Wakim v Coleman

Court of Appeal (NSW)|2010-08-02|Before: Giles JA, Hodgson JA, Macfarlan JA, McCallum J, MacFarlan JA

JUDGMENT OF: Giles JA at 1; Hodgson JA at 2; Macfarlan JA at 3

DECISION: The application for leave to appeal is dismissed with costs.

CATCHWORDS: PROCEDURE - civil - meaning of originating process - period for which originating process valid for service - test to be applied on application to extend that period - PROCEDURE - judgments and orders - resort to extrinsic material for the purposes of construction of order where order ambiguous

Chalmers v Redwood Anti-Ageing Pty Ltd [2007] NSWSC 1186; (2007) 215 FLR 8 D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 Heaven v Roads & Rail Wagons Ltd [1965] 2 QB 355 CASES CITED: House v The King [1936] HCA 40; (1936) 55 CLR 499 Owston Nominees No 2 Pty Ltd v Branir Pty Ltd [2003] FCA 629; (2003) 129 FCR 558 Symonds v Vass [2009] NSWCA 139; (2009) 257 ALR 689 Tolcher v Gordon [2005] NSWCA 135; (2005) 53 ACSR 442

Elias George Wakim (Applicant) David Coleman (First Respondent) Gervase Liddy (Second Respondent) PARTIES: Peter Wilson (Third Respondent) Stephen Cahill (Fourth Respondent) Ray McClenahan (Fifth Respondent) David Murr (Sixth Respondent) Andrew Ogborne (Seventh Respondent)

COUNSEL: D M J Bennett QC/M J Heath (Applicant) S R Donaldson SC/E A Bishop (Respondents)

Morgan Ardino & Co (Applicant) SOLICITORS: Yeldham Price O'Brien Lusk (First to Fifth Respondents) Lee & Lyons Lawyers (Sixth Respondent) Moray & Agnew (Seventh Respondent)

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT DATE OF DECISION: 19 December 2008

LOWER COURT MEDIUM NEUTRAL CITATION: Wakim v Coleman & Ors [2008] NSWSC 1377

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 2009/298164

GILES JA HODGSON JA MACFARLAN JA

2 SEPTEMBER 2010 WAKIM v COLEMAN Judgment 1 GILES JA: I agree with Macfarlan JA. 2 HODGSON JA: I agree with Macfarlan JA. 3 MACFARLAN JA: This is an application for leave to appeal and (if leave be granted) an appeal from a decision of McCallum J dismissing proceedings in which Mr Wakim sought an award of damages for professional negligence against the defendant solicitors and barristers. Her Honour dismissed the proceedings because the process that originated them was not served within the time delimited by the Uniform Civil Procedure Rules ("UCPR") and because her Honour considered that there was no good reason for extending the time for service.

The previous proceedings 4 The defendants acted on Mr Wakim's behalf in connection with three sets of proceedings that Mr Wakim had earlier conducted in the Federal Court. 5 These earlier proceedings and the background to them were described by the primary judge as follows: "7 Twenty-three years ago Mr Wakim obtained judgment in the sum of $786,801.45 for damages arising out of an injury he suffered at work [in 1980]. His employer at the time of the injury was the partnership of Mr Tedros Nader and Mrs Nawal Nader. Mr Wakim's solicitors had, however, sued only Mr Nader, who went bankrupt on his own petition less than three months after judgment was entered.

8 Since then, Mr Wakim has taken many steps to recover the value of the unsatisfied judgment. He received $100,000 from the partnership's insurer. He sued his former solicitors for their failure to join Mrs Nader in the action and settled that claim for $150,000. He also sued Mrs Nader and settled that claim for $10,000 on terms requiring her to acquire certain assets of her husband's estate from the trustee in bankruptcy. Mr Wakim has received $256,832 in distributions from the bankrupt estate.

9 Separately, Mr Wakim indemnified the trustee in bankruptcy to bring an equity suit against Mrs Nader for a declaration that the judgment debt was a debt of the partnership. On advice from the late Mr Darvall QC, the trustee consented to the dismissal of those proceedings on the basis that each party bear his or her own costs.

