New South Wales Supreme Court CITATION : Wakim v Coleman & Ors [2008] NSWSC 1377 HEARING DATE(S) : 4 July; 12 September 2008 JUDGMENT DATE : 19 December 2008 JURISDICTION : Common Law JUDGMENT OF : McCallum J DECISION : The proceedings are dismissed. I order the plaintiff to pay the defendants' costs of the proceedings including the applications heard by me. LEGISLATION CITED : Uniform Civil Procedure Rules CATEGORY : Procedural and other rulings FAI Insurances Ltd (in liquidation) v Mainprize [2006] NSWSC 554 Heaven v Road & Rail Wagons Limited (1965) 2 QB 355 CASES CITED : In Re Chittenden, Deceased [1970] 1 WLR 1618 NSW Insurance Ministerial Corporation v Anderson (unreported) NSWCA 14 June 1994 Weston v Publishing & Broadcasting Ltd [2007] NSWSC 1318 Elias George Wakim (Plaintiff) David Coleman trading as Taylor & Scott (1st Defendant) Gervase Liddy (2nd Defendant) PARTIES : Peter Wilson (3rd Defendant) Stephen Cahill (4th Defendant) Ray Mc Clenhan (5th Defendant) David MurrSC (6th Defendant) Andrew Ogborne (7th Defendant) FILE NUMBER(S) : SC 20223/06 COUNSEL : Mr M Neil QC/Ms G Preston (Plaintiff) Mr D Davies SC (Defendants) Morgan Ardino & Co. Solicitors (Plaintiff) SOLICITORS : Yeldham Price O'Brien Lusk Lawyers (1st to 5th Defendants) McCabe Terrill Solicitors (6th Defendant) Moray & Agnew Solicitors (7th Defendant) - 15 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION McCALLUM J 19 DECEMBER 2008 20223/06 GEORGE WAKIM v DAVID COLEMAN T/AS TAYLOR AND SCOTT AND 6 ORS JUDGMENT 1 HER HONOUR: On 13 June 2006 Mr George Wakim filed a statement of claim seeking damages for professional negligence against the solicitors and counsel retained by him in three earlier proceedings. The statement of claim was not served before it ceased to be valid for service. Mr Wakim did not apply for an extension of the time for service (until the hearing of the present matters). 2 After the statement of claim had ceased to be valid for service, and after a limitation defence had probably accrued in respect of at least part of the claim, a Registrar of the Court granted leave to Mr Wakim to file an amended statement of claim. The amended statement of claim has since been served on some of the defendants. 3 The applications before the Court raise the issue whether the proceedings should be permitted to continue in those circumstances. The defendants seek an order that the amended statement of claim be disallowed, a declaration that the original statement of claim is invalid for service and an order setting aside certain orders of the Registrar. In the alternative, the defendants seek summary dismissal of the proceedings under UCPR 13.4. 4 The plaintiff has responded to those applications with an application for leave to serve the amended statement of claim out of time or, alternatively, leave to serve the original statement of claim. 5 Mr Wakim was represented by Mr Duncan of counsel at the hearing of the applications. After the conclusion of the hearing, Mr Wakim filed a notice of motion seeking leave to re-open his case to put on further evidence and further submissions. The defendants opposed that application and a further contested hearing was conducted at which Mr Wakim was represented by Mr Neil QC. The parties consented to my determining the application for leave to re-open and the substantive applications at the same time. Having regard to the view I have reached, it is not necessary to make a separate determination in respect of the application to re-open. It is convenient to determine the substantive applications on the basis of all of the material placed before the Court on behalf of Mr Wakim, including the additional evidence and submissions put forward by Mr Neil QC. 6 That approach should not be taken to indicate an acceptance that the additional evidence and submissions included any matter that should have been put at the first hearing. Mr Duncan had, in my view, presented the plaintiff's position as favourably as was possible in the circumstances. The evidence of Mr Wakim and Mr Mee Ling at the second hearing did certainly not advance the plaintiff's claim. Background 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. 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. Mr Wakim's claim in these proceedings 16 In the original statement of claim, Mr Wakim alleges as against the partners of Taylor and Scott that they failed to obtain all of his papers relating to the proceedings from the solicitors previously retained by him in the proceedings; failed to make certain amendments to the statements of claim; failed to collect evidence in respect of the claim against the trustee; failed to confer with Mr Wakim before the trial and did not brief counsel of his choice. He also alleges that they made certain misrepresentations as to their preparation of the matter for hearing. 17 As against all of the defendants, Mr Wakim alleges that the proceedings before Einfeld J were conducted negligently in that the estate of Mr Darvall should have remained a party after he died; the defendants failed to run the argument that the trustee had no power to settle the equity suit against Mrs Nader; the defendants failed to lead certain evidence in respect of the claim against the trustee and the defendants failed to argue certain matters against the trustee in respect of the administration of the bankruptcy. 