THE ESTATE OF DARRYL ARTHUR HERBERT C/- THE PUBLIC TRUSTEE

Practice and procedure - Appeal against decisions of Registrar dismissing plaintiff's application seeking leave to re-amend amended Statement of Claim and the plaintiff's application seeking leave to extend the validity of the Writ of Summons - Turns on own facts

Insurance Contracts Act 1984

Applications seeking leave to re-amend amended Statement of Claim and leave to extend validity of the Writ of Summons dismissed

Banque Commerciale SA (in liquidation) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279

Coyne v Sun Securities & Commercial Equity Corporation Ltd & Ors (1992) 8 WAR 222

Krygger v Commonwealth of Australia, unreported; FCt SCt of WA; Library No 940070; 1 February 1994

Ramsay v Madgwicks (a Firm) [1989] VicRp 1; [1989] VR 1

Tony Sadler Pty Ltd & Ors v McLeod Nominees Pty Ltd (1994) 13 WAR 323

Hamersley Iron Ltd v Automotive Food, Metals, Engineering, Printing & Kindred Industries Union of Workers - Western Australia Branch & Ors [2000] WASC 66

State of Queensland and Anor v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146

Van Leer Australia Pty Ltd v Palace Shipping KK [1981] HCA 11; (1981) 180 CLR 337

1 DEANE DCJ: This matter concerns appeals by way of hearings de novo against decisions of a Registrar of the District Court on 12 August 2002 dismissing the appellant/plaintiff's application seeking leave to re-amend the amended statement of claim dated 8 April 2002 and the plaintiff's application for leave to extend the validity of the writ of summons pursuant to O 7, r 1(2) of the Rules of the Supreme Court 1971 filed on 27 December 2001. For the sake of convenience I shall refer to the parties as the plaintiff and second defendant and where necessary, the first defendant, because that is how the parties have been described in all relevant paperwork todate.

2 This action has a lengthy and somewhat unfortunate history, which it is necessary to outline in some detail in order that the appeals against the decisions of the Registrar can be understood and placed in context.

3 On 20 September 1994 the plaintiff was injured in the alleged accident which occurred whilst he was on holiday in Broome. At the time he was riding a horse during the course of a trail ride when it is alleged that the horse bolted throwing the plaintiff off as a result of which it is said the plaintiff injured both of his wrists. As the plaintiff is a chef by occupation it is alleged that these injuries are particularly problematic for him. At the time of the alleged accident the Cable Stable Trail & Equestrian Centre in Broome was owned and run by Mr Darryl Herbert, but it would seem that Mr Herbert sold the business in early 1995.

4 On 5 May 1995 the plaintiff instructed MacDonnells, a firm of solicitors based in Queensland, to act on his behalf in pursuit of his claim for personal injury. MacDonnells retained the services of Clayton Utz to act as their agents in Western Australia on 13 December 1995.

5 On 25 May 1997 Mr Herbert married but most regrettably the following month he died. Nothing further seems to have occurred until 25 May 1998 when Clayton Utz sent a letter of demand to the Cable Stable Trail & Equestrian Centre. Very shortly afterwards on 3 July 1998 the Public Trustee advised Clayton Utz that Mr Darryl Herbert's Will of 23 January 1997 had been revoked by his subsequent marriage in May 1997.

6 Once again there appears to have been a period of inaction because it was not until 10 July 2000 that a writ of summons was filed commencing proceedings against the second defendant and incorrectly nominating the first defendant as the estate of Darryl Arthur Herbert C/- the Public Trustee. For reasons that are not entirely clear the plaintiff did not serve the writ upon the second defendant until almost one year later on 10 July 2001. The second defendant subsequently entered an appearance on 19 July 2001. To date no person or entity has entered an appearance on behalf of the first defendant. It is evident that the first defendant was not served with the writ within 12 months of it being filed and further that the first defendant has not been served with a valid writ. The limitation period expired on 20 September 2000.

