Supreme Court New South Wales

• Medium Neutral Citation: Green v Healthscope Limited t/as The Hills Private Hospital [2014] NSWSC 43
• Hearing dates: 3 December 2013
• Decision date: 13 February 2014
• Before: Bellew J

Decision

1.The notice of motion filed by the plaintiff on 17 September 2013 is dismissed.

2.The proceedings brought by the plaintiff against the second defendant are dismissed.

• Catchwords: PRACTICE AND PROCEDURE - service of statement of claim - where statement of claim served after time for service expired - application made for extension of time for service - whether good reasons had been advanced for an extension - whether explanation advanced for the failure to make the application prior to the expiry of the statement of claim; PRACTICE AND PROCEDURE - service of statement of claim - where statement of claim served after time for service expired - application made for extension of time for service - where defendant filed a notice of appearance following service out of time - whether filing of notice of appearance constituted a waiver of objection to service - whether service deemed to have been effected
• Legislation Cited: Corporations Act 2001; Supreme Court Rules 1970; Uniform Civil Procedure Rules 2005
• Cases Cited: Elcham v Darling Island Sydney [2005] NSWSC 448; Kleinwort Benson Limited v Barbrak Limited [1987] AC 597; Pell v Hodges [2007] NSWCA 234; Vista Capital Developments Pty Limited v Talmarc Pty Limited and ors [2008] NSWSC 935; WFM Motors Pty Limited v Maydwell (SC (NSW) Bryson J, 23 April 1993, unreported)
• Category: Procedural and other rulings
• Parties: Liza Green (Plaintiff); Healthscope Limited t/as The Hills Private Hospital (Second Defendant)
• Representation: Ms L Friedwald (Plaintiff); Mr D Lloyd (Second Defendant); Brydens Lawyers (Plaintiff); Kennedys (Second Defendant)
• File Number(s): 2012/00025652
• Publication restriction: Nil

Judgment

INTRODUCTION

1 Before the Court are two notices of motion.

2 The first is a notice of motion filed by the plaintiff, seeking an order that time be extended for service of the statement of claim on the second defendant. In support of that motion the plaintiff read, without objection, the affidavit of Paul Kenneth Creed sworn on 27 September 2013.

3 The second is a notice of motion filed by the second defendant seeking that the proceedings be dismissed. In support of that motion the second defendant read, also without objection, affidavits of:

(i) Jelena Zmiric (undated);

(ii) Michelle Anne Stares (undated);

(iii) Samantha Kennedy sworn on 5 November 2013.

THE FACTS

4 The following summary of the facts is drawn largely from the affidavit of Mr Creed. Since 2012, Mr Creed has had the day to day carriage of the matter on the plaintiff's behalf, under the supervision of Lee Hagipantelis. No affidavit has been filed by Mr Hagipantelis. To the extent that Mr Creed deposed to matters which took place prior to the date on which he assumed carriage of the matter, he has done so by reference to his review of the relevant file.

5 The plaintiff filed a statement of claim in the District Court on 25 January 2012, bringing proceedings against four defendants seeking damages for negligence. In short, it is alleged that in late 2008 and early 2009, the plaintiff attended upon the premises of the second defendant suffering from (inter alia) weakness and numbness in the right upper limb. It is alleged that on those occasions the plaintiff was in fact suffering from episodic transient ischemia which, it is alleged, is a precursor to stroke or infarct.

6 The plaintiff alleges that she later suffered a stroke and that had her signs and symptoms been properly identified and diagnosed on those occasions upon which she attended at the second defendant's premises, such stroke would not have occurred. Various particulars of negligence are pleaded, including a failure to properly diagnose her condition.

7 Prior to filing the statement of claim, a search of the business name "The Hills Private Hospital" ("the hospital") was conducted by the plaintiff's solicitors. It stated that the business was carried on from an address in Baulkham Hills. However, it also stated that the corporation which carried on the business, Healthscope Pty Limited, had its registered office in Melbourne. Notwithstanding that, the statement of claim was delivered to the hospital premises. Annexed to the affidavit of Mr Creed is an affidavit of the process server, Mr Koopstra, who delivered the statement of claim. According to that affidavit, at the time of attending the premises with the statement of claim Mr Koopstra asked an employee of the second defendant, identified as Ms Zmiric:

"Is this the company registered office of Healthscope Pty Limited trading as the Hills Private Hospital and are you an employee of this office who is authorised to accept service of these documents?"

