ACM Group Ltd v Jenner

[2014] QMC 7

MAGISTRATES COURTS OF QUEENSLAND

CITATION:

ACM Group Ltd v Jenner [2014] QMC 7

PARTIES:

ACM GROUP LIMITED ACN 127181097
(Plaintiff)

V

PAMELA FAY JENNER
(Defendant)

AND BY COUNTERCLAIM

PAMELA FAY JENNER

(Plaintiff by counterclaim)

and

BERT VIEIRA

(Second defendant by counter claim)

and

ACM GROUP LIMITEDACN 127181097 

(Third defendant by counter claim)

and

NICHOLSONS SOLICITORS

(Fourth defendant by counter claim)

FILE NO/S:

52582/13

DIVISION:

Magistrates Courts

PROCEEDING:

Application by defendants to strike out the claim pursuant to Rule 171(2) of the Uniform Civil Procedure Rules 1999 (“UCPR”) and for judgment on the counter claim pursuant to UCPR 293 – Cross application to strike out defence and counterclaim as frivolous or vexatious.

ORIGINATING COURT:

Brisbane

DELIVERED ON:

21 March 2014

DELIVERED AT:

Brisbane

HEARING DATE:

25 February 2014

MAGISTRATE:

The Honourable Judge Carmody QC

ORDER:

1.          The application is dismissed.

2.          The defence and counterclaim are struck out.

3.          The defendant has leave to re-plead the defence within 28 days.

4. The parties to file and exchange written submissions within 14 days as to whether the defendant or Ms Wales should pay the plaintiff’s costs of and incidental to the application assessed on an indemnity basis pursuant to r 703 UCPR.

CATCHWORDS:

PRACTICE – PROCEDURE Where defendant “assisted” in conducting the litigation and at the hearing by unqualified “advocate” - whether “pleadings” of the defendant (and plaintiff by counterclaim) amounts to an abuse process, where “non legal” concepts and “higher law” principles relied on – whether indemnity costs should be awarded against non-party.

COUNSEL:

M Jones for the plaintiff

SOLICITORS:

Nicholsons Solicitors for the plaintiff

Self represented defendant assisted by Ms Wales, a friend.

The applications

1. This is an application by the defendant (and plaintiff by counterclaim) to strike out the claim under UCPR 171(2) and for judgment on the counter claim pursuant to UCPR 293.

1. The plaintiff and the other defendants by counterclaim (the ACM parties) oppose that application and seek to have both the defence and counter claim struck out.

1. The defendant is self represented and appeared today assisted her friend, Ms Wales.

1. The case highlights the tension between the fundamental principle that all parties have unobstructed access to civil justice regardless of whether or not they are legally represented (Tomasevic v Travaglini (2007) VSC 337 at [84]), on the one hand, and the need to protect members of the public from unscrupulous and unqualified people offering unsatisfactory legal services, on the other.

The claim

1. The plaintiff seeks recovery as the creditors assignee of an unpaid bank debt of $10,968.12 plus interest and costs,.

1. The defendant contends that the originating document amounts to a “commercial default and dishonour” (par 9 (m)-(u)), fails to disclose a reasonable basis for action, is an abuse of process, hopeless, frivolous and vexatious, affected by fraud and lacks good faith (par 9(v)-(x)).

1. There is no valid point of pleading here and no legal grounds for setting aside the claim.

1. The Statement of Claim clearly discloses a viable cause and alleges the material supporting facts.

1. The challenge is really to the merits of the claim not the regularity of its form, issuance or service (cf rule 16 (a)-(i), Ch 2 Pt 3, Ch 4 Pt 3, Ch 6 Pt 2 UCPR).

1. I reject the defendant’s submission for the claim amounts to an abuse of process of the court because of fraud, malice or any other recognised reason.

1. The defendant has not shown that the plaintiff has no real prospects of success or that a trial is not needed to resolve the dispute (Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232).

