notice of discontinuance - what constitutes "notice in writing" Words and Phrases - "notice in writing" Companies Ordinance 1962 (ACT) 8.230(3) ACT Supreme Court Rules - 0.30, rr.l, 2, 3; 0.67, r.4 B& J ENGINEERING PTY LTD (in liquidation) v JOSEF DAROCZY and HILTONIA INVESTMENTS PTY LTD No. ACT G.36 of 1984 HILTONIA INVESTMENTS PTY LTD trading as ACY CONSOLIDATED MACHINERY v JOSEF DAROCZY and B & J ENGINEERING PTY LTD No. ACT G.38 of 1984 Coram : Davies, Sheppard and Everett JJ Canberra 19 December 1984 IN THE FEDERAL COURT OF AUSTRALIA ) ) AUSTRALIAN CAPITAL TERRITORY ) Nos. ACT G.36 and G.38 DISTRICT REGISTRY ) of 1984 ) ) GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN 3 B & J ENGINEERING PTY LTD (in liquidation) Appellant AND : JOSEF DAROCZY and HILTONIA INVESTMENTS PTY LTD Respondents (No. ACT G.36 of 1984) ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN HILTONIA INVESTMENTS PTY LTD trading as ACY CONSOLIDATED MACHINERY Appellant AND : JOSEF DAROCZY and B & J ENGINEERING PTY LTD (in liquidation) Respondents (No. ACT G.38 of 1984) ORDER JUDGES MAKING ORDER Davies, Sheppard and Everett JJ 19 December 1984 DATE OF ORDER WHERE MADE Canberra The appeals are dismissed. In each appeal the appellant shall pay the costs of the respondent, Josef Daroczy, with the intent that such respondent recover only one set of costs. IN THE FEDERAL COURT OF AUSTRALIA ) ) AUSTRALIAN CAPITAL TERRITORY ) Nos. ACT G.36 and G.38 DISTRICT. ISTRY ) of 1984 ) ) GENERAL DIVISION ON _ APPEAL FROM THE SUPREME COURT OF THE AUSTRALI CAPITAL TERRITORY BETWEEN 3 B & J ENGINEERING PTY LTD {in liquidation) Appellant AND 3 OSEF_DAROC and HILTONIA INVESTMENTS PTY LTD Respondents (No. ACT G.36 of 1984) ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN HILTONIA INVESTMENTS PTY LTD trading as ACY CONSOLIDATED MACHINERY Appellant AND H JOSEF DAROCZY and B & J ENGINEERING PTY LTD (in liquidation) Respondents (No. ACT G.38 of 1984) REASONS FOR JUDGMENT Coram : Davies, Sheppard and Everett JJ 19 December 1984 2. DAVIES and EVERETT JJ : On 17 July 1979, Writ No.1293 of 1979, in which Josef Daroczy was described as the plaintiff and B& J Engineering Pty Limited (in liquidation) and ACY Consolidated Machinery (a firm) were described as defendants, was issued out of the Supreme Court of the Australian Capital Territory. There were two defects in the writ, the first being that B& J Engineering Pty Limited was a company in the course of liquidation and leave to commence proceedings against it had not been obtained in accordance with s.230(3) of the Companies Ordinance 1962 (ACT). The second was that the writ was addressed only to B & J Engineering Pty Limited and not to the other defendant. On 5 November 1979, the solicitor for the plaintiff received a memorandum from his secretary which advised that a notice of discontinuance against both defendants be given and that a fresh action be commenced. The solicitor endorsed the memorandum with the words "OK go ahead!" and, against the recommendation that there be a notice of discontinuance against both defendants, there was written in the handwriting of the secretary "File but dont serve". Whether this note was placed on the memorandum before it was seen by the solicitor or afterwards is not known, but we take the note to mean that the notice should be filed in the Supreme Court but not served. On 3 December 1979, a notice that "the plaintiff wholly discontinues this action against the defendants" was filed in the Supreme Court. The notice was signed by the solicitor for the plaintiff. The notice was not served on the defendants. We 3. would conclude from the whole of the evidence before the Court that that notice of discontinuance was filed with the authority of the solicitor for the plaintiff and we would so conclude notwithstanding his affidavit and oral evidence to the contrary. In January 1980, the plaintiff's solicitor drafted an originating summons and supporting affidavit seeking leave to commence and continue proceedings by Josef Daroczy against B & J Engineering Pty Limited. The proposed writ annexed to the affidavit showed Josef Daroczy as plaintiff and B & J Engineering Pty Limited (in liquidation) and ACY Consolidated Machinery (a firm) as defendants. On 18 Aprii 1980, an order was made on the originating summons giving leave to commence that proceeding. However, for reasons which have never been explained, new proceedings were not commenced