8 According to Mr Koopstra, Ms Zmiric responded:

"Yes, it is. Yes I am".

9 In her affidavit (commencing at paragraph 9) Ms Zmiric has stated that she has no specific recollection of being given the statement of claim by Mr Koopstra, and has no specific recollection of the conversation to which Mr Koopstra deposed as set out in [8] and [9] above.

10 Ms Kennedy, the Executive Personal Assistant to the General Manager of the hospital, stated (at paragraph 6 of her affidavit) that she had no recollection of receiving the statement of claim and in fact has never received such a document in her present role, or in her previous role as Front Office Manager. Similarly Ms Stares, who was the General Manager of the hospital in February 2012, stated (at paragraph 5 of her affidavit) that she has no recollection of ever seeing the statement of claim and that had it come to her notice she would have brought it to the attention of the appropriate person(s).

11 On 14 February 2012, a letter under the hand of Mr Hagipantelis was sent to the hospital serving two medical reports. It should be noted that this letter, and the various other letters to which I have referred below as having been sent by Mr Hagipantelis to the hospital, were all headed

"RE: LIZA GREEN

DATE OF ACCIDENT: 2 JANUARY 2009"

12 Given the cause of action brought by the plaintiff, the reference to "date of accident" was apt to confuse.

13 No response was forthcoming from the hospital to the letter of 14 February 2012.

14 On 26 April 2012 a pre-trial conference was held at the District Court. There was no appearance on behalf of the second defendant on that occasion. Accordingly, on 4 May 2012 a letter under the hand of Mr Hagipantelis was sent to the hospital advising that the pre-trial conference had been adjourned until 11 May 2012. Once again, there was no response forthcoming from the hospital to that letter.

15 At the adjourned pre-trial conference on 11 May 2012 there was again no appearance on behalf of the second defendant. A third letter under the hand of Mr Hagipantelis, dated 16 May 2012, was sent to the hospital. The letter enclosed a copy of the affidavit of service of the statement of claim, and advised that the pre-trial conference had been further adjourned to 12 June 2012.

16 On 24 May 2012 Ms Kennedy forwarded a letter to the plaintiff's solicitors, marked for the attention of Mr Hagipantelis. Having commenced with the salutation "Dear Lee", it read as follows:

"As per our hospital records, Liza Green (File No. LBH: Lee Hagipantelis:KMA:022025) has not been a patient here at the current (sic) The Hills Private Hospital.

We reopened as a Rehabilitation and Mental Health Facility in September 2009. All previous The Hills Private Hospital patient records are now held at Norwest Private Hospital - 11 Norbrik Drive, BELLA VISTA 2153 - 02 8882 8882.

For any further information, please do not hesitate to contact me".

17 Ms Kennedy's letter made no reference to the proceedings, the statement of claim, or the pre-trial conferences which had taken place prior to that time. It was obviously non-responsive to the letters of Mr Hagipantelis of 14 February, 4 May and 16 May. Despite that, no attempt was made, either by Mr Hagipantelis or by Mr Creed, to make contact with Ms Kennedy, or anyone else at the hospital.

18 At the pre-trial conference on 12 June 2012 there was, for the third successive time, no appearance on behalf of the second defendant. Orders were made facilitating (inter alia) service of the plaintiff's evidentiary material and the matter was listed for a directions hearing on 11 September 2012. On 19 June 2012 Mr Hagipantelis sent a further letter to the hospital advising of the orders which had been made.

19 On 28 June 2012 another letter was sent by Ms Kennedy to Mr Hagipantelis. It was in identical terms to the letter of 24 May 2012 and, significantly, it returned Mr Hagipantelis' letter of 19 June 2012 to him. Even in the face of that returned correspondence, no contact was made with the hospital by anyone on the plaintiff's behalf.

20 The affidavit of Mr Creed is silent as to what occurred between June 2012 and March 2013. It was within that period, namely on 25 July 2012, that the statement of claim expired.

