Cohen v The State of Victoria (No 2)
[2011] VSC 165
•13 May 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
No. 10544 of 2008
| HERSHALL COHEN | Plaintiff |
| v | |
| THE STATE OF VICTORIA | Firstnamed Defendant |
| PARKS VICTORIA | Secondnamed Defendant |
| THE SECRETARY TO THE DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENT | Thirdnamed Defendant |
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JUDGE: | J FORREST J | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 21 March, 15 April 2011 | |
DATE OF RULING: | 13 May 2011 | |
CASE MAY BE CITED AS: | Cohen v The State of Victoria & ors (No 2) | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 165 | |
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PRACTICE AND PROCEDURE – Application by the Defendant to dismiss proceeding as an abuse of process – Group proceeding – Part 4A of the Supreme Court Act – Proceeding issued without authority of the representative plaintiff – Abuse of process – No person prepared to act as representative plaintiff – Rights of group members – Sections 33ZD and 33ZF Supreme Court Act.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr I Waller SC and Mr P S Noonan | Herbert Geer |
| For the Defendants | Mr P Riordan SC and Mr M D Rush | Norton Rose Australia |
| For Mr D Oldham, Ms J Dymond and Oldham Naidoo Pty Ltd | Mr S M Anderson SC and Mr M J Stirling | Middletons |
| For Mr R Arnold | Mr C Harrison SC and Mr P Panayi | Berrigan Doube |
HIS HONOUR:
Introduction
Dr Hershall Cohen is the named representative plaintiff in a group proceeding issued pursuant to Part 4A of the Supreme Court Act against three defendants, each being a State related entity.
The proceeding, issued in December 2008, arises out of bushfires in 2003 in Northern Victoria and was instituted by Slidders Lawyers Pty Ltd (subsequently Oldham Naidoo Lawyers Pty Ltd)[1]. Unfortunately, a major problem has now emerged. Dr Cohen knew nothing about being named as the representative plaintiff until October 2010.
[1]On 4 June 2010, Slidders Lawyers Pty Ltd changed its name to Oldham Naidoo Pty Ltd. To avoid confusion, I have referred to the company as Oldham Naidoo.
Once he learnt of his involvement, Dr Cohen applied to be removed as the plaintiff and to have any costs orders made against him transferred to Mr Daniel Oldham, the solicitor responsible, and his firm, Oldham Naidoo. It is conceded that Dr Cohen did not authorise the solicitors to issue or maintain this proceeding on his behalf. Ultimately, the orders sought by Dr Cohen were consented to by Mr Oldham and Oldham Naidoo.
Other issues bound up with Dr Cohen’s application have now arisen. Mr Robert Arnold, a resident of Switzerland, originally applied to be substituted for Dr Cohen as the representative plaintiff. However, subsequent to the hearing on 21 March 2011 he withdrew his application. At that hearing, the defendants resisted Mr Arnold’s application and maintained that the proceeding should be dismissed as an abuse of process.
Given Mr Arnold’s late withdrawal, a fresh question has arisen as to whether any other group member should be given the opportunity to take on the role of representative plaintiff, or alternatively, whether the proceeding should be dismissed. I heard further argument on 15 April 2011 concerning the fate of the proceeding in the light of Mr Arnold’s change of heart.
Background to the applications
At the outset I should describe briefly and in broad terms the nature of the fire (or more accurately fires).
The fires commenced on 8 January 2003 in North Eastern Victoria and burnt until 7 March of that year. They were not ignited or spread from a single source – rather they broke out in a number of spots on public land, mostly as a result of lightning strikes. The fires ultimately expanded and coalesced, resulting in a mass conflagration, described as the Alpine fires. Over a million hectares was burnt out, including some 90,000 hectares of freehold land. The escape of fires from areas controlled or managed by the defendants was diverse and one aspect of fire management or control in a particular area may have no relevance to a fire in another area.
On 24 December 2008, the writ issued by Oldham Naidoo (bearing Mr Oldham’s reference) against the defendants, named “Hershall Cohen” as the plaintiff. Paragraph 1 of the general indorsement reads as follows:
The plaintiff brings this proceeding in accordance with Part 4A of the Supreme Court Act 1958 (Vic) as the representative land owners and occupiers of land who suffered loss and damage in early 2003 from bushfires in north-eastern Victoria when such fires commenced by reason of lighting strikes in the Mount Buffalo National Park, Alpine National Park and other National Parks and State Parks (the Parks) moved from the parks onto their property and damaged their property.