10 Mr Wakim was dissatisfied with the trustee's conduct of the bankruptcy and, in particular, the resolution of the equity suit. He commenced three sets of proceedings in the Federal Court. The first were commenced in July 1993 against the trustee alleging various breaches of duty. In December 1993 Mr Wakim commenced proceedings against Mr Darvall alleging negligence in relation to advice he provided to the trustee which led to the dismissal of the equity suit. In 1994 Mr Wakim commenced proceedings against the solicitors retained by the trustee alleging negligence in similar terms to that alleged against Mr Darvall.

11 Mr Darvall died before the proceedings were heard and HIH was substituted as a defendant in his place.

12 Mr Wakim retained the law firm Taylor and Scott to act in the three Federal Court proceedings. The first to fifth defendants in the present proceedings are the partners of that firm. Taylor and Scott briefed Mr Murr SC and Mr Ogborne to appear at the hearing of the proceedings between 13 and 16 June 2000 before Einfeld J. Mr Murr and Mr Ogborne are the sixth and seventh defendants respectively.

13 Some time after Einfeld J reserved his decision, Mr Wakim terminated Taylor and Scott's retainer and retained new lawyers who applied for leave to file further submissions to Einfeld J. Further submissions were provided by the end of January 2001 and judgment was handed down in all three matters on 20 February 2001. Einfeld J dismissed the claim against the trustee, finding no breach of duty. He dismissed the claim against the solicitors on the same basis. As to the claim against the barrister, the judge held that Mr Darvall had breached his duty of care to Mr Wakim but that the breach did not cause any of the loss alleged.

14 An appeal against the dismissal of the proceedings against the trustee was dismissed by consent with each party paying its own costs. As to the dismissal of the claim in respect of the advice of Mr Darvall, the plaintiff failed to obtain leave to appeal against HIH, which had gone into provisional liquidation after Einfeld J had delivered his judgment.

15 Mr Wakim successfully appealed against the decision dismissing the claim against the solicitors. The parties then settled that claim on the basis that Mr Wakim was to receive $1.4 million. He has received the value of the whole of that sum, having received a balance of $1.1 million after the deduction of his solicitor/client costs. Pursuant to the settlement, the solicitors were also required to pay Mr Wakim's costs but he has not enforced that obligation".

The present proceedings 6 The Statement of Claim commencing the present proceedings was filed on 13 June 2006. It was an "originating process" (see the definition of that phrase in the Civil Procedure Act 2005, s 3) and was valid for service for six months after 13 June 2006 (UCPR, r 6.2(4)(a)). UCPR, r 6.2(3) requires an originating process to be served on each defendant. 7 The primary judge found that the Statement of Claim was filed on 13 June 2006 because Mr Wakim had been concerned that the six year limitation period for commencement of the proceedings was about to expire (Judgment [47] - [48]). This concern was presumably based upon the fact that the hearing in the Federal Court before Einfeld J had commenced on 13 June 2000. Her Honour found that Mr Wakim's solicitor, Mr Mee Ling, said to Mr Wakim on 12 June 2006 that "he would hold off serving the [Statement of Claim] until they sorted out how it should be framed and until Mr Wakim's money was sorted out". 8 The Statement of Claim alleged that the defendants were negligent in a variety of ways in representing Mr Wakim before Einfeld J. The negligence alleged included a failure to lead certain identified evidence and to argue certain matters. It alleged that as a result of the negligence Mr Wakim settled an appeal against the decision of Einfeld J for $1.4 M rather than the amount of $3 M which Mr Wakim alleged that he would have obtained had the defendants not been negligent. 9 The proceedings were thereafter listed before a Deputy Registrar of the Court on a number of occasions. Mr Mee Ling appeared for Mr Wakim on these occasions. The following entries relating to them appear in the court records (see Judgment [19] - [33]):

(a) 25 October 2006: "Very long history in this matter. S/Claim not served yet. S/C filed due to limitation. Adjourn to February. In order to refine claim".

(b) 14 February 2007: "S/Claim still not served. P can't afford Senior Counsel. SC has some misgivings. Will be an amendment. Claim goes back to 1980".

(d) 4 July 2007: [There was no appearance for Mr Wakim when the matter was called on this day. As a result, the Court sent a letter to him advising that the proceedings had been adjourned to 1 August 2007 and warning that if there was no attendance for Mr Wakim on that date the Court might dismiss the proceedings (Judgment [23])].