21 On 8 March 2013, Mr Creed sent a letter to the hospital serving material in support of the plaintiff's claim for damages for domestic services. Sending that letter completely ignored what had previously occurred in respect of the correspondence which had passed between Ms Kennedy and Mr Hagipantelis. In particular, it ignored the fact that Mr Hagipantelis' correspondence had been returned to him by Ms Kennedy. Ms Kennedy responded to Mr Creed's letter by letter of 14 March 2013. The terms of that letter (under cover of which Mr Creed's letter of 8 March 2013 was also returned) were identical to those of her letters of 24 May 2012 and 28 June 2012. None of this prompted Mr Creed to make contact with Ms Kennedy, or anyone else at the hospital.

22 A directions hearing was then held in the District Court on 10 April 2013. According to the affidavit of Mr Creed, a representative of one of the other defendants indicated on that occasion that documents produced under subpoena had "indicated that there was a change in the corporate entity owning and operating The Hills Private Hospital". Although Mr Creed does not expressly say so, I infer that the suggestion of a change in the corporate entity caused him to make further enquiries as to that issue.

23 On 28 May 2013, Mr Creed obtained an extract of the business name "The Hills Private Hospital", along with an extract pertaining to Healthscope Pty Limited. Mr Creed does not specify precisely when it was that he became aware of the suggestion that there had been a change in the relevant corporate entity, although I infer it was on, or shortly after, the directions hearing of 10 April 2013. Why further documentation was not obtained until 28 May 2013, some six weeks later, is not explained. In any event, the documentation obtained by Mr Creed contained precisely the same information as that which was already in his possession, namely that the business of the hospital was conducted by a company whose registered office was in Melbourne.

24 On 18 June 2013, Mr Creed forwarded a letter to Healthscope Pty Limited at its registered office in Melbourne, under cover of which he served a number of documents, including the statement of claim. His affidavit is silent on what it was that prompted him to do so. If it was the case that he did so as the result of a close perusal of the documents obtained on 28 May 2013 (which, as I have said, contained information identical to that which was already in his possession) his affidavit is silent on why it was that almost three weeks elapsed before he sent the letter of 18 June 2013. In any event, following that letter, the second defendant filed a notice of appearance on 20 June 2013. The second defendant's solicitor also advised that instructions were being sought as to the issue of service.

25 An order was subsequently made transferring the proceedings to this court. On 27 August 2013, a timetable was agreed upon by all parties, including the second defendant, for the service of particulars and evidentiary statements.

26 The plaintiff's notice of motion was not brought until 17 September 2013, some three months after Mr Creed's letter of 18 June 2013. Even then, the motion was brought in response to the second defendant's motion, filed on 10 September, seeking that the proceedings be dismissed.

27 The second defendant does not dispute that service was effected upon it on 18 June 2013. However, this was well outside the time limit of six months imposed by r. 6.2(4)(b)(ii) of the Uniform Civil Procedure Rules ("the rules"). The operation of that rule required service of the statement of claim to be effected by 25 July 2012. Accordingly, as at 18 June 2013, the statement of claim was not valid for service.

THE ISSUES

28 As a consequence of the submissions made by counsel for the plaintiff, the following issues arise:

(i) whether, by virtue of the operation of r. 10.19 of the rules, the second defendant waived any objection to service by filing a notice of appearance;

(ii) whether, by virtue of the operation of r. 10.20, or alternatively r. 10.14 of the rules, service of the statement of claim is deemed to have been effected;

(iii) whether, as a matter of discretion, an order extending the time for service of the statement of claim should be made pursuant to r. 1.12.

THE ISSUE OF WAIVER

29 Rule 10.19 is in the following terms:

10.19 Waiver of objection to service

A party who files a document in reply to a document alleged to have been served on that party is taken to have waived any objection to the fact or manner of service unless he or she files and serves notice of the objection together with the document so filed.

30 Counsel for the second defendant stressed that it was not his client's position that it had not been served with the statement of claim at all. Rather, he submitted that such service was late, that it had occurred at a time when the statement of claim was no longer valid for service, and that an order extending the time for service was therefore required. He submitted that the operation of r. 10.19 did not address such a situation.