The plaintiff’s claim, as detailed in the general indorsement, alleged breach by the defendants of common law and statutory duties.
Between 19 June 2009 and 8 September 2010, there were a number of versions of the statement of claim.[2]
[2]See the brief history contained in [2010] VSC 371 [5] – [10].
In August 2010, I struck out parts of the statement of claim, but permitted a redacted version to be filed and served consistent with my ruling.[3] The amended claim was filed on 8 September 2010. In that pleading, Dr Cohen was alleged to be the registered proprietor of some 14 parcels of land said to be damaged by the fire.[4]
[3][2010] VSC 371.
[4]The damage was alleged to have included the destruction of 33km of fencing.
On 26 November 2010, Oldham Naidoo issued a summons, returnable on 25 January 2011, purportedly on behalf of Dr Cohen that he cease to be the plaintiff and that Mr Robert Arnold be substituted as the plaintiff (pursuant to r 9.06 of the Supreme Court (General Civil Procedure) Rules 2005).
That application was accompanied by a two page affidavit of Mr Oldham in which he swore that Oldham Naidoo was retained by Dr Cohen and he had the conduct of the proceeding on his behalf. Mr Oldham deposed as follows:
5. I am informed by Mr Cohen that he wishes to withdraw as a representative party in this proceeding.
6. I am instructed by Mr Robert Michael Arnold that he wishes to be substituted as a representative party in this proceeding. I am instructed by Mr Arnold and believe he suffered property and monetary damage from the 2003 bushfire.[5]
Mr Oldham later filed a second affidavit annexing a draft amended statement of claim which asserted that Mr Arnold occupied various properties in the Alpine region pursuant to leases with the State of Victoria and the Minister for Environment and Conservation and described the land as “the plaintiff’s land”.[6]
[5]Affidavit of 26 November 2010
[6]Affidavit of 18 January 2011.
Four affidavits have been filed by Ms Wearne, the solicitor for the defendants. She raised a number of issues concerning the allegations made in the affidavits and the draft amended statement of claim filed on behalf of the plaintiff, including:
(a)that Dr Cohen was not the registered proprietor of any of the parcels of land identified in the current version of the statement of claim;[7] and
(b)that Mr Arnold was (contrary to the assertion in the draft statement of claim prepared on his behalf) not a lessee of the premises identified in that document. Rather, he had been a director of two of the companies (now in liquidation or administration) which had leased the properties and had also issued separate writs in respect of damages allegedly suffered by them – those writs having been issued by Oldham Naidoo.[8]
[7]See [9] of Ms Wearne’s affidavit of 16 February 2011.
[8]See [5] – [9] of Ms Wearne’s affidavit of 21 January 2011.
At the hearing of the substitution application on 25 January, I said as follows of Mr Arnold’s position:
HIS HONOUR:---Well if Mr Oldham had been more fulsome in setting out what was going on, I would have a better understanding of all this. It seems to me without Ms Wearne going on affidavit, this court could have been seriously misled as to what the true position was with his claim.
COUNSEL FOR THE PLAINTIFF:---I accept that, your Honour.
HIS HONOUR:---And I for one have misgivings and I will hear from Mr Riordan in a moment, but I for one have misgivings about letting this case proceed without having something in concrete from Mr Arnold as to what his interest was and also having an amended statement of claim that reflects adequately that interest.[9]
Subsequently, I made orders adjourning the hearing of the application and requiring any further affidavits sought to be relied upon to be filed and served by 11 February 2011.
[9]T 5.
On 11 February 2011, Mr Oldham, perhaps mindful of the remarks I had made, swore a fulsome affidavit setting out the background to Mr Arnold’s alleged losses which were said to be as follows:
(a)loss of salary as Managing Director of the Mount Buffalo Resort;
(b)loss of accommodation and subsequent rental payments;
(c)smoke damage to furniture, clothes and chattels;
(d)expenses associated with storage of goods and moving of goods to a new residence;
(e)value of time spent in fighting a fire and mopping up after fire; and
(f)provision of sustenance and accommodation to fire fighters.