(e) 1 August 2007: "Problems with service - STILL. GRANTED LEAVE TO FILE AMENDED S/CLAIM". [The Amended Statement of Claim was filed on 7 or 8 August 2007.]

(f) 31 October 2007: "S/Claim still not served. Plaintiff suing solicitors and counsel. Senior counsel still considering. 1. [Amended] Statement of claim to be served on or by 28/11/07. 2. Back in Court 5/12/07. If not served by then to CM Judge on 7/12/07". 10 The Amended Statement of Claim was served on the first five defendants, who are the solicitor defendants, on 28 November 2007. There is an issue to which I will return (see below at [39]) as to whether the Amended Statement of Claim has been served upon the sixth and seventh defendants, the senior and junior counsel who appeared for Mr Wakim before Einfeld J. The Statement of Claim in its original form was not served on any of the defendants.

The Judgment at first instance 11 The primary judge dealt first with an argument that the Deputy Registrar had by the first direction that he made on 31 October 2007 (see [9(f)] above) extended from 13 December 2006 to 28 November 2007 the period for which the originating process was valid for service. Having referred to a concession by Mr Mee Ling that he had not asked the Court to grant any extension of this period and that Mr Mee Ling "had forgotten about the provisions of the rules that limit the time for which originating process is valid for service" (Judgment [36]), her Honour concluded as follows: "38 There is no basis for inferring that the Court intended at any stage to grant an extension of the validity of the originating process. The Court's intention is to be ascertained from the language of the orders made: NSW Insurance Ministerial Corporation v Anderson (unreported) NSWCA 14 June 1994 per Gleeson CJ, Kirby P and Priestley JA agreeing. The order made by the Registrar on 31 October 2007 did not purport to extend any period of time under the rules of service of originating process. It was directed to the service of the amended pleading that had been filed three months earlier. I am not satisfied that, in granting leave to amend or in directing the plaintiff to serve the amended document by a certain date, the Registrar was granting an extension of time for the purpose of the staleness rule. It follows that the Court has not, up to this point, granted an extension of the period of validity of the originating process". 12 The primary judge then dealt with a submission made on behalf of Mr Wakim that any service problem that he had was "cured" by the fact that the Deputy Registrar had on 1 August 2007 granted leave to file an Amended Statement of Claim. In rejecting that submission her Honour said: "44 In order to obtain an extension of time for service in those circumstances, Mr Wakim would have had to demonstrate exceptional circumstances ([ Heaven v Road & Rail Wagons Ltd [1965] 2 QB 355] at 365) or at least some good reason. It was not appropriate to circumvent those principles by seeking leave to amend without addressing the issue of the staleness of the originating process. It is quite clear that none of those matters was addressed on any of the occasions when the Registrar made orders in relation to the amended statement of claim. On 1 August, when leave to file an amended statement of claim was granted, the fact that a direction for the filing of an amended pleading had previously been made and no amended pleading filed within the time allowed should itself have been a compelling reason for refusing leave.

45 In my view, the order made 1 August 2007 granting leave to file an amended statement of claim should be set aside and the amendment disallowed. It follows that I am not prepared to grant leave to serve that pleading, as sought by Mr Wakim". 13 Finally, the primary judge rejected Mr Wakim's application for an extension of the period for service of the (original) Statement of Claim. Her Honour said that the test was whether Mr Wakim had established "good reason" for the extension (Judgment [46]). Her Honour's reasoning included the following: "52 At the first hearing, Mr Duncan submitted that there was good reason for extending the period of validity of the statement of claim in that the plaintiff has a strong case. That may be doubted. It appears, as submitted by Mr Davies, that it is likely that a substantial part of the claim will not be actionable due to the immunity afforded to advocates in respect of the conduct of proceedings in Court. Further, the evidence of Ms Somerville casts considerable doubt over the plaintiff's claim that he has suffered any loss. Her affidavit established that the amounts recovered by Mr Wakim over the past 23 years exceed the value of his original judgment, accounting for interest at Court rates.