7 On 17 September 2001 the plaintiff amended the statement of claim and served that document upon the second defendant on 20 September 2001. Fairly shortly thereafter on 8 November 2001 the second defendant filed its defence in the District Court. At a directions hearing in the District Court on 3 December 2001 the issue of the wrongly named or nominated first defendant on the writ of summons was raised and discussed, as a result of which it would seem that the plaintiff filed a chamber summons on 27 December 2001 seeking leave to extend the validity of the writ of summons filed at the District Court and served on the solicitors for the second defendant. This application was not successful. On 3 January 2002 the second defendant then filed a chamber summons seeking to strike out the plaintiff's statement of claim and seeking summary judgment but this application was dismissed by a Registrar of the District Court on 19 February 2002.

8 Shortly prior to this on 18 December 2001 the plaintiff's solicitors wrote to the Probate Office enquiring as to whether probate had issued in relation to Mr Herbert's estate and they were informed by the Probate Office on 20 December 2001 that a Ms Tazuko Kaino was the Administrator of Mr Herbert's estate. This was the first occasion it would seem upon which such an enquiry had been made, although it is apparent that it could have been made by the plaintiff's solicitors sometime earlier in mid-1998 when they were contacted by the Public Trustee regarding Mr Herbert's will.

9 On 8 April 2002 the plaintiff's solicitors filed a chamber summons to re-amend the amended statement of claim previously filed at the District Court. This was served on the solicitors for the second defendant on 13 June 2002. The proposed amendment sought to substitute Ms Tazuko Kaino as Administrator for the estate as the first defendant in the action. In a supplementary affidavit of 30 May 2003 Ms Janelle Spargo, a para-legal employed by the plaintiff's solicitors in Western Australia, who are now D'Angelo & Partners, deposes that in a letter to Ms Kaino dated 24 May 2003 suggesting that Ms Kaino may wish to seek legal advice regarding her position, a copy of the chamber summons seeking leave to re-amend the amended statement of claim and the amended statement of claim was enclosed. It is not clear if Ms Kaino was or has been served with a copy of the chamber summons seeking to extend the validity of the writ of summons. In any event Ms Kaino has not appeared personally or by counsel at any point in the history of this matter and has filed no materials or documentation indicating what her attitude or position to the plaintiff's applications might be.

10 The plaintiff's chamber summons seeking to re-amend the amended statement of claim and extend the validity of the writ was dismissed by a District Court Registrar on 12 August 2002 and an appeal from those orders was filed on 16 August 2002. On 20 August 2002 the notice of appeal was served on the solicitors for the second defendant. Following that in late August and early September 2002 there was a directions hearing regarding the application to appeal and it was ordered to be heard before a Judge of this Court. Administrative arrangements were then made for the matter to be listed.

11 On 15 November 2002 solicitors for the second defendant wrote to the plaintiff's solicitors advising that they intended to apply to strike out the appeal and they filed a summons to strike out the appeal for want of prosecution on 18 November 2002.

12 On 21 March 2003 the application to strike out the appeal notice was adjourned due to the late filing of affidavits on behalf of the plaintiff. The following month on 14 April 2003 the second defendant's application to strike out the appeal notice was dismissed and the plaintiff was ordered to pay the costs of the second defendant.

Plaintiff's application for leave to amend the amended statement of claim

13 The plaintiff seeks leave to re-amend the amended statement of claim by changing the name of the first defendant. Order 21, r 5(2) of the RSC provides that the Court may grant leave to amend in the manner proposed "if it thinks it just to do so". The exercise of the discretion to grant or refuse leave dictates that issues of fairness and prejudice as between the parties must be balanced. Furthermore practical considerations of case management principles must be considered; Tony Sadler Pty Ltd & Ors v McLeod Nominees Pty Ltd (1994) 13 WAR 323. In cases such as this where there has been a very considerable delay in making such an application, the plaintiff bears the burden of persuading the Court to exercise its discretion to grant leave to amend. The exercise of that discretion takes into account matters such as the reason for the delay and whether the person making the application is in some way at fault for the situation arising in the first instance. Clearly in exercising its discretion the Court must give weight to the need for and public interest in having litigation disposed of efficiently. I accept the argument by counsel for the plaintiff that if leave is not granted to re-amend the amended statement of claim to substitute the correct first defendant then the prejudice to the plaintiff is clear. That, however, as counsel for the second defendant points out does not predominate over prejudice to a respondent to such an application, having the matter dealt with expeditiously: Krygger v Commonwealth of Australia, unreported; FCt SCt of WA; Library No 940070; 1 February 1994. Counsel for the second defendant also points out that the Court has no jurisdiction to amend the writ in the absence of the first defendant; Banque Commerciale SA (in liquidation) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 288.