1. The defendant’s application for summary judgment pursuant to UCPR 293 must, therefore, be refused.

The defence

1. The defendant denies liability on the ground that (a) the claim is “fraudulent, defective and fictitious” (par 3(a) (sic) of the amended defence filed 06.01.2014) and \ or (b) any debt was impliedly discharged on 11 December 2013 by the plaintiffs conduct in failing to return a “valid” money order within time (par (5)(c) of the amended defence).

1. The “money order” or bill of exchange the defendant relies upon as discharging the disputed debt (par 5(a)-(b) of the amended defence) is the modified ACM letter of demand dated 24 October 2013 (page 35 of APB1) which on receipt the defendant returned endorsed in the following terms:

“Accept for value that is sufficient – except from levy. …Deposit to the Treasury AUSTRALIA and charge the same to: Pamela Fay Jenner 490-401-772.

1. As altered the document (a so called A4V notice) purports to be a payment order in favour of the ACM Group in the sum of $12,133.06 (the account balance as at the 24 October 2013) drawn on an account balance held by the defendant at “Treasury AUSTRALIA”.

1. The defendant purports to invoke unknown principles and spurious “higher laws” to override or avoid normal commercial obligations.  Through Ms Wales, Ms Jenner apparently claims the truly remarkable ability to transform a letter of demand into a cheque or other bill of exchange which is then payable by a non-entity from non-existent funds.

1. On her case the non return of the A4V notice within 72 hours of receipt “provided evidence of the acceptance by the plaintiff of the money order and satisfaction of the liability” (par 9(c)- (d)).

1. A “certified agreement” (see page 39 of APB 1) is also relied upon to prove a binding agreement “…by all parties that the plaintiff’s claim of a liability against the defendant was discharged” (par 9(j)(l)).

1. There is no evidence of any financial entity known as “Treasury AUSTRALIA” and no reason to believe that Ms Jenner has contractual or other recognised legal right or authority to compel enforcement of the “A4V notice” on presentation.

1. The A4V notice and the “certified agreement” are unilateral “quasi-agreements” unsupported by valuable consideration. Neither is binding on the involuntary party. The documents do not create formal legal relations or contractual consequences with or for anyone.

1. In fact despite its misuse of Latin maxims and bizarre make believe legal babble the A4V notice is not worth the paper it’s written.

1. The plaintiff claims that Ms Wales is an emerging breed of vicarious vexatious litigants known in Canada as organised pseudo legal commercial argument litigants (OPCA Litigants) characterised and distinguished by the use of muddled legal concepts and terms calculated to frustrate the legitimate legal rights of others and disrupt court proceedings (See Meads v Meads [2012] ABQB 571 per Rooke ACJ at [1]).

1. OPCA litigants, according to Rooke ACJ, belongs to a group unified by specific but irrelevant formalities and language they appear to believe to be (or portray as) legally significant and “…will only honour (agreements and legal obligations) if they feel like it.  And typically they don’t” (Meads at [4]).

1. According to A4V mythology OPCA adherents are associated with the secret government bank account with millions of dollars in it which can be unlocked and accessed by special stamps and notations that convert the original document into a bill of exchange drawn on the secret government account in favour of a nominated payee.

1. The A4V document here closely resembles those used by OPCA Litigants in Canada in “money for nothing schemes” discussed in Meads at [199] – [244].

1. As Counsel for the plaintiff points out the defence and counter claim here also bear a striking similarity to the OPCA modus operandi generally and, in particular, to the uses of unilateral agreements (eg A4V notice) and the fiction of quadruple counter claims (see Meads 473, 531, 483).

1. A similar situation arose in Boughan v HSBC Bank Australia Ltd [2009] FCA 1007 where a litigant asserted an implied agreement that the account was “settled and closed” [23-29] because a bank officer did not sign and return a document within a specified time.

1. Graham J held:

It is apparent that the applicant’s case against the bank well and truly earns the description of being unmeritorious and unsustainable.  The applicant has no recall or prospect of successfully prosecuting any part of his proceeding against the bank.  In relation to his claim for summary judgment against the bank it is totally without foundation, it proceeds on the premise that, because the bank did not reply to his rather odd communication to it, by its silence the bank agreed to make a gift to the applicant of $666,000.

