Bodycorp Repairers Pty Ltd v Maisano [No 13]
[2018] VSC 96
•6 March 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2016 02044
| BODYCORP REPAIRERS PTY LTD (ACN 068 589 408) | Plaintiff |
| v | |
| ANUNIZIATO ENZO MAISANO (also known as Michael Maisano and Michael Mason) AND ORS | Defendants |
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JUDGE: | RIORDAN J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 7 and 14 February 2018 |
DATE OF JUDGMENT: | 6 March 2018 |
CASE MAY BE CITED AS: | Bodycorp Repairers Pty Ltd v Maisano [No 13] |
MEDIUM NEUTRAL CITATION: | [2018] VSC 96 |
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COURTS AND JUDGES – Judgments – Application to set aside allegedly fraudulently obtained judgment – The elements of the cause of action.
PRACTICE AND PROCEDURE – Application for Summary Dismissal – Principles to be applied – Dismissal of proceeding on Court’s own motion under Civil Procedure Act 2010 s 63.
PRACTICE AND PROCEDURE – Standing of solicitor holding equitable fruits of litigation rights to be heard to oppose application for default judgment – Standing of solicitor holding equitable fruits of litigation rights to prosecute claim for summary judgment under Supreme Court (General Civil Procedure) Rules2015 r 23.01 and inherent power.
EQUITY – Subrogation – Whether available to solicitor holding equitable fruits of litigation rights.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J G Levine | Maciel Pizzorno & Co |
For the first defendant | The first defendant appeared in person | — |
| For Oakley Thompson & Co Pty Ltd | Mr N P De Young | Oakley Thompson & Co Pty Ltd |
HIS HONOUR:
The plaintiff in this proceeding (‘Bodycorp’) seeks an order setting aside the judgment of Elliott J given on 4 September 2013 in proceeding S CI 2015 09071 (‘the Original Proceeding’), which, among other things, dismissed Bodycorp’s claim against the first defendant (‘Maisano’).
By summons filed 24 August 2017, Bodycorp seeks summary judgment, alternatively judgment in default of appearance and/or defence, against Maisano.
By order of Hargrave J made 8 September 2017, Oakley Thompson & Co Pty Ltd (‘Oakley Thompson’) was joined as a party to the summons filed by Bodycorp.
By summons filed 23 October 2017, Oakley Thompson applied for Bodycorp’s claim against Maisano to be summarily dismissed.
By summons filed 10 January 2018, Bodycorp has made a further application for me to recuse myself from hearing these applications.
Background
In Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd,[1] the Court of Appeal summarised the background as follows:
In the mid-1990s Bodycorp was a franchisor of a network of motor vehicle smash repairers. One of the franchisees was Michael Maisano. Bodycorp entered into an agreement with a motor vehicle insurer, Australian Associated Motor Insurers (‘AAMI’), in June 1998 (‘the AAMI agreement’). Having the status of being an AAMI ‘recommended repairer’ was seen as advantageous to repairers. Under the AAMI agreement, AAMI was required, in substance and amongst other things, to remove this status for at least a period of six months from any Bodycorp franchisee who left the Bodycorp network. In 1998 franchisees, including Mr Maisano, did leave the Bodycorp network. AAMI did not comply with the provisions requiring it to remove the outgoing franchisees’ recommended repairer status. Subsequently the relevant provisions of the AAMI agreement were held to be void and unenforceable as unreasonable restraints of trade.[2]
[1][2018] VSCA 33 (Ferguson CJ, Whelan and McLeish JJA).
[2]Ibid [7].
The Original Proceeding was filed in the Federal Court of Australia on 10 December 2002 and was subsequently transferred to the Supreme Court of Victoria on 14 October 2005. After a protracted interlocutory history, the trial proceeded before Elliott J over 15 days in May 2013.
At the trial of the Original Proceeding, Bodycorp contended as follows:
(a) Maisano breached a franchise agreement with Bodycorp by terminating the agreement and also induced franchisees, from the following areas, to breach their franchise agreements with Bodycorp:[3]
[3]Bodycorp Repairers Pty Ltd v Maisano [No 8] [2013] VSC 472 [37]–[42] (Elliott J) (‘Trial Reasons’).
(i) Clayton;
(ii) Geelong;
(iii) Caulfield; and
(iv) Nunawading
(‘the Category A franchisees’).
(b)The fourth defendant in this proceeding, AAMI,[4] and its employee, the fifth defendant, Barry Martin, similarly induced other franchisees to breach their franchise agreements with Bodycorp. AAMI also breached a written agreement between the parties and further owed Bodycorp the sum of $1,445,335 for work and labour done.[5]
(c)The sixth defendant in this proceeding, All States (a subsidiary of AAMI),[6] breached an alleged agreement with Bodycorp by ceasing to provide work to Bodycorp’s franchisees.[7]
(d)The proprietors of the Melton franchise (including the seventh defendant in this proceeding, Scott Munro) similarly induced other franchisees to breach their franchise agreements with Bodycorp, but this claim was abandoned on the first day of trial.[8]
[4]Named in the writ simply as ‘AAMI’.
[5]Trial Reasons [43]–[57].
[6]Named in the writ simply as ‘All States’.
[7]Trial Reasons [58]–[59].
[8]Ibid [11], [60].
The second defendant, Oakley Thompson, acted as the solicitors for Maisano in the original proceeding and the eighth defendant, Jeremy Broadbent, is an employee of Oakley Thompson, who assisted in the conduct of the matter on behalf of Maisano.
On 4 September 2013, Elliott J dismissed Bodycorp’s claims against all defendants in the Original Proceeding and ordered (inter alia) that Bodycorp pay Maisano’s costs, including reserved costs (‘the costs order’).[9]
[9]Ibid [391].
On 22 April 2014, Oakley Thompson filed a summons for taxation of the costs order in Maisano v Bodycorp Repairers Pty Ltd S CI 2014 1914 on behalf of Maisano.
On 28 April 2015, Bodycorp’s appeal against the decision of Elliott J made 4 September 2013 in the Original Proceeding was dismissed.[10]
[10]Bodycorp Repairers Pty Ltd v Australian Associated Motor Insurance Ltd [2015] VSCA 73 (Warren CJ, Beach JA and Ginnane AJA).
On 30 June 2015, in proceeding S CI 2014 1914, Elliott J declared that Oakley Thompson had an equitable right over the costs order. His Honour also declared that Oakley Thompson was entitled to proceed with the taxation of costs in its own name, but not in Maisano’s name.[11]
[11]Oakley Thompson & Co Pty Ltd v Maisano [No 2] [2015] VSC 210 [116]–[118].
On 24 July 2015, Elliott J ordered that Oakley Thompson be added as a defendant in proceeding S CI 2014 1914 for taxation of the costs order, for the purpose of ‘advanc[ing] its position as a person having an equitable right over the costs judgment, whether or not that right aligns with the position adopted by Maisano’.[12]
[12]Maisano v Bodycorp Repairers Pty Ltd [No 2] [2015] VSC 365 [16].
On 11 November 2015, Gourlay JR taxed and allowed Maisano’s costs payable by Bodycorp, pursuant to the orders made in the original proceeding, at $289,988.68. It was further ordered that, after deducting the part payment received by Oakley Thompson, Bodycorp pay Oakley Thompson $233,588.68.[13]
[13]As amended by order of 13 November 2015.
On 26 May 2016, Bodycorp filed the writ in this proceeding seeking, among other things, an order that the judgment of Elliott J dated 4 September 2013 be set aside. On 10 August 2016, Bodycorp filed an amended statement of claim.
By summons filed 23 August 2016, the second and eighth defendants (together, ‘the Oakley Thompson defendants’) sought summary dismissal of the claims made against them in this proceeding pursuant to r 23.01 of the Supreme Court (General Civil Procedure) Rules2015 and s 62 of the Civil Procedure Act2010.
By a summons filed 23 August 2016, the sixth and seventh defendants sought similar relief. However, Bodycorp discontinued the proceeding against those defendants by a notice of discontinuance filed 16 September 2016.
