endorsement was that Dr Chess was a witness for Savcor's cause in the arbitration. Further, the terms of the affidavit and the general endorsement convey to the reader that Cathodic was a certifier and also the vendor of the protection system used in the bridge. Cathodic was sued both as a certifier and the supplier of the system.
64 His Honour went on to observe that after considering confidential exhibits which traced the involvement of Dr Chess in giving a statement to Savcor and its solicitors:
"It is sufficient that I conclude from a general inspection of them (the communications) that they show that Dr Chess was asked for and that he provided candid, technical information regarding the cathodic protection process, including information in response to expert witness statements filed in the arbitration by the Roads Corporation. Furthermore, Dr Chess submitted to the process of the preparation of his own witness statements including acquiescing in editorial decisions made by the legal advisers of Savcor. At the time he reposed in the trust which ordinarily accompanies one's dealings with a respectable firm of solicitors who are believed to have one's interests at heart."
65 No argument was put to this Court that his Honour's summary of Dr Chess' involvement was incorrect. But in my opinion his Honour was wrong to conclude that Dr Chess had reposed his trust in Savcor's solicitors because of the belief that they had Cathodic's "interest at heart". The firm was acting for Savcor. The main issue in the arbitration concerned the protective system. Criticism was made of it. Dr Chess's statement addressed those issues. He knew of the criticism. Dr Chess knew Savcor's solicitors were not acting for Cathodic. There could be no basis for him believing that the solicitors were looking after his interests.
66 His Honour then turned to the other basis of non-disclosure, namely, that Cathodic was unaware of the existence of the writ. In considering this question his Honour discussed the fact that Cathodic had not disclosed in its professional negligence insurance renewals the fact that it may have a claim against it which led to the policy being avoided. His Honour did not accept that the policy was avoided because of non-disclosure of the writ but observed:
"The fact, however, remains that it is very probable that CPI would have notified its insurers as soon as it learnt of Savcor's writ or of Savcor's intention to sue it for its conduct in connection with the San Remo bridge."
67 Whilst that is an obvious truism, in my opinion it is not relevant to the question whether there had been a non-disclosure. It is a factor which would have been relevant to the question of the exercise of the discretion.
68 The judge identified what he considered was the material non-disclosure under the heading of "materiality".
69 After noting that Mr Grant stated that the reason for not serving the writ was because the employee of Cathodic may not attend the expert's conclave his Honour said:
"He did not disclose as a further and more important reason his concern that the assistance in terms of technical input and witness statement preparation might be terminated if the true intention of Savcor were exposed by service."
70 In my respectful opinion his Honour was wrong. It was obvious to the Master, a person versed in litigation, that the revelation of the existence of the writ to an important witness such as Dr Chess would have led to the result that Dr Chess would have terminated his assistance. Mr Grant did not have to state the obvious.
71 His Honour said -
"This part of the present application, therefore, comes down to this. Was the non-disclosure of the fact that Savcor was obtaining technical assistance from CPI of the kind I have described a non-disclosure of such materiality that this Court should act as CPI has asked it to?"
72 It was clear on the material before the Master that Cathodic provided assistance to Savcor in respect of the issues in the arbitration. What his Honour is saying is that the Master was not informed that the assistance was "technical assistance", nor was the Master told that Dr Chess had spent time in preparing his statement, that it had gone through a number of drafts and that some of the material was changed in the draft or excluded. On the other hand the material would have led the Master to the conclusion that the employee was an important witness in the arbitration and that he was providing expert evidence. Expert evidence when dealing with a protection system to a bridge would be technical assistance. Further, the Master could infer from the material that the expert witness was important and that he must have provided a statement to Savcor. In my opinion, his Honour was wrong in concluding that there was a non-disclosure concerning the type of assistance, namely, "technical assistance" or that the Master would not have been able to infer that the assistance was extensive.
73 Having reached the conclusion that there was a non-disclosure, his Honour then had to address the question of materiality.
74 His Honour then posed the following test -
"The answer to this question (see para 68, supra) requires an examination of the role that this non-disclosed fact might have played in the application before the Master."
"The Master would have been aware that the applicant bore the onus of persuading him that this was a case for extension. He would have been troubled by the fact that no good reason was shown for the failure to serve promptly. Indeed, the reason given, that it wanted to conceal the hostile intention from a person in the hope that he would voluntarily assist it by attending the conclave of experts, is one which the Master would have found very unattractive. It may well have been that his concerns about this might have been allayed by the fact that the extension was to be relatively short and that no prejudice would be caused by the deferring of service."