but the Writ No.1293 was subsequently served on the two defendants. On 17 September 1980, B & J Engineering Pty Limited entered an appearance. On 20 December 1982, Hiltonia Investments Pty Limited trading as ACY Consolidated Machinery entered an appearance. Defences were delivered and the action continued until, on 15 March 1984, as a result of a search of the Court file, the defendants became aware of the notice of discontinuance filed on 3 December 1979. Proceedings were then taken by the defendants seeking, in substance, a declaration that the action had been discontinued in 1979 and that all steps taken thereafter in the action were invalid, and by the plaintiff seeking to uplift the notice of discontinuance on the ground that it was a nullity and to correct the defects in the writ which we have already mentioned. On 14 June 1984, Mr Justice Kelly made orders as sought by the plaintiff. The only issue which is raised in this appeal is whether Action 1293 of 1979 was discontinued by the filing of the notice of discontinuance or by the step subsequently taken by the plaintiff's solicitor in obtaining leave to institute a fresh action. Order 30, rules 1, 2 and 3, of the Rules of the Supreme Court of the Australian Capital Territory read : "1.¢1) The plaintiff may, where there are Pleadings, at any time before the receipt of the defendant 's defence, or, after the receipt thereof, before taking any other proceeding in the action (save any interlocutory application), and, where there are no pleadings, the plaintiff may, within fifteen days after appearance, by notice in writing, wholly discontinue his action against all or any of the defendants, or withdraw any part or parts of his alleged cause of complaint, and thereupon he shall pay the defendant's costs of the action, or, if the action is not wholly discontinued, the costs occasioned by the matter so withdrawn. Such costs shall be taxed, and such discontinuance or withdrawal (as the case may be) shall not be a defence to any subsequent action. (2) Save as in this rule otherwise provided, it shall not be competent for the plaintiff to withdraw the record or discontinue the action without leave of the Court or Judge, but the Court or Judge may, before, or at or after the hearing or trial, upon such terms as to costs and as to any other action and otherwise as are just, order the action to be discontinued, or any part of the alleged cause of complaint to be struck out. (3) The Court or Judge may, in like manner, and with the like discretion as to terms, upon the application of a defendant, order the whole or any part of his alleged grounds of defence or counter-claim to be withdrawn or struck out, but it shall not be competent toa defendant to withdraw his defence, or any part thereof without such leave. 5. 2. A cause may be discontinued at any time upon filing a consent in writing signed by all parties. 3. A defendant may enter judgment for the costs of the action if it is wholly discontinued against him, or for the costs occasioned by the matter withdrawn if the action is not wholly discontinued, in case such respective costs are not paid within four days after taxation." Rule 1(1) requires notice in writing. It was held by the learned Judge that this rule required notice in writing to the defendants. His Honour said, inter alia, "... The method provided for discontinuance, notice in writing, is to be contrasted with the method for taking other steps in an action which involve filing documents in the Court. See, for example, Order 14, r.11 and Order 56, r.2. Notice of a step in an action or of any kind is not given to the Court. Where necessary, documents are filed in Court but notice is given to the other party or parties to an action by service, delivery or other means. In my view, therefore, the method of discontinuance provided for by Order 30, r.1 is notice in writing given to a defendant or defendants. The notice need not be in any special form. Spincer v Watts, (1889) 23 Q.B.D. 350. -.. I think the words 'notice in writing' ought to be construed as meaning 'notice in writing to the defendant or defendants'." In the United Kingdom, during most of the nineteenth century, it was necessary to obtain the leave of the Court to discontinue. Chitty's Archbold's Practice of the Court of Queen's Bench, Vol.II, 12th ed (published 1866) describes the practice, at pp.1483-6, as follows, "If the plaintiff find that he has