53 In any event, the fact that the plaintiff will be deprived of the possibility of successfully pursuing his claim is not an exceptional or compelling circumstance. It is a necessary consequence of the application of the staleness rule". 14 The judge rejected an argument put on behalf of Mr Wakim that a good reason for extending the time for service was that Mr Wakim did not have the funds to prosecute the proceedings. Her Honour held that Mr Wakim did have sufficient funds until early 2005 at which time he lent a large amount of money to his brother. Thus her Honour took the view that any insufficiency of funds to prosecute the proceedings came about as a result of Mr Wakim's own choice.

The Issues on Appeal 15 Mr Bennett QC, who appeared with Mr M J Heath for Mr Wakim, challenged the primary judge's conclusion that the originating process was not served within the period for which UCPR, r 6.2(4) stated that it was valid for service. He did so on three bases to which I now refer. 16 First, Mr Bennett contended that the reference to "originating process" in r 6.2 was only to the Statement of Claim as originally filed and did not embrace an Amended Statement of Claim. He submitted that an Amended Statement of Claim had only to be served in accordance with such directions, if any, as were made by the Court in relation to its service and that the UCPR did not stipulate any particular time for service of such a document. This submission involved the proposition that the requirement to serve the original Statement of Claim disappeared once that document was amended. 17 I do not accept this submission. It would be curious indeed if the time limit for service of an originating process could be circumvented by the simple device of amending it, particularly when a Statement of Claim may be amended without leave within 28 days after the date on which it is filed (see r 19.1(1)). 18 The limitation of the period that an originating process is valid for service (r 6.2(4)) is an important protection for defendants that should only be regarded as eroded if the intent that that occur clearly appears from elsewhere in the UCPR. In my view an originating process such as a Statement of Claim remains an originating process even after it has been amended. Rule 6.2 thus applies equally to an Amended Statement of Claim and to a Statement of Claim in its original form. To satisfy r 6.2 the Statement of Claim in its then-current form must be served within the period specified in r 6.2(4) (that is, in such proceedings as those now under consideration, six months from when the originating process was filed in its original form). Thus service of the original Statement of Claim within that period will not suffice if the Statement of Claim has been amended by the time of service. Likewise, the fact that the Statement of Claim may have been amended after expiration of the period does not excuse any failure to serve the original form of Statement of Claim within the requisite period. 19 Secondly Mr Bennett submitted that if r 6.2 applies to an Amended Statement of Claim, the period of six months specified in r 6.2(4)(a) commences to run from the date of the filing of the Amended Statement of Claim. It follows from what I have said in relation to his first submission that this submission should also be rejected. If the Statement of Claim is amended after the expiration of the six months, the Statement of Claim in its original form will have had to have been served within six months of the commencement of proceedings for r 6.2 to have been satisfied. If the Statement of Claim is amended within the six month period, the period of validity for service still commences to run from the date of commencement of proceedings, that is when the originating process was first filed. 20 Thirdly Mr Bennett submitted, contrary to the conclusion of the primary judge, that the effect of the Deputy Registrar's first order of 31 October 2007 was to extend the period of validity for service of the originating process past the date upon which the Amended Statement of Claim was served on at least the first five defendants. 21 Mr Bennett submitted that although the Deputy Registrar's orders did not expressly state that the period of validity for service was extended, the grant of such an extension of time must be implied because a direction to perform an act (in this case, to serve the Amended Statement of Claim) must necessarily imply permission to do the act. In support of this submission he relied upon the decision of Barrett J in Chalmers v Redwood Anti-Ageing Pty Ltd [2007] NSWSC 1186; (2007) 215 FLR 8 and the authorities referred to in that decision at paragraph [13]. 22 Where a court order is ambiguous, it is permissible to resort to extrinsic material to resolve the ambiguity (Owston Nominees No 2 Pty Ltd v Branir Pty Ltd [2003] FCA 629; (2003) 129 FCR 558 at [18] and the authorities to which reference is there made). Here there is in my view relevant ambiguity as it is not clear on the face of the order whether the Deputy Registrar intended to extend the period of validity of the Statement of Claim for service. 23 Once recourse is had to the circumstances in which the order of 31 October 2007 was made, it is plain that the Deputy Registrar did not so intend. First, Mr Mee Ling did not make any application for such an extension and admitted that he had in fact forgotten that there was a limited time under the UCPR during which originating process was valid for service. Secondly, there is no basis for thinking that the Deputy Registrar nevertheless turned his mind to the question of whether or not he should grant an extension. In these circumstances, I do not consider that the order of 31 October 2007 should be construed as granting such an extension. The same conclusion applies to the orders of 9 May and 1 August 2007 concerning the filing of an Amended Statement of Claim. 24 I note that in the decision upon which Mr Bennett principally relied, Chalmers v Redwood Anti-Ageing Pty Ltd, Barrett J had recourse to the circumstances in which the order there under consideration was made by the Deputy Registrar and considered it significant that an application had been made for the grant of the leave that his Honour in that case concluded was implicit in the Deputy Registrar's order. The decision is accordingly distinguishable from the present. 25 If, contrary to my view, these orders were properly to be construed as impliedly extending the time for service, the Court would in my view nevertheless have had to set them aside. The application to the primary judge included an application to set aside the Deputy Registrar's order. In circumstances where the Deputy Registrar had given no consideration to whether a ground had been made out to grant an extension of the time for service, the primary judge would have had to set the order aside, unless she herself was satisfied that such a ground had been made out. It may be concluded that, for the same reasons as she gave on the application for extension brought before her, she would not have been so satisfied. 26 Accordingly, each of Mr Bennett's submissions as to why Mr Wakim's originating process was served during the period for which it was valid for service should be rejected. The primary judge was correct in holding that it was not so served. As a result, it is necessary to consider the challenge made on behalf of Mr Wakim to the primary judge's refusal to extend retrospectively the period of validity for service.