On the same day, an affidavit of Mr Arnold was electronically lodged in support of his application. He gave his address as c/- Oldham Naidoo and described himself as:
An international hotelier and am currently the managing proprietor of the Swiss College of Hospitality Manage Lenk in Switzerland, a position I have held since October 2008.
His resume, exhibited to the affidavit, gives his address 26 Heoelzlistrasse, 4710 Balsthal Switzerland. He affirmed his losses described in Mr Oldham’s affidavit.
An unexpected twist occurred the day before (on the 10th) when Dr Cohen, in a summons addressed to Oldham Naidoo, Mr Oldham and the solicitors for the defendants brought an application seeking:
“(a) a declaration that Oldham Naidoo was not authorised to commence or maintain this proceeding in his name;
(b)an order that the proceeding be stayed; and
(c)an order that any costs orders made in the proceeding against Dr Cohen be varied by substituting Oldham Naidoo and Mr Oldham for Dr Cohen.”
That application was accompanied by affidavits sworn by Dr Cohen, and his solicitor Mr Henrik Lassen of Herbert Geer.
Another twist (this time not entirely surprising) came some six days later. The application by Dr Cohen apparently provoked the defendants to issue a summons seeking to have the proceeding dismissed as an abuse of process.
Mr Oldham and Ms Dymond, a solicitor employed by Oldham Naidoo and responsible for the management of the proceeding under the supervision of Mr Oldham, each swore an affidavit on 17 February 2011.
Each of the three applications were returnable on 18 February 2011. At that hearing, senior counsel who appeared for Oldham Naidoo sought an adjournment so that Mr Oldham and Ms Dymond could (if necessary) be represented and provide instructions in respect of the allegations made by Dr Cohen and the defendants. There was also the question, he submitted, of representation of the group members, whose interests would be adversely affected if the defendants’ abuse of process argument succeeded.
I granted that application and adjourned each of the summonses to 21 March 2011. I also stayed the proceeding until further order.
Anticipating that there would inevitably be an issue as to security of costs given Mr Arnold’s place of residence, I had my associate contact the solicitors for the parties, prior to the hearing on 21 March, suggesting that this matter may require consideration at the hearing. Ms Wearne filed an affidavit providing an estimate of the defendants’ costs.
At the hearing on 21 March 2011, each of the parties were represented.[10] In addition, Oldham Naidoo, Mr Oldham and Ms Dymond were jointly represented. Mr Arnold was also separately represented on this application.
[10]The State related defendants are jointly represented.
On 1 April 2011, my associate received a letter from the solicitors acting for Mr Arnold indicating that he no longer wished to be substituted as the representative plaintiff.
On 15 April 2011 (and in the light of Mr Arnold’s withdrawal), I heard further submissions as to the abuse of process question and a peripheral costs issue.
The application brought by Dr Cohen
The following orders were made by the Court on 21 March 2011 with the consent of counsel for Dr Cohen and the Oldham Naidoo interests:
1.The Court declares that Oldham Naidoo Lawyers Pty Ltd was not authorised by Dr Hershall Cohen to commence or maintain proceeding 10544 of 2008 in his name.
2.All other costs orders made in proceeding 10544 of 2008 against Dr Hershall Cohen be varied by substituting for Hershall Cohen
(a)Oldham Naidoo Lawyers Pty Ltd; and
(b)Daniel Oldham
3.Oldham Naidoo Lawyers Pty Ltd and Daniel Oldham pay Dr Hershall Cohen’s costs of and incidental to this application on an indemnity basis (save that senior counsel’s fee at this day be excluded from such costs).
The defendants did not oppose the making of these orders, but a minor issue remained as to Dr Cohen’s costs related to the abuse of process application. There was a dispute as to whether Oldham Naidoo should pay Dr Cohen’s relatively minimal additional costs associated with that application brought by the Defendants. Dr Cohen already has an order in his favour for indemnity costs “of and incidental” to his own application. I am not persuaded to make any further order, given the scope of that order.
