Augment Communications Pty Limited (In Liquidation) v Sedgwick
[2008] NSWDC 251
•21 November 2008
CITATION: Augment Communications Pty Limited (In Liquidation) v Sedgwick & Ors [2008] NSWDC 251
This decision has been amended. Please see the end of the judgment for a list of the amendments.HEARING DATE(S): 15 & 16 October 2008
JUDGMENT DATE:
21 November 2008JURISDICTION: District Court - Civil - Commercial List JUDGMENT OF: Levy SC DCJ DECISION: 1. The points of claim seeking to rely on alleged representations made by non-parties and claimed to be in breach of the Trade Practices Act, 1944 (Cwth) are struck out.
2. The First Defendant / Respondent to the first motion is ordered to pay the Applicant’s costs of the second motion.CATCHWORDS: COSTS MOTION – motion for strike out of points of claim in support of claim for costs order to be made against non-parties – solicitors who had acted for unsuccessful plaintiff and former director of unsuccessful party in the principal proceedings – alleged representations by non-parties said to be misleading and/or deceptive – allegedly made by solicitors and the party represented by those solicitors – whether claimed costs remedies based on Part V of Trade Practices Act, 1974 (Cwth) are justiciable or triable issues properly raised in connection with a motion for costs against non-parties following conclusion of the principal proceedings. - STRIKE OUT – whether points of claim should be struck out for being frivolous, vexatious, disclosing no reasonable cause of action, having a tendency to cause prejudice, embarrassment or delay in the conclusion of the proceedings and amounting to a contrivance and abuse of the process of the court. LEGISLATION CITED: Legal Profession Act, 2004, s.348(1)
Trade Practices Act, 1974 (Cwth), s.4(1), s.52, s.75B
Civil Procedure Act, 2005, s.56, s.98, s.99
Uniform Civil Procedure Rules, 2005, Rule 13.4, Rule 14.28, Rule 42.3CASES CITED: AAMI v NRMA Insurance Ltd [2002] 124 FLR 518
Beach Club Port Douglas Pty Ltd v Page [2005] QSC 195
Butt v Tingey [1993] FCA 369
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Cran v The State of New South Wales (2004) Aust Torts Rep 81 – 737
Dey v Victorian Railways Commissioner (1949) 78 CLR 62
D’Orta-Ekenaike v Victoria Legal Aid [2005] 223 CLR 1
Energex Limited v Alstrom Australia Ltd [2004] FCA 575
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Knight & Anor v F.P. Assets Limited & Ors (1992) 174 CLR 178
Little v Law Institute of Victoria [1990] VR 247
Stockland (Constructors) Pty Limited v Retail Design Group (International) Pty Limited [2003] NSWCA 84
WJ Green & Co (1984) Pty Limited v Wilden Pty Limited (unreported, 24 April 1997, WASC)
LT King Pty Ltd v Besser [2002] VSC 354
National Mutual Life Assn of Australasia v Chris Poulson Insurance Agencies Pty Ltd (1998) 8 Tas R 123
Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589
Webster v Lampard (1993) 177 CLR 598
Yang v Hypec Electronics Pty Ltd (in liq) [2003] NSWCA 181PARTIES: Augment Communications Pty Ltd, In Liquidation (Plaintiff)
Vincent Sedgwick (First Defendant and Costs Applicant in the first motion)
Anthony Huxley (Applicant in the second motion and First Costs Respondent to the first motion)
Julianne Briscoe, Barry Stephen Spinks, formerly Robinson Legal and now trading as Robinson Legal Pty Ltd (Second Costs Respondents to the second motion)
Anthony Huxley (First Respondent)
Julianne Briscoe, Barry Stephen Spinks, formerly Robinson Legal and now trading as Robinson Legal Pty Ltd (Second Respondents)FILE NUMBER(S): 6558 of 2002 COUNSEL: Mr J Dupree (First Defendant and Costs Applicant in the first motion)
Mr M Condon with Mr L Gorham (First Respondent to the first motion)
Mr T Blyth, Solicitor (Second Respondents to the first motion)SOLICITORS: The Plaintiff company in liquidation did not appear as it was not affected by orders sought in the motion before the court
Russo & Partners (Applicant in the first motion / First Defendant)
M+K Musgrave Peach Lawyers (First Respondent to the first motion)
Middletons (Second Respondent to the first motion)
JUDGMENT
Introduction and background
1. These proceedings have had a convoluted history which culminated in a hearing on the merits before his Honour Judge Hughes following which on 16 November 2006 a verdict for the Defendants was entered in respect of the Plaintiff’s claim. Residual questions of costs remain to be resolved. The successful First Defendant has filed a motion seeking costs from non-parties to the principal litigation, namely a director of the Plaintiff company which is now in liquidation, as well as from the solicitors who had acted for that company. The present motion before the court seeks to strike out numerous points of claim of the First Defendant’s antecedent costs motion.
The motion before the court
2. The current strike out motion before the court arises in response to the First Defendant’s preceding motion for costs and asserts that the preceding motion is fundamentally flawed in its conception in that it relies upon a series of alleged representations which purportedly, and, it is claimed, invalidly, seek to invoke consumer protection remedies pursuant to the Trade Practices Act, 1974 (Cwth).
3. The Applicants in the current motion before the court, who were not parties to the principal proceedings, claim that no justiciable or triable issues are raised against them in the first motion and as a consequence they seek to strike out the points of claim the First Defendant has raised against them.
4. Before outlining the issues raised in the motion before the court it is necessary to review the background to the First Defendant’s application for costs.
The principal litigation
5. Proceedings were brought by Marvin Enterprises Pty Limited (“Marvin”) against Augment Communications Pty Limited (“Augment”) in the Local Court at Wyong, New South Wales, claiming moneys that were due for work done and materials provided. Mr Anthony Huxley was a director of Marvin.
6. Augment filed a defence to those proceedings and sought removal of the proceedings from Wyong to Sydney. Augment brought separate proceedings in the District Court in Sydney against Mr Sedgwick as First Defendant and Mr James Ashcroft as Second Defendant claiming damages for breach of contract arising from the same transactions that were the subject of the litigation brought by Marvin.
7. For the purpose of dealing with the motion before the court it is not necessary to further describe the claims brought by Marvin and Augment. Orders were made for the Local Court proceedings to be heard together with the District Court proceedings and they were heard in Sydney at the same time. On 16 November 2006 his Honour Judge Hughes entered a verdict and judgment for $30,678.59 in favour of Marvin in the proceedings that originated in the Local Court and at the same time, in respect of the amended claim for $237,118 brought by Augment, he entered a verdict and judgment for the Defendants in those proceedings.
The first motion
8. Following his successful defence of the principal proceedings that were brought against him by Augment, Mr Sedgwick, the First Defendant in those proceedings has filed an Amended Notice of Motion dated 5 September 2008 (the “first motion”) in which he seeks payment of his costs for successfully defending the principal proceedings. His claim for costs includes a claim for indemnity costs, comprising his solicitor’s costs and his counsel’s fees, which he has claimed in the total sum of $274,804.53.
9. It appears that the first motion has been brought against non-parties to the principal proceedings because after the trial Augment went into liquidation. As a result Mr Sedgwick seeks to claim his costs from Mr Anthony Huxley, the principal director of Augment, and from the solicitors who acted for Augment, namely Julie Anne Briscoe, Dominique Francoise Robinson and / or Barry Spinks who then traded as Robinson Legal (“the solicitors”).