76 In my respectful opinion, save for the onus of proof, his Honour's observations were irrelevant to the application before him. The issue before him was whether the alleged non-disclosures were material. In order to test materiality the judge was correct in determining what effect, if any, the alleged non-disclosures had on the outcome of the application. However, his Honour was wrong in speculating that the Master may have found the reason for extending the validity was unattractive and that he may have been prepared to accept it because the extension was relatively short. In my opinion, his Honour was wrong in speculating. The fact was that the Master on the material before him was satisfied there was a good reason, and it was obvious. Savcor did not wish to tell Cathodic that it was going to sue Cathodic because it was necessary to have their employee on its side in the arbitration. His Honour obviously thought this was inexcusable and double dealing but the fact was that the Master did not. In my opinion, realistically, if the Master had been told that Dr Chess had provided a witness statement which had gone through 11 drafts, it would not have made any difference to the result. The fact was that the Master was prepared to find that it was a good reason to not disclose the fact that a company was being sued in order to encourage it to provide an employee to provide assistance in the arbitration. As I have stated above, a number of authorities suggest that the reason given to the Master was not a good reason to extend the validity of the writ.
77 His Honour then went on to say -
"Accepting all of this, I find it inconceivable that the Master would have granted an extension had he been given a full account of the double-dealing of Savcor and its representatives. He would have recoiled from lending the support of the Court to such conduct by extending for even one moment the time within which this conduct might continue. This non-disclosure was a very material non-disclosure."
78 It is apparent from reading his Honour's reasons that the "double dealing" was the non-disclosure to Cathodic that Savcor had issued a writ suing it, that Savcor did this to ensure that the employee of Cathodic was prepared to provide evidence at the arbitration and attend an expert's conclave and that this was a form of deception. All those matters were already before the Master. He did not consider that it was inappropriate conduct. If he had been told that Dr Chess had taken some time over his witness statement, in my view it would have made no difference whatsoever to the outcome of the application. The fact was that the Master was prepared to permit this conduct to continue. In my respectful opinion, the learned judge was influenced in reaching his decision by his view that Savcor's solicitors were doing something wrong and the Master, who had the knowledge, should not have concluded there was good reason to extend the validity of the writ. In my opinion, this was irrelevant to the application before him.
79 Whether or not a court should extend the period for service of the writ in circumstances where the existence of the witness is kept secret to ensure co-operation, and whether this is double dealing, are moot questions on which the minds of lawyers and judges may differ. But it cannot be said that the Master was not made aware that the employee was not told, despite being requested to assist in the arbitration, of the fact that the writ had been issued. If it is double dealing to issue a writ against a party which is assisting the plaintiff and its advisers in an arbitration without telling the party of the existence of the writ, and if it is reprehensible conduct which a court would not condone, the fact is that the Master on a fair reading of the general endorsement and Mr Grant's affidavit had all the material to come that conclusion. The Master obviously thought it was a good reason to extend the validity of the writ. In my opinion, a Master who is experienced in litigation would have noted that the involvement of Cathodic's employee was substantial, that Cathodic's system was under attack and that the employee was to attend an expert witness's conclave. In my opinion the learned judge was wrong in concluding that the alleged non-disclosure of facts was not disclosed to the Master, and that they were material. The conduct described by the judge of "double dealing" was revealed and by extending the validity of the writ, the Master was permitting it to continue. It is not to the point in this application that in the circumstances the Master should not have extended time.
80 One can test that conclusion by adopting the approach stated by Isaacs, J. in Thomas A. Edison Ltd v. Bullock, supra, at p.682. His Honour stated that the party seeking the order fails in his obligation when he fails to "bring forward all the material facts which that party would presumably have brought forward in his defence to that application". If Cathodic had appeared at the hearing before the Master, would it have made any difference to the Master's order if Cathodic had said that Dr Chess had spent considerable time in preparing his statement and it had gone through many drafts? In my opinion, it would not have made any difference to the outcome based on what apparently the Master thought was a good reason. With the knowledge of the "double dealing" the Master was prepared to let it continue.
81 The judge under the heading of "discretion" stated that he concluded "that the order of Master Wheeler was obtained as a consequence of a material non-disclosure. I am satisfied that, had he been apprised of the true situation, the Master would have refused the application for extension." In my respectful opinion one could not possibly draw that conclusion bearing in mind the material that was before the Master and the fact that he found it was a good reason to issue a writ against a party who at the relevant time was assisting the plaintiff in another proceeding and not telling the party to ensure that the assistance continued.