31 The notice of appearance filed by the second defendant was clearly a document filed in reply to the statement of claim. Whilst the form of the notice of objection contemplated by r. 10.19 is not prescribed, no document answering that general description was filed by the second defendant at the time of the filing of the notice of appearance. In those respects, the present case falls within the terms of r. 10.19.

32 However, the waiver which arises under this rule is a waiver of any objection to the "fact or manner of service". The second defendant raises no objection to the manner of service of the statement of claim, nor does it raise any issue as to the fact of service. The objection raised by the second defendant is that because of the operation of r. 6.2(4)(b)(ii), the statement of claim was not valid for service at the time at which it was forwarded to the registered office of Healthscope Pty Limited. That is not, in my view, a circumstance which falls within the terms of r. 10.19. It follows that there has been no waiver on the part of the second defendant under that rule.

IS SERVICE DEEMED TO HAVE BEEN EFFECTED?

33 Rule 10.22 makes provision for the manner in which personal service is effected upon a corporation:

"Personal service of a document on a corporation is effected:

(a) by personally serving the document on a principal officer of the corporation; or

(b) by serving the document on the corporation in any other manner in which service of such a document may, by law, be served on the corporation".

34 Section 109X(1)(a) of the Corporations Act 2001 provides that service of a document on a company may be effected by posting it to the company's registered office.

35 Rule 10.20(5) is in the following terms:

"Unless an earlier date is proved, a defendant who enters an appearance is taken to have been personally served with the relevant originating process on the date on which appearance was entered".

36 Rule 10.20(5) does nothing more than deem the second defendant to have been personally served, in the manner prescribed by r. 10.22(b), on the date on which the notice of appearance was filed. The second defendant raises no issue that it was personally served in the prescribed manner by virtue of Mr Creed's letter of 18 June 2013. As I have noted, the issue raised by the second defendant is that at the time at which such personal service was effected, the statement of claim was not valid for service. Rule 10.20(5) does not address that issue, nor does it overcome it.

37 Counsel for the applicant also sought to rely, in the alternative, upon r.10.14 which is in the following terms:

10.14 Substituted and informal service generally

(1) If a document that is required or permitted to be served on a person in connection with any proceedings:

(a) cannot practicably be served on the person, or

(b) cannot practicably be served on the person in the manner provided by law,

the court may, by order, direct that, instead of service, such steps be taken as are specified in the order for the purpose of bringing the document to the notice of the person concerned.

(2) An order under this rule may direct that the document be taken to have been served on the person concerned on the happening of a specified event or on the expiry of a specified time.

(3) If steps have been taken, otherwise than under an order under this rule, for the purpose of bringing the document to the notice of the person concerned, the court may, by order, direct that the document be taken to have been served on that person on a date specified in the order.

(4) Service in accordance with this rule is taken to constitute personal service.

38 Specific reliance was placed upon r. 10.14(3) which provides the court with a discretion to confirm service if it is satisfied that steps have been taken for the purpose of bringing, to the notice of the person concerned, particular documents. In Elcham v Darling Island Sydney [2005] NSWSC 448 Campbell J (as his Honour then was) dealt with an application pursuant to Part 9 Rule 11 of the Supreme Court Rules 1970 which conferred a discretion upon the court similar to that conferred by r. 10.14(3). His Honour said (at [33]):

"The power which is given to the Court under Pt 9 r 11 is one which enables the Court to deem service to have been effected of particular documents. The condition stated in the rule for the exercise of the power is that:

... steps have been taken for the purposes of bringing, or having a tendency to bring, the document to the notice of that person ...

That is a fairly undemanding requirement".

39 The italicised words which appeared in the previous rule do not appear in r. 10.14(3). As a result, the requirement for the making of an order under r. 10.14(3) is more stringent that was previously the case under Pt 9 r 11.

40 The delivery of the statement of claim on the hospital premises was an obvious step taken for the purposes of bringing it to the notice of the second defendant. The letter of Mr Hagipantelis of 4 May 2012 (which made specific reference to the statement of claim) and his letter of 16 May 2012 (which enclosed a copy of Mr Koopstra's affidavit of service) could also be regarded as steps taken for the purpose of bringing the statement of claim to the second defendant's notice. As I have previously outlined, there were a series of directions hearings in the District Court in 2012 at which the second defendant was not represented. Had there been evidence of an appearance on behalf of the second defendant at any of those directions hearings, that would obviously have supported the conclusion that the requirement for the operation of rule 10.14 had been made out (see for example WFM Motors Pty Limited v Maydwell (SC (NSW) Bryson J, 23 April 1993, unreported); Vista Capital Developments Pty Limited v Talmarc Pty Limited and ors [2008] NSWSC 935). However, even in the absence of that evidence, I am satisfied that steps were taken for the purposes of bringing the statement of claim to the notice of the second defendant.