Whether the primary judge should have extended the period of validity for service 27 It was common ground that, as the primary judge's decision on this point was discretionary, a challenge to it needed to conform to the principles stated in House v The King [1936] HCA 40; (1936) 55 CLR 499. 28 The first basis upon which the primary judge's exercise of discretion was challenged was that in response to the submission that Mr Wakim had a strong case, her Honour said that "[t]hat may be doubted" and adverted to the defence of advocate's immunity and the question of whether Mr Wakim had suffered any loss as a result of the alleged negligence (Judgment [52] - see [13] above). 29 The judge did not say that the claim would fail by reason of the defence of advocate's immunity. Rather, her Honour said that "it is likely that a substantial part of the claim" would fail for that reason. This was a view that was open to the judge to reach and to take into account in the exercise of her discretion. 30 The Amended Statement of Claim contained the following particulars of negligence of the solicitor defendants: "1. Failed to obtain all the Plaintiff's files papers and documents relating to the said three proceedings, particularly the draft amendments of the Statements of Claim in the said proceedings, and the draft further affidavit of the Plaintiff; 2. Failed to amend the statements of claim to allege:- 1. that the trustee had acted negligently in failing to enforce consent order for partnership accounts; 2. that the trustee acted ultra vires in settling the claims against Mrs. Nader without either a creditor's resolution or an order of the Court; 3. that the solicitor acted negligently in failing to advise the trustee that the same would be necessary; 3. Briefed counsel without regard to the client's wishes; 4. Failed to confer with the client before the trial. 5. Failed to collect evidence or otherwise pursue the Trustee's failure to exercise the bankrupt's rights in respect of the bankrupt's share in T & N. Nader P/L". 31 The Amended Statement of Claim also alleged that all the defendants, that is both the solicitor and barrister defendants, "conducted the said proceedings before Mr. Justice Einfeld negligently". The following particulars were given: "1. The late Mr. Darvall's insurance company, HIH Casualty & General Insurance Ltd., was on the Defendants' application substituted for him, rather than added as a party with the estate also being made a party. 2. The Defendants failed to run the ultra vires argument or the argument that the Trustee was obliged by the general law to obtain the creditors' approval before compromising the claims of the estate. 3. The Defendants failed to properly lead evidence or argue that the Trustee neglected to realize the share in T & N. Nader P/L". 32 In light of the judgment of the High Court in D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 and the other authorities referred to by Ipp JA in his judgment in Symonds v Vass [2009] NSWCA 139; (2009) 257 ALR 689, the primary judge's view that it was likely the defence of advocate's immunity would succeed in respect of a substantial part of Mr Wakim's claim was a reasonable one. It is sufficient for present purposes to refer to the following statement that the plurality made in D'Orta-Ekenaike: "[T]here is no reason to depart from the test described in Giannarelli as work done in court or 'work done out of court which leads to a decision affecting the conduct of the case in court' ((1988) 165 CLR 543 at 560 per Mason CJ.) or, as the latter class of case was described in the Explanatory Memorandum for the Bill that became the [ Legal Practice Act 1996 (Vic)], 'work intimately connected with' work in a court. (We do not consider the two statements of the test differ in any significant way.)" (at [86]). 