By summons filed 23 August 2016, the third defendant also sought similar relief; but the proceeding against that defendant was discontinued on the oral application of Bodycorp on 29 September 2016.
By summons filed 24 August 2016, the fourth and fifth defendants (together ‘the AAMI defendants’) sought summary dismissal of the claims made against them.
On 28 October 2016, I summarily dismissed Bodycorp’s claims against the second, fourth, fifth and eighth defendants being the Oakley Thompson defendants and the AAMI defendants.[14]
[14]Bodycorp Repairers Pty Ltd v Maisano [No 11] [2016] VSC 645.
On 25 November 2016, I made orders for costs and adjourned Bodycorp’s summons dated 5 October 2016, for reinstatement of the discontinued claim against the third defendant, to a date to be fixed after the hearing and determination of Bodycorp’s appeal against the judgment given on 28 October 2016.
On 22 February 2017, the Court of Appeal refused Bodycorp’s application for leave to appeal against the decision of Elliott J of 24 July 2015.[15]
[15]Oakley Thompson & Co Pty Ltd v Maisano [No 2] [2017] VSCA 23 (Warren CJ, Tate and McLeish JJA).
On 15 September 2017, the Court of Appeal granted leave to appeal on one ground, but dismissed Bodycorp’s appeal from my decision of 28 October 2016, and refused the application for leave to appeal on the other grounds.[16]
[16]Bodycorp Repairers Pty Ltd v Maisano [2017] VSCA 252 (Whelan, Kyrou and Hansen JJA).
In Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd,[17] the Court of Appeal said, with respect to the failure by Maisano to pay the costs of the Original Proceeding, as follows:
Mr Maisano has been in dispute with Oakley Thompson in relation to the recovery of legal costs from him. He has made common cause with Bodycorp in resisting Oakley Thompson’s attempts to recover on the costs orders made in favour of Mr Maisano against Bodycorp. This Court has held that Oakley Thompson has an equitable lien over the costs orders made in Mr Maisano’s favour.
[17][2018] VSCA 33 [11] (Ferguson CJ, Whelan and McLeish JJA).
Application for recusal
On 3 November 2017, I rejected an application by Bodycorp that I recuse myself from hearing this application on the ground of apprehended bias.[18]
[18]Bodycorp Repairers Pty Ltd v Maisano (Recusal Application) [No 12] [2017] VSC 676.
Bodycorp has made a further application by summons filed 10 January 2018, on the basis of an alleged change of circumstances arising from the following statement of the Court of Appeal in Kuek v Wade,[19] which was published on 15 November 2017:
The appearance of impartial justice would be compromised if the words or actions of a judge conveyed the impression that he or she had preconceived adverse views about a party’s case and that those views were so strongly held that the judge was unwilling or unable to consider on their merits any submissions made, or evidence adduced, by that party which were inconsistent with those views. However, the expression of tentative views during the course of argument as to matters on which the parties are permitted to make full submissions does not manifest partiality or bias.[20]
[19][2017] VSCA 329.
[20]Ibid [66] (Tate and Kyrou JJA), applying Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577, 610 [112] (Kirby and Crennan JJ).
Mr Levine, counsel for Bodycorp, submitted that the words or actions, which conveyed the impression that I had preconceived adverse views about Bodycorp’s case, consisted of my decision in Bodycorp Repairers Pty Ltd v Maisano [No 11][21] summarily dismissing Bodycorp’s claims against the Oakley Thompson defendants and the AAMI defendants. It was further submitted that that decision was also the basis for conveying the impression that ‘those [adverse] views were so strongly held that the judge was unwilling or unable to consider on their merits any submissions made, or evidence adduced, by that party which were inconsistent with those views’.[22]
[21][2016] VSC 645.
[22]Kuek v Wade [2017] VSCA 329 [66] (Tate and Kyrou JJA).
On the first day of hearing, 7 February 2018, I rejected the application for the following reasons:
(a)In Kuek v Wade, the Court of Appeal identified the two steps involved in the principles relating to apprehended bias as:
(i)identifying what it is said might lead a judge to decide a case other than on its legal and factual merits; and
(ii)articulating the logical connection between the matter and the feared deviation from the course of deciding the case on its merits.[23]
[23]Ibid [65], applying Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337, 345 [8] (Gleeson CJ, Gummow, McHugh and Hayne JJ).
(a) I do not consider that the fact that I dismissed Bodycorp’s claim against the Oakley Thompson defendants and the AAMI defendants, on grounds that were upheld by the Court of Appeal, is of itself a basis for concluding that I might not decide the current applications other than on the legal and factual merits.
(b) I consider that the comments of the Court of Appeal in Kuek v Wade[24] are particularly directed to ‘the words or actions of a judge’ in the course of, or preparatory to, a trial. The Court of Appeal cited Concrete Pty Ltd v Parramatta Designer Developments Pty Ltd,[25] which is a passage where Kirby and Crennan JJ discuss judicial interventions, observations and tentative views. Although my reasons for decision in Bodycorp Repairers Pty Ltd v Maisano [No 11][26] led to a decision adverse to Bodycorp, I do not consider that such reasons indicate that I have ‘preconceived adverse views about a party’s case’ or that I would be ‘unwilling or unable to consider submissions made or evidence adduced’ by Bodycorp.
[24][2017] VSCA 329 [66] (Tate and Kyrou JJA).
[25](2006) 229 CLR 577, 610 [112].
[26][2016] VSC 645.
(c) Mr Levine submitted that he would be arguing that the fresh evidence proposed to be led by Bodycorp could constitute an inducement to breach contractual relations contrary to my conclusion in my previous reasons. Such a submission will require me to consider the submission in light of the current evidence and the decision of the Court of Appeal.[27] It may be expected that, because of my previous reasons, I am more likely to decide the issue adversely to Bodycorp. However, this does not mean that I will approach the issues on this application otherwise than with an impartial and unprejudiced mind. The fact that my reasons for decision in Bodycorp Repairers Pty Ltd v Maisano [No 11][28] may generate such an expectation is not sufficient. As Mason J said in Re JRL; ex parte CJL:
It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than he will decide the case adversely to one party.[29]
[27]Bodycorp Repairers Pty Ltd v Maisano [2017] VSCA 252 (Whelan, Kyrou and Hansen JJA).
[28][2016] VSC 645.
[29](1986) 161 CLR 342, 352. See also AJH v Careri (2011) 34 VR 236, 242 [21] (Warren CJ, Hansen JA and Almond AJA).
In my opinion, the acceptance of Bodycorp’s proposition could result in unworkable and undesirable consequences. For example, after determination of a liability as a preliminary question, it could, on Bordycorp’s approach, be open to the unsuccessful party to apply to have the trial judge recuse him or herself from hearing the balance of the trial because adverse findings on the liability question could impact on the quantum question.
As I said in reasons for rejecting the second recusal application, ‘different considerations may arise in cases where a judge has made findings with respect to the credit of key witnesses before the commencement of the trial.’[30] However, that is not this case. I have made no adverse findings about the credibility of Bodycorp or, more particularly, to any of the evidence relied upon by Bodycorp.
[30]Bodycorp Repairers Pty Ltd v Maisano (Recusal Application) [No 12] [2017] VSC 676 [25].
Standing of Oakley Thompson
It is common ground that Oakley Thompson has an equitable ‘fruits of litigation’ lien over the costs order.
Oakley Thompson contends that it is entitled to defend the application for summary judgment made by Bodycorp and prosecute a claim for summary dismissal of Bodycorp’s proceeding.