misconceived his action, or that for some defect in the pleadings, or other reason, he will not be able to maintain it, he may obtain a rule for leave to discontinue. This rule may be had at any time, as of course, after the commencement of the action, and before trial or writ of inquiry or demurrer argued and allowed; but not during a rule with a stay of proceedings. ... The terms upon which a party is allowed to discontinue are in the discretion of the Court. In general, the payment of costs is imposed. ... As soon as you have obtained the side-bar rule, or rule absolute, take it to ome of the Masters, and get an appointment on it to tax costs. Serve a copy of the rule and appointment on the defendant's attorney or agent, and attend at the time appointed, and the Master will tax the costs. Where plaintiff has leave to discontinue upon payment of costs, they should be paid forthwith; for, until paid, the action is not discontinued or stayed, and the plaintiff may be compelled to proceed therein as usual. ... When the piaintiff has obtained a rule to discontinue, the defendant may by motion, or summons and order, compel the plaintiff to enter the judgment of discontinuance, and carry in the judgment roll; but if the plaintiff had leave to discontinue upon payment of costs, they must first be paid. ..." A subsequent change to the rules permitted discontinuance by notice. The 13th edition of Chitty's King's Bench Forms (1902) sets out the then rule, 0.XXVI r.1, as follows, at p.160 : "The plaintiff may, at any time before receipt of the defendant's defence, or after the receipt thereof before taking any other proceeding in the action (save any interlocutory application), by notice in writing, wholly discontinue his action against all or any of the defendants or withdraw any part or parts of his alleged cause of complaint, and thereupon he shall pay such defendant's costs of the action, or, if the action be not wholly discontinued, the costs occasioned by the matter so withdrawn. Such costs shall be taxed, and such discontinuance or withdrawal, as the case may be, shall not be a defence to any subsequent action. Save as in this rule otherwise provided, it shall not be competent for the Plaintiff to withdraw the record or discontinue the action without leave of the Court or a Judge, 7. but the Court or a Judge may before, or at, or after the hearing or trial, upon such terms as to costs, and as to any other action, and otherwise, as may be just, order the action to be discontinued, or any part of the alleged cause of complaint to be struck out. The Court or a Judge may, in like manner, and with the like discretion as to terms, upon the application of a defendant, order the whole or any part of his alleged grounds of defence or counter-claim to be withdrawn or struck out, but it shall not be competent toa defendant to withdraw his defence, or any part thereof, without such leave." It will be seen that the new rule dispensed with leave of the Court in the circumstances specified, but required notice in writing to be given and also provided for the payment by the Plaintiff of the defendant's taxed costs. Clearly, the notice intended was not notice to the Court but notice to the defendant, for leave of the Court was dispensed with and notice to the parties was substituted. The service of the notice was intended to inform the defendant of the discontinuance of the action and also to inform the defendant of the defendant's entitlement to costs and to enter judgment in respect of those costs if they be not paid. The form of notice set out in Appendix B No.19 to the Rules of Court, was a notice "To the above-named defendant, and to Mr. Z., his solicitor or agent". See Chitty's King's Bench Forms, 13th ed, p.160. The new rule was always so understood. The 6th edition of Danieli''s Chancery Practice (1882), said, at page 567, "A notice of discontinuance or withdrawal must be served on the other parties to the action in the manner before described, and a defendant may sign judgment for the costs of the action if it is wholly discontinued, or for the costs occasioned by the matter withdrawn if the action be not wholly discontinued." That view of the rules has not since been questioned. Williams Supreme Court Practice, Vol.1, 2nd ed, states, at p.1404 : "Notice of Discontinuance. If the plaintiff desires to discontinue or to withdraw part of his claim in a case where he can do so0 without