Garrett v Cahill
[2015] VSC 572
•20 OCTOBER 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROFESSIONAL LIABILITY LIST
S CI 2015 01232
| ANDREW MORTON GARRETT | Plaintiff |
| v | |
| FRANCIS CAHILL | First Defendant |
| and | |
| ALTIUS PARTNERS PTY LTD | Second Defendant |
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JUDGE: | RIORDAN J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 5 OCTOBER 2015 |
DATE OF JUDGMENT: | 20 OCTOBER 2015 |
CASE MAY BE CITED AS: | GARRETT v CAHILL |
MEDIUM NEUTRAL CITATION: | [2015] VSC 572 |
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BANKRUPTCY – Stay of pending proceeding commenced by bankrupt – Election by trustee in bankruptcy pursuant to s 60(2) of Bankruptcy Act 1966 (Cth) to discontinue proceeding – Whether action is stayed when party to proceeding, acting as trustee, subsequently becomes bankrupt – Whether an action as defined in s 60(5) of the Bankruptcy Act 1966 (Cth) includes claims alleging conduct which contravenes criminal statutes – Severability of claim against solicitor for failure to prosecute a defamation claim – Claims stayed against defendants except for defamation related claim – Statement of claim struck out with limited leave to re-plead.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | In person | In person |
| For the First and Second Defendants | Mr C Juebner | K&L Gates |
HIS HONOUR:
By a generally indorsed writ filed on 19 March 2015, the plaintiff claims the sums of $310,000 and $4.5 million from the first and second defendants (‘the defendants’) essentially on the basis of alleged breaches of trust.
On 15 May 2015, a sequestration order was made against the estate of the plaintiff in the Federal Circuit Court. Mr Timothy Holden was appointed the sole trustee of the bankrupt estate of the plaintiff.
By letter dated 17 June 2015, Mr Holden elected under s 60(2) of the Bankruptcy Act 1966 (Cth) (‘the Act’) not to continue with this proceeding.
The defendants now seek in substance the following orders, which they contend are consequential upon Mr Holden’s election under s 60(2) of the Act:
(a) the claim against the second defendant be dismissed with costs; and
(b) the plaintiff file and serve a fresh statement of claim pleading the defamation related claim[1] against the first defendant, but no other claims.
[1]See paragraph [31] below.
Background
In summary, the general indorsement contained the following allegations:
(a)Between 11 December 2011 and 14 February 2014, the plaintiff either personally or alternatively as trustee of the Andrew Garrett Family Trust No 4 (‘AGFT 4’) paid to HC Legal Pty Ltd, of which the first defendant was a director and a principal within the meaning of the Legal Profession Act 2004 (Vic), the sum of $310,000 on account of fees.
(b)On 23 February 2014, the first defendant received $4.5 million by way of a GST credit that was intended to be paid to the trustee of the AGFT 4 to satisfy the corresponding GST liability on the running balance account of the AGFT 4.
(c)In breach of trust the first defendant failed to account to the plaintiff for these amounts and the plaintiff claims the sum of $4.81 million as money had and received by the first defendant to the use of the plaintiff.
(d)The second defendant received from the first defendant money that comprised part of the funds referred to in sub-paragraph (c) above, and as a result the plaintiff claims the sum of $4.81 million as money had and received by the second defendant to the use of the plaintiff.
On 19 March 2015, the plaintiff filed a statement of claim in which he seeks the following orders and declarations:
(a)That an order is made that the evidence sought to be relied upon by the plaintiff that was not available in the court below is adduced as evidence in this proceeding.
(b)That a declaration is made that the defendant traded HC Legal Pty Ltd (In Liquidation) (Controller Appointed) and HC Legal Services Pty Ltd (In Liquidation) while insolvent in breach of s 588G of the Corporations Act 2001 (Cth).