The classic exposition of a solicitor’s rights under an equitable fruits of litigation lien was given in Ex parte Patience; Makinson v Minister[31] by Jordan CJ who said:
A solicitor has no lien for his costs over any property which has not come into his possession. If, however, as the result of legal proceedings in which the solicitor has acted for the client, the client obtains a judgment or award or compromise for the payment of money, although the solicitor acquires no common law title to his client’s right to receive the money or to any part of that right, he acquires a right to have his costs paid out of the money, which is analogous to the right which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor. That is to say, the solicitor has an equitable right to be paid his costs out of the money; and if he gives notice of his right to the person who is liable to pay it, only the solicitor and not the client can give a good discharge to that person for an amount of the money equivalent to the solicitor’s costs. If the person liable to pay refuses, after notice, to pay the costs of the solicitor, the solicitor may obtain a rule of Court directing that the amount of his costs be paid to him and not to the client; and payment by the judgment debtor to the client after notice of the solicitor’s claim is no answer to an application for such a rule. Further, if the client and a judgment debtor make a collusive arrangement for the purpose of defeating the solicitor’s right, the Court will enforce that right against the judgment debtor notwithstanding the arrangement and notwithstanding that no notice of the solicitor’s claim had been given to the judgment debtor prior to the arrangement. These special rights have no resemblance to a solicitor’s general possessory lien, although they are sometimes miscalled liens. In Barker v St Quinton, Parke B said that ‘the lien which an attorney is said to have on a judgment (which is, perhaps, an incorrect expression) is merely a claim to the equitable interference of the Court to have that judgment held as security for his debt’, a remark which is reproduced in Chitty’s Archbold, and has been repeated in many later authorities. In practice, however, the solicitor has always been treated as possessing equitable rights in the judgment independently of any declaration of those rights, and the Court’s assistance is invoked not to create the rights but to enforce them. The rights are assignable.[32]
[31](1940) 40 SR (NSW) 96 (Jordan CJ, Davidson and Halse Rogers JJ).
[32]Ibid 100–1 delivered by Jordan CJ as the judgment of the Court (citations omitted) (emphasis added).
It is well established that:
(a) the equitable fruits of litigation lien extends to money payable, but not paid, under an order for costs in favour of the client;[33]
(b) a solicitor may seek an order of the Court seeking that costs owed to the client be paid to the solicitor and not to the client; [34] and
(c) the equitable fruits of litigation lien exists independently and before a court intervenes to protect it. It comes into existence at a time of making a costs order.[35]
[33]Firth v Centrelink (2002) 55 NSWLR 451, 464 [35(f)] (Campbell J); Twigg v Keady (1996) 135 FLR 257, 266–267 (Finn J, with whom Fogarty J agreed).
[34]Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd [2017] VSCA 23 [50] and the cases there cited (Warren CJ, Tate and McLeish JJA).
[35]Firth v Centrelink (2002) 55 NSWLR 451, 464 [35(g)] (Campbell J).
The Court exercises its equitable jurisdiction in making orders which protect the solicitor’s fruits of litigation lien. In Ex parte Patience, Jordan CJ said:
The remedy provided by the inherent jurisdiction is a flexible one. It is available whenever a right to receive money has been established as the result of legal proceedings, notwithstanding that the costs have not yet been taxed and that there is not yet any formal judgment; and it will be made available whenever it is shown that there is some risk that the solicitor may otherwise go unpaid.[36]
[36]Ex parte Patience; Makinson v Minister (1940) 40 SR (NSW) 96, 108 delivered by Gordon Jordan CJ as the judgment of the Court (citations omitted). .
The above passage was cited by the Court of Appeal in Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd in concluding that, in respect of crafting an appropriate remedy, ‘the relevant question is what is necessary to protect the solicitor’s position from risk’.[37] For that purpose, a court may make an order enabling the solicitor to take whatever steps its former client could have taken.[38]
[37][2017] VSCA 23 [51]–[52] (Warren CJ, Tate and McLeish JJA).
[38]Ibid [56]; Fairfold Properties Ltd v Exmouth Docks Co Ltd [1993] Ch 196, 204–5 (Ferris J).
In my opinion, to permit its equitable lien to be protected, it is necessary to order that Oakley Thompson be permitted to be heard on its summons for summary dismissal of Bodycorp’s claim; and in opposition to Bodycorp’s summons for judgment for the following reasons:
(a)Maisano has failed to take any action to defend the order made by Elliott J dismissing the claims against him and, in particular, to protect the costs order. It may readily be inferred that he has little or no interest in doing so because the beneficiary of the enforcement of the costs order would be Oakley Thompson.
(b)If Oakley Thompson is not permitted to take all reasonable steps to defend Bodycorp’s claim, then no person will resist Bodycorp’s claim to set aside the order of Elliott J and the costs order. If the costs order is set aside, the orders of Elliott J permitting Oakley Thompson to tax the costs order will be rendered inutile.
However, it was contended on behalf of Bodycorp that Oakley Thompson was not able to make an application for summary dismissal under the Civil Procedure Act 2010 because ss 62 and 63 only contemplate such an application by the relevant defendant.
In my opinion, if it was necessary to protect Oakley Thompson’s lien, it would be appropriate to order that Oakley Thompson be subrogated to the rights of Maisano with respect to the costs order, including the right to stand in the shoes of Maisano for purposes associated with the defence of Bodycorp’s claim in this proceeding.
Subrogation is the ‘process by which one party is substituted for another so that he may enforce that other’s rights against a third party for his own benefit’.[39]
[39]Charles Mitchell, The Law of Subrogation (Clarendon Press, 1994) 3 cited with approval in Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174, 183 [49] (Gleeson JA, with whom Meagher and Leeming JJA agreed).
While there are established categories in which the doctrine of subrogation applies, the categories are not closed.[40] Subrogation is an empirical doctrine that ‘calls for application of “the cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts”’.[41]
[40]Re Trivan Pty Ltd (1996) 134 FLR 368, 371 (Young J).
[41]Bofinger v Kingsway Group Limited (2009) 239 CLR 269, 278–9 [1] (Gummow, Hayne, Heydon, Kiefel and Bell JJ) citing Warman International Ltd v Dwyer (1995) 182 CLR 544, 559.
Subrogation is more properly described as a remedy rather than a right or cause of action.[42] Equity will grant the remedy when it is required to avoid injustice.[43] As Lord Salmond said in Orakpo v Manson Investments Ltd:
The test as to whether the courts will apply the doctrine of subrogation to the facts of any particular case is entirely empirical. It is, I think, impossible to formulate any narrower principle than that the doctrine will be applied only when the courts are satisfied that reason and justice demand that it should be.[44]
[42]Boscawen v Bajwa [1995] 4 All ER 769, 777 (Millet LJ); see, in the context of trusts, Commonwealth v Byrnes [2018] VSCA 41 [44] (Ferguson CJ, Whelan, Kyrou, McLeish and Dodds-Streeton JJA).
[43]ATCO Controls Pty Ltd (in liq) v Stewart (in his capacity as liquidator of Newtronics Pty Ltd) [2013] VSCA 132 [234] (Warren CJ, Redlich JA and Cavanough AJA); reversed in the High Court on other grounds in Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307.
[44][1978] AC 95, 110.
The circumstances which may give rise to the application of the doctrine were described by Gleeson CJ and Priestley JA in Registrar General v Gill as follows:[45]
The equitable principles relating to subrogation aim to adjust the interests of three parties, such as a creditor, a debtor and an insurer or surety, in such a way as to avoid the unconscionable result of double recovery by the creditor or inequitable discharge of the liability of the debtor.[46]
[45] Registrar-General v Gill (1994) 17 BPR 33,709, 33,713 (Mahoney J agreeing).
[46]Ibid 348.
An example of an established category arises in the relationship of creditor and surety. In Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq),[47] Gibbs ACJ explained the principle underlying this category as it ‘be[ing] inequitable for a creditor, by choosing not to resort to remedies in his power, to cast the whole of the obligation on the surety’.[48]
[47](1979) 141 CLR 335.
[48]Ibid 348.
In my opinion, the reasons — why it would be appropriate to make an order for subrogation were it necessary to protect Oakley Thompson’s equitable lien — are as follows:
(a)Maisano has demonstrated no interest in defending Bodycorp’s claim against him in this proceeding and, as Oakley Thompson claims a lien over the costs order, it appears that he may have little real interest in doing so.