1. The A4V concept was also reviewed and rejected in Underworld Services Ltd v Money Inc [2012] ABQC 327.

1. When a filed defence is irregular or deficient in some way judges should, nonetheless, do their best to ensure that poorly expressed or unstructured pleadings of unrepresented litigants are not peremptorily struck out when they may raise genuine triable issues and with proper amendment or permissible assistance from the court could be put in to proper form (Coronis v Jilt Pty Ltd (2013) 1 Qd R 104 at 107 per McMurdo P).

1. Accordingly, the defendant will be given the opportunity to re-plead free from interference by the unmeritorious arguments presently being advanced.

1. The ACM parties do not resist this option.

The counter claim

1. The counter claim for $43,872.48 is based on the alleged “commercial default and dishonour” of the AGC parties (refer page 9 par 3 of the counter claim) said to justify quadruple liability for damages.

1. Liability and quantum are both “…derived from the law of equity based upon the higher law (Luke 19: 8; 2 Sam 12: 6) being an amount four times what was falsely claimed.”

1. It must be struck out pursuant to UCPR 171.  It is incurably bad because it does not disclose (or even resemble) a reasonable a cause of action, is frivolous (if not vexatious) and abuses the courts process.

Ms Wales

1. Ms Wales does not claim to have legal qualifications or training but calls herself an “attorney-in-fact; executor and trustee” for Ms Jenner.

1. At the outset of the hearing she handed up a document entitled power of attorney dated 24 February 2014 with her written submissions. The document is signed and witnessed and terminates on 30 June 2014 with immediate effect. It appoints Ms Wales to act as Ms Jenner’s “attorney in fact and Trustee” and “notwithstanding gross negligence or wilfull (sic) misconduct releases her from any liabilities incurred from any action taken or not taken in accordance with the authorities granted herein.

1. The authority and powers conferred on Ms Wales also include:

1)   the authority to initiate, maintain, arbitrate, defend settle or otherwise manage and dispose of (including the right to receive or pay any resulting settlement) any and all actions in other legal proceedings against me or on my behalf.

2)   doing anything that Ms Jenner could otherwise do personally.

3)   Clause 8 specifically provides that Ms Wales is not entitled to any compensation for acting as Ms Jenner’s attorney beyond reimbursement of that out of pocket.

1. A party cannot validly grant a lay advocate the right to appear in court on his or her behalf by way of power of attorney because of the public interest in ensuring that litigation is conducted by those who are qualified, fully accredited (and insured), owe an overriding professional duty to assist the court and who are subject to professional standards and disciplinary action (Waddington v Magistrates Court & Anor [2014] VSCA 12 at [7]).

1. To prevent injustice a McKenzie friend (so called because of the decision of the English Court of Appeal in McKenzie v McKenzie (1971) P33) is sometimes allowed to be present in court beside a self representing litigant or her to assist by prompting, taking notes and quietly giving advice.

1. In the United Kingdom a McKenzie friend has no right of audience to carry out the conduct of litigation and must not (i) act as the litigants agent in relation to the proceedings; (ii) manage the case outside the court; for example by signing court documents; or (iii) address the court, make oral submissions or examine witnesses. (Practice Guidance (McKenzie friends) (2010) 4 All England Reports 272)

1. The Australian practice appears similar but how far a court permits a true McKenzie friend to be involved will depend on the particular circumstances.

1. The rules also make provision for litigation by and against “persons under a legal incapacity” by a “legal guardian” r 93(1) but even then such a person who is not a solicitor may only act by a solicitor (r 93(3)).

1. However, Magistrates in this State have both statutory and implied general law to grant a third party audience: s18 Magistrates Court Act, 1921: (Hubbard Association of Scientologist International v Anderson (1972) VR 340, 342; O’Toole v Scott (1965) AC 939; Abse v Smith (1986) 1QB 536).

1. As Adams J observed in Hubbard v Association of Scientologists International (1972) VR 340, 342 the true position appears to be:

“…any court can, in the exercise of control over its proceedings, allow itself to be addressed in a proper case by any person considered a proper person to be allowed audience.”