18 Mr Wakim alleges that, but for the defendants' negligence, he would have recovered $3,000,000 rather than the $1.4 million for which he settled the appeal. Orders previously made in these proceedings 19 When the statement of claim was filed on 13 June 2006, the proceedings were entered in the Professional Negligence List and listed for a conference hearing before a Deputy Registrar on 25 October 2006. Mr Mee Ling, solicitor, appeared for Mr Wakim on that date. The record of proceedings states: "Very long history in this matter. S/Claim not served yet. S/C filed due to limitation. Adjourned to February. In order to refine claim." 20 The amended statement of claim filed in due course is in substantially the same terms as the original pleading. The amendments are not marked up. It is difficult to see how the amendment refined the case. 21 The proceedings were stood over to 14 February 2007. Mr Mee Ling appeared on that date. The record of proceedings states: "S/Claim still not served. He can't afford Senior Counsel. SC has some misgivings. Will be an amendment. Claim goes back to 1980." 22 The proceedings were stood over to 9 May 2007. Mr Mee Ling appeared on that date. I note that the period of six years from the date Einfeld J handed down his judgment had passed since the previous mention of the proceedings before the Registrar. The record of proceedings for 9 May states: "Not served. Not ready to proceed. P to file and serve amended S/Claim within 28 days." 23 No amended statement of claim was filed or served pursuant to that direction. The proceedings were stood over to 4 July 2007. On that date there was no appearance for the plaintiff and the Court sent a letter pursuant to UCPR 13.6 adjourning the proceedings to 1 August 2007 and warning that if there was no attendance for the plaintiff on that date the Court may dismiss the proceedings. The re-listing of the proceedings in those circumstances can only be described as an extraordinary indulgence to the plaintiff. The originating process had been invalid for service for over 6 months, a direction to file and serve an amended pleading within 28 days had been ignored and the plaintiff did not appear. In my view, the appropriate order on 4 July would have been to dismiss the proceedings. 24 On 1 August 2007 Mr Mee Ling appeared for the plaintiff. The record of proceedings states: "Problems with service – still. Granted leave to file amended S/Claim." 25 As observed by Mr Davies SC, who appeared for the defendants, it is difficult to imagine that there were problems with service as at that date. All of the defendants are lawyers with practice addresses in the central business district of the city. Further, it is difficult to accept that the plaintiff had been attempting to serve anything when he had not yet filed an amended statement of claim, as contemplated in the order made on the previous occasion. The amended statement of claim had not been filed as at that date. It was filed 7 days later, on 8 August 2007. If Mr Ming Lee did in fact refer to "problems with service" when he appeared before the Registrar, it seems likely that he misrepresented the true position, although I note that he has not been invited to respond to that suggestion. 26 The proceedings were stood over to 5 September 2007. There is no record of proceedings for that date and it is not clear how the proceedings were brought back before the Court. The next record of proceedings is dated 31 October 2007. Mr Mee Ling appeared for the plaintiff on that date. The record of proceedings states: "S/Claim still not served. Plaintiff suing solicitors and Counsel. Senior Counsel still considering. 1. 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." 27 The amended statement of claim filed on 7 August 2007 was served on the partners of Taylor and Scott on 28 November 2007. They have not entered an appearance in the proceedings. 28 The amended statement of claim was not validly served on Mr Murr but was delivered to his Chambers. He has entered a notice of appearance but seeks leave to withdraw it on the basis that it was entered in ignorance of the matters relied on in support of the present applications. He does not, however, appear to take any point as to the method of service. 29 No documents have been served on Mr Ogborne and he has not entered an appearance. 30 Mr Mee Ling gave evidence that, at the call-over on 31 October 2007, the following exchange occurred between him and the Deputy Registrar: "Registrar: The statement of claim may be going stale. When was it amended? Mr Mee Ling: The amended claim was filed in August." 31 Mr Mee Ling's evidence was that the Court ordered that the amended statement of claim be served on or by 28 November 2007. That is consistent with the terms of the record of proceedings. I note that an affidavit of Julie Somerville relied on in support of the defendants' applications states that on 31 October 2007 the plaintiff "was granted leave to serve the amended statement of claim by 28 November 2007". That is not an accurate reflection of the record of proceedings in that it contains no reference to any grant of leave. I do not take Ms Somerville's evidence on that issue to amount to a concession by the defendants that the Court granted any indulgence on that date. 32 Mr Mee Ling said that every time he went up to Court he asked for a further period of time in which he said he was going to serve the