(c)That leave is granted to the plaintiff pursuant to s 588M of the Corporations Act 2001 (Cth) to sue the defendant in his personal capacity for the amounts of the Vendor Finance Loans and/or in the alternative the face value of the invoices issued for the sale of [r]ights to HC Legal Pty Ltd (In Liquidation) (Controller Appointed), Dynamic Legal Pty Ltd (Deregistered) and HC Legal Services Pty Ltd (In Liquidation).
(d)That an order is made that the defendant pays all moneys claimed in this statement of claim to the plaintiff pursuant to s 588M of the Corporations Act 2001 (Cth).
(e)That a [d]eclaration is made that the defendant is [a]bsolutely [l]iable to the plaintiff for all moneys claimed in accordance with s 592(6A) of the [Corporations Act 2001 (Cth)] and s 6.2 of the [Criminal Code Act 1995 (Cth)].
(f)That a [d]eclaration is made that the Performance Security dated 11th and the Supplementary Deed dated 11th July 2014 are binding between the Trustee of AGFT 4 and HC Legal Pty Ltd (In Liquidation) (Controller Appointed).
(g)That an order is made extending time to register the Performance Security dated 11th July 2012 to the 1st of August 2013 pursuant to s 588FM [of the Corporations Act 2001 (Cth)] on just and equitable grounds.
(h)That a [d]eclaration is made that the [a]ppointment of the plaintiff as Controller is effective at law.
(i)That the defendant pay the amount of the Part A Trust Moneys set out in the [p]leadings to me in my capacity as Trustee of the Andrew Garrett Family Trust No 4 being $4,500,000 plus consequential loss and damages.
(j)That the Court makes a declaration that the alleged [t]ax [i]nvoices dated 7th November 2011 and those provided to the plaintiff on the 7th November 2012 are non-genuine documents.
(k)That an order is made that the defendant pays me in my personal capacity the amount of the Part A Trust Money being $310,000 pursuant to the distribution in specie of the claim against the defendant by the trustee of the Andrew Garrett Family Trust No 4 dated 7th November 2014.
(l)That a declaration is made that the payment of the amount of the Bankruptcy Notice by set off on the 6th September 2014 was effective whether by way of set off against moneys owed to the plaintiff in his personal capacity or in his [c]apacity as Managing Controller or in his capacity as [s]ole Trustee of the Andrew Garrett Family Trust No 4.
(m)That an order is made that the defendant pays the amount of the [l]etters of [d]emand issued to him dated 10th and 13th September 2014 to the plaintiff in his capacity as Managing Controller of HC Legal Pty Ltd (In liquidation) (Controller Appointed).
(n)That an order is made that the issued capital of [Altius] Partners Pty Ltd is transferred from the defendant to the plaintiff in his capacity as Trustee of the Andrew Garrett Family Trust No 4 and/or in the alternative that the Contract for Purchase of Business executed between [Altius] Partners Pty Ltd and HC Legal Pty Ltd (In Liquidation) (Controller Appointed) is void and of no effect and that the assets and undertakings subject of the Contract and the business of the second defendant is properly of the Trustee of the Andrew Garrett Family Trust No 4.
(o)That an order is made that any money advanced by the defendant to the second defendant or any other person is trust money and the property of the Trustee of the Andrew Garrett Family Trust No 4.
(p)That a [d]eclaration is made that the [d]efendant has been [p]rofessionally [n]egligent in failing to act as instructed under the [a]greements referred to in the pleadings.
(q)That an order is made that the defendant pay amounts of consequential [l]oss and liquidated, punitive and exemplary damages as this Honourable Court deems fit.
(r)That the Court makes [c]riminal [f]indings as set out in the pleadings which are to be referred by the Registrar of the Court to the Office of the Director of Public Prosecutions.
(s) Costs.
(t) Interest.
(u) Such other orders as this Honourable Court deems fit.