1. Considerable caution is to be exercised especially where it appears that the lay advocate is making a practice of seeking to represent unrepresented litigants (cf Rights of Audience (1997) Fam Law 403).[1]

   [1] See also Danjanovic v Maley (2002) 55 NSWLR 149

1. Giving a non-lawyer leave to address a court about the legal rights and interests of a litigant in person under s18 of the Magistrates Court Act or otherwise will normally require special circumstances. It is a privilege not a right and can be limited or withdrawn at will.

1. I (unwisely) allowed Ms Wales to participate in the capacity of lay advocate at Ms Jenner’s request because it initially seemed to be the most expedient way to proceed.

1. That view, as it turned out, was completely wrong. It quickly became evident that Ms Wales was what might most aptly be described as a “vexatious litigant by proxy” but I will deal with that aspect of the case in more detail later. 

1. There is, of course, a difference between giving a self represented party liberty to conduct proceedings generally through a legally unqualified agent, on the one hand, and giving a lay advocate leave to appear in a particular interlocutory application as an expediency (Winn v Stewart Bros Construction (2012) 114 SASR 149 at 155[23]) .

1. In Queensland the Legal Profession Act 2007 (Qld) (LPA) regulates legal work and the people permitted to do it for reward within the State.

1. The LPA protects the interests of the administration of justice and consumers of legal services by precluding a person from engaging in “legal practice” in this jurisdiction unless he or she is an Australian legal practitioner (s24 (1) of the LPA).

1. Section 24 (4) and 24 (5) of the LPA prohibit payment for anything done in breach of subsection 24(1).

1. Section 25 forbids persons other than legal practitioners from claiming that they are entitled to engage in legal practice.

1. The term ‘legal practice’ is not defined but it clearly includes giving legal advice and drawing documents (Legal Practice Board v Tilly (2006) WASC 73, Legal Practice Board v Adams (2001) WASC 78).

1. The broader question of whether Queensland law governing legal work may disadvantage self represented litigants is discussed in Jones, “With a Little Help from a Friend”: Self Represented Litigants, Payment and Legal Professional Regulation (2013) 33 Queensland Lawyer 52.  If, for example, a self represented litigant is unable to prepare his or her own submissions and asked a friend for help, how may that friend assist the litigant without breaching the legal practice legislation? Does it matter whether the friend is rewarded in some way?

1. There is no single or simple answer to this question but the decided cases suggest that the friend is strictly limited in the help that he or she can provide.

1. Clearly a self represented litigant may not accept services from a friend which might represent work done in the ordinary course of a legal practice. Even more importantly, the litigant must not pay a friend for any assistance provided.

1. At [17] in Waddington the Court of Appeal noted “an occasional honorary appearance by a lay spokesperson on behalf of the party would not rise to the level of engaging in legal practice”.

1. In Australian Competition and Consumer Commission v Murray (2002) FCA 1252 Heerey J noted at [448]:

“…the advising of a particular person in a particular situation and the production of a document which effects legal rights and which is tailored to the particular needs of that person” is the very essence of legal practice.

1. In Cornall v Nagel (1995) 2 VR 188 a non-lawyer claimed to act for clients as “attorney and agent” he prepared affidavits and letters of demand on their behalf. At 208 Phillips J said:

“In my opinion giving of legal advice, at least as part of a course of conduct and for reward, can properly be said to lay at or near the very centre of the practice of law, and hence of the notion of acting or practicing as a solicitor…If the public is to be adequately protected from those lacking relevant qualifications, …giving of legal advice professionally is, a thing, to be regarded as exclusively the province of those properly trained in the law and having the necessary expertise. It is thus something required to be undertaken only by the legally qualified…”

1. Ms Wales appears to be adherent of the OPCA school of thought or something similar. She is clearly giving bad “legal” advice to the defendant and hijacking someone else’s litigation to use as a platform to advance empty concepts and meritless pseudo “legal” principles. She has clearly played an active role in the preparation and conduct of the defence case. There is reason to suppose that (whether knowingly or not) her interest in the litigation may actually be adverse to the defendants.