33 Mr Bennett submitted secondly that the primary judge's comment that the evidence "casts considerable doubt over the plaintiff's claim that he has suffered any loss" (Judgment [52], see [13] above) ignored the "costs of various proceedings at various stages, including solicitor/client costs" and that it was necessary for the defendants to show costs that Mr Wakim had not been able to recover were less than the amount ($30,000) by which his overall recoveries exceeded the original verdict that he obtained in 1980 plus interest (Appeal Transcript p 15). I do not accept this submission. If Mr Wakim wanted to show that it was in the interests of justice that an extension of time be granted, it was in my view incumbent upon him to show to what extent, if any, he suffered a shortfall in his recoveries of costs. In the absence of Mr Wakim doing that it was reasonable for the primary judge to express doubt as to whether Mr Wakim had suffered any loss. 34 A further answer to the attack that Mr Wakim makes on the reasons that the primary judge gave in [52] of her Judgment (see [13] above) is that they were alternative to the view her Honour expressed that a strong case and demonstration of loss on the part of Mr Wakim would not in any event, without more, justify the grant of an extension of time (Judgment [53], see [13] above). I agree that more would be required to be shown before it would be appropriate to grant an extension such as Mr Wakim sought. 35 Mr Wakim's Written Submissions also complained that the primary judge did not expressly respond to the submission that was made to her that the fact that the case was a complicated one was a good reason for extending time (see Judgment [54]). There was in my view no need for her Honour to do so. Her reference to the submission showed that she was conscious of it. It was not a point of any particular significance and it was sufficient for her to conclude, as she did, that no good reason had been established for an extension of time. 36 In his Written Submissions Mr Wakim also complained that the delay in service was due to "lamentable delay" on the part of Mr Mee Ling. It is not clear whether that submission was made to the primary judge but, assuming that it was, it had no foundation because the effect of her Honour's findings was that the Statement of Claim was not served because it contained an ambit claim that needed refinement before it could proceed and that Mr Wakim did not provide the funds to enable that to occur (Judgment [55] - [56], see [14] above). Mr Wakim had funds that would have enabled him to do this until he decided to make a large loan to his brother (see [14] above). 37 In these circumstances my view is that Mr Wakim's challenge to the primary judge's discretionary decision not to extend the time for service of the Statement of Claim fails. 38 I would add that some discussion occurred at the hearing of the appeal as to whether the primary judge applied too strict a test to Mr Wakim's application by requiring him to establish "exceptional circumstances" in line with the test propounded in Heaven v Roads & Rail Wagons Ltd [1965] 2 QB 355 at 361 (see Judgment [44] quoted in [12] above). It is clear however when her Honour's judgment is considered as a whole that, consistently with the decision of this Court in Tolcher v Gordon [2005] NSWCA 135; (2005) 53 ACSR 442 her Honour did not require this but instead required Mr Wakim to demonstrate a "good reason" for the grant of an extension of time (see for example Judgment [46], referred to above at [13], and [57]).

Service on the barrister defendants 39 Some discussion occurred at the hearing of the appeal as to whether the two barrister defendants had even now been served. In light of the conclusions I have expressed above concerning Mr Wakim's arguments, it is unnecessary to determine whether these defendants have been served as any service that did occur clearly did not occur within the period of time during which the Statement of Claim or Amended Statement of Claim was valid for service.

Orders 40 The reasons I have given above indicate that if leave were granted Mr Wakim's appeal would fail. In these circumstances I propose that his application for leave to appeal be dismissed with costs.

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