14 It is patently clear, as pointed out by counsel for the plaintiff, that a mistake has been made in that the estate of Mr Darryl Herbert is named as the first defendant on the writ of summons rather than the natural person acting on behalf of the estate, in this case being Ms Kaino. It is quite unclear, however, and does not appear to have been satisfactorily explained as to why this error persisted for some time albeit that in November 1998 solicitors for the plaintiff were informed that Mr Herbert had died the previous June. The Public Trustee advised Clayton Utz that Mr Herbert's Will was revoked by his marriage. In all of the circumstances there is no acceptable explanation provided on behalf of the plaintiff through his solicitors as to why a number of years have passed before action was taken to correct an error or serious oversight that was not apparently noted or appreciated by two firms of solicitors.

15 Ms Lainee Bartholomaeus, a solicitor in the employ of the solicitors for the second defendant, has the conduct of this matter under the supervision of counsel for the second defendant. Ms Bartholomaeus has sworn two affidavits of 3 January 2002 and 18 February 2002 canvassing the background to this matter and outlining the prejudice which it is alleged the second defendant will suffer if the plaintiff's appeals succeed and the applications are allowed.

16 To that second affidavit sworn by Ms Bartholomaeus is an annexure "LRB-1", being an affidavit of Michael Begovich, an assistant claims manager employed by the second defendant, which further adds to the history of this matter and elaborates upon the difficulties occasioned to the second defendant as a result of various delays in the progress of the matter.

17 In her affidavit of 18 February 2002 Ms Bartholomaeus refers to the fact that the plaintiff's solicitors were aware on 8 October 2001 that the first defendant had not been served with the writ of summons and they further acknowledged on 3 December 2001 in chambers that the first defendant had been incorrectly joined. On 21 January 2002 the plaintiff's solicitors advised the Court that the plaintiff had located Ms Kaino and intended to substitute her for the first defendant. Solicitors for the second defendant then immediately took steps to locate Ms Kaino, apparently without a great deal of assistance from the solicitors for the plaintiff, and were successful in doing so.

18 Ms Bartholomaeus deposes that during discussions with Ms Kaino on 30 January 2002 over the telephone she confirmed that she had married Mr Darryl Herbert approximately three months before his death. He had, however, sold Cable Stable Trail & Equestrian Centre approximately 18 months before Ms Kaino met him. Consequently Ms Kaino knew nothing about the alleged accident involving the plaintiff nor had Mr Herbert ever mentioned the incident to her. She was aware that Mr Herbert had various people working with him during the period he owned Cable Stable Trail & Equestrian Centre but she could provide no detail as to their names save for recalling that a Betty Rupe, who subsequently purchased the business, assisted Mr Herbert from time to time in the business.

19 Ms Kaino suggested that a Mr Bernard Gerbe, a close friend of Mr Herbert's, may be able to assist with investigations. When Mr Gerbe was spoken to on that same day, however, it was his recollection that Mr Herbert ran the business as a one man operation with the assistance of temporary helpers who were often backpackers passing through Broome. Mr Herbert took groups of between four and six people out on rides either alone or with assistance of a helper. He vaguely recalled Mr Herbert mentioning something about an accident occurring around the relevant time but could remember no details of who was involved or the circumstances of the accident.

20 Ms Kaino did provide the name of a woman called Anjie Nord who apparently worked with Mr Herbert in his business for a time and it was believed Ms Nord had returned to live in the Eastern States. Mr Bartholomaeus immediately attempted to locate Ms Nord and was successful in doing so. Ms Nord, however, advised that she had only worked for Mr Herbert for a brief period of 1½ weeks and could recall no accident of the description provided to her by Ms Bartholomaeus. Subsequently Mr Gerbe advised that he had attempted to locate a young blonde woman whom he recollected as working with Mr Herbert around the time of the accident but had not been successful in doing so. He did, however, speak with a Christine Kuwait who had worked with Mr Herbert and she had a vague recollection of an accident at the business in 1994 but had no recall of any of the details and indeed believed it was a female who was involved in the accident.

