Finch v Arnold Thomas and Becker Pty Ltd
[2014] VSCA 45
•18 March 2014
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2013 0188 | |
| JO-ANNE FINCH | Applicant |
| v | |
| ARNOLD THOMAS AND BECKER PTY LTD | Respondent |
JUDGES: | BEACH JA and SIFRIS AJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 18 March 2014 | |
DATE OF JUDGMENT: | 18 March 2014 | |
MEDIUM NEUTRAL CITATION: | [2014] VSCA 45 | |
JUDGMENT APPEALED FROM: | Arnold Thomas & Becker Pty Ltd v Jo-Anne Finch Unreported, County Court of Victoria, Judge Lacava, 29 November 2013 | |
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PRACTICE AND PROCEDURE – Application for leave to appeal – Solicitors – Breach of retainer – Negligence – Costs – Immunity from suit – Extent of immunity – Pleadings – Summary judgment – Decision not attended with doubt – No injustice in leaving decision unreversed – Application dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | In person | |
| For the Respondent | Mr D C Harrison | Arnold Thomas & Becker Lawyers |
BEACH JA
SIFRIS AJA:
Introduction
The respondent, Arnold Thomas & Becker Pty Ltd is an incorporated legal practice. The applicant, Jo-Anne Finch, is a former client of the respondent. Up until 4 November 2009, the respondent acted for the applicant in a proceeding brought by the applicant, under the Equal Opportunity Act 1995, at the Victorian Civil and Administrative Tribunal (‘VCAT’). The applicant and the respondent parted ways on 4 November 2009 in circumstances which are currently a matter of dispute between the parties.
Subsequent to 4 November 2009, the applicant retained a different firm of solicitors to prosecute her VCAT proceeding. In May 2010, the VCAT proceeding came on for trial. After a trial lasting some 20 days, the applicant’s proceeding was dismissed.[1]
[1]Finch v The Heat Group Pty Ltd (Anti-Discrimination) [2010] VCAT 802.
On 5 October 2010, this Court[2] dismissed the applicant’s application for leave to appeal against VCAT’s orders dismissing the VCAT proceeding.[3] Subsequently, the High Court dismissed the applicant’s application for special leave to appeal against the orders of the Court of Appeal.[4]
[2]Warren CJ and Mandie JA.
[3]Finch v The Heat Group Pty Ltd & Ors [2010] VSCA 256.
[4]Finch v The Heat Group Pty Ltd & Ors [2011] HCASL 117.
On 31 January 2011, VCAT made a costs order against the applicant in relation to the costs of the VCAT proceeding. On 8 April 2011, this Court[5] dismissed an application by the applicant for leave to appeal this costs order. Subsequently, the High Court dismissed an application by the applicant for special leave to appeal against the orders of the Court of Appeal.[6]
[5]Tate JA and Hargrave AJA.
[6]Finch v The Heat Group Pty Ltd & Ors [2011] HCASL 139.
At all relevant times up to the termination of the respondent’s retainer, the respondent acted for the applicant pursuant to a conditional costs agreement and disclosure statement. A dispute has arisen, and is currently on foot, between the parties as to whether the respondent is entitled to charge the applicant in respect of legal work done by the respondent while the respondent was acting for the applicant.
The present proceeding
In March 2011, the respondent commenced a proceeding in the Magistrates’ Court against the applicant, seeking to recover the sum of $72,049.97 in respect of legal fees and disbursements. The respondent served the Magistrates’ Court complaint on the applicant under cover of a letter that provided:
We advise we have $18,000 sitting in trust and you are required to pay the difference being the sum of $54,049.97.
The applicant filed a defence, then an amended defence, then a counterclaim and finally an amended counterclaim in the Magistrates’ Court proceeding. In those documents, the applicant has denied that the respondent is entitled to charge her any fees, contending that the respondent acted on a no win no fee basis. Additionally, the applicant makes allegations that the respondent was negligent and in breach of the retainer agreement between the parties. The applicant contends that these breaches of duty and retainer have caused the applicant to suffer loss and damage. Further, in addition to contending that she has no liability to the respondent, the applicant claims to be entitled to a substantial amount in damages – expressed in the amended counterclaim as being ‘in excess of $403,480’. The damages claimed by the applicant are particularised under five headings, to which we will refer below.