(b)Without Maisano undertaking his own defence, Bodycorp may be able to set aside the costs order without regard to the merits.
(c)If the costs order is set aside, Oakley Thompson’s interest in the costs order will be defeated.
(d)Maisano will not suffer any detriment by reason of the subrogation. In opposing Bodycorp’s claim on his behalf, Oakley Thompson would not be acting against his interests; and appropriate orders could ensure that he would not be affected by any liability for costs to Bodycorp or for the costs of defending the proceeding.
In these circumstances, I consider it would be inequitable for Maisano (as the creditor) to choose not to exercise his rights against Bodycorp (as the debtor) so as to cast the cost of the litigation of the Original Proceeding on Oakley Thompson. The interests of justice require that the real parties, whose interests are in conflict, should be permitted to protect their respective interests in this litigation.
However, for the reasons set out below at [49]–[50], I do not consider it necessary, for the purposes of protecting the interests of Oakley Thompson, for there to be a subrogation order.
Section 63 of the Civil Procedure Act 2010 empowers the Court to make orders for summary dismissal of its own motion if it is satisfied that it is desirable to do so. The principles to be applied on this application are set out below at [65]–[74]. If the Court is satisfied, after the matter has been fully argued, that the claim to set aside a judgment is without merit, the need for finality in litigation and the obligation on the Court to give effect to the overarching purpose[49] make it appropriate for the Court to summarily dispose of the claim. As Blue J said in Clone Pty Ltd v Players Pty Ltd:[50]
Courts have said at the highest that a judgment cannot be set aside merely for perjury (except perhaps after criminal conviction for perjury) and at the lowest that great caution needs to be exercised before contemplating setting aside a judgment merely for perjury. There is good reason to treat an application to set aside a judgment on the ground of perjury differently from other cases because many cases turn on the assessment of the credit of witnesses giving competing accounts and the losing party in those cases will always contend that the opposing witnesses gave false evidence. It would be contrary to the interests of justice and the principle of finality to permit a further trial, or a series of further trials, examining afresh whose evidence should be accepted, at the very least in the absence of compelling new material relevant to that question.
[49]Civil Procedure Act 2010 s 8.
[50] (2016) 127 SASR 1, 81 [356] (emphasis added).
This matter has come before the Court and has been fully argued on both sides. After considering:
(a) that, for the reasons set out in [75]–[79], there is no real prospect of Bodycorp’s claim succeeding; and
(b) the other discretionary factors referred to at [80];
I am satisfied that it is desirable, on the Court’s own motion, to summarily dispose of this claim against Maisano.
Bodycorp’s Submissions
Bodycorp does not seek to reagitate the breach of contract claim against Maisano; but it does contend that Maisano perjured himself in the trial in the Original Proceeding in denying that he induced each of the four Category A franchisees, being for the areas of Clayton, Geelong, Caulfield and Nunawading, to breach the relevant franchise agreement.
Bodycorp’s amended statement of claim in the Original Proceeding alleged that, in the period between March 1998 and July 1998, Maisano stated to each of the Category A Franchisees words to the effect that:
(a) it would be in the best interests of the franchisee to terminate its franchise agreement with Bodycorp; and
(b) if it did so, the franchisee would continue to be recognised by AAMI as a Recommended Repairer but would no longer have to pay an 8 per cent management fee to Bodycorp
(‘the Statement’).
Further, it was alleged that:
(a) at the time of each of the Statements, Maisano was aware of, and intended that the franchisee should decide to terminate, its franchise agreement; and
(b) each franchisee was induced to breach its franchise agreement before the expiry of the fixed term of the agreement.
As I recorded in Bodycorp Repairers Pty Ltd v Maisano [No 11], with respect to the claim against Maisano for inducing breach of contract, Elliott J found as follows:[51]
[51][2016] VSC 645 [36].
(a)As for franchisees for the areas of Geelong, Caulfield and Nunawading, which had allegedly been wrongly terminated at the inducement of Maisano, there was no evidence of when the three-year term of each of the franchise agreements expired.[52] Accordingly, there was no evidence that the alleged statements had been made during the terms of the franchise agreements.
[52]Trial Reasons [196].
(b)With respect to the fourth franchisee, being the Clayton franchisee, the evidence relied upon by Bodycorp was that Maisano had made the following statements to the proprietor of the Tottenham franchise, Rocco Crea:
- Why did he want to pay 8% of his turnover to Bodycorp?
-He should try and contact Martin ‘in the sense that … maybe you can go out on your own’?
-Basically the franchisee ‘should break away and be my own personal panel shop’.[53]
It was contended that the Court should infer it was likely that the same statements would have been made to the proprietor of the Clayton franchise.
(c)Elliott J found these conversations were ‘entirely consistent with Maisano suggesting arrangements might be made [by the franchisees] with AAMI at the expiration of the franchise agreement with Bodycorp’ and his Honour was not prepared to infer that the statements were made for the purpose of inducing Crea to breach his contract.[54]
(d)There was no direct evidence of statements made to the proprietors of the Clayton franchise;[55] and Elliott J did ‘not find the evidence of Crea as being probative of establishing an inference that the conduct alleged against Maisano in relation to Bodycorp Clayton actually occurred’.[56]
[53]Ibid [203].
[54]Ibid [208].
[55]Ibid [204].
[56]Ibid [210].
Counsel for Bodycorp did not submit that there was any evidence, on this application, that the periods of the franchise agreement for the areas of Geelong, Caulfield and Nunawading had not expired by the time that the relevant Statement was made to each of these franchisees. Neither was it explained how any such evidence of the period of these franchise agreements could be considered fresh evidence.
With respect to the claim against Maisano for inducing the franchisee to breach the Clayton franchise agreement, in response to my request for him to identify all the material relied upon by Bodycorp in support the proposition that Maisano induced the Category A franchisees to breach their franchise agreements,[57] counsel for Bodycorp took me to the following material, which I set out in full below:
[57]Transcript of proceedings of 14 February 2018, 285.
(a) By his affidavit sworn 17 November 2014, Maisano deposes as follows:
27Prior to me taking the stand Mr Cawthorn was having a discussion with Mr Broadbent in my presence. Mr Cawthorn, said Barry Martin would be saying that he did not induce any Bodycorp repairers to leave and I was then instructed to do the same. I was told by Cawthorn that if I was asked in the witness stand if I had any contact with any franchisees after I left Bodycorp that I should say No. My reply was I can’t say that because I did in fact meet with ex and other Bodycorp repairers and that I had in fact had meetings with them. Broadbent’s reply to that was if you say that you will go down for inducing other franchisees and that is the claim against you do you understand this. He also advised that I could go down for a Million dollars worth of damages. Cawthorn backed it up by saying your evidence Mr Maison must corroborate with Martin’s evidence that you did not induce franchisees to leave Bodycorp. So simply say you didn’t have any meetings with Bodycorp repairers. I was worried as Cawthorn and Broadbent were telling me to tell untruths to the court. I wanted to get out of there.
…
31At the next group meeting at a restaurant then known as the Keg in Albert Park with the other repairers I told them that I did not know why Barry Martin was using my name and telling everybody that I was suing Bodycorp in order to leave Bodycorp and retain my sign. I explained to the group at the luncheon what had happened to myself in relation to the disagreement with Bodycorp.
32I told them that I received a letter from AAMI advising me that my sign had been terminated because of the alliance between AAMI and Bodycorp. Once I received the letter I contacted Don Casbolt by telephone and we had a discussion. As it appeared that there was no reconciliation in site [sic] I told him that I would sue AAMI. He then said that this was appropriate and that is exactly what I should do as my case would then be heard by more senior AAMI management.
33Concerned I then rang Barry Martin and told him of my discussion with Don Casbolt. Barry replied if that is what Don told you to do you should then do it because it would lead to an investigation. I then asked him about my work and he told me I would continue to do work whilst the investigation was on foot.
34I then told the group that I was given a draft Statutory Declaration that had been prepared by AAMI's Lawyers and was awaiting to sign it.