That left, at that time, two interlinked issues to be determined:
(a)whether Mr Arnold should be substituted as the plaintiff and if so, on what terms; and
(b)whether the proceeding should be dismissed or stayed as an abuse of process.
The application to substitute Mr Arnold as plaintiff
This application was issued by Oldham Naidoo, asserting that it was made on behalf of Dr Cohen.
The hearing before me on 21 March 2011 proceeded on the basis that Mr Arnold was ready, willing and able to act as the representative plaintiff. He had, of course, filed an affidavit to that effect and had set out his losses caused by the fire. His counsel made submissions opposing the dismissal of the claim as an abuse of process and supporting his application to be substituted for Dr Cohen.
As I have said, prior to the hearing, the question of Mr Arnold providing security for costs was canvassed by me. On the day of the hearing, I heard oral argument and then directed Mr Arnold to file any further material concerning: (a) whether there should be an order for security of costs; and (b) if so on what terms - by 4 April 2011. The defendants were to file any material in response by 18 April 2011.
Mr Arnold now does not wish to pursue the application. This application will be dismissed. The defendants did not seek costs from Mr Arnold. The question of any other order as to the costs of the defendants can be resolved as part of the abuse of process application.
The application by the defendants to strike the proceeding out as an abuse of process
This application raises a novel consideration – what should a court do about a representative proceeding in which no group member is prepared to take up the role of representative plaintiff. This problem is exacerbated by the fact that absent a Part 4A proceeding, any individual claims by group members would now be statute barred.[11]
[11]Any relevant limitation period effecting a group member is suspended upon the issue of a group proceeding: s 33ZB.
I do not propose to recite in detail my reasoning in Matthews v SPI Electricity Pty Ltd & Ors (Ruling No 1)[12] which traverses a number of the issues relevant here. In Matthews (No 1) I identified the following matters which are pertinent to this application:
[12][2010] VSC 167 Matthews (No 1).
(a) The lack of authority on the part of the solicitors when issuing, and maintaining the proceeding is not fatal to the maintenance of a group proceeding under Part 4A of the Supreme Court Act;[13]
(b) The court has the power pursuant to s 33ZF to “regularise” the proceeding or to dismiss it, or to take whatever other steps it considers to be in the interests of justice; and
(d) In determining whether the proceeding should be struck out as an abuse of process the court will take into account all of the matters surrounding the institution and maintenance of the proceeding, particularly the effect that a strike out order will have on members of the group. Ultimately the Court’s aim is to ensure that the abuse does not result in injustice to the parties.
[13]Subsequent references to particular sections are all references to provisions of Part 4A, unless otherwise stated.
There are two other aspects of Part 4A that should be mentioned now. First, in Matthews (No 1),[14] I identified a number of provisions of Part 4A which make it clear that it is the representative plaintiff who carries forward the claim on behalf of the group. He or she plays a pivotal role in the carriage of the group’s claim. Second, s 33ZD enables a court to make a costs order against the representative plaintiff and precludes an order against a group or sub-group member.
[14]Matthews (No 1) [48]-[52].
Given that at the present time there is no actual or putative representative plaintiff, I think that there are two options in relation to the future disposition of this claim. The first is to accede to the defendants’ application and dismiss the proceeding as an abuse of process. The second is to direct that there be advertisements placed in local newspapers in the north east and one Statewide newspaper to the effect that the proceeding is liable to be dismissed unless a representative plaintiff can be found and substituted for Dr Cohen. That option would require someone taking on the responsibility to pay for the costs of the advertising. Oldham Naidoo is prepared to pay the reasonable costs of that exercise.
The principles relevant to dismissal for abuse of process were recently set out by the High Court in Jeffrey and Katauskas Pty Ltd v SST Consulting Pty Ltd:[15]
The term "abuse of process", as used in Australia today, is not limited by the categories mentioned above or those which constitute the tort. It has been said repeatedly in the judgments of this Court that the categories of abuse of process are not closed. In Walton v Gardiner the majority adopted the observation in Hunter v Chief Constable of the West Midlands Police that courts have an inherent power to prevent misuse of their procedures in a way which, although not inconsistent with the literal application of procedural rules of court, would nevertheless be "manifestly unfair to a party to litigation ... or would otherwise bring the administration of justice into disrepute among right-thinking people". This does not mean that abuse of process is a term at large or without meaning. Nor does it mean that any conduct of a party or non-party in relation to judicial proceedings is an abuse of process if it can be characterised as in some sense unfair to a party. It is clear, however, that abuse of process extends to proceedings that are "seriously and unfairly burdensome, prejudicial or damaging" or "productive of serious and unjustified trouble and harassment".[16] (citations omitted)
[15](2009) 239 CLR 75.
