Murdoch Lawyers Pty Ltd & Ors v Gouldson & Anor

In this significant case, the plaintiffs sought and obtained a renewal of their claim for 12 months after it would have lapsed. The defendants sought orders setting aside the renewal. In a comprehensive judgment, Wilson J considered the principles relevant to considering whether or not a claim should be renewed.

Wilson J

7 May 2021

The first plaintiff engaged the defendants to represent him in family law proceedings in the, then, Federal Magistrates Court in 2011. [18]. On 11 September 2017, the plaintiffs filed a claim seeking damages for professional negligence, breach of contract and breach of warranties under the Australian Consumer Law (“the ACL”) against the defendants. [4].

Pursuant to r 24(1) of the Uniform Civil Procedure Rules 1999 (“the UCPR”), the claim was due to lapse on 11 September 2018. [7]. However, on 5 September 2018, to avoid this fate, the plaintiffs applied to a registrar of the Supreme Court pursuant to r 24(2) on an ex parte basis for an order to renew the claim for a further 12 months. [8]. Prior to the application, the plaintiffs did not make any attempt to serve the defendants. The registrar allowed the application on 7 September 2018. [9]. The first and second defendants were ultimately served nearly a year later, on 6 September 2019, with the third defendant being served on 9 September 2019. [10]. Preparation for the proceedings continued until 11 December 2020, when the defendants applied to set aside the registrar’s order and dismiss the proceedings. [11].

In considering this application, Wilson J first set out the three sources for the Court’s power to set aside the registrar’s order: [13]:

(1) r 16(d) of the UCPR, which permits the Court to “set aside an order extending the period for service for an originating process”

(2) r 667(2)(a), which permits the Court to set aside an ex parte order; and

(3) in the exercise of the Court’s inherent jurisdiction.

Her Honour further noted there are no express time limits for such an application to be brought. [14]. On hearing the application, the court proceeds as a hearing de novo, to be determined on the whole of the material before the Court. [15].

Was there was “another good reason to renew the claim”

Wilson J noted that the discretion to renew must be exercised in the context of r 5 of the UCPR which requires that matters be resolved in a just and expeditious way, avoiding undue delay. [55]–[58]. Accordingly, “the mere fact that a party will be denied the opportunity of pursuing an apparently worthwhile claim” does not on its own satisfy the requirements of r 24(2). [62]. Similarly, the apparent lack of prejudice to the defendants would also not of itself be enough to satisfy r 24(2). [64]. Her Honour also cited a judgment of Jackson J where his Honour held that “the inability of a plaintiff to formulate the precise loss suffered” was also not a sufficient reason. [65].

Her Honour ultimately found that, while the list of relevant considerations was not exhaustive, the following factors were of particular relevance to the exercise of the discretion to renew the claim under s 24(2): [66]–[67]:

“(a)  The reasons for the plaintiffs’ delay in serving the claim, in particular, whether they made a deliberate choice not to serve the claim, which counts strongly against renewal. The inability to precisely formulate the loss suffered is not, of itself a ‘good reason’ to renew a claim.

(b)  Whether the limitation period for any of the causes of action pleaded expired before the application to renew the claim. Expiry of the limitation period counts against renewal.

(c)  The strength of the plaintiffs’ case, although this factor is not determinative.

(d)  Whether renewal of the claim would cause prejudice to the defendant. Proof of prejudice will count against renewal but the defendant does not bear the onus of proving that renewal would prejudice them.”

As applied to the instant case, a critical issue for Wilson J to consider was whether the plaintiffs’ delay in serving the claim was a “deliberate choice”, or whether expeditious investigations were undertaken to determine the viability of the claim. [73]. Due to the substance of the claim, the plaintiffs required an expert legal opinion relating to the conduct of other lawyers, as well as complex legal and accounting tax opinions. [75]. The plaintiffs contended that the viability of their claim was not clarified until those opinions had been obtained. [75]. After considering these matters, her Honour found that it was appropriate for the plaintiffs to take advice on the claim before serving it and the plaintiffs had acted expeditiously. [92]–[95], [125].

The parties were also in dispute about when the relevant limitation periods would have elapsed. [103]-[105], [115]. It was common ground that the limitation period for the actions for breach of contract and breach of the ACL had expired prior to the renewal of the claim. It was not clear whether the limitation period for the negligence action had expired. Her Honour held that “even if the limitation period for the negligence action (as well as the actions for breach of contract and breach of the ACL) had expired before the claim was renewed … the factors supporting the renewal outweigh those against it”. [129]–[130].

In the event, Wilson J was satisfied that, given the defendants were on notice of the possibility of a claim being made against them since October 2014, renewing the claim would not materially prejudice the defendants. [116]–[119].

Although “finely balanced”, Wilson J ultimately concluded that there was “another good reason” to renew the claim. [131]. Accordingly, the applications were dismissed. [132].

M Paterson