35I explained to them that I was advised by Philip Oswald to instigate proceedings against AAMI via my solicitor but I didn’t actually have to sue AAMI.
36After this meeting my work continued and my sign was never removed. I did however have to sign the Statutory Declaration prepared by AAMI’s solicitors in order to retain my work. I also had to sue Bodycorp repairers and Tony Murdaca in relation to the Malvern shop in which I did not want to but was told by my solicitor Tim Davies of Oakley Thompson that AAMI would continue to support me in Moorabbin but I had to take this action in order to secure my lively hood [sic].
(b)By his affidavit sworn 13 November 2014, Joe Anthony deposes as follows:
Whilst I was a franchisee of Bodycorp, Mick Mason would attend my shop once per month as he was on the committee of Bodycorp. I believe he would attend each of the shops for which he was responsible to collect feedback, concerns or questions from the franchisee. Mick Mason, Kevin and Margaret from Geelong, Steve Morish, my deceased partner Lorenzo and I would attend a luncheon at the Keg in Albert Park once per month so that Mick would not have to travel to each shop separately. Even though Mick Mason had left Bodycorp’s business prior, he continued to attend such gatherings and at one of these gatherings in mid to late August 1998, Lorenzo said that Barry Martin had told him that he was advising repairers to do what Mick Mason did and sue AAMI, leave Bodycorp and keep your sign. Lorenzo had formed the view that we should to do the same and thereby this would generate more work.
(c)By his affidavit sworn 4 August 2016, Antonio Murdaca deposes that he had at least 11 telephone conversations with Maisano in July 2016, in which:
10The words spoken, during the abovementioned conversations, to the best of my recollection are as follows:
a)The First Defendant said ‘I have read the writ, I have no defence.’
…
e)He said ‘I called Don Casboult, about the Malvern sign. He said that ‘Martin told him that the Malvern shop would not get quoting opportunities.’ I called other AAMI officers. They all supported Barry Martin, and told me that Malvern would not get work. I thought you misled me, and put me in a shop that would not get a sign. Barry Martin said “Your best option is to disassociate yourself with Bodycorp. You would have a better chance dealing with us on an individual basis. Melton and Sunbury have already left, and they are keeping their sign. There are things going on with Bodycorp in the background that I cannot tell you about. You would be better off alone”. I left. I wrote to you. There was an abusive phone call with you. I was angry with you. How dare you tell me that I would lose my sign? We had a close relationship in the past. How could you do this to me?” I received a letter from Don Casboult telling me that I had lost my sign. I was angry with everyone it was a bad time for me. I had lost the Malvern shop. I lost $80K in renovations to my shop. My wife had cancer. I went to Tim Davies at Oakley Thompson and Co. Davies started to negotiate with Ken Adams at Freehills.’
…
g)He said ‘Barry Martin was telling Bodycorp Franchisees in the Eastern suburbs to call me and that l would tell them how I left Bodycorp and how I kept my sign. l told them that I had left Bodycorp because of a dispute with the Malvern shop. Clayton, Berwick Caulfield, Geelong and Nunawading called me. I was told by Don Casboult (the state manager of AAMI) that 1 should have the franchisees sue AAMI, but not really sue them, that would start an investigation and they would keep their signs. The franchisees wanted to use my lawyer Tim Davies as he had previously dealt with AAMI’s lawyers and he understood how to deal with the situation.’
…
q)… He said ‘Mr Cawthorn told me privately that I had to cooperate and go along with the evidence that was going to be given by Mr Martin and that I would have the same defence that Mr Martin was going to have and that I would have to listen to him as to what I should say during the trial.’
11…He said ‘the Bastards knew that I was meeting the franchisees after I left. How can they make me say I did not have the meetings when they knew that I did? Cawthorn said if you state that you did meet these franchisees you will go for a million dollars in damages. Cawthorn said you received the letter dated 14 August 1998. I said it does not have my name upon it. Broadbent said don’t worry we will find the letter with your name on it, we will find it. I said it is not addressed to me. Broadbent said we will find that letter. I felt terrible in that witness box, when your counsel said I was not on the mailing list. The judge had a go at me. Cawthorn and Broadbent would not look at me. I was like a stuffed turkey, those dogs, put me in that positon. I lied in that witness box. I was only saying what they wanted me to say.’
…
He said ‘AAMI held all of the cards. 90% of my work was with AAMI. I had no idea that it would go this far.’ He said ‘the franchisees were calling me. They asked me, how did you get out of Bodycorp? The franchisees were calling me because Barry Martin told them to call me to find out how to get out of Bodycorp. Jim Poulos (Bodycorp Clayton) told me that Martin asked him to call me, and I would show him how to keep your sign and get out of Bodycorp.’ He said ‘I said my situation was different. I sued Bodycorp for the Malvern franchise because Barry Martin said that it was never going to get a sign. I know different now. If Jim Miller had not shown me all of Barry Martin’s notes, I would not have believed it. He lied to me then. That is why I had it in for you. I thought you wrecked my Malvern business, but I know that it was AAMI, they used me as a pawn to destroy your business.’ He said ‘Jim Poulos said he was told to sue AAMI. I said that he did not really have to sue AAMI. Don Casboult said tell them make out that they are suing us but not really sue us and that will spark an investigation against Bodycorp, we will investigate Bodycorp and the franchisees will end up keeping their signs.’
He said ‘I was getting calls from the franchisees, was meeting the franchisees. Barry Martin has put it out, that I know how to get out of Bodycorp. I said to Kevin Oldham (Bodycorp Geelong) that you just have to make out that you are suing AAMl, but don't actually do so, just make the threat. He (Oldham) said I will do what I have to do to keep my sign. I saw him at the meeting at AAMI, where the statutory declarations where provide.’
He said ‘I told Stan Hugh (Bodycorp Nunawading) that you just have to make out that you are suing AAMI, but don’t actually do so, just make the threat, that will start the investigation and you will keep your sign. He (Stan Hugh) said “What do I have to do? I said just go to head office, ask for Don Casboult and Philip Oswald, and they will deal with it.” He said ‘I said the same thing to Joe Anthony (Bodycorp Caulfield). He (Joe Anthony) said to me, I don’t have a sign. I said, but you will keep your work if you do what they say.’ He said that ‘I remained on the Bodycorp committee. I was the point of contact with all of the Eastern franchisees. I was the first to leave from the Eastern suburbs. Barry Martin got me to leave. That lying bastard got me to leave. He sucked me in. He then used me as a bunny to get everyone else to leave.’[58]
[58]Emphasis added.
(d) By his affidavit sworn 5 October 2016, Maisano deposed as follows:
In relation to me ever seeing any Bodycorp repairers after I left, I was told by Mr Broadbent, and Mr Cawthorn and Mr Dilello that if I was asked by counsel for the plaintiff I was to say I say no. I followed their instructions under duress as stated in my previous affidavit.
(e)In his affidavit sworn 4 August 2016, Manny Stamatopoulos deposed as follows:
I have also read the affidavit of Mr Antonio Murdaca dated 4 August 2016 relating to the discussions he had with Mr Maisano. I concur that the information in that affidavit is true and correct as Mr Maisano has made these comments in my presence on several occasions. Further I have heard Mr Maisano give evidence in the cost court [sic] hearing brought by Oakley Thompson where he again repeated these comments whilst giving evidence before Justice Elliot [sic].
(f) By his affidavit sworn 4 August 2016, James Miller deposed as follows:
Mr Maisano opened up to me and admitted to me that he was coached in relation to what testimony he was to give in the County Court proceeding. He further went on to say that this coaching continued in the Supreme Court Matter No 9071/2005.
(g)By his affidavit sworn 10 January 2018, Antonio Murdaca deposes that in mid to late 2017, he had conversations with Maisano in which Maisano stated words to the following effect:
Why don’t you get the rest of the franchisees and I am happy to talk to them and refresh their memory as I was the main person that AAMI was talking to.