10. Neither Mr Huxley nor the solicitors were parties to Augment’s litigation against Mr Sedgwick.
11. In the first motion Mr Sedgwick seeks, innovatively, to recover his costs against the solicitors and Mr Huxley upon the basis of a series of allegations described as misleading and / or deceptive representations made by the solicitors and Mr Huxley. The allegations seek to involve remedies founded upon the consumer protection provisions within Part V of the Trade Practices Act, 1974 (Cwth).
12. Mr Sedgwick claims that the primary conduct of the solicitors in the litigation as well as the alleged accessory conduct of Mr Huxley in the principal proceedings amounted to misleading and / or deceptive conduct in contravention of section 52(1) of the Trade Practices Act, 1974 (Cwth). It is argued that Mr Huxley was involved in such conduct because the solicitors who acted for Augment did so on his instructions.
13. It should be noted that the allegations concerning misleading and / or deceptive conduct, having only been raised on 5 September 2008, at this stage remain as untested assertions. However, for the purpose of determining the issues raised in the motion before the court, but not otherwise, I am required to treat such allegations as being on their face, correct.
14. The allegations relied upon by Mr Sedgwick in his pursuit of attempted recovery of his successful costs have been incorporated into the body of the document comprising the first motion as a sequential list of statements of material facts and conclusions as if they were set out in the form of a pleading supported by particulars. These statements are described as points of claim and are enumerated between paragraphs 6 to 133 of that document.
The second motion
15. At the outset of the hearing of the first motion the solicitors against whom orders for costs are claimed sought and obtained leave to file in court a Notice of Motion dated 15 October 2008 (the “second motion”) by which they seek to strike out those parts of the Applicant / First Defendant’s claims as set out in the first motion seeking to invoke remedies for misleading and / or deceptive conduct pursuant to Part V of the Trade Practices Act, 1974 (Cwth).
16. The parties have approached the matter in a practical manner and with a high level of co-operation. They have agreed that it was both convenient and appropriate to deal firstly with the second motion in order to determine the preliminary issues because the outcome of the second motion impacts upon the viability of the first motion.
17. It has been agreed between the parties that for convenience, Mr Huxley, who has not filed his own motion to seek strike out orders, would also seek the same strike out relief as was sought in the solicitor’s motion. The hearing was conducted on that basis and I dispensed with the need for a notice of motion to that effect to be filed on behalf of Mr Huxley.
18. The non-party costs remedy sought in the first motion as against Mr Huxley and Augment’s solicitors is based upon the claimed existence of a series of seven alleged misleading and / or deceptive representations that are said to have been made by Mr Huxley and the solicitors during the protracted and chequered course of the procedural history of the principal litigation.
19. For the purpose of determining the second motion, other than as previously outlined, it is not necessary to further review in detail the complex procedural history of the matter which included a number of listings for interlocutory and case management hearings which both preceded and post-dated the hearing on the merits in the principal action.
20. To determine the second motion it is necessary to consider the allegations made in the first motion that are described as representations in order to decide whether or not the rules of procedure require that they should be struck out.
Issues for determination
The first issue21. The core issue for determination in the second motion is whether the alleged representations referred to in the first motion raise justiciable or triable issues. To decide that issue the following four questions require determination:
- (a) The appropriateness of joinder of each of the Respondents to the first motion.
- (b) Were the alleged representations made in the course of trade or commerce within the meaning of section 4(1) of the Trade Practices Act, 1974 (Cwth) ?
(i) they are frivolous or vexatious; or(c) Are the alleged representations which are claimed to be misleading and / or deceptive within the meaning of Part V of the Trade Practices Act, 1974 (Cwth) framed in such a way that the interests of justice requires that they should be struck out pursuant to Rule 13.4 of the Uniform Civil Procedure Rules, 2005 because:
(ii) they disclose no reasonable cause of action; or
(iii) they are an abuse of the process of the court; or alternatively
(i) they disclose no reasonable cause of action; or(d) Are the alleged representations which are claimed to be misleading and / or deceptive within the meaning of Part V of the Trade Practices Act, 1974 (Cwth) framed in such a way that the interests of justice requires that they should be struck out pursuant to Rule 14.28 of the Uniform Civil Procedure Rules, 2005 because:
(ii) they have a tendency to cause prejudice, embarrassment or delay in the proceedings; or
(iii) they are otherwise an abuse of the process of the court?
22. If the ultimate conclusion on the threshold issue is that the alleged representations are capable of being raised as justiciable or triable issues that may be relied upon by Mr Sedgwick for the purposes of pursuing his costs orders then the appropriate order would be for the solicitor’s strike out motion to be dismissed.
23. If on the other hand the ultimate conclusion is that in the context in which the allegations have been raised, the remedies sought to be raised pursuant to Part V of the Trade Practices Act, 1974 (Cwth) are not justiciable or triable then on behalf of Mr Sedgwick it is conceded that the affected portions of the points of claim filed on his behalf should be struck out.
24. Such findings will inevitably affect the subsequent disposition of the issues raised in the first motion.
Applicable rules governing strike out
25. The second motion as originally filed in court sought relief under Rule 13.4 of the Uniform Civil Procedure Rules, 2005. Rule 13.4 provides:
- “ 13.4 Frivolous and vexatious proceedings
(1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:
(a) the proceedings are frivolous or vexatious, or
(b) no reasonable cause of action is disclosed, or
(c) the proceedings are an abuse of the process of the court,
(2) The court may receive evidence on the hearing of an application for an order under subrule (1).”
26. During the course of the hearing of the second motion Mr Dupree submitted that rule 13.4 was not the appropriate rule to be invoked. For more abundant caution, Mr Blyth, for the solicitors, then sought and was granted leave to include in paragraph 1 of the second motion a prayer for relief pursuant to rule 14.28 which provides:
- “ 14.28 Circumstances in which court may strike out pleadings
(1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading:
- (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or
(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or
(c) is otherwise an abuse of the process of the court.
27. In my view, both Rule 13.4 and Rule 14.28 are each appropriate rules upon which to base a strike out application in the case of the relief sought in the second motion as it impacts upon the first motion.
The Motions
28. I set out the terms of each motion for convenient reference. I will then review the evidence and submissions in the light of the relevant consumer practitioner legislation.
The First Motion
29. The first motion seeks the following orders which I set out in full:
“(1) That Mr Vincent Sedgwick be awarded his costs and all disbursements incurred by him of and incidental to the proceedings herein in the sum of $274,804.53 on the basis of the calculation set out in SR2 annexed hereto (“Sedgwick’s costs”).
(2) That Julie Anne Briscoe, Dominique Francoise Robinson and/or Barry Spinks (“the Solicitors”) both jointly and severally, as the partners and/or the proprietors of the firm of Solicitors that acted from time to time for Augment Pty Limited (in Liquidation) in respect of the proceedings herein pay Sedgwick’s costs or in the alternative Sedgwick’s assessed costs on an indemnity basis.
(3) Further or in the alternative that Mr Anthony Huxley (“Huxley”) pay Sedgwick’s costs or in the alternative Sedgwick’s assessed costs on an indemnity basis.
(5) That Sedgwick’s costs include all costs and/or disbursements incurred in respect of Mr Vincent Sedgwick’s application for those costs herein.”(4) That interest be allowed in respect of and added to Sedgwick’s costs or in the alternative Sedgwick’s assessed costs and all disbursements such interest to be allowed in accordance with the schedule provided for in respect of interest as set out in the Uniform Civil Procedure Rules (as amended from time to time) such interest to be calculated from the date such costs or disbursement was incurred.
30. Clearly, the success or otherwise of the first motion is dependent upon the viability grounds, material facts and particulars as set out in paragraphs numbered 6 to 133 which are incorporated into that document.
31. In the present interlocutory application I am not required to determine the first motion in view of the issues that have arisen in connection with the second motion.