leave he must serve on the defendant a notice of discontinuance. For form of notice, see Appendix B, No.19. This form should be followed, but no particular form is necessary. A notice by the plaintiff's solicitors that they were instructed to proceed no further with the action has been held sufficient (The Pommerania (1879), 4 P.D. 195; see Spincer v. Watts (1889), 23 Q.B.D. 350 at p.352; Nichol v. Fearby, [192313 1 K.B. at p.503; £19223 All E.R. Rep.790; The Salybia, £19103 P.25); while a letter stating that the plaintiff would discontinue and would send a notice to that effect was held insufficient in Moon v. Dickinson (1890), 63 L.T.766. Although the Rule is silent on the question, notice of discontinuance must be served on the defendant. However, it need not be _ served personally. See Metropolitan Permanent Building Society v. McClymont, £1983] Qd.R.160." In the Pommerania Case (1879) 4 PD 195, the solicitors for the plaintiff wrote to the solicitors for the defendant, "We are instructed to proceed no further with this action. We presume you do not require a formal order dismissing it." Sir Robert Phillimore held that letter to be a sufficient notice of discontinuance. As can be perceived, that notice was not a notice to the Court or even in the form of a document suitable for filing in Court. It was a letter from one party to another. In Spincer v Watts (1889) 23 QBD 350, the plaintiff's solicitors had written to the defendant Watts informing him that they did not propose to prosecute the action any further against him as 9. far as the plaintiff's claim was concerned. It was held that that letter was a good notice of discontinuance. At page 353, Lopes LJ said, "I think that it amounted to such a notice in writing as was contemplated by the rule." Lindley LJ also accepted the letter to be a notice of discontinuance. We are therefore satisfied that the notice in writing of which Order 30 r.1(1) speaks is a notice in writing by the plaintiff to the defendant and that anaction may not be discontinued unless such notice is given within the time specified. It was submitted by Mr J.C. Campbell, who appeared for the appellant, that such notice was given in the present instance by being filed in the Registry. Mr Campbell relied upon Order 67 r.4 which reads : "4.(1) Where no appearance has been entered fora party, or where a party or his solicitor (as the case may be), has omitted to give an address for service as required by Orders 5 and 13, all writs, notices, pleadings, orders, summonses, warrants, and other documents, proceedings, and written communications in respect of which personal service is not requisite may be served by filing them. (2) Any document so filed shall be posted up in the Registrar's office and shall remain so posted up for fourteen days." However, as is stated both in The Annual Practice 1956 (UK), at p.1534, and in Williams Supreme Court Practice, Vol.2, 2nd ed, at p.2499, this rule applies only to a case where it is incumbent upon a party to enter an appearance or otherwise to give an address for service. The present was not such a case, for the writ had not been served. Earlier forms of the rule are stated 10. in Chitty's Archbold's Practice, Vol.I, 12th ed (1866), as follows, at p.168 : "Where a party sues or defends by an attorney, and the attorney has neglected to make an entry of his name and place of business, as directed by r.165, H.1853, 'the fixing up of any notice or the copy of any pleadings, notice, summons, order, rule, or other proceeding for such attorney in the Master's office shall be deemed a sufficient notice.' And ee r.166, H.1853, ante, 165, as to sticking up proceedings in the Master's office, where a party sues or defends in person, and has neglected to leave his address at the Master's office, as directed by that rule. By r.162, H.T.1853, 'where the residence of a defendant is unknown, rules, notices, and other proceedings may be stuck up in the office, but not without previous leave of the Court or a judge'." It necessarily follows that no notice in writing was given to the defendants within the time specified by Order 30 r.1(1) and therefore that the action was not discontinued. Mr Campbell submitted that, by his action in seeking approval of the Court to the commencement of fresh proceedings against the defendants, the plaintiff had lost the right to allege that the action had not been discontinued. But if the action