82 In my opinion, there was sufficient disclosure. The learned judge was wrong in concluding that there had been a non-disclosure of facts to the Master and further that the alleged non-disclosed facts were material.
Discretion
83 At first instance Savcor relied upon the delay by Cathodic in applying to set aside the order and the prejudice it has suffered as a result of the delay. It submitted that the trial judge should in the exercise of his discretion in any event have refused to set aside the order. It is appropriate to consider this ground in case I am wrong in my conclusion that there was no material non-disclosure.
84 In considering this ground, it is necessary to briefly consider the events shortly after the writ was served. The writ was served on 29 June 2001, and on 4 July 2001 Cathodic's insurer engaged a Melbourne solicitors firm, Peter Black & Associates, to act on behalf of Cathodic. The firm specialises in insurance work. On 10 August 2001, the firm filed a conditional appearance. At that time, matters for the firm to consider were questions of applying to have the extension of validity set aside on the ground that the period for service should not have been extended on the facts, and whether the service should be set aside because of some jurisdictional ground. Another matter to consider was whether there had been some irregularity in the making of the order. One would expect that the reasonable solicitor would approach these issues in a pragmatic way. If the service could be set aside on some jurisdictional ground, it was clearly in the interests of Cathodic to go down that path. On the other hand, if there were grounds for setting aside the extension of the period for service of the writ, it could not have been lost on the solicitors that a successful outcome to any such application in July/August 2001 would result in the issue of another writ. The fact was that the solicitors advised Dr Chess there was no basis for seeking to set aside the service of the writ and on 24 August 2001 the appearance became unconditional. Savcor delivered a statement of claim. A writ was issued by Savcor against different defendants and the two proceedings were consolidated in the Building List. Savcor served a lengthy statement of claim in the consolidated proceeding and responded to a request for further and better particulars. Other interlocutory steps took place in the months that followed the consolidation. The consequences of the delay were substantial expense and passage of time leading to possible limitation defences. Savcor proceeded on the assumption that no attack was being made concerning the issues of validity and service of the writ.
85 The learned judge considered the question of discretion. He noted that the court has a discretion whether or not to discharge the order "and will do so where the justice of the case directs". He noted that there may be an argument based on waiver but noted it was not the subject of any argument before him. He observed that he was not sitting on appeal and went on to state:
"I am asked to discharge his order on the basis of facts which were not before him and to do so in the light of events which have occurred since his order."
"Determining whether the non-disclosure was of sufficient gravity to warrant the setting aside of the order and of what has flowed from it and, generally, in the circumstances as they now stand, including the balance of hardship to the affected parties, where the interests of justice lie."
87 At the outset it is necessary to identify the issues involved in the exercise of the discretion.
• Once it is established that there has been a material non-disclosure or misstatement of fact, the general rule is that the order be set aside. However, the general rule is not inflexible and the court has a discretion whether it will do so.
• The issue is whether in the exercise of the discretion to set aside, the wrongdoing should be excused.
• Factors relevant to the issues are the gravity of the wrongdoing, whether there has been delay, whether the delay has resulted in prejudice to the wrongdoing party, whether the party affected by the order has acquiesced under the order and whether the wrongdoing party may suffer any hardship if the order is set aside or the innocent party suffers hardship if the order is not set aside.
88 In Spry, Equitable Remedies 6th ed., the learned author said:[39]
"In appropriate circumstances an injunction may be ... continued despite, a material non-disclosure, and in such cases the court may, in its discretion, hold that the plaintiff should be penalised by an appropriate order as to costs. Here in deciding whether, despite a material non-disclosure, an injunction should be ... continued, ... the court takes into account the conduct of the plaintiff, the importance of the relevant undisclosed fact and the hardship or prejudice that may be caused according to whether relief is granted or refused, as well as the desirability, as a matter of public policy, that full disclosure should be made to the courts on ex parte applications. If a non-disclosure is not innocent, but the plaintiff has acted culpably, the court is particularly reluctant to ... continue an existing injunction, but this also is a discretionary consideration, of more or less weight according to all the circumstances. Further, where an injunction is already issued the fact that the defendant has delayed unreasonably in approaching the court in order to have it set aside and that the plaintiff has been prejudiced by that delay may render the grant of relief inappropriate."
(Emphasis added).