…
I did induce the franchisees to leave Bodycorp, Martin was sending them to me. I had to tell them how to get out of the Bodycorp agreement, by pretending to sue AAMI but not actually suing them.
Martin told me ‘I will refer franchisees to you. You have to get them to leave Bodycorp. You have to tell them how to leave Bodycorp. You have to give them the contact details of the people to speak at AAMI. You have to give them Don Casboult's phone number. You have to tell them what to say to him. You have to tell them to threaten to sue AAMI but not actually do it.’
Martin was sitting down with me, in the meetings with the franchisees. Martin said contact other repairers, spread the word, Bodycorp will go under, stop invoicing Bodycorp, you will lose your money, I have spoken to the claims managers, the money will not be paid to Bodycorp. You have to get out of Bodycorp. All you have to do is send us a letter. AAMI will give you new recommended repairer agreements in your own name. You will sink with Bodycorp, if you stay with them. AAMI has made a corporate decision to distance themselves from Bodycorp, and if you want to support that decision and keep on working for AAMI you need to leave Bodycorp and AAMI will give you a new sign in your own name.
On 7 February 2018, the first day of the hearing, counsel for Bodycorp sought leave to call Maisano and to cross-examine him for the purpose of obtaining admissions that:
(a)he had meetings with Category A franchisees after July 1998; and at those meetings he induced breaches of the franchise agreements; and
(b)there were discussions between Maisano and Barry Martin about Maisano making inducing statements to the Category A franchisees.[59]
[59]Transcript of proceedings of 7 February 2018, 29–30.
I granted leave to Bodycorp to call Maisano and ask him questions limited to the issue of the inducements made to the Category A franchisees.[60]
[60]Transcript of proceedings of 7 February 2018, 100.
The cross-examination of Maisano proceeded for about three hours over the two days of the hearing. Most of the cross-examination was directed to credit.
In summary, the evidence given by Maisano under cross-examination was as follows:
(a) He denied inducing any franchisees to breach the franchise agreements.
(b)He asserted that the affidavits sworn by him, which were relied upon by Bodycorp in this application, were drawn by agents of Bodycorp and were:
(i) inconsistent with his instructions;
(ii) not read by him prior to swearing the affidavits; and
(iii) untrue.
Counsel for Bodycorp submitted that I should find that Maisano’s evidence was false and that, on the basis of such a finding, I should draw an inference that Maisano did make representations to induce the Clayton franchisee to breach his franchise agreement.
The inferences that can be drawn from the falsity of the witness’ evidence were considered by Gibbs J in Steinberg v Federal Commissioner of Taxation:[61]
The question that then arises, however, is whether it was right to conclude, as his Honour did, that the shares in the company were bought to enable the purchasers to acquire the land for the main or dominant purpose of profit-making by sale. The fact that a witness is disbelieved does not prove the opposite of what he asserted. It has sometimes been said that where the story of a witness is disbelieved, the result is simply that there is no evidence on the subject but although this is no doubt true in many cases it is not correct as a universal proposition. There may be circumstances in which an inference can be drawn from the fact that the witness has told a false story, for example, that the truth would be harmful to him; and it is no doubt for this reason that false statements by an accused person may sometimes be regarded as corroboration of other evidence given in a criminal case.
[61](1975) 134 CLR 640, 694 (citations omitted).
Counsel for Bodycorp referred to the decision of the Court of Appeal in Chong v CC Containers Pty Ltd,[62] in which the Court said:
It has also been recognised at an intermediate appellate level that the fact that a witness has concealed or misrepresented the truth about some matter may indicate a consciousness that the truth in respect of that matter would not have assisted his or her case.[63]
[62](2015) 49 VR 402 (Redlich, Santamaria and Kyrou JJA).
[63]Ibid 455 [184].
In Bodycorp Repairers Pty Ltd v Maisano [No 11],[64] I set out the principles relating to setting aside a judgment for fraud and the principles relating to summary dismissal, which I repeat in substance below.[65]
[64][2016] VSC 645, [47]–[59].
[65]The summary of principles relating to setting aside a judgment for fraud has been amended to accord with the decision of the Court of Appeal in Bodycorp Repairers Pty Ltd v Maisano [2017] VSCA 252 [18]–[21], [66]–[69].
Principles relating to setting aside a judgment for fraud
The relevant principles to be applied on applications to set aside a judgment on the ground of fraud were set out by Kirby P in Wentworth v Rogers [No 5].[66] These principles have been adopted by the Victorian Court of Appeal in Karam v Palmone Shoes Pty Ltd.[67]The following statement of Kirby P identifies the elements of the cause of action, relevant procedural rules and guidelines:
First, the essence of the action is fraud. As in all actions based on fraud, particulars of the fraud claimed must be exactly given and the allegations must be established by the strict proof which such a charge requires.
Secondly, it must be shown, by the party asserting that a judgment was procured by fraud, that there has been a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment. ...
Thirdly, mere suspicion of fraud, raised by fresh facts later discovered, will not be sufficient to secure relief. The claimant must establish that the new facts are so evidenced and so material that it is reasonably probable that the action will succeed. This rule is founded squarely in the public interest in finality of public litigation and in upholding judgments duly entered at the termination of proceedings in the courts.
Fourthly, although perjury by the successful party or a witness or witnesses may, if later discovered, warrant the setting aside of a judgment on the ground that it was procured by fraud, and although there may be exceptional cases where such proof of perjury could suffice, without more, to warrant relief of this kind, the mere allegation, or even the proof, of perjury will not normally be sufficient to attract such drastic and exceptional relief as the setting aside of a judgment. The other requirements must be fulfilled. ...
Fifthly, it must be shown by admissible evidence that the successful party was responsible for the fraud which taints the judgment under challenge. The evidence in support of the charge ought to be extrinsic. It is not sufficient to show that an agent of the successful party was convicted of giving perjured evidence in the former proceeding, the result of which it is sought to impeach. It must be shown that the agent, in so acting, was in concert with the party who derived the benefit of the judgment.
Sixthly, the burden of establishing the components necessary to warrant the drastic step of setting aside a judgment, allegedly affected by fraud or other relevant taint, lies on the party impugning the judgment. It is for that party to establish the fraud and to do so clearly. In summary, he or she must establish that the case is based on newly discovered facts; that the facts are material and such as to make it reasonably probable that the case will succeed; that they go beyond mere allegations of perjury on the part of witnesses at the trial; and that the opposing party who took advantage of the judgment is shown, by admissible evidence, to have been responsible for the fraud in such a way as to render it inequitable that such party should take the benefit of the judgment. [68]
[66](1986) 6 NSWLR 534.
[67][2014] VSCA 148 [39] (Nettle JA, with whom Whelan JA [47] and Almond AJA [56] agreed).
[68]Wentworth v Rogers [No 5] (1986) 6 NSWLR 534, 538–9 (citations omitted).
I summarise the essential elements of the cause of action as follows:
(a)Fresh facts: It must be shown that there are facts (‘the fresh facts’) which were:
(i) not considered by the original trial court; and
(ii) not known to the applicant until after the conclusion of the trial.
(b)Responsibility: It must be established that it was the fraud of the party, who was successful at the original trial (‘the successful party’), that was responsible for the fresh facts not being known by the applicant or considered by the court, such that it would be inequitable for the successful party to retain the benefit of the judgment.
(c)Causation: It must be established that the fresh facts are so material (by themselves or in combination with other facts) that it is reasonably probable that the applicant’s case will succeed.
Further, the above passage from Kirby P identified the following procedural rules and guidelines which apply, consistent with the public interest in the finality of litigation, when the Court is asked to take the ‘drastic step’ of setting aside a judgment:
(a)As the action is based in fraud, precise particulars of the allegations of fraud are required.
(b)The burden of proving each of the elements of the cause of action is on the applicant and each element must be established by strict proof.[69] With respect to each of the elements:
[69]As the action is based on fraud the principles of Briginshaw v Briginshaw (1938) 60 CLR 336 would be applicable. See also Evidence Act 2008 s 140(2).
