Transfield Philippines v Pacific Hydro [2006] VSC 175

What the court decided

Luzon Hydro Corporation was a Philippine company, half-owned by Pacific Hydro Limited, a Victorian company [2]. Transfield Philippines Inc undertook design and construction for Luzon under a turnkey contract, and its parent Transfield Holdings Pty Ltd guaranteed its performance, together Transfield [3].

The writ's general indorsement alleged misleading or deceptive conduct by Pacific and Luzon, without details of the conduct [20]. The service indorsement asserted that Luzon was a necessary and proper party and cited paragraphs of rule 7.01(1) [21].

The general indorsement was sufficient for rule 5.04(2)(b), as it is not in the nature of a pleading [28]. New claims in the statement of claim needed leave under rule 14.03(2), which was never sought [31].

The only ground pursued for service out was rule 7.01(1)(l), under which the test is whether the defendants are properly joined under rule 9.02 [33]. Her Honour rejected Luzon's arguments that the claim against it had been abandoned and that no common question was shown [41], [42]. Because the claims of Transfield Holdings against Luzon would not be stayed, it could not be said that Luzon was not a necessary or proper party [43].

A rule 7.02 indorsement must identify the paragraphs of rule 7.01 relied on and must also state the facts which bring the case within that rule [45]. The assertion that Luzon was a necessary and proper party was "a bald conclusion rather than a factual summary", and nothing alleged where the conduct occurred [47]. Whatever the answer to differing first instance views on reading an indorsement with a pleading, such a defect cannot be cured by a pleading provided after service [48].

The failure to comply was an irregularity, and the court may dispense with rule 7.02 if the interests of justice require it [49]. Transfield argued that Luzon had adequate notice because the claims were those raised in the arbitrations [50]. Her Honour accepted that misleading conduct claims had been raised in both arbitrations and that Luzon's solicitors had seen the writ months before service [51]. But those claims were put only in the most general terms, which did not let Luzon assess this court's jurisdiction [52]. Luzon was "still left guessing", so her Honour declined to dispense and held that service should be set aside [53].

Luzon sought a stay under section 7 of the International Arbitration Act 1974 (Cth) [55]. Had it been necessary to rule, her Honour would have stayed the misrepresentation claims of Transfield Philippines against Luzon [79]. The claim of Transfield Holdings was no longer arbitrable because of mutual releases in the June 2005 settlement [83]. The new claims against Luzon would have been stayed [88]. The proceeding against Pacific would continue, but Transfield would need leave to amend the writ to raise the new claims [177]. In the alternative, Transfield sought substituted service on Luzon's Australian lawyers [92]. Her Honour accepted that the requirements of rule 6.10 had been satisfied [93]. She saw little point in serving the deficient writ and invited further submissions [94], [95].

In a separate proceeding, Transfield sought preliminary discovery under rule 32.05 of the Supreme Court (General Civil Procedure) Rules 1996 [6]. It relied on e-mails obtained by subpoena and discovery in an arbitration [101], [103]. Applying Esso Australia Resources Ltd v Plowman, her Honour held that the e-mails were subject to an implied undertaking [110]. She was not persuaded that the court had inherent jurisdiction to release Transfield from it, and in any event refused a release [124], [134]. The documents formed no part of the evidence on the application [135]. Absent a basis for believing that Pacific, the only Victorian party, joined any conspiracy, Luzon was not a necessary or proper party [139]. The application for preliminary discovery failed against both Pacific and Luzon [176]. Service of the originating motion on Luzon was to be set aside [178]. The form of orders and costs were left for further hearing [179].

Why it matters

A writ to be served outside Australia should state in its rule 7.02 indorsement the facts that bring the claim within rule 7.01, including, for a conduct claim, where the conduct occurred. A statement of claim served after the writ will not repair the omission, and notice from parallel proceedings may not secure a dispensation. This is a single judge's decision, and readers should check the current text of the Rules.

Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.