The Second Motion
32. When the first motion was called on for hearing Mr Blyth, who appeared for the solicitors, sought and was granted leave to file in court a Notice of Motion dated 15 October 2008 (the “second motion”) which sought orders for the striking out of portions of the material within paragraphs 6 to 133 relating to claimed remedies under Part V of the Trade Practices Act, 1974 (Cwth). With the co-operation of all parties I allowed amendments to that document to ensure that the enumeration of the relief sought matched the enumeration of the paragraphs in the first motion.
33. The second motion, as amended, sought the following orders which I set out in full:
“1. The following paragraphs of the further amended notice of motion and points of claim filed 5 September 2008 be struck out pursuant to Rule 13.4 and Rule 14.28:
(a) 7;
(b) 49 to 54;
(c) 59 to 64;
(d) 67 to 71;
(e) 76 to 81;
(f) 83 to 90;
(g) 96 to 101;
(h) 104 to 105;
(i) the words in paragraph 119 ‘the costs representations and/or the further debts incurred to’; and
(j) 131 to 133.
2. Sub-paragraphs (i) and (ii) under the heading ‘In respect of the Solicitors’ on pages 27 and 28 of the further amended notice of motion and points of claim filed 5 September 2008 be struck out.4. Costs.”3. Such further or other orders as the Court sees fit.
34. During the hearing of the second motion an evidentiary issue arose which, having regard to the circumstances wherein the hearing of the second motion commenced on the day it was filed, by agreement between the parties, the hearing of the prayer for relief in paragraph 2 of the second motion, which covered the alleged representations in paragraph 119 of the points of claim, was severed in order for it to be separately determined on another date if there was a remaining need to do so and when the parties were prepared to meet the evidentiary issue that had arisen.
Evidence
35. The parties proceeded upon the premise that on an interlocutory application for strike out, the facts, matters and circumstances set out in the points of claim incorporated into the first motion should, for the purpose of argument, be taken as being correct. Accordingly, no evidence was adduced either in support of the strike out motion or in response to it.
36. To aid the process of analysis of the points of claim in contention for the purpose of the strike out application, Mr Blyth, for the Second Respondent prepared a helpful schedule cross-referencing the relevant paragraphs of the points of claim seeking Trade Practices Act relief to the seven alleged representations relied upon by the Applicant / First Defendant in the first motion. That schedule was marked MFI “1”. I will subsequently refer to the alleged representations in more detail.
Submissions by the parties to the second motion
37. Each party prepared written submissions and supplemented them with oral argument.
38. Mr Condon, counsel for Mr Huxley, the First Respondent to the second motion relied upon written submissions dated 23 and 24 September 2008. Those submissions were marked MFI “2”.
39. Mr Blyth, the solicitor for the solicitors who were the Applicants in the second motion relied upon written submissions which were marked MFI “3”.
40. Mr Dupree, counsel for the First Defendant / Respondent to the second motion relied upon written submissions which were marked MFI “4”. Those submissions were supplemented with oral submissions.
41. On behalf of Mr Huxley, Mr Condon made three core submissions:
(a) The conduct relied upon in the points of claim was not relevantly conduct within trade or commerce within the meaning of the Trade Practices Act, 1974 (Cwth) and therefore did not enliven the operation of Section 52 of that Act to make available the relief sought;
(c) The allegations made in the points of claim are so broad that on first principles they ought not be permitted to stand having regard to the requirements of section 56 of the Civil Procedure Act, 2005.(b) The allegations sought to be advanced against Mr Huxley were manifestly bad and unsustainable in the way they have been framed because they invoked alternative notions of actual and / or imputed knowledge on the part of Mr Huxley as principal accessory in respect of the claimed contraventions;
42. On behalf of the solicitors, Mr Blyth adopted the submissions made by Mr Condon. In addition, Mr Blyth submitted that:
(a) It was of determinative significance that the relevant conduct of the solicitors which Mr Sedgwick seeks to impugn as representations arose in the course of steps taken in the course of the principal litigation and therefore it was not in the course of trade or commerce;
(b) Therefore, the allegations relied upon were embarrassing to the judicial process;
(d) The pleaded points of claim seek to circumvent the principle of absolute immunity of legal practitioners in respect of statements to the court either orally or in affidavit form : D’Orta-Ekenaike v Victorian Legal Aid & Anor (2005) 223 CLR 1; [2005] HCA 12.(c) Anshun estoppel arises in respect of the first, third, sixth and seventh claimed representations in that Mr Sedgwick is seeking to re-litigate matters that should have been litigated in the principal proceedings and has raised matters that were actually decided in the judgment of his Honour Judge Hughes on 16 November 2006 : Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 509 at 598-599;
43. Both Mr Huxley and the solicitors have therefore submitted that pursuant to the court’s power founded upon either Rule 13.4 or Rule 14.28 of the Uniform Civil Procedure Rules, 2005, those paragraphs in Mr Sedgwick’s points of claim which have been identified in paragraph 1 of the second motion should be struck out.
44. For the purpose of determining the issues raised in the second motion Mr Huxley, the First Respondent, and the solicitors, the Second Respondents have the same broad interests.
45. In defence of the orders sought in the first motion, on behalf of Mr Sedgwick, Mr Dupree submitted that:
(a) The question raised is whether or not the representations were made in trade or commerce is a prime question;
(b) The prime question is a triable issue and is not to be disposed of other than on a trial of the issue : General Steel Industries Inc v Commission for Railways (1964) 112 CLR 125;
(c) Whether or not the representations were made in trade and commerce is a triable issue that on a trial will be considered as terms of the “ widest import ”;
(d) The representations and context relied upon by Mr Sedgwick in the present proceedings are clearly distinguishable from the context and the words used in Little v Law Institute of Victoria & Ors (No 3) [1990] VR 257;
(f) The points of claim satisfy the requirements of Rule 41.7 and Rule 14.8 of the Rules of Court (sic).(e) Mr Huxley, as the sole director of Augment, in giving instructions to the solicitors, must in effect, be taken as having made the representations in question;
Relevant consumer protection legislation
46. Part V of the Trade Practices Act, 1974 (Cwth) is concerned with consumer protection. The first motion seeks to invoke relief pursuant to section 52 of that Act which concerns misleading or deceptive conduct. Section 52(1) provides:
“(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
47. Part VI of the Trade Practices Act, 1974 (Cwth) is concerned with enforcement and remedies. Section 75B from within Part VI is concerned with interpretation and provides:
- “75B (1) A reference in this Part to a person involved in a contravention of a provision of Part IV, IVA, IVB, V or VC, or of section 75AU, 75AYA or 95AZN, shall be read as a reference to a person who:
(a) has aided, abetted, counselled or procured the contravention;
(b) has induced, whether by threats or promises or otherwise, the contravention;
(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d) has conspired with others to effect the contravention.
(2) In this Part, unless the contrary intention appears:
(a) a reference to the Court in relation to a matter is a reference to any court having jurisdiction in the matter;
(b) a reference to the Federal Court is a reference to the Federal Court of Australia; and
(c) a reference to a judgment is a reference to a judgment, decree or order, whether final or interlocutory.”
48. Section 4(1) of the Trade Practices Act, 1974 (Cwth) defines “trade or commerce” as follows:
“ ‘ trade or commerce’ means trade or commerce within Australia or between Australia and places outside Australia; ”
49. It is argued on behalf of Mr Sedgwick that Mr Huxley was, within the terms of section 75B of the Act, a relevant contravenor.