21 Ms Kaino also advised Ms Bartholomaeus that a few weeks prior to their telephone conversation she had located a diary which was owned, or believed to have been owned, by Mr Herbert and she thought that the diary contained names of some people who had worked with Mr Herbert in his business. Ms Kaino, however, had disposed of that diary because she had no further use for it and was not aware that she would have any use for it in the future or indeed that any other person would have use for it.

22 According to Ms Bartholomaeus' affidavit of 18 February 2002 as at 15 February 2002 the solicitors for the second defendant had not received further communication from the plaintiff's solicitors regarding their intention of substituting Ms Kaino as the first defendant or whether it was still intended to do so. On that same day Mr McKenna, counsel for the second defendant, contacted the plaintiff's solicitors and was informed that they intended to serve Ms Kaino shortly with the writ of summons naming her as the first defendant in the action.

23 It is correct as counsel for the plaintiff points out that the information as to the diary and its contents is not precise in the sense that there is no evidence that the diary contents cover the period relevant to the time of the alleged accident or that any names contained in the document related to employees or persons employed in Mr Herbert's business or names of persons who may be able to assist with inquiries.

24 Nonetheless in my view due to the delay and inaction on the part of the plaintiff's solicitors, Ms Kaino was not immediately contacted or contacted in a timely manner, although she could have been, and as a result a document which may well have contained information critical to the investigation of the plaintiff's alleged accident and the defence of the allegations made by the plaintiff was disposed of or destroyed. As a result the second defendant has been denied an important opportunity to prepare and conduct its case. This in itself in my opinion does establish substantial prejudice to the second defendant arising out of the amendment which the plaintiff seeks. This application is therefore dismissed as is the appeal on this point.

Application to extend the validity of the writ of summons

25 Order 7, r 1(1) of the RSC provides "for the purposes of service, a writ (other than a concurrent writ) is valid in the first instance for 12 months beginning with the date of its issue ...". There is a wide discretion to permit an extension of the validity of a writ, but by implication such discretion should be exercised where there is a good reason for doing so depending on the particular circumstances of the case; Coyne v Sun Securities & Commercial Equity Corporation Ltd & Ors (1992) 8 WAR at 222.

26 The reasons for the non-service of the writ upon the first defendant are outlined in the affidavit of Ms Sally-Anne Hayward sworn 20 December 2001. Essentially the reasons referred to in Ms Hayward's affidavit are that;

"(1) The plaintiff's solicitors were awaiting delivery of the High Court decision in FAI v Australian Hospital Care Pty Ltd [2001] HCA 38 which it was believed was relevant to the plaintiff's prospects of success in his claim.

(2) The plaintiff's solicitors in Queensland were never in possession of a sealed writ of summons and a statement of claim and so could not have effected service directly themselves.

(3) The SGIO never raised the matter of service on the first defendant until towards the end of 2001.

(4) The plaintiff's solicitors were unaware of the alleged importance of service upon the first defendant.

(5) Clayton Utz whom the plaintiff's solicitors in Queensland instructed to act as their local agents in Western Australia failed to serve the first defendant.

(6) Non-service of the first defendant is a procedural matter and late service upon that party should not be prejudicial to it and further the plaintiff expects the first defendant to be impecunious."

27 Counsel for the plaintiff conceded in argument that the reasons put forward in Ms Hayward's affidavit were not compelling. In my view one can go further and observe that the explanations proffered are a matter for particular concern and disquiet coming as they do from a firm of legal practitioners. They in no way provide a satisfactory explanation or excuse for the lack of action or knowledge on the part of the legal practitioners involved. It should be noted that the failure of the solicitors involved both in Queensland and Western Australia to appreciate the need to serve the writ was not in any way due to any failure or lack of diligence and action on the part of the plaintiff personally.

28 In exercising its discretion in this area whilst the Court must take into consideration the general justice of the case and the relative hardships which a grant or refusal of renewal of the writ would impose upon the parties, the Court is also bound to take account of case flow management principles in making such a decision. Obviously lengthy delays in proceedings make it difficult to locate witnesses who may be able to recall matters of relevance and substance and they can also result in financial burdens being imposed upon potential defendants. It is not sufficient that a plaintiff or a plaintiff's solicitors fail to take action merely because they are awaiting some future development in the law by way of a legal decision being handed down; Ramsay v Madgwicks (a Firm) [1989] VicRp 1; [1989] VR 1 at 5.