41 The fact that such requirement has been met means that there is power to make an order under r. 10.14(3). However there is a further question, namely whether in the circumstances of this case I should exercise my discretion to do so (see Elcham at [34]). I have already outlined the events which took place following the delivery of the statement of claim at the premises of the hospital. In my view, a number of important matters emerge from those events.

42 Firstly, each of the letters sent by Ms Kennedy was in identical terms. None of them were responsive to those sent by Mr Hagipantelis. It may be that the heading in each of the letters of Mr Hagipantelis contributed to the confusion. Secondly, there is evidence that the letters sent by Mr Hagipantelis were returned to him. Mr Creed also had returned to him his letter of 8 March 2013. Thirdly, although each of Ms Kennedy's letters invited contact, no such contact was made. Fourthly, there were successive occasions on which the second defendant was not represented at pre-trial conferences.

43 It must have been plainly evident from all of these circumstances that there were real issues concerning the second defendant's knowledge, and appreciation, of the proceedings which had been commenced. It must have been equally evident that whatever step(s) had been taken to bring the statement of claim to the notice of the second defendant, those steps had been less that successful.

44 Notwithstanding all of these circumstances, nothing was done by Mr Hagipantelis, or Mr Creed, to address the situation. In fact, in the face of correspondence being returned under cover of non-responsive replies, further correspondence was sent on behalf of the plaintiff which made no attempt to address the situation which had arisen. No affidavit has been filed by Mr Hagipantelis which addresses these issues. The affidavit of Mr Creed is completely silent in relation to them. No explanation has been forthcoming from anyone on the plaintiff's behalf as to why the events were allowed to develop as they did.

45 All of these matters, in my view, tend against the exercise of discretion in favour of making an order under r. 10.14(3).

THE DISCRETION TO GRANT AN EXTENSION OF TIME

46 Counsel for the plaintiff submitted that even if I were to reject the submissions made regarding the operation of those provisions of the rules to which I have referred, an extension of time was warranted in any event. In this regard, counsel again relied upon the steps which had been taken to bring the proceedings to the attention of the second defendant prior to June 2013, along with the fact that the second defendant had, since that time, taken an active part in the proceedings. Counsel also pointed to the fact that no evidence of actual prejudice had been adduced by the second defendant.

47 Counsel for the second defendant acknowledged that although it was not completely clear, the likelihood that the plaintiff's action was now statute barred was a factor which weighed in favour of an extension of time being granted. He did not point to any prejudice which would be suffered by the second defendant in the event that I were to grant the extension sought. However, he submitted that no good reason(s) had been advanced in support of an extension of time. He also submitted, with some emphasis, that no satisfactory explanation had been provided by the plaintiff, or by anyone on her behalf, for the failure to apply for an extension of time before the statement of claim expired.

48 Rule 1.12, which confers a discretion to extent the time for service of the statement of claim, is in the following terms:

Extension and abridgement of time

1.12

(1) Subject to these rules, a court may, by order, extend or abridge any time fixed by these rules or by any judgment or order of the court.

(2) The court may extent time under this rule, either before or after the time expires, and may do so after the time expires even if an application for extension of time is made after the time expires.

49 The discretion conferred by r. 1.12 is not, in terms, fettered. However, a plaintiff who seeks an extension of time must establish a proper and adequate reason for such an extension being granted, and proof is required of a satisfactory explanation for the delay (see Pell v Hodges [2007] NSWCA 234 at [30] per Handley AJA, Tobias and Basten JJA agreeing).