The first issue - appropriateness of joinder of the Respondents as parties to the first motion
50. Neither Mr Huxley nor the solicitors who acted for Augment were parties to the principal proceedings yet they have been joined as Respondents to the first motion. On first examination their joinder to the first motion would therefore seem counter-intuitive to the conventional pathways of litigation, absent a foundation in sound precedent or a clear statutory basis. The award of costs against non-parties is not without precedent but the discretion to do so must be exercised judicially : Knight & Anor v F.P. Assets Limited & Ors (1992) 174 CLR 178 at page 192. It becomes necessary to consider the terms of the legislation which would permit such an award.
Joinder of the solicitors
51. The first motion includes a misconceived prayer for relief founded upon Rule 42.3(2)(g) of the Uniform Civil Procedure Rules, 2005 based on a supervisory jurisdiction over officers of the court which, in this case, refers to the solicitors. The jurisdiction to which the rule refers is vested in the Supreme Court of NSW as it refers to officers of the court and as such it is not available in this court.
52. Joinder of legal practitioners is permitted in limited circumstances in respect of costs issues pursuant to section 348(1) of the Legal Profession Act, 2004 and section 99 of the Civil Procedure Act, 2005.
53. Section 348(1) of the Legal Profession Act, 2004 provides:
- “(1) If it appears to a court in which proceedings are taken on a claim for damages that a law practice has provided legal services to a party without reasonable prospects of success, the court may of its own motion or on the application of any party to the proceedings make either or both of the following orders in respect of the practice or of a legal practitioner associate of the practice responsible for providing the services:
(a) an order directing the practice or associate to repay to the party to whom the services were provided the whole or any part of the costs that the party has been ordered to pay to any other party,
(b) an order directing the practice or associate to indemnify any party other than the party to whom the services were provided against the whole or any part of the costs payable by the party indemnified.”
54. Without in any way expressing a view of the merits of a claim for costs against the solicitors and without in any way expressing a view on the legitimacy of the joinder of the solicitors as Respondents in the first motion, it is clear from the terms of section 348(1) of the Legal Profession Act, 2004 that it was open to Mr Sedgwick to seek to argue a claim for costs relief from the solicitors.
55. Further, section 99 of the Civil Procedure Act, 2005 also provides for an array of circumstances in which costs orders can be made against legal practitioners as a consequence of their conduct during litigation. The focus of that section relates to alleged serious neglect, misconduct or impropriety on the part of a legal practitioner in litigation, including incurring costs without reasonable cause. That section enables the court to disallow certain costs or to order that particular legal practitioners pay certain costs after an opportunity has been afforded to such practitioners to enable them to be heard on the issues so raised.
56. In my view, if the seven alleged representations are ultimately accepted as having occurred in the manner sought to be characterised by Mr Sedgwick, then they come within the purview of section 99 of the Act.
57. Accordingly, it is clear that for the purposes of determining the issues raised in the first motion the solicitors are appropriately joined to the first motion to enable an argument for costs to be paid by them notwithstanding that they were not parties to the principal action.
Joinder of Mr Huxley
58. The position with regard to the claim for costs relief sought against Mr Huxley appears to be somewhat different to the position with regard to the joinder of the solicitors.
59. None of the powers conferred by Section 99 of the Civil Procedure Act, 2005 permit a non-party such as Mr Huxley to be joined for the purpose of such costs arguments where that non-party was not a legal practitioner with a relevant role in the proceedings.
60. However the circumstances of the joinder of Mr Huxley make it necessary to consider the combined operation of s.98 of the Civil Procedure Act, 2005 and Rule 42.3 of the Uniform Civil Procedure Rules, 2005.
61. Section 98 of the Act provides:
- “ 98 Courts powers as to costs
- (1) Subject to rules of court and to this or any other Act:
- (a) costs are in the discretion of the court, and
(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.
(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to:
- (a) costs up to, or from, a specified stage of the proceedings, or
(b) a specified proportion of the assessed costs, or
(c) a specified gross sum instead of assessed costs, or
(d) such proportion of the assessed costs as does not exceed a specified amount.
(6) …”
62. It is therefore apparent that section 98(2) provides a basis upon which to make a claim that costs be paid by “any other party” and in the circumstances this would prima facie include Mr Huxley.
63. Section 98 of the Act must be read in conjunction with Rule 42.3 of the Uniform Civil Procedure Rules, 2005 which allows for exceptional circumstances. That rule provides:
- “ 42.3 Powers of the court generally
- (1) Subject to rule 42.27, the court may not, in the exercise of its powers and discretions under section 98 of the Civil Procedure Act 2005 , make any order for costs against a person who is not a party.
(2) This rule does not limit the power of the court:
- (a) to make an order for payment, by a relator in proceedings, of the whole or any part of the costs of a party to the proceedings, or
(b) to make an order for payment, by a person who:
- (i) is bound by an order made, or judgment given, by the court in proceedings or is bound by an undertaking given to the court in proceedings, and
(ii) fails to comply with the order or the judgment or breaches the undertaking,
(c) to make an order for payment, by a person who has committed contempt of court or an abuse of process of the court, of the whole or any part of the costs of a party to proceedings occasioned by the contempt or abuse of process, or
(d) to make an order for costs against a person who purports, without authority, to conduct proceedings in the name of another person, or
(e) to make an order for costs against a person who commences or carries on proceedings, or purports to do so, as an authorised director of a corporation, or
(e1) in the case of proceedings in the Land and Environment Court, to make an order for costs against a person who carries on proceedings as a party’s agent, or
(f) to make an order of the kind referred to in rule 42.27, or
(g) to make an order for costs in exercise of its supervisory jurisdiction over its own officers, including solicitors, barristers and court appointed liquidators.”
64. [It is therefore apparent that an exceptional circumstance such as is contemplated by section 98(2) of the Act and Rule 42.3(2)(e) exists so as to permit a claim for costs to be made against a non-party director of a corporation in order to prevent the frustration of a costs order due to the existence of the corporate veil which would be otherwise impervious : Yang v Hypec Electronics Pty Ltd (in liq) [2003] NSWCA 181 at [104]; National Mutual Life Assn of Australasia v Chris Poulson Insurance Agencies Pty Ltd (1998) 8 Tas R 123 at 135.] [Excised 17 December 2009]
65. The prayer for relief in the first motion relies upon Rule 42.3(c). In my view this prayer is misconceived as there has been no finding of contempt or the commission of an abuse of the process on the part of any person which is a necessary precondition for such relief.
66. [On the foregoing analysis, for the purpose of the costs argument the First Defendant seeks to make in the first motion, I find that Mr Huxley has been appropriately joined to the first motion.] [Excised 17 December 2009]
67. It now becomes necessary to determine whether the relevant conduct of the Respondents could be reasonably characterised as having been in the course of “trade or commerce” so as to reasonably base the claim for costs relief sought which is in turn based on allegations founded upon the relevant consumer protection legislation.
The second issue - were the Respondents engaged in trade or commerce within the meaning of Section 4(1) and Section 52(1) of the Trade Practices Act, 1974 (Cwth)?
68. On behalf of the First Defendant / Applicant to the first motion Mr Dupree fairly concedes that the justiciability or triability of the issue of trade or commerce is pivotal to the outcome of the second motion and its consequential impact upon the first motion.
The position of Mr Huxley
69. Mr Huxley was a director of the Plaintiff company which was involved in litigation with the First Defendant concerning a building dispute. There is little room for doubt that the dispute which led to that litigation arose from activity legitimately described as occurring in trade or commerce within the meaning of the Act. Accepting that Augment was engaged in activity that was properly described as being in trade or commerce prior to the advent of the litigation that does not necessarily mean that Mr Huxley was also engaged in activity that could be characterised as being in trade or commerce. The particular question which arises is whether the pursuit of litigation is conduct that can reasonably be characterised as being in trade or commerce.