As a result of the applicant’s counterclaim exceeding the jurisdictional limit of the Magistrates’ Court, the proceeding was transferred to the County Court.
On 2 September 2013, the respondent issued a summons seeking to have the applicant’s counterclaim stuck out on the basis that the counterclaim does not disclose a cause of action; is scandalous, frivolous and vexatious; may prejudice, embarrass or delay the fair trial of the proceeding; and is an abuse of process. In substance, the respondent’s point was that the applicant’s counterclaim did not disclose a cause of action because the respondent was entitled to rely upon the immunity described by the High Court in D’Orta-Ekenaike v Victoria Legal Aid & Anor.[7]
[7](2005) 223 CLR 1.
On 13 September 2013, the applicant issued a summons in which, essentially, the applicant sought summary dismissal of the respondent’s claim, the return of the amount of $18,000 paid by the applicant to the respondent, and a stay of the counterclaim ‘with the [applicant’s] rights still protected to take action against [the respondent] in future relating to matters contained in the [applicant’s] counterclaim’.
On 15 November 2013, the applicant issued a further summons seeking, in substance, the same relief as that sought in the applicant’s first summons together with some additional orders, the purpose of which would appear to have been the summary resolution of all matters in dispute between the parties, in favour of the applicant.
On 7 November 2013, the respondent filed and served an amended summons in which it added a claim for summary judgment in favour of the respondent on the applicant’s amended counterclaim. The application for summary judgment was made pursuant to s 63 of the Civil Procedure Act 2010 and Rules 23.01 and 23.03 of the County Court Civil Procedure Rules 2008.
On 22 November 2013, the applicant’s two summonses and the respondent’s amended summons came on for hearing in the County Court before Judge Lacava. On 29 November 2013, his Honour made orders as follows:
1.The [applicant’s] summonses dated 13 September 2013 and 15 November 2013 are dismissed.
2.On the [respondent’s] amended summons, the particulars to paragraph 8 of the amended counterclaim … are struck out. Otherwise the amended summons is adjourned for further hearing on 16 December 2013.
3.The [applicant] to file and serve any proposed further amended counterclaim on or before 4 pm on 13 December 2013.
4.The proceeding is adjourned for directions on Monday 16 December … at which time a decision [will be made] whether any proposed further amended counterclaim will be permitted to stand.
5.The [applicant] pay the [respondent’s] costs of and incidental to each of the summonses issued on 13 September 2013 and 15 November 2013 … .
6.Reserve the question of costs of the [respondent’s] summons dated 2 September 2013 and the amended summons dated 7 November 2013.
7.The trial date of 19 February 2014 is confirmed.
Notwithstanding the orders made by the judge, the applicant did not file or serve any proposed further amended counterclaim. Instead, on 13 December 2013, the applicant issued an application for leave to appeal Judge Lacava’s orders. The applicant’s proposed notice of appeal contains some fifty grounds, many of which are opaque – if not plainly unintelligible.
The judge’s reasons
Having set out background matters, his Honour turned to the specifics of the applicant’s counterclaim. His Honour noted that the applicant’s counterclaim of $403,480 was particularised under paragraph 8 of the amended counterclaim under five headings as follows:
(i) Legal fees $108,000.
(ii) Unfavourable costs orders made against [the applicant] $102,000.
(iii) Loss of opportunity $153,480.
(iv) Loss of happiness in life $20,000.
(v) Public humiliation $20,000.
The ‘legal fees’ claimed by the applicant relate to fees incurred by the applicant after the respondent ceased acting for her. The material discloses that the applicant was unable to retain new lawyers for the VCAT proceeding who were prepared to act on a no win no fee basis. The amount claimed by the applicant in respect of ‘unfavourable costs orders’ relates to orders made at VCAT and in subsequent applications in which the applicant failed to obtain the relief she sought.
The judge noted the respondent’s argument that the applicant’s amended counterclaim must fail because of the existence of the immunity discussed by the High Court in D’Orta-Ekenaike v Victoria Legal Aid & Anor[8] and s 7.2.11 of the Legal Profession Act 2004. His Honour then referred to a passage in the judgment of the plurality in D’Orta-Ekenaike as follows:
No sufficient reason is proffered for reconsidering the Court's decision, in Giannarelli, that an advocate is immune from suit whether for negligence or otherwise in the conduct of a case in court. Should the boundary of the operation of the immunity be redrawn?