[16]Ibid [28]. See also Heydon J [56]-[58]. See also Jago v the District Court of New South Wales (1989) 168 CLR 23, 74. Walton v Gardiner (1993) 177 CLR 378, 393.
The Defendants submitted that there were a number of considerations which should result in dismissal:
(a)this proceeding was issued without the authority of Dr Cohen and maintained as a claim in this Court for over two years – also without his authority. At no time has he ratified the proceeding, and therefore it is said the proceeding should be treated as an abuse of process. Moreover, they submitted, the perpetuation of the proceeding as a claim on behalf of the group members for a lengthy period amounted to a contumelious breach by the solicitors with the end result that the proceeding should be terminated;
(b)that there was no evidence that any other person was prepared to take on the role of representative plaintiff and given the passage of time and the publicity that this case has recently attracted, then it could be readily inferred that no one is prepared to pick up the baton;
(c)that no claim was issued by any person affected by the fires during the relevant limitation period (six years from the date of the fires – January to the end of February 2003). The writ was issued on Christmas Eve 2008 and not served until April 2009. By that time, any person bringing a claim in their own name would have been subject to a defence under the Limitation of Actions Act 1958 (Vic). It could be inferred, counsel said, that the reality is that no one (either individually or as a representative plaintiff) wishes to take on this claim. Counsel also emphasised the fact that the representative plaintiff takes on, in a group proceeding, a far greater burden than a plaintiff in an individual proceeding, both in terms of potential costs liability and obligations to the Court and to the group members;
(d)that it is over 8 years since these fires occurred, and for the past two years the defendants have been vexed by this litigation which has, to put it mildly, an unfortunate history; and
(e)that it is inevitable that this case will be the subject of further interlocutory disputes which may well require the claim being divided into sub-groups; or as the defendants contend, will ultimately require the dismissal of the proceeding as being unsuitable as a group proceeding (s 33C, s 33H).
Mr Arnold was the contradictor at the hearing on 21 March 2011. At the subsequent hearing on 15 April 2011, in the absence of Mr Arnold, counsel for Oldham Naidoo put further submissions in opposition to the dismissal of the proceeding.
The substance of the resistance was as follows:
(a)that it is a drastic step to dismiss or stay the proceeding which will inevitably terminate the rights of the group members at this point of time;
(b)that there is a prospect that a member of the group would be prepared to take on the role as representative plaintiff, notwithstanding the lack of any apparent enthusiasm to date. It is not a foregone conclusion that there is not an affected person who would take on the role;
(c)every opportunity should be given to permit a group member to take on the role. By s33X(i)(c), if a group proceeding is to be struck out for want of prosecution then notice must be given to group members. By analogy such notice should be given here; and
(d)given that dismissal will terminate the rights of group members, there should be a final opportunity for group members to assume the role of representative plaintiff. Appropriate notices would provide that opportunity. Oldham Naidoo has agreed to pay the costs of and incidental to advertising for a representative plaintiff, if this course is undertaken.
Resolution
I put to one side questions of deterrence based upon the conduct of Mr Oldham and Oldham Naidoo. The case has received considerable publicity and any competent practitioner could not now be aware of the risks of issuing a case without authority. The appropriate course on this issue is to refer the conduct of Oldham Naidoo and Mr Oldham to the Legal Services Commissioner for investigation.[17] I will, if necessary, order that the affidavits and exhibits filed in this application be made available to the Commissioner.[18]
[17]Legal Profession Act2004 (Vic) s 4.4.8.
[18]Subject to hearing any application from Mr Oldham or Oldham Naidoo.
I also accept that dismissing a claim, particularly a group proceeding, as an abuse of process is an extreme step and one that should only be taken after careful consideration of the evidence, and even then, cautiously.[19] The following matters however persuade me that this is the appropriate course.
