FEDERAL COURT OF AUSTRALIA Practice and procedure - whether an address for service in an original application remained as the address for service - discontinuance of proceedings - leave to file cross-claim - parties to a proceeding - estoppel - proportionality between remedy and detriment. Federal Court Rules - O 5 r 8(1), O 7 r 6, O 8 r 2(2), O 22 r 2(1)(d), O 22 r 5(1) Cameron v Goldtek Australia Pty Ltd,Moore J, 5 February 1997, unreported - considered The Commonwealth v Verwayen (1990) 170 CLR 394 - applied Ernst and Young v Butte Mining PLC [1996] 1 WLR 1605 - considered WOOL INTERNATIONAL v SEDGWICK LIMITED (No. 2) NG 721 of 1993 JUDGE: BEAUMONT J PLACE: SYDNEY DATED: 25 JUNE 1997 IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NG 721 of 1993 ) GENERAL DIVISION ) BETWEEN: WOOL INTERNATIONAL Applicant AND: SEDGWICK LIMITED Respondent JUDGE: BEAUMONT J PLACE: SYDNEY DATED: 25 JUNE 1997 REASONS FOR JUDGMENT (No. 2) Before the Court, pursuant to an amended notice of motion filed in Court today, is an application by the respondent, Sedgwick Limited ("Sedgwick") for a declaration in terms of para 2 of the amended notice of motion, that is, a declaration that the service of the cross-claim, filed on 27 March 1997 and served on the offices of Norton Smith, solicitors, on 27 March 1997, constituted valid service on the cross-respondents. There is also before the Court in the amended notice of motion an application, in the alternative, on behalf of the respondent, that it be granted leave to serve the cross-claim on the cross-respondents outside the jurisdiction of the Court pursuant to O 8 r 2(2) of the Federal Court Rules. It is not necessary that I deal with the application for leave to serve out of the jurisdiction at this stage and I will order that that part of the application, that is to say, the application made in para 3 of the amended notice of motion, be adjourned to a date to be fixed. These reasons are directed to para 2 which seeks, in substance, a declaration that the service of the cross-claim was validly effected on the cross-respondents when it was served on the solicitors mentioned. In order to understand the issues that arise, it will be necessary to describe some of the history of the proceedings. On 17 September 1993 several applicants, including the present applicant and the cross-respondents, filed an application and a statement of claim against Sedgwick in these proceedings. The principal proceedings came before Sheppard J for directions on 6 June 1996. It appears that, on that occasion, the (then) first and the (then) second applicants and the present applicant, being the (then) third applicant, sought leave for the (then) first and second applicants to discontinue the proceedings. Sedgwick's solicitor indicated to the Court that he did not oppose the discontinuance, subject to the issue of costs. He submitted that the question of costs should be reserved until the next directions hearing, that is, following the necessary amendments to the pleadings, at which time Sedgwick would be in a better position to assess the extent of those costs. Sheppard J then granted leave to the (then) first and second applicants to discontinue the proceedings, reserving costs in that connection, and made other orders in accordance with the short minutes of order which had been prepared by the solicitors for the applicant. Under those short minutes of order, the applicant was to file and serve a further amended statement of claim and amended application by 20 June 1996 and Sedgwick was to file and serve its defence on or before 4 July 1996. The matter was stood over until 22 August 1996. The matter came before Sheppard J for further directions on 22 August 1996. On that occasion, his Honour made orders in accordance with the short minutes of order which had been handed up and which provided that the applicant was granted leave to substitute Wool International as the applicant in the proceedings and that Sedgwick was to file and serve its defence on or about 2 September 1996. After hearing argument on the question of costs which had been reserved, his Honour ordered that the costs of, and occasioned by, the amendment made on 6 June 1996 and thrown away as a consequence of it, were to be paid by the applicant. In the meantime, on 4 July 1996, a second further amended statement of claim had been filed and the (then) first applicants, who are the present cross-respondents, were no longer stated to be a party to the principal proceedings. On 19 July 1996 an amended application was filed; again, the original first applicants, the present cross-respondents, were not shown as applicants, or otherwise as a party, to the principal proceedings. The matter came before me on 27 March 1997 for directions. On that occasion, I granted leave to Sedgwick to file the subject cross-claim. On the same date, 27 March 1997, Sedgwick served the cross-claim at the offices of Norton Smith, solicitors. On 2 April 1997 the first applicants, the present cross-respondents, by their agent Norton Smith, filed a notice of discontinuance discontinuing their proceedings against Sedgwick. By letter dated 3 April 1997 Norton Smith wrote to Phillips Fox, solicitors for Sedgwick, disputing the validity of the purported service of the cross-claim on the cross-respondents. I have heard argument today on a number of questions that arise in the present connection but I have not heard any submissions on behalf of the cross-respondents themselves. However, I have had the benefit of submissions, not only from counsel for Sedgwick, but also from counsel for the present applicant. Counsel for the applicant has also indicated a willingness to assist the Court as amicus curiae in this connection. However, I have already indicated to counsel that, not only is the present application, as a matter of form or substance, interlocutory, and thus not final in any sense, but that any views that I form at this stage must, of necessity, be provisional only, in the absence of hearing submissions which may be put on behalf of the cross-respondents. In other words, the purpose of these reasons is to indicate my tentative thinking on the matter. Before forming any concluded view, I would, of course, be open to persuasion and will provide an opportunity to the cross-­respondents to make such submissions to me on the point as they may be advised. As I have said, a number of points have been presented but, in the end, the present question, I think, turns on two points. The first is whether, as at 27 March 1997, the address for service given by the (then) first applicants, the present cross-respondents, in their original application, that is, the address of their then solicitors, Norton Smith, remained their address for service at that latter date, being the date upon which the cross-claim was purportedly served. Secondly, if so, was the conduct of Sedgwick in this connection so unconscionable that the Court should hold