Again, we consider that no sufficient reason is proffered for doing so. In particular, there is no reason to depart from the test described in Giannarelli as work done in court or ‘work done out of court which leads to a decision affecting the conduct of the case in court’ or, as the latter class of case was described in the Explanatory Memorandum for the Bill that became the Practice Act, ‘work intimately connected with’ work in a court. (We do not consider the two statements of the test differ in any significant way.)[9]
[8](2005) 223 CLR 1.
[9]Ibid [85]-[86] (citation omitted).
The judge then went on:
22In moving for the orders sought in the plaintiff’s amended summons Mr Harrison argued that the defendant’s counterclaim had no real prospects of success and should be dismissed. Concentrating on the particulars of damage Mr Harrison argued that when analysed they are all damages asserted to flow not from any negligence out of court by the plaintiff but directly from the unsuccessful result that the defendant obtained in the VCAT proceeding. There is merit in the argument especially as it relates to the claims for damages for ‘Unfavourable costs orders made against the defendant $102,000.00’ and ‘Loss of Opportunity $153,480.00’. Each of those heads of damage are dependent upon what happened in the hearing at VCAT and the outcome of the hearing. To litigate those claims in this court would be to re-litigate the VCAT proceeding which is the very vice that justifies the existence of the advocates immunity. This is especially so insofar as the claim for damages relates to the costs orders in the VCAT proceeding. See, D’Orta-Ekenaike at paragraph 83.
23For these reasons the particulars of damage claimed by the defendant in sub-paragraphs (i) to (iii) inclusive of paragraph 8 of the amended counterclaim should be struck out.
24The claims for damages for ‘Loss of Happiness in Life $20,000.00’ and ‘Public Humiliation $20,000.00’ are not recognised heads of damages under the law of this State. For that reason they too should be struck out.
25The problem with the defendants’s pleading in the amended counterclaim is that the pleaded claims for damages do not result from the negligence as particularised in the pleading. It may be that the defendant can properly plead a claim for limited damages (for example her claim for $18,000 costs paid to the plaintiff) that results from the negligence alleged by her and that particular negligence is not immune from suit because it is not ‘work done out of court which leads to a decision affecting the conduct of the case in court’. Whether or not that can be done remains to be seen.
26I have formed the strong view that although the defendant’s amended counterclaim is best described as weak, it is not fanciful and may succeed to some limited extent dependent upon how it is amended and how the evidence comes out at trial. However, it is clear to me that the defendant’s arguable counterclaim (if any) is limited and the amount of damages is nowhere near that which is presently claimed. The maximum amount of any counterclaim in my opinion is well within the lower scale level of the Magistrates’ Court from whence this proceeding came.
27Pursuant to section 64(b) of the Civil Procedure Act 2010 (Vic) I am of the view that the dispute is of such a nature that only a full hearing on the merits is appropriate. The defendant will have to further amend her amended counterclaim. She cannot re-plead the particulars to paragraph 8 in the way it is presently drafted and those particulars are struck out.
28As to each of the defendant’s summonses it cannot be argued that the plaintiff’s claim has no reasonable prospects of success or is fanciful. The defendant is not entitled to judgment against the plaintiff in default of defence to the amended counterclaim or on a summary basis. The amended counterclaim as presently framed is poorly drawn and not capable of being properly pleaded to. Each of the defendant’s summonses is dismissed.[10]
[10]Arnold Thomas & Becker v Finch, Unreported County Court, Judge Lacava, delivered 29 November 2013 (‘Reasons’) [22]-[28].
The judge then made the orders to which we have already referred.
Analysis
In her amended counterclaim, the applicant gives 25 particulars of the respondent’s alleged negligence and breach of retainer. Many, if not all of these particulars, when coupled with the claims for damages identified in paragraphs (i), (ii) and (iii) under paragraph 8 of the amended counterclaim seek to dispute the correctness of VCAT’s decision to dismiss the VCAT proceeding. Such a course was (and is), as the judge said, not open to the applicant. In our view, the judge was plainly correct to strike out paragraphs (i), (ii) and (iii) under paragraph 8 of the applicant’s amended counterclaim.
