Hind v Ronsel Investments (No 2)
[2021] VSC 42
•17 February 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROFESSIONAL LIABILITY LIST
S ECI 2019 02152
| GREGORY ROY HIND | Plaintiff |
| v | |
| RONSEL INVESTMENTS PTY LTD | Defendant |
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JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 1 October, 12 November and 17 December 2020. Further written submissions filed on 13 and 25 January 2021. |
DATE OF JUDGMENT: | 17 February 2021 |
CASE MAY BE CITED AS: | Hind v Ronsel Investments (No 2) |
MEDIUM NEUTRAL CITATION: | [2021] VSC 42 |
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PRACTICE AND PROCEDURE – Application to file further amended statement of claim –Whether there are inconsistencies between versions of the further amended statement of claim – Whether pleading discloses plaintiff’s cause of action with sufficient precision – Plaintiff to be given a further opportunity to serve a proposed further amended statement of claim.
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APPEARANCES: | Counsel | Solicitors |
| The plaintiff in person | ||
| For the Defendant | Mr J Tesarsch | Carter Newell |
HER HONOUR:
Introduction
These reasons concern a proceeding between the plaintiff, Mr Gregory Hind, and the defendant, Ronsel Investments Pty Ltd (trading as Ronald Segal & Associates) (‘law firm’), concerning the adequacy of Mr Hind’s pleading of a claim for professional negligence against the law firm arising out of legal services provided by it to Mr Hind[1] between 2010 and 2014. The background to the proceeding, and the allegations made by Mr Hind against the law firm, were discussed in some detail in reasons delivered in response to the law firm’s summary judgment application delivered on 23 July 2020 (‘first reasons’).[2]
[1]Strictly speaking, some of the legal services were provided to a partnership of which Mr Hind and his elderly mother were the only members, but little turns upon that for the purposes of the current application, save that, given that Mrs Hind is no longer a party to this proceeding, any losses claimed by Mr Hind cannot include losses alleged to have been suffered by his mother.
[2]See Hind v Ronsel Investments Pty Ltd [2020] VSC 428.
In the first reasons, I indicated that I was prepared to enter judgment in favour of the law firm with respect to claims brought against it regarding its conduct of a proceeding between Mr Hind and the Australian Taxation Office (‘ATO’) (‘County Court proceeding’). Given that this proceeding was issued on 16 May 2019, and my finding that Mr Hind first suffered loss and damage by reason of the law firm’s conduct no later than 6 July 2011, there was no real prospect of Mr Hind overcoming the law firm’s defence that Mr Hind’s claims against it with respect to the County Court proceeding were time‑barred owing to the operation of s 5 of the Limitation of Actions Act1958 (Vic).
However, I refrained from entering judgment against Mr Hind immediately, on the basis of certain procedural complications arising out of miscommunications between and misunderstandings on the part of Mr Hind and the Court Registry. On or about 2 December 2019, Mr Hind sought the law firm’s consent to the filing of an amended pleading, which, among other things, sought to add claims against the law firm with respect to its conduct of a professional negligence claim against Rigby Cooke Lawyers (‘Rigby Cooke’) concerning the advice given by Rigby Cooke in relation to the financing of a multi-unit residential development project undertaken by Mr Hind (‘Rigby Cooke proceeding’).[3] The law firm refused to consent to the filing of the proposed amended statement of claim, because, among other things, the law firm asserted that Mr Hind had no standing to bring any claims against the law firm with respect to any matter, as Mr Hind had been declared bankrupt on the petition of the ATO on 22 July 2014, and any claims Mr Hind had against the law firm vested in his trustee in bankruptcy.
[3]The development project was actually undertaken by the partnership between Mr Hind and his mother (see the comments at footnote 1).
Mr Hind then sought to issue a separate proceeding making claims against the law firm with respect to the Rigby Cooke proceeding, but the writ and statement of claim were rejected by the Court Registry, mistakenly so, it seems. In the meantime, on 24 February 2020, the law firm brought an application for summary judgment, relying, among other things, upon the question of whether Mr Hind had standing to issue the proceeding, and its submission that it had an insurmountable defence to the effect that Mr Hind’s claims with respect to the County Court proceeding were time-barred.
Summary judgment application
The law firm’s application for summary judgment was returnable on 9 April 2020. The standing issue was resolved shortly prior to the hearing by Mr Hind obtaining an assignment of his claims against the law firm from his trustees in bankruptcy on or about 6 April 2020. At the hearing on 9 April 2020, Mr Hind foreshadowed that he would seek to amend his statement of claim to bring in his claims against the law firm with respect to its conduct of the Rigby Cooke proceeding. However, as became apparent to me during the course of preparing my reasons with respect to the law firm’s summary judgment application, Mr Hind’s claims against the law firm with respect to the Rigby Cooke proceeding were almost certainly time‑barred on or about 20 March 2020, as the Rigby Cooke proceeding was compromised and dismissed on or about 20 March 2014.