1. Allowing her to represent Ms Jenner was clearly a mistake.  She was unfit for the purpose.  Her intervention obscured rather than clarified potentially arguable grounds of defence or counter-claim.

1. She lacked the capacity to formulate a coherent submission or counter argument. She was incapable of preparing or presenting a case in accordance with legal principle.

1. There is reason to suspect that this defendant is not the only “client” Ms Wales has in this court.

1. Unsuspecting lay people like the defendant and other parties ought to be protected from unscrupulous and reckless conduct of this sort.

1. Accordingly, the Registrar will be directed to refer the file and transcript of these proceedings to the appropriate authorities for investigation of Ms Wales.

Costs

1. The ACM parties submit that Ms Wales should be required to indemnify the defendant from any costs liability she incurs as a consequence of this proceeding, or alternatively, pay costs on an indemnity (rather than standard) basis directly to them.

1. The ACM parties contend that the defendant’s conduct in not only pleading a meritless defence but in actively seeking summary judgment on a claim based on meaningless documents and absurd propositions provides the special circumstances necessary in order to depart from the usual rule and award costs on an indemnity basis within the principles of Colgate Palmolive Co v Cussins Pty Ltd [1993] 46 FCR 222.

1. UCPR 703 provides for costs to be assessed on the indemnity instead of standard basis.

1. The courts power to determine who is liable to pay costs and the purpose of such an order mean that there is jurisdiction to order costs for or against a non-party with sufficient connection with the conduct of litigation in exceptional cases including where the non-party has the effective management of the action for a party e.g. a company director (Symphony Group Ltd v Hodgson (1994) Q B 179 at 191-192)

1. Indemnity costs orders have previously been made in circumstances which include allegations of fraud knowing them to be false and making irrelevant claims of deceit, misconduct causing loss of time to the court and other parties, commencing proceedings in wilful disregard to clearly established law and prolonging proceedings by groundless contentions.

1. In Knight v F P Special Assets Ltd [1992] 174 CLR 178 at 202 Dawson J recognised jurisdiction to award costs against a non party to proceedings “where that person is the effective litigant standing behind the actual party or where there has been a contempt or abuse of the process of the court”.

1. Examples include where the party to the litigation is an insolvent person or man (sic) of straw, where the non party has played an active part in the conduct of the litigation and where the non party, or some person on whose behalf he or she is acting or by whom he or she is appointed, has an interest in the subject of the litigation.

1. In White Industries (Qld) Pty Ltd v Flower and Hart [1998] 156 ALR 169 Goldberg J said, in the context of a costs application against a litigants lawyer,

I consider that there are limitations on a proposition that commencing or maintaining proceedings which have no or substantially no prospects of success may result in a costs order being made against a practitioner.  Something must be added to the questions.  Such as, for example, an ulterior motive, abuse of process, or serious dereliction of duty.

The authorities do not support the proposition that simply instituting or continuing a proceeding on behalf of a client which has no or substantially no prospect of success will invoke the jurisdiction. There must be unreasonable conduct.  It is not clear what is encompassed by “unreasonable” initiating or continuing proceedings if they have no or substantially no chance of success. 

It seems to me that it involves some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success with either recognition that there is no chance for success but an intention to use the proceedings for an ulterior purpose or with disregard of proper consideration of the prospects of success.

Expressing the principle this way culminates in the competing principle that a party is entitled to have a practitioner act for him or her, “even in an unmeritorious case.

1. I am prepared to consider doing so in this case but not without allowing the defendant and Ms Wales a fair opportunity to persuade me against it.

Orders

1.          The application is dismissed.

2.          The defence and counterclaim are struck out.

3.          The defendant has leave to re-plead the defence within 28 days.

4. The parties to file and exchange written submissions within 14 days as to whether the defendant or Ms Wales should pay the plaintiff’s costs of and incidental to the application assessed on an indemnity basis pursuant to r 703 UCPR.

Direction

1.          The Registrar is directed to refer the file and transcript to the Legal Services Commission (or other relevant authority) to inquire into the relevant conduct of Ms Wales to determine if she is acting contrary to the Legal Profession Act 2007 (Qld) or other laws.