The statement of claim alleges that the plaintiff is or has been the trustee of nine different trusts and is the Managing Controller, pursuant to Part 5.2 of the Corporations Act 2001 (Cth), of two corporations each of which have been trustees of various trusts. The facts, which are pleaded as the basis for the relief sought in the proceeding, are substantially set out chronologically over 29 pages. It is not immediately apparent how, or if, many of the allegations relate to recognised causes of actions or the claimed relief. However, the plaintiff is self-represented and I attempt to summarise the apparently significant allegations as follows:
(a) The first defendant is:
(i) A director and shareholder of HC Legal Services Pty Ltd (‘HC Legal Services’) (In liquidation)(Controller Appointed).
(ii) A director and shareholder of HC Legal Pty Ltd (‘HC Legal’) (In liquidation)(Controller Appointed), which operated an incorporated legal practice until appointment of a liquidator on 26 April 2014.
(iii) The sole director and shareholder of the second defendant, which operates an incorporated legal practice.
(iv) A director and shareholder of Dynamic Legal Pty Ltd, which operated an incorporated legal practice until deregistration on 8 June 2014.
(b) By a Vendor Finance Loan Agreement dated 2 September 2011, Sanctuary Australasia Pty Ltd as trustee for the AGFT 4 agreed to advance $7.5 million to HC Legal Services to fund the purchase price payable under a First Rights Sale Agreement. The First Rights Sale Agreement (dated 2 September 2011) was executed on 14 October 2011 and effected the sale of, what is termed, ‘Legal Services Management Rights’ by Sanctuary Australasia Pty Ltd as trustee of the AGFT 4 to HC Legal Services.
(c)In the first week of October 2011, the plaintiff met with the first defendant and his partner, Mr Peter Hambros, at a meeting convened by a Mr Robert Nowak, to discuss possible claims against the following:
(i) National Australia Bank Ltd;
(ii) Fosters Wine Estates Ltd;
(iii) Minter Ellison, for negligence;
(iv) Lancione Partners, for negligence;
(v) the Commissioner of Taxation, in respect of various matters;
(vi) Mr Peter Macks and Mr Stephen Duncan, as trustees in bankruptcy, with respect to various matters;
(vii) Mr Bruce McNab, for negligence; and
(viii) Mr Marcus Denning, for defamation.
The setting aside of the judgment of R v Garrett (DCCRN-2007-742) was also discussed.
By letter dated 30 November 2011 to the plaintiff, Mr Hambros advised that unless $20,000 was received in advance, HC Legal Services would not be in a position to act for the plaintiff.
On 22 December 2011, a further Heads of Agreement (referred to in the statement of claim as the ‘Second Rights Sale Agreement’) was executed between Holy Grail Hospitality Pty Ltd as trustee of the AGFT 4 and the first defendant in his capacity as the sole director and secretary of HC Legal. The Second Rights Sale Agreement was further documented by a Rights Purchase Deed and a Vendor Finance Agreement dated 31 December 2011. Effectively under these agreements $45 million plus GST was advanced to HC Legal by Holy Grail Hospitality Pty Ltd to fund the purchase price of the rights, which loan was to be repaid out of EBIT share over a 10 year term.
On 23 December 2011, HC Legal Services was placed in liquidation by the first defendant.
On 23 December 2011, the first defendant executed a summary of affairs of OenoViva (Australia and New Zealand) Pty Ltd (‘OenoViva’) (another former trustee of AGFT 4) and did not declare the liability to AGFT 4 of $8.25 million.
On 16 January 2012, OenoViva as trustee of AGFT 4, paid $25,000 into the trust account of HC Legal.
On 24 January 2012, Mr Hambros provided the plaintiff with a copy of the draft costs disclosure agreement between Simon Wilson QC and Hambros & Cahill Lawyers setting out that costs of $2,310 had been incurred by the defendant with respect to the defamation proceeding being brought against Mr Denning.
On 8 February 2012, OenoViva as trustee of AGFT 4 paid $10,000 into the trust account of HC Legal.
On 13 February 2012,[2] $250,000 was paid by OenoViva as trustee for AGFT 4 to the trust account of HC Legal.