that Sedgwick is estopped from contending that, as at 27 March 1997, the address for service of the (then) first applicants, the cross-respondents, was the offices of Norton Smith? Other subsidiary points arise but, unlike the two questions that I have specifically mentioned, they do not raise any substantial issue. I have dealt with several of them in the course of argument. I mention in this connection, for instance, a submission put on behalf of the applicant that, by virtue of the provisions of O 5 r 8(1), a respondent may only cross-claim against a person who is not a party with the leave of the Court and that no such leave was given here. There are a number of assumptions in that submission to which I will need to return but I should say at once, that my construction of the order I made on 27 March 1997 is that I did grant leave to file the cross-claim whether or not the cross-respondents were, at that point of time, still parties to the proceedings. In order to understand the first of the main issues that arises, it is necessary to refer to the Rules of Court dealing with the procedure to be followed where a party desires to discontinue a proceeding. This is dealt with by O 22 r 2 and, in the present circumstances, it is clear and, indeed, common ground that, given the history of the matter and the progress of the directions hearings and the progress of the pleadings, the relevant provision is O 22 r 2(1)(d). That Rule has the effect that the first applicants, the present cross-respondents, could only have discontinued the proceedings as at 6 June 1996 with the leave of the Court. That leave was, as has been noted, granted on 27 March 1997. However, by O 22 r 5(1), it is provided that a discontinuance under r 2 shall be made by filing a notice stating the extent of the discontinuance. It is well settled that the procedure mandated by O 22 r 5 has a clear purpose of providing a formal and unambiguous method of bringing proceedings to an end, so that the courts have insisted upon compliance with its provisions as the means of effecting a discontinuance (see Cameron v Goldtek Australia Pty Ltd, Moore J, 5 February 1997, unreported, and the cases there cited). It follows, in my opinion, that the present proceedings were not discontinued by the first applicants until 2 April 1997. Put differently, until 2 April 1997 and at least until 27 March 1997, the first applicants were still, as a matter of form and substance, parties to the principal proceedings. As at 27 March 1997 the first applicants had given an address for service, as 0 7 r 6 required, and that address was at the offices of Norton Smith; that address was notified in the original application and, until the filing of the notice of discontinuance on 2 April 1997, the first applicants remained parties to the proceedings. As an incident of their status as such a party, the first applicants' address for service remained as originally stated in the application filed on 17 September 1993. It is true, as counsel for the present applicant has pointed out, that at the directions hearing before Sheppard J on 22 August 1996, short minutes of order were handed up which showed that the only applicant in the principal proceedings was the Australian Wool Realisation Commission and that there was no mention of the first applicants as a party. Be that as it may, the fact is that, until the filing of the notice of discontinuance on 2 April 1997, the first applicants remained parties to the principal proceedings. The second main question, as I have indicated, is the question of the alleged estoppel. It is true that on 22 August 1996 Sedgwick elected to submit to Sheppard J that it should receive costs as a consequence of the foreshadowed discontinuance and that his Honour ordered costs accordingly. In a sense then, it may be said that Sedgwick received a benefit as a consequence of the application for leave to discontinue. However, as Mason CJ said in The Commonwealth v Verwayen (1990) 170 CLR 394 (at 413): "A central element of [the] doctrine [of estoppel] is that there must be a proportionality between the remedy and detriment which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption." In my opinion, if I were to uphold the submission now advanced on behalf of the present applicant, there would be a lack of proportionality between the remedy and the detriment, in the sense explained by Mason CJ. In the first place, in the absence of special circumstances, the costs would have followed the event. Secondly, the amount of the costs involved could not have been at all substantial and, when compared with the cost and inconvenience involved in seeking leave to serve out of the jurisdiction and to effect service overseas upon a number of parties, it would be, again in the language of Mason CJ, "inequitable and unjust to insist, upon a disproportionate making good of the relevant assumption". I therefore provisionally hold that Sedgwick is not estopped from contending that the office of Norton Smith was the address for service of the cross-­respondents as at 27 March 1997. I would add that I accept that it may be possible, in some circumstances, to look at the present kind of matter on a broader basis than estoppel. There can be circumstances, where, for instance, the serving of a notice of discontinuance can itself amount to an abuse of process which the Court ought to set aside (see Ernst and Young v Butte Mining PLC [1996] 1 WLR 1605). In the present case it is not, of course, suggested that the first applicants were themselves guilty of any abuse of process in seeking to discontinue the proceedings, but neither can it be suggested that Sedgwick was guilty of any such abuse in taking the steps it did. The initiative in this matter rested, in the first instance, upon the applicants in the principal proceedings; it was these applicants who chose, in respect of the position of the (then) first and second applicants, to seek leave to discontinue the proceedings. It was the (then) first applicants who, relevantly, chose to file the notice of discontinuance on 2 April 1997 and not before that date. In my provisional view, all that Sedgwick did was to act in accordance with the provisions of the Rules of Court by serving a document, in respect of which it had received leave to bring a cross-claim, upon an address stated as the address for service of a person who, at that stage, remained a party to the principal proceedings. Given the provisional nature of these reasons, I will stand the matter over, without any orders being made, for the purpose of hearing further argument should that be desired by any party. I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont Associate: Dated: 25 June 1997 Counsel for the Applicant: C C Hodgekiss Solicitor for the Applicant: Norton Smith & Co Counsel for the Respondent: J B Simpkins Solicitor for the Respondent: Phillips Fox Date of Hearing: 25 June 1997 Date of Judgment: 25 June 1997