was not discontinued by the filing of the notice of discontinuance, it was not discontinued by the action of the plaintiff's solicitor in proceeding as though that notice had been valid and effective. No ground of estoppel arises for the defendants did not know of the notice of discontinuance until March 1984 and were not misled by it. In these circumstances, the appeals should be dismissed. In each appeal, the appellant shall pay the costs of the ll. respondent Josef Daroczy with the intent that such respondent recover only one set of costs. ( certify that this andthe #en Go) preceding pages are a true copy of the reasons for judgment herein of The Honour- able Mr. Justice Davies and The Hanovr- able Mr. Justice Everett Associate 19/1/e- L. IN THE FEDERAL COURT OF AUSTRALIA J ! AUSTRALIAN CAPITAL TERRITORY U DISTRICT REGISTRY , n£ LIRA ' GENERAL DIVISION CN _APPRAL FROM THE SUPREME COURT GE THE AUSTRALIAN CAPITAL TERRITORY BETWEEN : R_& oT ENGINEERING PTY LIMITED (in Liquidation) Sppellant yeic TUSEP DARGOCZY and ANOR, Reependenr 3s BETWEEN: HILTONTA TNVESTMENTS ETY LIMITED trading as ACY CONSOLIDATED MACHTNERY Appellant AND: JOSEF DARACZY and ANOR. Fesrondents CORAM: Davies. Sheppard and Everett JT. Ls Deremher Laakd¢ REASONS FOP TUDGMENT SHEPPAPD 7: In this matter T have had the advantage of readina the iudament to be 'delivered bv Davies and Everett TW, LT respectfully aqree with fhete conclusiten that the appeals should be dismissed with ensts, T alsn agree virh 2. their view that "notice in writing" in Order 30. rule 1 means notice to the defendant. The authorities and texts to which thev refer make that clear. In a case fo which the rule applies there can be no effective discontinnance of the proceedings unless notice be qiven the defendant. For my part. however, I would prefer ta rest mv conclusion that the appeals should be dismissed tipon a different aground. [In my opinion, Order 30, rule 1(1l: of the s Rules has no application to the circumstances of a case such as this. That 1s because the writ had not been served at the time the notice of discontinuance was filed. In my opinion this case is aoverned, not by Order "0, rule Lil) but by Order 30, rule 1(2). There could be no discontinuance without the leave of the Court. Mv reasons for this view stem from a ennsideration of a number of the provisions of the cules, including those of Order 30, rule 1. The words of rhat rnle make 1t -lear that in a case where there are no pleadings and no appearance has been entered. there can be no discontinuance without leave, The relevant part of the rule provides that. where there are no pleadings, the plaintiff may, within 15 adavs after appearance. discontinue. In such a case there is no entitlement to discontinue as of course either before appearance or after the expiration of 15 days from the entry of the appearance. That part of the rule is not relevant to the present case because there was a statement of claim. It was indorsed on the writ as provided for in Order 4, rule 5. Counsel for the appellants relied on the seemingly wide words of Order 30, rule 1(1), "The plaintiff may, where there are pleadings, at any time before the receipt of the defendant's defence wholly discontinue his action". Here the notice of discontinuance was filed before the filing of any defence by the defendants. The question is whether those words should be construed as widely as is contended for by counsel. My first observation is that it is not necessarv to indorse a statement of claim ona writ. A plaintiff may do so; but Order 24, rule 1 permits the alternative course of filing a statement of claim within 14 days after appearance. It would seem odd if Order 30, rule 1(1) applied before appearance to a case where the statement of claim was indorsed on the writ or accompanied it, but had no such application in a case where the plaintiff chose not to plead at the time he issued his writ. The application or not of the rule would depend on which of the elections provided for in the rule a solicitor or party made. Furthermore, there can be no discontinuance as of course before appearance in actions for libel. slander, malicious prosecution, false imprisonment, seduction or breach of promise of marriage, or in actions in which fraud 4. is alleged. In such cases a statement of claim may not be indorsed on the writ nor delivered with it; see Order 4, rule 5. The plaintiff must await appearance by the