50 In Kleinwort Benson Limited v Barbrak Limited [1987] AC 597, Lord Brandon (with whom the other members of the House of Lords agreed) formulated three categories of cases in which an application for an extension of time for service might be made. He said (at 615-6):

"Category (1) cases are where the application for extension is made at a time when the writ is still valid and before the relevant limitation period has expired. Category (2) cases are where the application for extension is made at a time when the writ is still valid but the relevant period of limitation has expired. Category (3) cases are where the application for extension is made at a time when the writ has ceased to be valid and the relevant period of limitation has expired".

51 The present case falls within the third category identified by his Lordship who went on to say (at 623):

"Good reason is necessary for an extension in both category (2) cases and category (3) cases. But in category (3) cases the applicant for an extension has an extra difficulty to overcome, in that he must also give a satisfactory explanation for his failure to apply for extension before the validity of the writ expired. The decision whether an extension should be allowed or disallowed is a discretionary one for the judge who deals with the relevant application. Jones v Jones shows that, in exercising that discretion, the judge is entitled to have regard to the balance of hardship. In doing so, he may well need to consider whether allowing an extension will cause prejudice to the defendant in all of the circumstances of the case."

52 As counsel for the second defendant conceded, the fact that the plaintiff's action is, in all likelihood, now statute barred, and the absence of prejudice, are factors which weigh in favour of an order being made granting an extension of time. However, as was pointed out in Pell (supra) and Kleinwort Benson (supra) there is a requirement placed upon a person who seeks an extension to provide a satisfactory explanation for any delay.

53 No affidavit has been filed from the plaintiff in the matter. Her knowledge of, or involvement in, its progress is not known.

54 No affidavit has been filed by Mr Hagipantelis. This is despite the fact that he supervised Mr Creed's carriage of the matter, that he himself wrote letters to the hospital, and that he received correspondence from the hospital marked for his attention, under cover of which his own letters were returned.

55 That leaves the affidavit of Mr Creed as the only affidavit relied upon in support of the order sought. That affidavit sets out what is, in effect, a chronology of events. It does not provide, and in fact makes no attempt to provide, any explanation for the delay which has been occasioned in bringing the present application to extend the time for service. More specifically, it makes no attempt to explain why the present application was not brought prior to the expiry of the statement of claim. In my view, there are a number of aspects of this case which, on the evidence, bear upon the question of delay, for which there has been no explanation.

56 Firstly, it was clear from the initial searches conducted in the office of the plaintiff's solicitors prior to the filing of the statement of claim that the business of the hospital was operated by Healthscope Pty Limited, whose registered office was in Melbourne. Consistent with that information, the statement of claim names the second defendant as "Healthscope Pty Limited t/as the Hills Private Hospital". There is no explanation of why it was, in these circumstances, that service was not effected on Healthscope Pty Limited at its registered office.

57 Secondly, between April 2012 and June 2012 there were no less than three pre-trial conferences conducted in the District Court at which the second defendant was unrepresented. I have already commented upon the nature of the correspondence which passed between Mr Hagipantelis and Ms Kennedy during that period. There is no explanation of why, in these circumstances, what was an obvious issue was not addressed.

58 Thirdly, as I have noted, it might reasonably be inferred that Mr Creed was informed of the suggestion of a change in the corporate entity of the second defendant shortly after the directions hearing which took place on 10 April 2013. 6 weeks elapsed until the result of a further search was obtained. That search produced precisely the same information as had been in his possession, and/or that of Mr Hagipantelis, since January 2012. Given everything that had occurred in the preceding 16 months, it must have been apparent that service of the statement of claim had not been properly effected. It must have been equally apparent that the statement of claim was not valid for service, and not been for almost 12 months. Rectification of that issue was a matter of urgency. Notwithstanding all of that, Mr Creed did not send the statement of claim to Healthscope Pty Limited until 18 June 2013. A further three months elapsed before the present notice of motion was filed.

59 There has been a complete failure on the part of those acting for the plaintiff to make any attempt to explain the delay which has been occasioned in this matter. In my view, the complete absence of such explanation outweighs those factors which I have identified as weighing in favour of the making of the order sought.

ORDERS

60 I make the following orders:

(1) The notice of motion filed by the plaintiff on 17 September 2013 is dismissed.

(2) The proceedings brought by the plaintiff against the second defendant are dismissed.

61 I will hear the parties on the question of costs.

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Decision last updated: 13 February 2014