The position of the solicitors
70. The solicitors Respondents were acting on the instructions of Augment. My preliminary view is that when the solicitors were engaged in the litigation on Augment’s behalf they were not engaged in trade or commerce within the meaning of the Act.
The process of litigation
71. The process of litigation before a court involves the activity of one party in initiating proceedings in a forum that requires the participation of the other parties to submit to the court’s adjudication of the dispute subsisting between them. That is not an activity which has the character of a commercial transaction. A party ignores litigation at their commercial peril whereas participation in the activity of trade or commerce is optional. The distinction between these activities is significant. My initial view therefore is that the process of litigation is not one in which the litigants, their directors or their lawyers are engaged in the course of trade or commerce. This issue necessarily involves a public policy question concerning the characterisation of the business of the courts.
Applicable test for determining whether the issues raised are justiciable or triable or should be summarily dismissed
72. The test for determining whether an action ought to be terminated summarily and not be permitted to proceed to a hearing on the merits is to be found in the judgment of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 approving the passage within the dissenting remarks of Dixon J as he then was in Dey v Victorian Railways Commissioner (1949) 78 CLR 62.
73. In Dey, at page 91, Dixon J reviewed the authorities and expressed the test in the following terms:
“A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.”
74. In General Steel, at pages 129 to 130, Barwick CJ confirmed that the jurisdiction to summarily terminate an action is to be sparingly employed and is not to be used except in clear cases. He described the test thus:
“It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense".
As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same.”At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument"; "so to speak apparent at a glance".
75. In AAMI v NRMA Insurance Ltd [2002] 124 FLR 518 Conti J referred to the General Steel test as restated in Webster v Lampard (1993) 177 CLR 598 to require a finding that the action ought not be permitted to go to trial in the ordinary way because it was apparent that it must fail. In Webster Mason CJ, Deanne and Dawson JJ said at 602-603:
“The power to order summary judgment must be exercised with ‘ exceptional caution ’ and ‘ should never be exercised unless it is clear that there is no real question to be tried ’. Nowhere is that need for exceptional caution more important than in a case where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact.”
Were the representations made in the course of trade and commerce?
76. On behalf of Mr Sedgwick Mr Dupree submits that to determine the strike out motion “the prime question” to be decided first is whether the representations relied upon were made in trade or commerce. Mr Dupree submits that the prime question is a triable question on a triable issue that ought not be disposed of other than on a trial of that issue, in line with the decision in General Steel Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.
77. Mr Dupree further submits that the prime question is to be seen in the light of the decision in Re: Ku-Ring-ai Co-operative Building Society (No 12) Ltd (1978-1979) 36 FLR 134 which requires that the question of whether the representations are made in the course of trade and commerce be determined by giving those terms the widest import. In Ku-Ring-ai, at page 167 Deane J said:
“The terms ‘ trade’ and ‘ commerce ’ are not terms of art. They are expressions of fact and terms of common knowledge. While the particular instances may fall within them will depend upon varying phases of development of trade, commerce and commercial communication, the terms of the widest import …”
78. To do justice to that submission I must examine the representations set out in the points of claim for relevant content with the remarks within the foregoing cases in mind.
79. I therefore turn to deal with the particular points of claim in the first motion that are placed in contention by the second motion. Each of those points of claim are dependent upon the viability of the assertion that the impugned activity was undertaken in trade or commerce.
Paragraph 7 of the points of claim in the first motion – conduct in trade or commerce
80. Paragraph 7 of the points of claim in the first motion asserts that “at all material times Augment Communications Pty Limited was engaged in trade and commerce in Australia”. Whilst that assertion is undoubtedly correct insofar as the business activities of Augment were concerned, I am not satisfied that this assertion has been made out in respect of the litigation activities of that company in its capacity as Plaintiff in the principal proceedings. In respect of those material times, that is, during the course of litigation it is my tentative view that Augment was not conducting trade or commerce but was instead conducting litigation.
The seven alleged representations
81. The seven representations relied upon by the Applicant / First Defendant in the first motion are complex. They are laid out in the form of a pleading of points of claim in paragraphs 6 to 133 over 28 pages in the body of the first motion.
82. In essence the representations all arise within the principal litigation and concern first, the making of a claim for quantum in the sum of $206,271; second, making a submission to the court asserting readiness for trial; third, filing an Amended Statement of Claim in the revised quantum amount of $213,666.84; fourth, obtaining an adjournment on grounds of unpreparedness for trial; fifth, making submissions to the Court in order to obtain leave to file further affidavit material in support of the claim; sixth, the swearing of an affidavit in which it was sought to make additional contractual allegations in the litigation and seventh, the preparation of a proposed Further Amended Statement of Claim in which the quantum of the claim was revised to the sum of $237,118.
83. A more extensive rendition of the seven alleged representations sought to be relied upon by Mr Sedgwick is to be found in the Annexure to this judgment.
84. In deference to Mr Dupree’s earnest arguments on the trade or commerce point I have given careful consideration to the question of whether a director of a corporation who gives instructions to solicitors in the course of litigation by that corporation, can in such circumstances be said to have been fairly, reasonably and properly engaged in conduct which is in trade or commerce even when giving those words their widest import. I have given similar careful consideration to whether such a contention could also fairly, reasonably and properly be applied to the conduct of the litigation by the solicitors engaged by the corporation for that purpose.
85. In my view, all the representations relied upon, both individually and when taken as a whole, are clearly, intimately and inextricably bound up with matters concerning the course of the principal litigation which is an activity that is entirely different to conduct that is carried out in trade or commerce.
86. It is necessary to review the relevant authorities to test this view with exceptional caution, particularly in view of the costs consequences for the Applicant / First Defendant in the first motion if the second motion succeeds.
The litigation context of the alleged representations
87. The question of whether a submission or statement, which I here interpolate to include a representation made to a court, was capable of being relied upon in the pursuit of relief under consumer protection legislation has been considered in Little v Law Institute of Victoria (No 3) [1990] VR 257. That case involved section 11 of the Fair Trading Act, 1985 (Vic) which is in similar terms to section 52 of the Trade Practices Act, 1974 (Cwth). In that case, in relation to statements made to the court in litigation at page 273 Kaye, Beach JJA held:
As Bowen CJ said in Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 22 ALR 621, at pp. 624-5; 36 FLR 134, AT 139: “The terms ‘trade’ and ‘commerce’ are ordinary terms which describe all the mutual communings, the negotiations verbal and by correspondence, the bargain, the transport and the delivery which comprise commercial arrangements … The word ‘trade’ is used with its accepted English meaning: traffic by way of sale of exchange or commercial dealing.” A statement made to a court during the course of litigation is not a statement made in connection with or as part of a commercial arrangement.”“In our opinion, this aspect of the appellant’s claim is quite untenable. For the appellant to succeed he must first establish that the statement upon which he relies was a statement made in trade or commerce. The statement relied upon was made to Southwell J during the course of the proceedings brought by the second-named respondent against the appellant seeking to restrain the appellant from acting or practising as a solicitor. In our opinion, statements made during the course of litigation cannot be categorised as statements made in trade or commerce nor can they be categorised as representations.