(i) If the applicant has evidence of the fraud at the time of the trial, it cannot refrain from raising its objection at that time and thereby keep the complaint in reserve.
(ii) Proof of responsibility for the fraud should be established by admissible and extrinsic evidence. The perpetrator of the fraud must be the successful party and ‘it is not sufficient to show that an agent of the successful party was convicted of giving perjured evidence in the former proceeding, the result of which it is sought to impeach. It must be shown that the agent, in so acting, was in concert with the party who derived the benefit of the judgment.’[70] Further, mere suspicion of fraud is insufficient.
(iii) Proof of perjury alone is not sufficient to attract the exceptional relief of the setting aside of a judgment. Each of the elements of the cause of action must be established and in particular it must be proven that, absent the perjured evidence, it is reasonably probable that the applicant will succeed.
[70]Wentworth v Rogers [No 5] (1986) 6 NSWLR 534, 539 (citations omitted).
Principles on application of summary judgment
The applications for summary dismissal by the Oakley Thompson defendants and the AAMI defendants are made pursuant to r 23.01 of the Supreme Court (General Civil Procedure) Rules 2015 and/or s 63 of the Civil Procedure Act 2010. Rule 23.01(1) provides:
(1) Where a proceeding generally or any claim in a proceeding—
(a) is scandalous, frivolous or vexatious; or
(b) is an abuse of the process of the Court—
the Court may stay the proceeding generally or in relation to any claim or give judgment in the proceeding generally or in relation to any claim.
Sections 62 and 63(1) of the Civil Procedure Act 2010 provide:
62 A defendant in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a plaintiff's claim or part of that claim has no real prospect of success.
63(1) Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires,
has no real prospect of success.
The incorporation of the power to apply for summary dismissal of a proceeding under ss 62 and 63 of the Civil Procedure Act 2010 resulted in the repeal of r 23.03 of the Supreme Court (General Civil Procedure) Rules 2015[71] and the amendment of r 22 to include rules for the making of an application under s 62 of the Civil Procedure Act 2010.
[71]Rule 23.03 provided that ‘On application by a defendant who has filed an appearance the Court at any time may give judgment for that defendant against the plaintiff if the defendant has a good defence on the merits’. This rule was a successor of Order XIV(A) of the Rules of the Supreme Court of Victoria (which was in force from its introduction on 20 December 1900 until replaced by the Supreme Court (General Civil Procedure) Rules 1986). Order XIV(A) was described by Dixon J in Dey v Victorian Railways Commissioner (1949) 78 CLR 62, 90–1 as ‘an order peculiar to Victoria … [which] should be reserved for exercise as to actions that are absolutely hopeless’. In Bayne v Riggall (1908) 6 CLR 382, 398, O’Connor J said that the rule was ‘little more than a formal expression of the inherent power to deal with its own process which the Superior Courts have always exercised’.
It is now clear that a claim that ought to be dismissed as an abuse of process on the ground that it was hopeless, untenable, bound to fail or could not possibly succeed, will now be dismissed under s 63.[72]
[72]Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd (2011) 35 VR 1, 8–9 [18] (Dixon J).
The proper approach to an application under s 62 was explained in Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd[73] as follows:
(a) the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a ’real’ as opposed to a ’fanciful’ chance of success;
(b)the test is to be applied by reference to its own language and without paraphrase or comparison with the ’hopeless’ or ’bound to fail test’ essayed in General Steel;
(c)it should be understood, however, that the test is to some degree a more liberal test than the ’hopeless’ or ’bound to fail’ test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
(d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.[74]
[73](2013) 42 VR 27 (Warren CJ, Nettle and Neave JJA)
[74]Ibid 40 [35] (Warren CJ and Nettle JA).
If the Court finds that the proceeding has no real prospect of success, it has a broad residual discretion,[75] to be exercised consistently with the overarching purposes of the Civil Procedure Act 2010,[76] to nonetheless refuse the application because:
(a) it is not in the interests of justice to do so; or
(b) the dispute is of such a nature that only a full hearing on the merits is appropriate.[77]
[75]Civil Procedure Act 2010 s 64; Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd (2011) 35 VR 1, 8–9 [12] (Dixon J).
[76]Ibid 42 [41]–[42] (Neave JA).
[77]Civil Procedure Act 2010 s 64.
Although, in most circumstances, the most appropriate basis of an application for summary dismissal on the ground of no real prospect of success is pursuant to s 62 of the Civil Procedure Act 2010, an application to stay or dismiss a proceeding may still be made under r 23.01 or under the Court’s inherent jurisdiction ‘to stop the abuse of its process when it is employed for groundless claims’.[78] The High Court has said that the power may be exercised:
(a) if the plaintiff’s claim is ‘manifestly groundless’ and to allow it to proceed would ‘involve useless expense’;[79] and
(b) if the Court has ‘a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way’.[80]
[78]Dey v Victorian Railways Commissioner (1949) 78 CLR 62, 91 (Dixon J).
[79]General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 138 (Barwick CJ); cited in Wentworth v Rogers[No 5] (1986) 6 NSWLR 534, 536 (Kirby P).
[80]Agar v Hyde (2000) 201 CLR 552, 575–6 [57].
Decision
With respect to the claims to set aside the dismissal of the claims against Maisano for inducing the franchisees for the areas of Geelong, Caulfield and Nunawading to breach its franchise agreement, in the Original Proceeding, there is no real prospect of success because:
(a) Elliott J found that there was no evidence, in the trial of the Original Proceeding, of the periods for which each of these franchisees were bound to Bodycorp;[81]
[81]See [54] above.
(b) it was not submitted that the absence of such evidence in the Original Proceeding was the result of Maisano’s fraud;
(c) there was no evidence of these matters in the current applications; and
(d) counsel for Bodycorp was (quite properly) unable to submit any basis upon which the tendering of such evidence in this proceeding could be said to be fresh.
Accordingly, each of the claims to set aside the dismissal of the claims against Maisano for inducing each of the franchisees for the areas of Geelong, Caulfield and Nunawading to breach its franchise agreement in the Original Proceeding has no real prospect of success.
With respect to the material relied upon by Bodycorp in support of its application relating to the Clayton franchisee:
(a) The affidavits do not say that Maisano had any role in inducing the Clayton franchisee to breach his contractual obligations. The only evidence that relates to a conversation with the Clayton franchisee is an alleged statement made by Maisano to Murdaca on 23 July 2016. The relevant conversation is referred to in the emphasised part of paragraph [56(c)] above, but in substance is as follows:
(i)The Clayton franchisee told Maisano that Barry Martin, the AAMI employee, asked him to call and Maisano would show him how to keep his sign and ‘get out of Bodycorp’.
(ii)The Clayton franchisee said that he was told to sue AAMI. He said Maisano told him that Don Casboult of AAMI had said they only had to ‘make out’ that they were suing, because that would spark an investigation against Bodycorp; and franchisees would ‘end up keeping their signs’.
The content of the conversation was solely about how the franchisee could keep the AAMI sign, if he was no longer contracted to Bodycorp. This is entirely unremarkable because, at the relevant time, AAMI was contractually bound to take reasonable steps to ensure that AAMI recommended repairers’ signs were not displayed by former Bodycorp franchisees[82] — a contractual term that Elliott J ultimately found to be an unreasonable restraint of trade.[83] The conversation does not rise even to the representations that Elliott J found Martin had made to franchisees;[84] but that did not constitute a relevant inducement to breach contractual relations.[85] In my opinion, it is telling that Murdaca had the opportunity to speak to Maisano about what he said to the Clayton franchisee; and there is no evidence of any statement by Maisano that that would substantiate a finding of inducing breach of contract.
[82]Trial Reasons [46].
[83]Ibid [135], [155]–[156].
[84]Bodycorp Repairers Pty Ltd v Maisano [No 11] [2016] VSC 645 [37].
[85]Trial Reasons [208], [302]-[304].