defendant before delivering his statement of claim. There will thus be no pleadings until after appearance. Yet the construction sought to be put upon Order 30, rule 1 by the appellants would permit discontinuance as of course before appearance in caseas involving all other causes of action provided a statement of claim was indorsed on or accompanied the writ. I can think of no reason why this distinction should exist. The consequences of the construction contended for by counsel for the appellants are thus arbitrary and capricious. One ought not give the rule that construction unless the words of the rule plainly require it. It is to be noted that the words in the rule do not refer to the appearance, but to the defence. Order 13 of the rules provides for appearances: Order 25 for defences. Rule 6 thereof provides that where a defendant has entered an appearance, he shall deliver his defence within 14 davs from the time limited for appearance, or from the delivery of the statement of claim, whichever is the later. The assumption upon which the rule proceeds is that the defendant may not file a defence unless he has first entered an appearance. Once he has entered it, he has a period of 14 days after the time limited for his appearance expires or the service of the 5. statement of claim in which to file his defence. He is not obliged to file his defence at the same time as he enters an appearance, although he may do so. The rules thus contemplate an interval between appearance and defence of 14 days. I return to the words used in Order 30, rule 1(1). If there are pleadings, there may be discontinuance as of course at any time before the defendant's defence. The rule concentrates on that event as the event after which there can be no discontinuance as of course unless in the excepted cases specified in the rule. The rule thus contemplates discontinuance as of course at least between appearance and defence. Does it contemplate more than that? The fact that there may be no discontinuance as of course before appearance in actions where there are no pleadings strongly suggests that 1t does not. Such a view gives the rule a cohesive and sensible operation. It will apply in the same way whether there have been pleadings or not. In cases where a writ has not been served or has been served but no appearance has been entered, a plaintiff will always be able to seek the leave of the Court to discontinue the action pursuant to Order 30, rule 1(2). In my opinion the rule needs to be understood as though the words "after appearance and" were inserted after the words "at any time" so that it reads, "The plaintiff may, where there are 6. pleadings, at any time after appearance and before the receipt of the defendant's defence ... wholly discontinue his action ... At first sight the conclusion I have reached may seem cumbersome. But Order 9, rule 1 provides that a writ of summons shall not be in force for more than 12 months from its date. That is subject to the power of the Court to renew it in situations provided for in the rule. A plaintiff who has not served a writ, either because he is disinclined to do so or cannot find the defendant, may thus simply allow it to lapse. Being unserved, the defendant will not act in relation to it and it has no effect during its life. That leaves cases where a defendant has been served, but has not appeared. Such a case may occasion a plaintiff some procedural difficulty if he wishes to bring the proceedings to an end without going to the expense of an application for leave to discontinue. There may be a case for an amendment to the rule to provide for leave to discontinue as of course at any time after the service of a writ. rather than after appearance, provided notice be given the defendant. If that were to be done, I would think notice would need to be served on the defendant in the same manner as the writ itself was or could be served on him. It would seem undesirable that the procedure provided for in Order 67, rule 4 should be available in sucha _ case. That enables service, where no 7. appearance has been entered, by the filing of the document and the posting up of it in the Registry for 14 days. In the result I agree that the appeals should be dismissed with costs. Teertify taat this and the b preceding pages are a true copy of the reasons for judgment herein of The Honqurable Mr Justice Sheppard. AP Ath a~ " Assoclata Dated /9 DECEMBER /BY