88. In Little’s case Ormiston J who dissented, considered the General Steel test contended for in this case by Mr Dupree, and at page 275 concluded:
“The relevant test varies according to the nature of the application brought. With the greatest of respect to Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964)112CLR 125, it is not satisfactory to pose the same test for a pleading summons as for a summons to stay on grounds that the proceeding is frivolous, vexatious or an abuse of process. On a pleading summons it is not unreasonable to require the court to examine the pleaded case to determine whether as a matter of law it discloses a cause of action, even if the latter requires extensive examination of authority. However, when a stay is sought, the circumstances will vary greatly and, unless a clear issue of law is raised on the affidavits, the possibility that the evidence will vary at the trial should lead the court to exercise its powers with “exceptional caution”, reserving its powers to stay to cases which “do not admit of reasonable argument”. Many of the difficulties in the present appeal arise because facts are not, and could not be, fully before the court. Whatever reservations one may have about the plaintiff’s ability to make out his allegations, he has not yet had to prove his case and it would be unreasonable to call upon him to do so before trial, except, perhaps, on a specific defined issue. Here, four causes of action are pleaded but all relevant facts are nowhere directly stated, so that it is far from clear what will be proved at the trial.”
89. In Little’s case, at page 292 Ormiston J considered the issue of statements made in the course of evidence or affidavit with the aim of persuading a judge and concluded that such statements were not made in trade or commerce:
“Notwithstanding the broad interpretation which has been properly afforded to the expression “in trade or commerce”, I agree that it cannot include the present circumstances, that is where the allegedly misleading and deceptive statements are made in the course of evidence, whether on affidavit or otherwise, for the purpose of persuading a judge of this or any other superior court to exercise his judicial functions in making an order in favour of a litigant.”
90. In Stockland (Constructors) Pty Ltd v Retail Design Group (International) Pty Ltd [2003] NSWCA 84 Little’s case was construed to be limited to representations made in the course of litigation : per Hodgson JA in Stockland at [22].
91. I consider Little’s case to be good and persuasive authority. I do not see a reasonable basis upon which to distinguish that case as Mr Dupree has submitted. Accordingly, I am inclined to find that the alleged representations, even when given their widest import, do not constitute conduct in the course of trade or commerce. Before making a final finding in those terms, having regard to the need to proceed with exceptional caution on this issue, I will give consideration to a wider range of authorities.
92. It is important to note that in the instant case under consideration in this motion, all of the representations sought to be relied upon were made in the course of litigation and were therefore not made in the course of trade or commerce. This serves to reinforce my tentatively stated view.
93. In Concrete Constructions(NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 602-603 the majority held that the phrase “in trade or commerce” in s.52 of the Trade Practices Act, 1974 is not a term of art but has a restrictive operation involving the central conception of the nature of the activity in question, namely a trading or commercial character.
94. There is a distinction between the term trade or commerce and matters incidental to trade or commerce. It seems to me that the prosecution of litigation by Augment to seek damages that arose from trade or commerce may well have been incidental to trade or commerce but is not of itself trade or commerce. That view was applied by Parker AJ in the Supreme Court of WA in WJ Green & Co (1984) Pty Ltd & Ors v Wilden Pty Ltd (Unreported, 24 April 1997 Supreme Court of WA) where at page 16 he held:
“Furthermore, there is another difficulty in the way of relief under the Trade Practices Act. It is necessary that the conduct alleged occurred “in trade or commerce”. It is clear that the words “trade or commerce” are to be given a wide meaning: Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 22 ALR 621 at 648-649 per Deane J; Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594. It is the case, however, that the conduct complained of must occur in trade or commerce. It has been decided that the phrase “in trade or commerce” means the conduct itself must be trading or commercial in character; Concrete Constructions (NSW) Pty Ltd v Nelson . Conduct that is merely incidental to trade or commerce is not in trade or commerce.”
95. The same view was taken in LT King Pty Ltd v Besser [2002] VSC 354 where, in the Supreme Court of Victoria Osborn J, applying Little’s case, held at [27]:
“In the case of the practise of law it is not appropriate to describe conduct in the area of litigation as conduct in trade or commerce.”
96. In King’s case, Osborn J at [39] came to that view notwithstanding the recognition that the transactional basis of the underlying litigation was in the field of trade or commerce.
97. It is claimed that in the litigation Mr Sedgwick relied upon alleged representations made by Augment’s solicitors and its director Mr Huxley and thereby acted to his detriment. Such a plea in the points of claim pre-suppose that in adversarial litigation a litigant owes a duty of care to the opponent. That view was rejected in Cran v The State of New South Wales (2004) Aust Torts Rep 81 - 737. Although Cran dealt with prosecutorial duties I believe the principle holds good in civil cases : Beach Club Port Douglas Pty Ltd v Page [2005] QSC 195 per Muir J at [12] – [25].
98. In Butt v Tingey [1993] FCA 369 consideration was given to the question of whether a solicitor acting on instructions from a corporate client had acted so as to mislead or deceive in a way that was actionable when sending a letter on behalf of a client in the course of correspondence over a contractual dispute but not in the course of litigation. At trial a finding was made against the solicitor but by majority this was overturned on appeal. In that case Neaves and Beazley JJ held at [13]:
“13. In our opinion, the evidence does not establish that the appellant, in writing the facsimile transmission and the letter, was doing more than conveying to the solicitors for the respondent the essence of the instructions he had received from Mr Cook on behalf of Blu-Binda. There is nothing in the documents as we read them to warrant the conclusion that the appellant was adding his imprimatur to what was stated there as being his instructions. The only representation he himself made in what was written in the facsimile transmission was that he had been informed of certain mattes by his client. The only representations he made in the letter dated 15 December 1989 were that he had taken full instructions from his client and that those instructions were to the effect set out in the letter. There is no finding that those representations were false but, even if they had been false, they would not have subjected the appellant to any liability under s.52 of the Trade Practices Act .”
99. It is of noteworthy significance to the instant case that Butt’s case was not one in which the representations were made in the course of litigation yet the comparable assertions were held not to be triable in that case.
Conduct in litigation
100. In D’Orta-Ekenaike v Victoria Legal Aid [2005] 223 CLR 1 the important public policy considerations concerning the judicial processes were outlined by Gleeson CJ, Gummow, Hayne & Heydon JJ at [45]:
“Rather, the central justification for the advocate's immunity is the principle that controversies, once resolved, are not to be reopened except in a few narrowly defined circumstances. This is a fundamental and pervading tenet of the judicial system, reflecting the role played by the judicial process in the government of society. If an exception to that tenet were to be created by abolishing that immunity, a peculiar type of re-litigation would arise. There would be re-litigation of a controversy (already determined) as a result of what had happened during, or in preparation for, the hearing that had been designed to quell that controversy. Moreover, it would be re-litigation of a skewed and limited kind. No argument was advanced to this Court urging the abolition of judicial or witness immunity. If those immunities remain, it follows that the re-litigation could not and would not examine the contribution of judge or witness to the events complained of, only the contribution of the advocate. An exception to the rule against the reopening of controversies would exist, but one of an inefficient and anomalous kind.”
101. Further, in D’Orta-Ekenaike the majority stated at [74]:
“Questions of abuse of process can be relevant to the present issue only if it is accepted that there are, or may be, circumstances in which the result reached in earlier litigation should not be impugned. The circumstances in which proceedings might be classified as an abuse of process have been described in various ways. In Hunter v Chief Constable of the West Midlands Police , to which extensive reference was made in the speeches in Arthur J S Hall v Simons , Lord Diplock spoke of abuse of process as a misuse of a court's procedure which would "be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people". In Rogers v The Queen , Mason CJ observed of Lord Diplock's speech that, with what had been said in this Court, it indicated:
“… that there are two aspects to abuse of process: first, the aspect of vexation, oppression and unfairness to the other party to the litigation and, secondly, the fact that the matter complained of will bring the administration of justice into disrepute.”
(References omitted from quote)
102. The foregoing statements in D’Orta-Ekenaike are an apt framework in which to decide the issues in the current motion.