29 The affidavit of Michael Begovich sworn 7 January 2002 refers in par 28 to the alleged prejudice to the second defendant should leave to extend the validity of the writ be granted. Mr Begovich points out that the plaintiff's failure to notify either Mr Herbert or the first defendant or the second defendant of the potential claim until nearly four years after the alleged accident and the unexplained delay between MacDonnells obtaining Clayton Utz on 13 December 1995 and 2½ years later when on 25 May 1998 Clayton Utz sent a letter of demand to Mr Herbert's business, was the first correspondence indicating notification of the plaintiff's claim. As I understand it from counsel for the second defendant a formal claim by or on behalf of the plaintiff has still not been made.

30 Mr Begovich also refers to the failure of Clayton Utz to inform the second defendant of Mr Herbert's death in June 1997 until November 1998 which was approximately six months after Clayton Utz had been given that information.

31 Whilst counsel for the plaintiff points out that those matters are not alleged prejudices arising out of late service, nonetheless in my view there is a clear argument that the sooner a party at risk in a claim is notified the better both for that party itself and its legal advisers. Here there was a four year delay from the date of the alleged accident to the first notification of it and hence a potential claim.

32 Counsel for the plaintiff submitted that it was inappropriate for the learned Registrar to dismiss the plaintiff's application at first instance when the proposed first defendant, Ms Kaino, did not oppose the application nor suggest that she would suffer any prejudice as a result of it. It now seems that Ms Kaino was advised by letter that it was proposed to substitute her as the first defendant but for reasons which are not apparent Ms Kaino chose not to respond to this information. It is entirely speculative on the material currently available to arrive at any view as to what Ms Kaino's attitude is towards these applications and indeed whether she holds the view that if they are successful she will suffer prejudice or not. Further one cannot wholly discount the fact that although there is no evidence put forward of prejudice to the first defendant directly, a degree of prejudice has been raised on behalf of the second defendant which might arguably apply at least in part to the position of first defendant.

33 Counsel for the second defendant submitted that the plaintiff's cause of action against it is based on s 51 of the Insurance Contracts Act ("the Act"). As a result it is contended the case as pleaded against the second defendant in the amended statement of claim can only succeed if liability to pay damages to the plaintiff can be established in the first instance against the first defendant. To date the first defendant has been incorrectly named in the proceedings and no writ has issued in the correct name nor has the first defendant been served with a valid writ of summons within the limitation period.

34 Counsel for the second defendant further argues that if the plaintiff's applications or appeals are unsuccessful he will not be able to establish liability on the part of the first defendant and the second defendant will have complete defence pursuant to s 51 of the Act. It is the second defendant's position that it will suffer considerable prejudice if the applications or appeals are successful because it will then be denied the opportunity of pleading in its defence to the plaintiff's claims that the limitation period in respect of his cause of action has expired.

35 It is accepted that Mr Herbert did not report the alleged accident to the second defendant, who only learnt of it through an insurance broker in July 1998. Mr Herbert therefore breached the notification condition of the policy. Section 51 of the Act allows in this case the plaintiff the opportunity to recover from the second defendant an amount equal to the second defendant's liability under the contract in relation to the insured's liability and damages. The second defendant therefore argues that even if s 51 of the Act were found to apply the plaintiff would not have a claim against the second defendant because it would not be liable under the policy issued to Mr Herbert given the prejudice it suffered because of Mr Herbert's breach of the notification provisions. The practical result it is said would therefore be to engage in a somewhat expensive and ultimately fruitless exercise.

36 In relation to the issue as to whether or not to grant leave to extend the validity of the writ of summons the focus is largely but not solely on the argument relating to prejudice or lack thereof to the parties. The Court cannot, however, ignore policy considerations relating to the exercise of the discretion of its powers in relation to the matter. In this case there have been lengthy and inexplicable delays in the sense that the explanations advanced as to the reasons for non-service of the writ of summons on the first defendant are totally unsatisfactory. It is a balancing exercise and one must be very mindful of the desirability that a plaintiff be able to pursue a cause of action against all relevant parties. As against this in the overall context of the material before the Court in this application I am persuaded that if leave to extend the validity of the writ of summons is granted, considerable prejudice will be occasioned to the second defendant. For this reason the appeal in this regard is also dismissed.