[19]See Jago v District Court of New South Wales (1989) 168 CLR 23, 33-34; Australian Securities and Investments Commission v Lindberg [2010] VSCA 19, [71].
First, the issuing and maintenance of this claim in Dr Cohen’s name was a patent abuse of process. He did not retain Oldham Naidoo to act on his behalf and its maintenance was without his authority. Whilst not determinative, it is a relevant consideration.
Second, and this probably goes without saying, Dr Cohen has not sought to ratify the proceeding. It remains an unauthorised proceeding.
Third, there is no-one prepared to take on the role of representative plaintiff. Not only in the space of eight years has no other person emerged who will volunteer to be the representative plaintiff, but there is also the fact that no discrete claim was issued by any group member prior to the expiry of the limitation period (putting to one side the effect of s 33ZE). It is unlikely in the extreme that any potential plaintiff was deterred from this course by reason of this proceeding, as it was issued close to midnight of the expiration of the limitation period and served after midnight. This, in my view, tells significantly in favour of the proposition that there is no one prepared to come forward and shoulder the burden. But for the actions for Mr Oldham in issuing this proceeding (without authority from any person affected by the fire), in all likelihood this claim would never have seen the light of day.
Fourth, there is the reality of the prosecution of class actions in this country: the driving forces behind group proceedings are lawyers or litigation funders. Generally, as I noted in Matthews (Ruling No 1), this is necessary because of the size, costs and complexity of such claims[20] – here Mr Oldham who issued the proceeding without authority, was the driver. He was unable to procure a plaintiff prepared to take on the task. The two potential candidates who have been identified are Dr Cohen and Mr Arnold. Dr Cohen was added without his knowledge and will not take on the job. Mr Arnold, after reflection, is a non-starter.
[20]Matthews No 1 [120]-[123].
I think it fair to surmise that absent a litigation funder or a deep-pocketed lawyer who will carry the costs of the group, there is little or no prospect of finding a willing plaintiff – this is particularly so given the potential individual costs liability of the representative plaintiff under s 33ZD.
Fifth, I am not persuaded, given the history of this matter, that even with appropriate notice a lurking and hitherto silent group member will spring out of the alpine areas of Northern Victoria and take on the role of representative plaintiff. One of the reasons for the adjournment on 18 February 2011 was to enable Oldham Naidoo to contact group members to determine if any wished to be represented at any subsequent hearing. No one has yet surfaced. There is no evidence of any person presently sufficiently interested to take on the role – notwithstanding that this proceeding has attracted a reasonable amount of publicity (or notoriety). I do not think that the analogy with the want of prosecution provision (s 33X(1)(c)) is persuasive given the history of this proceeding.
Sixth, I regard the risk of there being, in a real sense, an infringement on the rights of any group member as very low. True it is that each member had at 24 December 2008 a subsisting right (almost but not statute barred) against the defendants in respect of any loss as a result of the fire. However that right, as events have shown, is one which no one seems willing to exercise – other than, it can be inferred, perhaps to remain a member of the group without costs exposure.
Seventh, whilst it would be unwise of me to express any view about the prospects of success of this proceeding, it is clear given its history and the issues that are likely to be raised, that the prosecution of this claim will be tortuous and lengthy. Inevitably, the claim will be subject to further applications, which at the least, I suspect, would result in the group being reduced in description or divided into sub-groups. At worst there is a risk that the claim would be “decertified” as a group proceeding as a result of an application by the defendants that it does not conform with the requirements of s 33C.
Finally, this case without a representative plaintiff has vexed the defendants for over two years – with numerous amendments to the statement of claim and interlocutory applications (virtually all of which have resulted in orders for costs against “the plaintiff”). It has been, I think, truly burdensome, and there is no genuine prospect of it being prosecuted adequately in the future.
In summary and to apply the words of the High Court I think that this proceeding has “become seriously and unfairly burdensome, prejudicial or damaging”.[21] It is not in the interests of justice to let it continue as though on autopilot. Enough is enough.
[21]Jeffrey and Katavskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75 [28].
Conclusion
The proceeding should be dismissed as an abuse of process.
I will allow the defendants and Oldham Naidoo to, within 14 days, file submissions as to appropriate orders as to costs.
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