The Anshun point
103. Mr Blyth has referred to Port of Melbourne Authority v Anshun Pty Ltd [1981] 147 CLR 589 and has argued that the judgment of his Honour Judge Hughes has created an Anshun estoppel concerning the matter Mr Sedgwick wishes to litigate. I do not need to explore that issue as the doctrine of estoppel only operates where the same issue is sought to be raised between the same parties to the earlier adjudication. I accept Mr Dupree’s submission that it is not the case here because it appears that the issues decided on the merits by his Honour Judge Hughes are different to the issues raised in the claim for costs which Mr Sedgwick now seeks to pursue in the first motion. Further, the Respondents to the motion were not parties to the litigation decided by his Honour Judge Hughes.
Resolution of the trade or commerce question raised in the motion – the prime question
104. Having given due and cautious consideration to the foregoing authorities I find that on the face of the claimed representations, even when giving them their widest import, they cannot truly be said to arise in the course of trade and commerce within the meaning of the Trade Practices Act, 1974 (Cwth). Instead, they arise in the course of litigation.
105. In my view the first motion is in reality an action for damages under the Trade Practices Act, 1974 but masquerading as a motion for costs to be determined in accordance with the Civil Procedure Act, 2005 and the Uniform Civil Procedure Rules, 2005.
106. Having determined that the Respondents were not relevantly engaged in trade or commerce in the manner contended for on behalf of Mr Sedgwick I now turn to a consideration of the impact of that finding on the points of claim of the first motion.
The third and fourth issues – should the points of claim be struck out
Characterisation of the costs relief sought by Mr Sedgwick
107. It is necessary to characterise the nature of the costs relief sought in the first motion. The points of claim include the following formulation of the claim for costs:
“And Sedgwick claims Sedgwick’s costs or Sedgwick’s assessed costs:
i. Pursuant to the retainer in respect of the District Court proceedings whereby Mr Russo and Sedgwick’s Solicitors performed legal work and incurred disbursements for and on behalf of Sedgwick (“the legal work”).
ii. Pursuant to the retainer in respect of the District Court proceedings Mr Russo and Sedgwick’s Solicitors incurred disbursements and fees in respect of the legal work for and on behalf of Sedgwick (“the disbursements”).
iii. Pursuant to the retainer in respect of the proceedings Sedgwick incurred a liability for legal cost, fees and disbursements to Mr Russo and Sedgwick’s Solicitors for the legal work in the sum of $274,804.53 as set out in the documents set out in SR2 attached hereto.
In respect of Mr Anthony Huxley
i. pursuant to Section 98 of the Civil Procedure Act 2005 and Rule 42.3
(e)(c) of the Uniform Civil Procedure Rules 2005and/or further or in the alternative
ii.damages (in the sum of Sedgwick’s costs or Sedgwick’s assessed costs) payable under Section 82 and/or Section 87 as a person who pursuant to section 75B of the Trade Practices Act was involved in the contraventions set out above of the Trade Practices Act;In respect of the Solicitors
i. pursuant to Section 98 of the Civil Procedure Act 2005 and Rule 42.3(g) of the Uniform Civil Procedure Rules 2005
and/or further or in the alternativeii.damages (in the sum of Sedgwick’s costs or Sedgwick’s assessed costs) payable under Section 82 and/or Section 87 as persons who pursuant to section 75B of the Trade Practices Act were involved in the contraventions set out above of the Trade Practices Act as limited by Section 87AB of the Act”
108. The foregoing formulation of the claim for costs is reliant and inseparable from the antecedent form of pleading of the assertion of conduct in the course of trade or commerce and the related assertion of seven key representations. In my view this is to be characterised as an action for damages in the nature of costs rather than the pursuit of an order for costs that would normally follow the conclusion of litigation.
109. In my view, a consideration of the foregoing text within the points of claim in the light of the authorities cited compels me to the view that the relief sought by Mr Sedgwick is not maintainable. I have come to this view giving the phrase “in trade or commerce” its meaning of widest import. In my view the points of claim in the first motion are in reality an artful contrivance aimed at pursuing a claim for damages under the guise of seeking a costs order.
110. In my view this position is plainly evident at a glance by merely reading through the points of claim in the first motion. It is plainly apparent that there is no real question to be tried. To allow the points of claim to stand would only involve useless expense because the claims made are misconceived, unsustainable and in my view cannot possibly succeed. In my view the claims made do not permit of reasonable argument and I conclude that a trial of such issues is bound to fail. There is no justiciable or triable issue raised under the Trade Practices Act, 1974. To permit the claims to proceed beyond this point would be an embarrassment to the judicial process.
Conclusions
111. I find that because the alleged representations raised in the first motion arose in the course of litigation the assertion that they arose in trade or commerce is:
(a) frivolous;
(b) vexatious;
(c) disclosing of no reasonable cause of action in the context of a notice of motion for costs;
(e) a contrivance that amounts to an abuse of the process of the court.(d) having a tendency to cause prejudice, embarrassment or delay in the conclusion of the proceedings;
112. Accordingly, for the reasons I have outlined I have come to the conclusion that the impugned portions of the points of claim in the first motion should be struck out.
113. I therefore order that those portions of the points of claim seeking to invoke the consumer protection remedies under the Act be struck out as summarised in the following table.
Item Impugned points of claim Description Order 1. Paragraph 7 Assertion of trade and commerce Struck out 2. Paragraphs 49 to 54 Representation 1 Struck out 3. Paragraphs 59 to 64 Representation 2 Struck out 4. Paragraphs 67 to 71 Representation 3 Struck out 5. Paragraphs 76 to 81 Representation 4 Struck out 6. Paragraphs 83 to 90 Representation 5 Struck out 7. Paragraphs 96 to 101 Representation 6 Struck out 8. Paragraphs 104 to 105 Representation 7 Struck out 9. Paragraphs 131 to 133 Claim for relief Struck out
Orders
114. The formal orders I make are:-
(a) That the following paragraphs of the points of claim of the Further Amended Notice of Motion filed by the Applicant / First Defendant on 5 September 2008 be struck out, namely paragraphs:
(i) 7,
(ii) 49 to 54,
(iii) 59 to 64,
(iv) 67 to 71,
(v) 76 to 81,
(vi) 83 to 90,
(vii) 96 to 101,
(viii) 104 to 105, and
(ix) 131 to 133;
(a)(i) The claim of the Applicant /First Defendant be dismissed against Anthony Huxley.(a)(ii) The Applicant /First Defendant shall pay the costs of Mr Huxley of and incidental to his claim against Mr Huxley.
(b) By consent, the issues arising from paragraph 2 of the second motion and concerning paragraph 119 of the points of claim in the first motion be separately determined if the parties still require those issues to be determined;
(c)(i) Mr Huxley’s costs of the strike out motion be paid forthwith and for that purpose Mr Huxley is given leave to proceed to an assessment of those costs forthwith, such costs to be paid on an indemnity basis;(c) The costs of the Respondents to the second motion filed in court on 15 October 2008 are to be paid by the Applicant / First Defendant;
(d) The Direction Hearing in respect of the Further Amended Notice of Motion filed on 5 September 2008 which was originally fixed for 24 October 2008 and which I ordered to be vacated is reinstated and fixed for 5 December 2008.
ANNEXURE
Representation 1 – paragraphs 49 to 54 in the points of claim in the first motion
1. The alleged representation 1 relates to the quantum of Augment’s claim in the principal litigation and asserts that in swearing an affidavit on 30 September 2003 in the course of the principal litigation, the Financial Controller of Augment, a person who was not Mr Huxley, alleged that Augment’s claim for work done and materials provided was $206,271. It is claimed that the alleged quantum of Augment’s claim was a representation made without reasonable grounds and as such “was misleading and / or deceptive” and was made in contravention of Part V and in particular, s.52 of the Trade Practices Act, 1974 (Cwth). It is further asserted that in the principal litigation, as a Defendant, Mr Sedgwick “relied upon the first representation to his detriment” and that Mr Huxley and / or the solicitors “knew or ought to have known that the first representation was misleading and made in contravention of Part V and s.52 of the Act.