Similarly, we see no error in the judge’s decision to strike out paragraphs (iv) and (v) on the basis that ‘Loss of Happiness in Life’ and ‘Public Humiliation’ are not recognised heads of damages. However, that is not to say that there may not be some cause of action open to the applicant to plead against the respondent. There are, as the cases show, circumstances where a claim for breach of contract or a claim in negligence might give rise to an entitlement to damages for loss of reputation or distress or inconvenience.[11]
[11]See generally, Baltic Shipping Co v Dillon (1993) 176 CLR 344; Walmsley v Cosentino [2001] NSWCA 403; and Leitch v Reynolds [2005] NSWCA 259, [114].
The judge did not summarily dismiss the applicant’s counterclaim: he struck out five particulars of the applicant’s claim for damages. The decision to strike out part of the applicant’s pleading was an interlocutory decision on a matter of practice and procedure. There is, as has been said many times before, a high hurdle facing an applicant seeking leave to appeal from an interlocutory decision on a question of practice and procedure. It is sufficient for us to say on this application that, far from any error being shown in relation to the judge’s orders, in our view his Honour’s orders were plainly correct. Further, there is, in any event, no injustice in leaving the orders unreversed. The applicant was given leave to file and serve a proposed further amended counterclaim. In that document, the applicant may properly plead any claims she has for anxiety or distress or loss of reputation, provided that the applicant sets out the material facts giving rise to the cause of action for which these damages might be claimed, and provided that such pleading conforms with authority.
As to the D’Orta-Ekenaike immunity, the applicant will not be permitted to plead any cause of action which calls into correctness the dismissal of the VCAT proceeding or the costs orders made against her thereafter. However, it may be open to the applicant to plead causes of action against the respondent which could be argued to not be caught by the immunity because the applicant does not seek to challenge the correctness of a previous decision. The possibility of such a case being open was recognised by Lasry J in Francis v Bunnett.[12]
[12](2007) 18 VR 98.
In Francis v Bunnett, the plaintiff sued her former solicitor for damages for breach of retainer and negligence in connection with the conduct of a County Court proceeding. Central to the plaintiff’s case was an allegation that the defendant had consented to the settlement of the proceeding for a fraction of what might have been recovered. A Master of this Court stayed the plaintiff’s negligence claim on the basis that the defendant was protected by advocates’ immunity. Lasry J allowed the plaintiff’s appeal, accepting that it was at least arguable that where there was no judgment in underlying litigation to be called into question, the basis for advocates’ immunity did not exist. Of considerable importance in his Honour’s reasoning was the proposition in D’Orta-Ekenaike that the central justification for advocates’ immunity is the undesirability of permitting parties to re-litigate matters which have already been judicially determined: the argument being that there is no advocates’ immunity in cases where a plaintiff does not seek to call into question the correctness of an earlier judgment. This issue, it must be said, is not free from doubt.[13]
[13]See the judgment of Cavanough J in MM&R Pty Ltd v Grills & Ors [2007] VSC 528 (delivered on the same day as the judgment in Francis v Bunnett), [34]-[35] and Goddard Elliott v Fritsch [2012] VSC 87, [800] (Bell J). See further, Gesah v Ross & Ors [2013] VSC 165 (Beach J). See also Foster James Pty Ltd v Dalton (2010) 28 VR 204, 209 [30] (Ferguson J).
So far as the applicant’s summonses are concerned, we see no error in the judge’s failure to give the applicant the summary relief she sought. The respondent plainly has an arguable defence to all of the applicant’s claims in her amended counterclaim, including the claim for the return of the $18,000 that the applicant alleges was paid under duress, and in breach of the conditional costs agreement entered into between the parties.
With respect to the dismissal of the applicant’s applications for summary relief, again we see no error in the judge’s failure to give the applicant the relief she sought in her summonses. The respondent is entitled to a trial of the various issues put in contest by the applicant. This morning the applicant expressed concern that the dismissal of her applications by the judge would give rise to an estoppel preventing her from maintaining the claims in respect of which she sought summary relief at trial. However, the mere dismissal of an interlocutory application seeking summary relief does not pose any impediment to a party from litigating the subject of that application at trial.
Conclusion
The orders of Judge Lacava made on 29 November 2013 are not attended with doubt. Further, there is in any event no injustice in leaving them unreversed. The applicant’s summons filed on 13 December 2013 must be dismissed.
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