statement of claim. He conceded, however, that he did not at any time ask for an extension of time under the rules of service. His answer recorded at T28.32 of 12 September 2008 is "No, I didn't ask for a full extension of time". I apprehend that may be a typographical error and that his answer was in fact "No, I didn't ask for a formal extension of time". In either event, it is clear that no application was made. 33 Mr Mee Ling gave evidence that, when the proceedings came before the Court on 13 December 2007 and Ms Somerville was present, she asked whether an order had been made extending the time for service of the statement of claim, to which the Registrar responded "An order was made on 31 October 2007". Mr Mee Ling said that the Registrar then appeared to look in the file and then said "An order was made on 1 August to grant leave to amend. On 31 October an order was made to extend time for service to 28 November 2007". According to the record of proceedings, however, there was no order made on 31 October extending time under the rules of service. To that extent, if that is what the Registrar said on 13 December, it appears to have been inaccurate. Was the period of validity of the originating process extended? 34 It is clear that the original statement of claim was not served within the six months for which it was valid for service: UCPR 6.2(4). The failure to serve originating process within that time does not prevent a plaintiff from commencing fresh proceedings by filing another originating process: UCPR 6.2(5). However, the proceedings first commenced cannot continue unless the Court grants an extension of the time during which the statement of claim is valid for service under UCPR 1.12. 35 Mr Neil QC, who appeared at the second hearing, submitted that the amended statement of claim was valid for service when it was served on the first to fifth defendants. He relied on the statement in Ms Somerville's affidavit at paragraph 13 that the plaintiff was "granted leave" to serve the amended statement of claim by 28 November 2007, which he relied on as an agreed fact. He submitted, in effect, that the order made on that date amounted to or implied an extension of the time during which the originating process was valid for service. He submitted that I should not accede to the submission that the Registrar overlooked the staleness rule, because the Registrar should be presumed to know the rules. 36 The difficulty I have with that submission is that the Registrar did not, in terms, grant any leave or extension on that date. Ms Somerville was mistaken in that respect. The order made was a direction that required the plaintiff to serve the amended statement of claim by a certain date. Mr Mee Ling concedes, however, that he did not seek an extension under the rules. He admitted that he had forgotten about the provisions of the rules that limit the time for which originating process is valid for service. 37 It is one thing to say that the Registrar should be presumed to know the rules. It is quite another to construe his orders on the assumption that he intended to cure any deficiency in the proper constitution of the proceedings. It is not the Court's role to be astute to matters that have been overlooked by a party. It was quite clear from Mr Mee Ling's evidence that he did not at any stage after 13 December 2006 draw the Registrar's attention to the fact that no order should or indeed could be made in the proceedings without there first being granted to the plaintiff the indulgence of an extension of the time during which the statement of claim was valid for service. Such an indulgence is not granted by necessary implication simply because a party seeks, and obtains, an order which should not have been made without it. 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. Was the problem cured by any order of the Court? 39 Mr Neil submitted that, in any event, any delay goes "by the board" as a result of the orders made by the Registrar. 40 In my opinion, the orders made by the Registrar on 9 May 2007 (directing the plaintiff to file and serve an amended statement of claim within 28 days), 1 August 2007 (granting leave to file an amended statement of claim) and 31 October 2007 (directing the plaintiff to serve the "statement of claim" by 28 November) ought not to have been made. As submitted by Mr Davies, there is compelling authority for the proposition that the Court should not extend the validity of an originating process after the period allowed for service has expired if the effect of doing so will be to deprive a defendant of the benefit of an accrued limitation defence: see Heaven v Road & Rail Wagons Limited (1965) 2 QB 355. In that case it was said that there must be "exceptional circumstances" before leave would be given. Although that test appears to have been disapproved in In Re Chittenden, Deceased [1970] 1 WLR 1618 at 1624-1626 it is at least clear that there should be good reason for granting the extension. 41 There is some indirect support for that proposition in New South Wales in FAI Insurances Ltd (in liquidation) v Mainprize [2006] NSWSC 554 at para [16] where Simpson J appears to have accepted that test at [15] and [16]. 42 The reasoning of those decisions applies with equal force to the question whether a plaintiff should have leave to amend a pleading before it has been served where a limitation defence may have accrued in the meantime. 