Representation 2 – paragraphs 59 to 64 in the points of claim in the first motion
2. The alleged representation 2 asserts that on 18 December 2003 when the principal litigation was listed before his Honour Judge Rolfe in the Commercial List of the District Court for orders and directions, without reasonable grounds the solicitors represented to the Court that Augment was able to have the principal litigation proceed to a hearing on 23 March 2008. It is claimed that such second representation “was misleading and / or deceptive” and was made in contravention of Part V and in particular, s.52 of the Trade Practices Act, 1974 (Cwth). It is further claimed that Mr Sedgwick “relied upon the second representation and to his detriment continued his defence of the District Court proceedings” and that Mr Huxley and / or the solicitors “knew or ought to have known that the first representation was misleading and made in contravention of Part V and s.52 of the Act.
Representation 3 – paragraphs 67 to 71 in the points of claim in the first motion
3. The alleged representation 3 asserts that on 23 December 2003, when Augment, by the solicitors acting on its behalf, filed an Amended Statement of Claim in the principal litigation in which it not only persisted with its allegations against Mr Sedgwick but also asserted an alternative claim alleging that Marvin was also liable to Augment and made an amended quantum claim of $213,666.84. It was claimed that such representation “was misleading and / or deceptive” and was made in contravention of Part V and in particular, s.52 of the Trade Practices Act, 1974 (Cwth). It is further alleged that Mr Sedgwick relied upon the third representation and to his detriment continued to defence of the principal litigation and that Mr Huxley and / or the solicitors “knew or ought to have known that the first representation was misleading and made in contravention of Part V and s.52 of the Act.
Representation 4 – paragraphs 76 to 81 in the points of claim in the first motion
4. The alleged representation 4 asserts that on 2 March 2004, in the principal proceedings, a solicitor in the employ of the solicitors swore an affidavit in which on behalf of Augment deposed that Augment was not ready to proceed with the principal litigation on 23 March 2004 and when, on 5 March 2004, when the principal litigation was listed before his Honour Judge Rein SC as His Honour then was, an order was procured upon the basis of disclosures made in the affidavit and the hearing date was vacated with consequential adverse costs orders being made against Augment. It is claimed that such disclosures were a representation made by Augment without reasonable grounds and as such “was misleading and / or deceptive” and was made in contravention of Part V and in particular, s.52 of the Trade Practices Act, 1974 (Cwth). It is further asserted that in the principal litigation, Mr Sedgwick, as a Defendant, relied upon the fourth representation to his detriment and continued to defend the District Court proceedings and that Mr Huxley and / or the solicitors “knew or ought to have known that the first representation was misleading and made in contravention of Part V and s.52 of the Act.
Representation 5 – paragraphs 83 to 90 in the points of claim in the first motion
5. The alleged representation 5 asserts that on 26 March 2004 when the principal litigation was again listed before his Honour Judge Rolfe at which time leave was granted for Augment to file further affidavits consequent upon disclosure said to be made by the solicitors on behalf of Augment and Mr Huxley such disclosures were a representation made without reasonable grounds and as such “was misleading and / or deceptive” and was made in contravention of Part V and in particular, s.52 of the Trade Practices Act, 1974 (Cwth). It is further alleged that as a Defendant Mr Sedgwick relied upon the fifth representation and to his detriment continued the defence of the principal litigation and that Mr Huxley and / or the solicitors “knew or ought to have known that the first representation was misleading and made in contravention of Part V and s.52 of the Act.
Representation 6 – paragraphs 96 to 101 in the points of claim in the first motion
6. The alleged representation 6 asserts that on 1 July 2004 one of the solicitors swore an affidavit in the principal litigation which had exhibited to it a draft Further Amended Statement of Claim which sought to expand Augment’s claim in the litigation by making additional allegations of a contractual nature. It is claimed that such sixth representation which was made by the solicitors on behalf of Augment was made without reasonable grounds and as such “was misleading and / or deceptive” and was made in contravention of Part V and in particular, s.52 of the Trade Practices Act, 1974 (Cwth). It is further alleged that in reliance on the sixth representation Mr Sedgwick continued the defence of the principal litigation to his detriment and that Mr Huxley and / or the solicitors “knew or ought to have known that the first representation was misleading and made in contravention of Part V and s.52 of the Act.
Representation 7 – paragraphs 104 to 105 in the points of claim in the first motion
7. The alleged representation 7 asserts that Augment’s persistence with its various claims for quantum in its Further Amended Statement of Claim against Mr Sedgwick was not maintainable when it knew that the revised quantum claimed within that proposed Further Amended Statement of Claim in the sum of $237,118 was inaccurate. It is claimed that the persistence with a claim for an inaccurate quantum amount was conduct in contravention of Part V of the Trade Practices Act, 1974 (Cwth) and it is claimed that such conduct was exhibited in the principal litigation when:
(a) On 13 July 2004 a Notice of Motion filed by the solicitors on behalf of Augment was listed before his Honour Judge Gerahty;
(b) On 28 July 2004 when the solicitors on behalf of Augment filed a Notice of Motion seeking to set aside orders made by his Honour Judge Gerahty on 15 July 2004;
(c) On 13 August 2004 when the solicitors on behalf of Augment filed a Notice of Motion and a holding summons in the Supreme Court in respect of the orders made by his Honour Judge Gerahty on 15 July 2004;
(d) On 16 August 2004 when Augment’s motion filed on 28 July 2004 was listed before his Honour Judge Armitage and was adjourned;
(e) On 6 October 2004, after the Court had placed the principal proceedings in the Long Hearing Allocations List for 28 February 2005, the principal litigation was listed before her Honour Judge JC Gibson who, inter alia , granted Augment leave to file and serve the proposed Further Amended Statement of Claim ultimately relied upon at trial;
(g) On 3 December 2004 Mr Sedgwick filed his defence to Augment’s Further Amended Statement of Claim.(f) On 29 October 2004 Augment filed its Scott Schedule;
Claim for relief – paragraphs 131 to 133 in the points of claim in the first motion
8. By paragraphs 131 to 133 of the Points of Claim in the first motion it is asserted that at the hearing of the principal litigation both Mr Huxley and the solicitors either knew or ought to have known that “Augment in effect abandoned its claim” against Mr Sedgwick and asserts, as a consequence, that by reason of the first, second, third, fourth, fifth and sixth representations, which is described as “the conduct”, Mr Sedgwick suffered “damage” when such conduct was in contravention of Part V of the Trade Practices Act, 1974 (Cwth).
17/12/2009 - Slip Rule corrections - Paragraph(s) Paras 64 and 66: all text in these paragraphs is placed in brackets and altered by overstrike with the addition of the words “[Excised 17 December 2009]”;Para 114: inserting sub-paragraph “(a)(i) The claim of the Applicant /First Defendant be dismissed against Anthony Huxley”;Para 114: inserting sub-paragraph “(a)(ii) The Applicant /First Defendant shall pay the costs of Mr Huxley of and incidental to his claim against Mr Huxley”;Para 114(c): inserting sub-paragraph “(i) Mr Huxley’s costs of the strike out motion be paid forthwith and for that purpose Mr Huxley is given leave to proceed to an assessment of those costs forthwith, such costs to be paid on an indemnity basis.”
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