89 In my opinion, those principles apply in respect to all ex parte applications. The learned author's statement of the principles is amply supported by the cases. Another factor that must not be overlooked is that the wrongdoing party may apply again for a similar order. In a case such as the present, if the service had been set aside soon after it had been effected, it would have been open to Savcor to issue another writ.
90 His Honour identified the factors relevant to the balancing of the hardship and where he said the interests of justice lie. They were:
(i) Savcor "by making a deliberate decision for what in my view was no good reason, ran the risk that the writ would not be extended".
(ii) The decision was for its own convenience and by bringing the application late when refusal would have had serious consequences Savcor walked to the very edge of the precipice.
(iii) The decisions by Savcor were made in furtherance of its own conduct viz a viz Dr Chess, to which the Court would not wish to lend its aid.
(iv) The continuance of the proceeding carries prejudice to Cathodic, because Dr Chess made disclosures which may be used against him and his company; he agreed to "a deletion from his witness statement, which may cause him later difficulty".
(v) The question of Cathodic's insurance position "is more problematic". If it had received notice earlier, Cathodic would have advised its insurer, possibly in the 1999-2000 or 2000-2001 policy year and Dr Chess "does say that his lack of information about the writ has meant that 'CPI has been unable to act so as to avoid prejudice to its insurance cover'. I have no reason to doubt this."
(vi) Considering the consequences to Cathodic, it would be unlikely to retrieve its insurance position.
(vii) As against this, his Honour noted that Savcor would not be statute barred in terms of its liability to the Roads Corporation because its liability had not been established. However he observed, Savcor would be put to the trouble and expense of continuing a fresh proceeding against Cathodic and "the utility to Cathodic of the orders which it seeks is the prospect or the possibility that Savcor might not start again."
(viii) His Honour concluded -
"Weighing up these considerations as best I can, I am persuaded that the application should be granted. I cannot escape the fact that this writ should not, in the circumstances now known, have been extended. The Court which was led into error by the Savcor non-disclosure, should do all possible to set this matter aright."
91 At the outset, it is noted that the learned judge did not refer to what in my opinion was a relevant consideration of substance. He made no mention of the fact that the solicitors acting for Cathodic after service, having filed a conditional appearance, later advised the client there was no basis for attacking the service, and the appearance became unconditional, a new writ was issued consolidated with the earlier writ and the matter progressed for a period all told of about nine months. The prejudice to Savcor is obvious. It is both financial and the possible loss of rights due to limitation defences becoming available. His Honour noted that it was possible some causes of action were barred. There was some basis for thinking some of the breach of contract claims were statute barred. He noted the costs of starting again, but made no mention of the substantial costs thrown away, not to mention the costs order resulting from the dismissal of the proceeding. In my opinion, these matters were relevant to the exercise of the discretion. In addition, Cathodic, by its conduct during this period, acquiesced in the order. Again, his Honour made no reference to this fact. The omission to consider what in my view were relevant matters meant that his Honour's discretion miscarried.
92 But in addition, in my opinion there were other matters his Honour took into account which were irrelevant. The factors identified in paragraph 87, supra, factors (i), (ii) and (iii), in my opinion, were irrelevant to the question of discretion on the application before the judge. They may have been matters relevant to the Master's decision and would have been relevant on a re-hearing of that decision, but in my view were not relevant to the exercise of the discretion after it was proven that there had been a material non-disclosure.
93 Further, his Honour's consideration of the question of insurance is not supported by the facts. The insurer declined cover because of failure by Cathodic in the years earlier than 1999-2000 to disclose a possible claim against it.
94 Finally, in weighing up the considerations his Honour stated that the application should not be granted and went on to observe that he could not overlook the fact that the writ in the circumstances now known should not have been extended. That was a fact which was relevant to the materiality of the alleged non-disclosure, but in my view was not a fact to be taken into account on the question of discretion. The degree of culpability may have been. However, his Honour did not find that there was any intentional wrongdoing on the part of Savcor or its advisers.
95 In my opinion, his Honour's discretion miscarried. The question was whether the discretion should have been exercised in favour of Savcor. If it was a material non-disclosure not to state the full extent of Dr Chess's involvement in preparing a witness statement, it was in the context not a serious transgression bearing in mind that the Master was aware that the existence of the writ was kept from Dr Chess. A decision was made by Cathodic's lawyers to continue with the proceeding, the delay caused financial prejudice to Savcor but more importantly exposed it to limitation defences which were not available at the time when the appearance became unconditional. If there was material non-disclosure, justice, in my opinion, dictated that the order extending the validity of the writ should not have been set aside.