43 In the present case, a limitation defence may well have accrued after the statement of claim ceased to be valid for service and before leave was granted to amend, since the period of six years from the date Einfeld J handed down his judgment passed between those dates. 44 In order to obtain an extension of time for service in those circumstances, Mr Wakim would have had to demonstrate exceptional circumstances (Heaven 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. Should an extension of time be granted now? 46 It remains to consider whether I should accede to Mr Wakim's application for leave to serve the original statement of claim. Although it is not articulated in such terms, it is in substance an application for an extension of the time during which the original statement of claim remains valid for service. The test is whether Mr Wakim has established good reason for an extension. 47 Mr Wakim's evidence suggested that he instructed Mr Mee Ling to start preparing a claim against the defendants shortly after the settlement of the Federal Court proceedings following the successful appeal but that there was a period of decision-making during which it was necessary to consider what causes of action he had. On 12 June 2006 he pressed Mr Mee Ling to commence proceedings urgently because they were "almost out of time". Mr Wakim's concern in that respect presumably derived from an awareness of the fact that the hearing before Einfeld J had commenced on 13 June 2000. In response to Mr Mee Ling's concern as to whether it was necessary to run all of the potential causes of action, he said "No, I want you to run everything. We can get counsel to sort out the precise action later". 48 Mr Mee Ling agreed to commence proceedings to "stop the limitation issue" but said he would hold off serving the claim until they sorted out how it should be framed and until Mr Wakim's money was sorted out. Mr Mee Ling filed the statement of claim the next day. 49 Mr Wakim said that "throughout 2006 and 2007" he gave instructions to Mr Mee Ling to retain counsel to provide an advice on prospects and to amend the pleadings, but that no barristers were ever ultimately retained. He disclosed in cross examination that the reason counsel did not accept a brief was that he did not have the funds to pay counsel's fees and that Mr Mee Ling had been trying to find someone who would take on the case either on a speculative basis or on the basis that the payment of fees would be deferred. 50 Mr Wakim conceded that, following the settlement of the Federal Court appeal, he had the money to fund the proceedings until January 2005. However, he said that, at that time, he still hadn't decided what, if anything, he was going to proceed with. In early 2005 he lent a substantial amount of money to his brother and he says that sum has not been repaid. 51 Mr Mee Ling's evidence was to similar effect. He said that Mr Wakim had many, many grievances with the way his matter had been conducted but that, since he did not have the means to "instruct counsel in the ordinary way", they had to persuade counsel that they had a cause of action that was likely to be remunerative and not too difficult. He said the problem they faced and feared was a long, difficult, complicated trial that didn't amount to very much in the way of damages. 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. 54 At the re-opened hearing, Mr Neil relied on the evidence of Mr Mee Ling and submitted that there was good reason for extending the time within which the pleading was valid for service because the case was complicated and Mr Wakim did not have the funds to prosecute the matter. 55 For at least part of the period during which Mr Wakim could have commenced proceedings, he had the funds to brief Counsel but he chose not to. From early 2005 he says he became impecunious because he lent a very large proportion of the $1.1m judgment to his brother and that debt has not been repaid. He also made other loans from those funds. That was his choice. The fact remains that he has chosen to bring this claim relying on the good will of lawyers prepared to provide their services without fee. 56 Further, the evidence at the second hearing clearly established that this proceeding is an ambit claim. Mr Mee Ling expressed his concerns as to the causes of action to be pleaded before the originating process was filed, but was prevailed upon to file the statement of claim, in haste, so as to avoid a limitation defence. Since then, no attempt has been made to distil the claim. The amended statement of claim, when finally filed, made almost no amendment. It is tempting to conclude that the amendment was a ruse to obtain the extended period of validity of the originating process that should have been sought at the first return of the proceedings. 57 Whether or not that is so, I am confident in the conclusion that there is no good reason for extending the time within which the statement of claim may be served. 58 The proceedings should be dismissed. I will hear the parties as to whether it is necessary to make any other order to give effect to these reasons. 59 The plaintiff should pay the defendants' costs of the proceedings including the applications heard by me. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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