[2]Paragraph 44 of the statement of claim says 13 February 2024 but I have presumed that the year was 2012 on the basis of where it sits in the chronology.
On 14 February 2012, the first defendant and Mr Hambros each withdrew $25,000 of the money which had been paid into the trust account of HC Legal for their own personal benefit.
On 17 February 2012, the ‘Legal Management Services Rights’ which related to OenoViva Business Systems were sold to Dynamic Legal Services Pty Ltd in its capacity as trustee of what is now known as the OenoViva (Australia and New Zealand) Trust. This is referred to in the statement of claim as the ‘Third Rights Sale Agreement’.
Under the Third Rights Sale Agreement, $75 million plus GST was advanced to Dynamic Legal Services Pty Ltd under a Vendor Finance Loan Agreement to fund the purchase price of the rights sale.
On 23 February 2012,[3] the Commissioner of Taxation released a GST credit of $4,491,954. It is alleged that this was trust money because it was the intention of the parties that $4.5 million would be paid to AGFT 4 to enable it to meet its GST liability arising under the Second Rights Sale Agreement.
[3]Paragraph 56 of the statement of claim says 23 February 2014 but I have presumed that the year was 2012 on the basis of where it sits in the chronology.
On 1 March 2012, the Commissioner of Taxation froze the bank accounts of HC Legal.
By email dated 22 April 2012 to Mr Hambros, the plaintiff sought an update on various matters including the claims against the NAB, Minter Ellison, Lancione Partners and the defamation action against Mr Denning.
On 11 July 2012,[4] a Supplementary Deed and Performance Security were executed.
[4]Paragraph 71 of the statement of claim says 11 July 2011 but I have presumed that the year was 2012 on the basis of where it sits in the chronology.
On 7 November 2012, the plaintiff received a number of invoices from the first defendant and Mr Hambros, the majority of which were dated from 1 February 2012.
On 27 March 2013, the second defendant was incorporated as a ‘phoenix entity’.
On 16 April 2013, HC Legal allegedly entered into a contract to transfer its assets and undertakings to the second defendant.
On 26 April 2013, HC Legal was placed in liquidation following the decision of HC Legal Pty Ltd v Deputy Commissioner of Taxation[5] in the Federal Court.
[5][2013] FCA 45 (Murphy J).
On 31 March 2014, the Legal Services Commissioner made a decision with respect to a complaint made by the plaintiff, finding that $305,000 of money paid into trust accounts controlled by the defendants was not in fact trust money.
On 14 May 2014, the plaintiff lodged a claim against the fidelity fund to recover the moneys paid into AGFT 4 of $4,810,000.
On 24 July 2014, a bankruptcy notice was served on the plaintiff.
The application
Subject to one concession (set out in the following paragraph), the defendants contend that this action was stayed pursuant to s 60 of the Act and is now discontinued by reason of the election of the trustee in bankruptcy. The relevant provisions of s 60 are as follows:
(2)An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.
(3)If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action.
(4)Notwithstanding anything contained in this section, a bankrupt may continue, in his or her own name, an action commenced by him or her before he or she became a bankrupt in respect of:
(a)any personal injury or wrong done to the bankrupt, his or her spouse or de facto partner or a member of his or her family; or
(b)the death of his or her spouse or de facto partner or of a member of his or her family.
…
(5)In this section, action means any civil proceeding, whether at law or in equity.
The defendants concede that to the extent that the plaintiff claims damages arising from the negligence of the first defendant in its failure to properly prosecute the defamation claim (‘the defamation related claim’), the plaintiff is not precluded from continuing such a claim because it falls within the exception in s 60(4) of the Act.[6]
[6]See Moss v Eaglestone (2011) 83 NSWLR 476.
Plaintiff’s submissions
The plaintiff contends that s 60(2) of the Act does not operate to stay the claims for the following reasons:
(a)The claims are brought by the plaintiff in his capacity as a trustee.