(b) To the extent that the material alleges generalised admissions by Maisano that he did make inducing statements to franchisees and that he had no defence to Bodycorp’s claim in this proceeding, I observe that:
(i)the evidence makes no reference to any statements made, at any time, to the Clayton franchisee; and
(ii)the material does not attempt to descend to particularise any statement and, in particular, whether any such statements made by Maisano to any franchisees rose as high as the alleged Statement or any like statement.
This is of particular significance because:
(i) a claim to set aside a judgment for fraud requires precise particulars and strict proof; and
(ii) in this case the statements relied upon by Bodycorp in the Original Proceeding (which were found by Elliott J to have been made) were found not to constitute an inducement to breach a franchise agreement.[86]
[86]Trial Reasons [208]–[214], [302]–[304] confirmed on appeal in Bodycorp Repairers Pty Ltd v Australian Associated Motor Insurers Ltd and Barry Martin [2015] VSCA 73 [53]–[61] (Warren CJ, Beach J and Ginnane AJA).
(c) With respect to the evidence that Maisano’s solicitor and counsel advised him that, if he admitted that he had meetings with ‘ex and other BodyCorp repairers’, he would ‘go down for inducing other franchisees and … could go down for a Million dollars’ worth of damages’.[87] I reject the submission of counsel for Bodycorp that, from this statement, it could be inferred that it was the lawyers’ opinions, based on Maisano’s instructions, that he had induced a breach of contract; and therefore that Maisano must have instructed them that he had made statements which would constitute inducing breach of the franchise agreements. My reasons are:
[87]See [56(a)] above.
(i)the subject of the discussions was about giving evidence about meeting other franchisees, and the discussions say nothing about what may have been said by Maisano to the franchisees;
(ii) the material does not purport to relate to the Clayton franchisee; and
(iii)the inferences contended for are, in my opinion, speculative in the extreme.
(d) Further, I reject Bodycorp’s submission that a court could draw an inference in all the circumstances that Maisano had made the alleged Statement to the Clayton franchisee on the basis of:
(i)Maisano’s denial at trial that he had meetings with the franchisees after July 1998; and
(ii)his denial of the truth of the content of the affidavits sworn by him and the alleged admissions made by him, which are relied upon by Bodycorp in this application.
With respect to these allegations, I observe as follows:
A.As was pointed out by the Court of Appeal in Bodycorp Repairers Pty Ltd v Maisano,[88] despite Maisano’s evidence at the trial of the Original Proceeding that he did not speak to any other franchisee after he terminated with Bodycorp, in fact he did give additional evidence about attending a meeting on 27 July 1998.
B.I am not positively persuaded that Maisano was not telling the truth in his evidence before me, or in his evidence in the trial of the Original Proceeding.
Nonetheless, on this application, I assume that the material relied upon by Bodycorp will be accepted; and, in particular, the admissions made by Maisano in the affidavits are true; and, consequently, the evidence of Maisano (referred to in (i) and (ii) above) is false. In these circumstances, an inference may be drawn that ‘the truth will not assist [Maisano]’.[89] However, critically, in the absence of other evidence of the making of a relevant inducement, it would not be open to conclude that he made the alleged Statement to, or otherwise positively induced, the Clayton franchisee to breach the franchise agreement at a relevant time sufficient to make out the alleged cause of action.[90]
[88][2017] VSCA 252 [38]–[39].
[89]Chong v CC Containers (2015) 49 VR 402, 453-4 [180] (Redlich, Santamaria and Kyrou JJA).
[90]Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640, 694.
As the Court of Appeal observed in Bodycorp Repairers Pty Ltd v Maisano, ‘in order to set a judgment aside for fraud the fresh facts must be both “so evidenced” and “so material” that it is reasonably probable that the action will succeed’.[91] With the one exception referred to in [56(c)] (which for the reasons explained in [77(a)] could not constitute the relevant tort), there is no evidence of what Maisano said to the Clayton franchisee. In my opinion, there is no real prospect of Bodycorp successfully establishing the elements of the cause of action to set aside the judgment in the Original Proceeding.
[91][2017] VSCA 252 [78].
I have reached this conclusion on the assumption that Bodycorp’s evidence, on the application for summary dismissal, should be dealt with at its highest. However, I am fortified in the conclusion that there is no real prospect of success by the fact that Bodycorp’s claim is based in fraud, which requires precise particulars of the allegations of fraud and each element is required to be established by strict proof. Bodycorp is, even now, unable to provide precise particulars of the allegation of fraud and, in particular, what was said by Maisano to the Clayton franchisee, in respect of which Maisano allegedly perjured himself by not disclosing in the Original Proceeding.
In considering whether to exercise the Court’s residual discretion under s 64 of the Civil Procedure Act 2010, I have taken into account the overarching purpose set out in s 7 of that Act and the following additional matters that support the summary dismissal of this claim:
(a) Bodycorp’s claim principally relies upon the recollection of a single witness in affidavits, the truth of which he strenuously denied in oral evidence.
(b) The principal events relied upon a conversation that took place approximately 20 years ago.
(c)The original claim, which Bodycorp seeks to reagitate, was filed over 16 years ago; and judgment was given in the original proceeding over four years ago.
In these circumstances, and for the reasons set out in [49]–[50], I propose to order that Bodycorp’s claim against Maisano be dismissed on the Court’s own motion.
Further, for the same reasons, I consider that Bodycorp’s claim is manifestly groundless and that to allow it to proceed would involve useless expense. I also have a high degree of certainty that Bodycorp’s claim will fail if the claim was to proceed to trial. Accordingly, if necessary, I would have been prepared to dismiss this proceeding on Oakley Thompson’s application under O 23 or the Court’s inherent power.
Bodycorp’s claim for default judgment, in its summons filed 24 August 2017, is made pursuant to r 21.04, which provides:
(1)Where a claim is made other than for the recovery of a debt, damages or any property, whether or not a claim for such recovery is also made in the proceeding, and the plaintiff is entitled to judgment on that claim against any defendant in accordance with Rule 21.01 or 21.02, the Court may give judgment for the plaintiff upon the statement of claim.
(2)An application for judgment under paragraph (1) may be made without notice to the defendant.
For the reasons set out above, I will also dismiss Bodycorp’s summons filed 24 August 2017 applying for default judgment.
Even if I was not prepared to summarily dismiss Bodycorp’s claim against Maisano, I would not have been prepared to enter judgment in default of appearance or defence for the following reasons:
(a) Although said in the context of parties seeking to set aside a judgment by consent on appeal, the Court needs ‘to be affirmatively satisfied that there should be a rehearing, given the potential cost and resource implications involved’ before setting aside a judgment of the Court.[92] I consider that this principle would apply with at least equal force to an unopposed application in the trial division to set aside a judgment for fraud.
(b) In the Amended Statement of Claim, Bodycorp alleges that there was ‘an improper attempt to influence the evidence to be given by Maisano’. However, there is no allegation as to the evidence that should have been given by Maisano (if he had not been so influenced); or how such evidence would have materially affected the decision of the trial Judge. Accordingly, in those circumstances, I do not consider that it would be appropriate to exercise my discretion to enter a default judgment setting aside a judgment of this Court based on (at its highest) an unparticularised allegation of perjury.[93]
[92] Loftus v Australian and New Zealand Banking Group [No 2] [2016] VSCA 308 [3] (Redlich, Osborn and McLeish JJA). See also Newton v Geelong Ethnic Communities Council [2011] VSCA 59 [16]–[17] (Weinberg JA; Nettle and Redlich JJA agreeing); Hennes v Hobsons Bay City Council [2012] VSCA 215 [7] (Harper JA, Beach and Davies AJJA); Kovacic v Transport Accident Commission (2016) 76 MVR 82, 84 [4] (Weinberg and Beach JJA).
[93]Everett v Ribbands (1946) 175 LT 143, 146 (Morton LJJ with whom Somervell LJJ agreed).
On 7 February 2018, for the reasons then given, I rejected Bodycorp’s further application for recusal. I now formally dismiss the summons filed 10 January 2018.
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