Waiver
96 The fourth ground relied upon by Savcor was that by permitting its appearance to become unconditional and thereafter participating in the proceeding for eight months during which time Savcor incurred significant expense, Cathodic waived any irregularity in relation to the extension of time for the service of the writ and its service. At the outset, it is necessary to consider whether this was a live issue before the learned trial judge. According to his reasons, see para 41, it was not an issue before him. In light of my conclusions it is unnecessary to consider this question.
Notice of Contentions
97 Cathodic as respondent to the appeal filed a notice of contention on 8 April 2004. The grounds were divided into three categories. Cathodic abandoned ground A(a). Ground A(b) contended that the Master would have understood paragraph 6 of the affidavit of Mr Grant as meaning Cathodic was aware of the issue of the writ. I do not read paragraph 6 in that way at all. The context is totally opposed to any such contention. That ground fails.
98 Ground B states that in exercising his discretion the judge should have taken into account the statement made in paragraph 6 of Mr Grant's affidavit, that the extension of the validity of the writ would not materially prejudice the defendant was wrong, and that Mr Grant should have informed the Master of the potential prejudicial effect upon Cathodic's position with its professional indemnity insurers. I do not accept for one moment that that is a matter relevant to the discretion. It has not been contended and has not at any stage been contended that there was a material non-disclosure in respect to that. There is no evidence that Savcor's solicitors were at the relevant time aware of Cathodic's insurance position. The contention fails.
99 Ground C is concerned with the question of denial of natural justice and proceeds on the assumption that this Court accepted the submission of the appellant. Because the Court has not reached that conclusion this ground is irrelevant.
Conclusion
100 In my opinion, the learned judge was wrong in coming to the conclusion that in the circumstances there was a non-disclosure to the Court or that any non-disclosure was material. If I am wrong in that conclusion, in my opinion his Honour's discretion, whether to set aside the order or not, miscarried. His Honour should have refused the application with costs.
101 In my opinion, the appeal should be allowed, the orders made by the learned trial judge on 14 June 2002 in paragraphs 1, 2 and 3 be set aside, and the matter should be remitted to the judge in charge of the Building List for further directions.
[1] See e.g. Gao v. Zhang [2005] VSCA 200 esp. at para.[12].
[2] [1979] HCA 38; (1979) 143 C.L.R. 1 at 16 - see also Owners of the SS Kalibia v. Wilson [1910] HCA 77; (1910) 11 CLR 689 at 694.
[3] See Zinc Corporation Limited v. Hirsch [1916] VicLawRp 69; [1916] VLR 550 at 555.
[4] (1998) 19 W.A.R. 561 at 569.
[5] [1983] 1 W.L.R. 721 at 727.
[6] supra at p.555.
[8] At pp.513-514.
[9] see Garrard v. Email Furniture Pty Ltd (1993) 32 NSWLR 662 at 677 per Mahoney AP.
[10] [1933] A.C. 289 at 306-7.
[11] [1908] P. 189 at 201.
[13] (1850) 2 Mac and G 231; [1850] EngR 688; 42 E.R. 89.
[15] [2000] EWCA Civ 9; [2000] 1 W.L.R. 1443.
[16] [1912] HCA 72; (1912) 15 C.L.R. 679 at 681-2.
[18] At 307.
[19] (2001) 1 V.R. 654 at 659-60.
[20] [1988] 1 W.L.R. 1350 at 1351.
[21] At 1357.
[22] [1985] F.S.R. 87 at 90.
[23] [1849] EngR 509; (1849) 18 L.J. Ch. 458; 47 E.R. 1406.
[24] Supra at 201.
[25] [1939] 4 All. E.R. 16 at 25.
[27] supra, at 1356.
[28] [1989] VicRp 1; [1989] V.R. 1 at p.6.
[29] (1981) 55 A.L.J.R. 243 at 249.
[30] [1982] VicRp 86; [1982] V.R. 861.
[33] See Soper v. Matsukawa [1982] VicRp 96; [1982] V.R. 948 at 953.
[34] Supra.
[36] See Part IV of Wrongs Act.
[37] [1936] HCA 40; (1936) 55 C.L.R. 499.
[38] [1950] HCA 52; (1950) 81 C.L.R. 513 at 533.
[39] At 497.
Savcor Pty Ltd
Cathodic Protection International APS [2005] VSCA 213
(1910) 11 CLR 689
(1993) 32 NSWLR 662