(b)The claims allege conduct which would constitute criminal offences. As a result, the action could be considered to be a private prosecution and therefore would not come within the definition of ‘action’ under s 60(5) of the Act.
(c)The Supreme Court has the inherent jurisdiction to supervise officers of the Court; and the allegations of misconduct give rise to a duty on the Court to investigate such conduct for the protection of the public.
(d)The claims give rise to questions about the proper separation of powers under the Constitution Act 1934 (SA) and the Constitution Act 1975 (Vic) and whether that separation of powers is in conflict with the International Covenant on Civil and Political Rights;[7] Schedule 2 of the Human Rights and Equal Opportunity Act 1986 (Cth) and the Commonwealth of Australia Constitution Act 1900 (UK), and its interpretation under s 109 of the Constitution.
[7]International Covenant on Civil and Political Rights, opened for signature 16 December 1966, 999 UNTS 171 (entered into force 23 March 1976).
Section 60(2) applies to bankrupts acting as trustee
In Deputy Commissioner of Taxation v Garrett,[8] the plaintiff similarly submitted that claims brought by a bankrupt in his or her capacity as a trustee were not affected by s 60(2) of the Act. I rejected that submission and gave the following reasons:
[8][2015] VSC 347.
34The proceeds of a claim brought by a bankrupt on behalf of a trust are not property divisible amongst creditors pursuant to s 116 of the Act and such proceeds do not vest in the trustee pursuant to s 58 of the Act. However, in Re Lofthouse, Gray J explained why, nonetheless, s 60(2) applied to stay claims brought by a bankrupt in the capacity as trustee, stating:
Section 60 is not the provision that vests the right of action in the trustee in bankruptcy. It has a different, and in some respects wider, role. It operates to stay pending proceedings unless the trustee elects to prosecute or discontinue them. It also provides the machinery for a defendant or other party to a pending proceeding to force the making of an election. It is directed towards the protection of the bankrupt's creditors, by preventing the unnecessary dissipation of the assets of the estate in fruitless litigation. In my view, s 60 also has the purpose of protecting a defendant or other party to a pending proceeding. A defendant or other party to a pending proceeding suffers an immediate detriment upon the plaintiff becoming a bankrupt. The detriment is that if the defendant or other party should be successful in the proceeding, and should obtain an order that the plaintiff pay the costs of the proceeding, the order will be effectively unenforceable because of the bankruptcy. The rationale behind s 60(2) and (3) is therefore, at least in part, to protect those whom the bankrupt has been suing. Such protection would be lost if the word "action" in s 60 were to be construed as excluding a proceeding in which the bankrupt has sued as a trustee for someone else.
In my view, s 60 has been enacted deliberately as a broad provision, so as to encompass any proceeding brought by a bankrupt before bankruptcy. The exceptions have been expressed quite narrowly. The intention is that, once a bankruptcy occurs, no further costs should be incurred in a proceeding unless the trustee in bankruptcy makes an election to continue the proceeding. If such an election is made, the trustee in bankruptcy will ordinarily become substituted as plaintiff in the pending proceeding, in the capacity of trustee in bankruptcy for the former plaintiff. The trustee in bankruptcy will thereby become liable for the costs of the proceeding in the event that it is unsuccessful and a costs order is made in favour of the defendant in the proceeding or some other party to it. The trustee in bankruptcy may be entitled to an indemnity in respect of those costs out of the bankrupt estate, as expenses of the administration of the estate, to the extent to which the estate has assets. The trustee in bankruptcy will obviously consider whether continuing to prosecute the proceeding will be likely to have any benefit to the estate of the bankrupt, and therefore to the bankrupt's creditors.[9]
[9](2001) 107 FCR 151, 157-8 [19]-[20].
35The conclusion of Gray J in Re Lofthouse was accepted by Edelman J in Duckworth v Water Corporation.[10] In that decision, his Honour:
(a)articulated seven reasons in support of the decision in Re Lofthouse;[11]
(b)considered and rejected the doubts cast upon the decision in Re Lofthouse by the Administrative Appeals Tribunal;[12] and
(c)explained why the history of s 60(2) does not contradict the interpretation adopted in Re Lofthouse.[13]
36Further, although this issue was not squarely raised in Owens v Comlaw (No 62) Pty Ltd, Ashley JA, with whom Redlich JA agreed, quoted with approval the passage from Re Lofthouse I have cited in paragraph [34] above.[14] Accordingly, I do not consider the fact that the defendant brings the Application as a trustee avoids the operation of s 60(2) of the Act.
[10][2012] WASC 30.
[11]Ibid [32]-[48].
[12]See discussion of Re Singh and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 720 in Duckworth v Water Corporation [2012] WASC 30 [49]-[59] (Edelman J).
[13]Ibid [65]-[82].
[14](2006) VSCA 151 [40].
On this application, the plaintiff did not challenge this ruling but submitted that the interpretation of s 60(2) should be that, on the trustee electing not to continue the action, the right to continue the action should revert to the bankrupt. I reject this submission for the following reasons:
(a)In my opinion, the plain reading of ss 60(2) & (3) is that the trustee is empowered to elect whether to prosecute or discontinue the action; and there is no room to interpret the subsections as contemplating the continuation of the discontinued action by the bankrupt.
(b)Section 60(4) specifies what actions may be continued by a bankrupt and does not contemplate that a bankrupt may continue an action which the trustee has elected to discontinue.
(c)The interpretation, as submitted by the plaintiff, is contrary to the legislative intention as explained by Gray J in Re Lofthouse being ‘The intention is that, once a bankruptcy occurs, no further costs should be incurred in a proceeding unless the trustee in bankruptcy makes an election to continue the proceeding’.[15]
[15](2001) 107 FCR 151, 158 [20].
The plaintiff argued that the reasoning in Deputy Commissioner of Taxation v Garrett[16] did not apply because the ‘action’ in that case was an appeal, or at least an application for leave to appeal. I reject this submission. In Deputy Commissioner of Taxation v Garrett consideration was given to whether an application for leave to appeal was an ‘action’ within the meaning of s 60(2).[17] However, the fact that the present claim is brought by writ cannot be the basis for distinguishing the reasoning in Deputy Commissioner of Taxation v Garrett that an action brought by a bankrupt in the capacity as a trustee is subject to s 60(2) of the Act.
[16][2015] VSC 347.
[17]Ibid [19]-[20].
The alleged conduct could constitute criminal offences
The statement of claim alleges that the defendant obtained property by deception and a financial advantage by deception and refers to breaches of various provisions of the Crimes Act 1958 (Vic), Crimes Act 1914 (Cth) and the Criminal Code Act 1995 (Cth). However, the fact that a civil claim brought by writ in the Common Law Division of this Court under the Supreme Court (General Civil Procedure) Rules 2005 (Vic) contains allegations that, if substantiated, could also constitute criminal conduct, does not mean that the action is not a civil claim within the meaning of s 60(5) of the Act or otherwise mean that the action is not subject to s 60(2) of the Act. The plaintiff’s further submission that, by reason of the allegations of contravention of criminal statutes, the action could be considered to be a private prosecution, and therefore not come within the definition of action under s 60(5), must be rejected. The proceeding has not been commenced in accordance with the Criminal Procedure Act 2009 (Vic) and is not a criminal proceeding.
Duty of the court to investigate the conduct of officers of the court
The plaintiff submitted that the Supreme Court’s inherent jurisdiction to supervise solicitors and allegations of misconduct made against solicitors gives rise to a duty on the Court to investigate the conduct for the protection of the public. The plaintiff’s submission was that ‘this court is involved in the administration of justice and administrative law applies to the process that the court applies to its operation, then the obligation to enquire is inherent to the application’.
The plaintiff contended that this obligation to enquire into the conduct of solicitors, at least on a tribunal, was supported by a decision of the Full Court of the Supreme Court of South Australia in Legal Practitioners Conduct Board v Figwer.[18] In Figwer, the Full Court considered an application by the Legal Practitioners Conduct Board to strike off the name of a solicitor from the Roll of Legal Practitioners. At the invitation of the Board, and unopposed by the practitioner, the Court adopted the findings of unprofessional conduct and unsatisfactory conduct made by the Legal Practitioners Disciplinary Tribunal (‘the Tribunal’). The issue before the court was whether the unprofessional conduct, as found by the Tribunal, was of such a character as to require the practitioner’s name to be struck from the Roll. In determining this issue the court emphasised the public interest involved in the court’s exercise of its supervisory function. It identified that there is a public interest in:
(a) the protection of the public from a practitioner whose past conduct demonstrates that they lacked the qualities of character and competence essential to the practice of the profession of law; and
(b) maintenance of public confidence that professional standards are being upheld and with that, the maintenance of the public confidence in the mechanisms for supervising professional conduct.
[18][2013] SASCFC 115.
The court noted that it sat at the apex of the structure established by the Parliament for that purpose.[19] In the circumstances the court determined that to maintain the public confidence in the proper regulation of the legal profession and the administration of justice ‘nothing less than striking off the practitioner’s name from the Roll sufficed’.[20] However, I am unable to find any reference to a duty on either the Tribunal or the Court to enquire into allegations of unprofessional conduct by a legal practitioner.
[19]Ibid [14].
[20]Ibid [15].
It may be accepted that the Court has an inherent jurisdiction to supervise the conduct of legal practitioners; and it may be accepted that the Court could, in appropriate cases, act on its own motion. However, the submission that, because the pleadings in the action include allegations of impropriety by a solicitor, section 60 of the Act does not apply to the action must be rejected for the following reasons:
(a)The proposition that the Court had a duty to investigate any allegations of professional conduct was made without authority.
(b)The provisions of ss 60(2) & (3) are mandatory and would not entitle a court to disregard the sub-sections on the basis that it proposed to carry out an investigation of the allegations.
The action raises constitutional and human rights issues
The plaintiff submits that the following serious questions arise in this proceeding:
Whether there are questions arising as to the proper separation of powers under the Constitution Act 1934 (SA) and the Constitution Act 1975 (Vic) however that separation of Powers is in conflict with the International Covenant on Civil and Political Rights;Schedule 2 of the Human Rights and Equal Opportunity Act 1986 (Cth) and the Commonwealth of Australia Constitution Act 1900 (UK) and its interpretation under s 109 [of the Constitution].
I reject this submission for the same reasons as the previous submission. Whether there are serious questions that arise in the public interest cannot affect the application of ss 60(2) & (3) because the Court has no discretion as to the application of those sub-sections. Further, as the plaintiff conceded, the statement of claim in this proceeding does not raise these issues. Although they are formulated in the submissions, I do not consider that they are intelligible.
Conclusion
With the exception of the defamation related claim against the first defendant, s 60(2) of the Act applies to the plaintiff’s claims in this proceeding against the defendants and, as a result of the election by the trustee in bankruptcy, such claims are now discontinued.
With respect to the defamation related claim, I make the following observations:
(a)The claim is related but is not inseverable from the other claims in the action and the defendant has therefore properly conceded that it falls within the exception provided in s 60(4) of the Act.
(b)The plaintiff concedes that the defamation related claim does not relate to and is not made against the second defendant. Accordingly, the claims against the second defendant are wholly discontinued.
(c)The vast majority of the allegations contained in the pleadings do not relate to the defamation related claim and those facts that are pleaded with respect to the defamation related claim are not adequate to permit the matter to proceed.
Accordingly, I propose to order as follows:
(1) The statement of claim filed 19 March 2015 be struck out.
(2)The plaintiff have leave to file a fresh statement of claim relating solely to the defamation related claim by 27 November 2015.
I will hear the parties on the question of costs and any consequential orders.
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