Accordingly, while Mr Hind had signalled his intention to bring claims with respect to the Rigby Cooke proceeding to the law firm and the Court prior to 20 March 2020, no proceeding was brought with respect to those claims within time. Given Mr Hind’s status as a self‑represented litigant, and what had transpired during his dealings with the Court Registry, I decided not to give judgment on the amended statement of claim as it stood, but refrained from doing so in order to give Mr Hind the opportunity to make an application to amend the statement of claim in this proceeding,[4] which would then enliven the Court’s discretion under r 36.01(6) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’), and enable Mr Hind to bring forward his claims with respect to the Rigby Cooke proceeding. The law firm acquiesced in (or at least did not oppose) this course of action, subject of course to its rights to object to a pleading which was not in a proper form, or which failed to disclose a cause of action.
[4]Or, more accurately, the amended statement of claim.
Accordingly, on 23 July 2020, I made orders permitting Mr Hind to make an application for leave to amend his statement of claim to bring his claims with respect to the law firm’s conduct of the Rigby Cooke proceeding, and to strike out the claims in the existing version of the amended statement of claim which I had found to be time barred. The application for leave was ultimately returnable on 1 October 2020, and the law firm opposed the filing and service of the proposed further amended statement of claim circulated by Mr Hind on 7 August 2020. On that day, I delivered an unpublished ruling, including the following reasons:
I agree with the submissions of the defendant that the proposed second amended statement of claim (‘draft statement of claim’):
(a)fails to give effect to my ruling of 23 July 2020, which foreshadowed entering judgment against the plaintiff with respect to his claims against the defendant with respect to its conduct of the County Court proceeding and the subject matter of the County Court proceeding; and
(b)insofar as it concerns the defendant’s conduct of the Rigby Cooke proceeding, the draft statement of claim fails to adequately plead the facts necessary to establish these claims, and the allegations are confusing and vague, and, in some respects, irrelevant.
In particular, I stated:
… Mr Hind must go beyond mere generalities to say precisely how the defendant failed to properly conduct the Rigby Cooke proceeding, and the consequences of that failure. What I can glean from the current pleading is that Mr Hind alleges that the defendant failed to gather evidence to support the partnership’s claim that the negligence of Rigby Cooke caused the partnership to lose the opportunity to undertake a profitable development, thus maximising the value of the partnership’s claim against Rigby Cooke. The defendant’s alleged failure to advance and obtain evidence of that claim put the partnership in the position that it was forced to settle the Rigby Cooke proceeding for an amount which was substantially less than its true value. Further, as the partnership was depending upon a favourable outcome from the Rigby Cooke proceeding to meet Mr Hind’s obligations to the ATO, Mr Hind may also seek to claim the financial losses said to have been incurred by him as a result of his inability to meet the ATO’s demands for payment of the tax debt.
And further:
As for Mr Hind’s claim with respect to the defendant’s alleged conflict of interest, Mr Hind must plead that the defendant owed him a fiduciary duty (which, again, should not be uncontroversial), and identify how the defendant’s interests were in conflict with the partnership’s interests (noting that it is necessary for the pleading to go beyond mere speculation), what conduct of the defendant amounted to it favouring its own interests over those of the partnership, and the consequences of that conduct.
In this ruling, I directed Mr Hind to some possible ways in which a proper pleading could be framed, and stated as follows:
What the draft statement of claim should include in relation to the negligence claim is as follows:
(a)a description of the parties and the scope and terms of the retainer of the defendant with respect to the Rigby Cooke proceeding;
(b)an allegation that the defendant owed Mr Hind a duty of care;
(c) a brief description of the partnership’s claims in the Rigby Cooke proceeding, and the estimated value of the Rigby Cooke proceeding;
(d)what the defendant should have done in their [sic] conduct of the Rigby Cooke proceeding, and failed to do;
(e)the actual outcome of the Rigby Cooke proceeding;
(f)how the defendant was responsible for the difference between the value of the Rigby Cooke proceeding and the financial return to Mr Hind from the Rigby Cooke proceeding; and
(g)whether there were other financial losses suffered by Mr Hind as a consequence of the defendant’s alleged negligence.
If Mr Hind’s allegation is that the defendant was negligent in failing to obtain evidence to support the partnership’s loss of profits claim (referred to by Mr Hind in shorthand as the ‘causation issue’), and that failure in effect caused the partnership to settle the Rigby Cooke proceeding too cheaply, then the draft statement of claim should say so. A reasonably clear explanation of what is described as the ‘causation issue’ is to be found in the transcript of the hearing before Macaulay J in February 2013, where there was an exchange between his Honour and Mr Alstergren about how the plaintiffs were putting their loss and damage claim in the Rigby Cooke proceeding.
What the draft statement of claim should include with respect to the breach of fiduciary duty claim is as follows:
(a)an allegation that the defendant owed him a fiduciary duty, which includes a duty not to favour its own interests over the interests of the partnership;
(b)it should describe with some precision the nature of the conflict between the interests of the partnership and the interests of the defendant;
(c)it should describe with some precision how, and by what conduct, the defendant favoured its own interests over that of the partnership; and
(d)the financial consequences to Mr Hind of the defendant’s alleged breach of its duty to not favour its own interests ahead of the interests of the partnership.
What the draft statement of claim should not include is:
(a)any reference to any claims by Mrs Hind[5] against the defendant, unless she is to be joined as a party to the proceeding;
(b)any claims by Mr Hind with respect to the defendant’s conduct of the County Court proceeding (or the subject matter of the County Court proceeding) as I have already found that those claims are time barred, save that I accept that there may need to be some reference to Mr Hind’s dealings with the ATO as possibly forming a head of loss and damage; and
(c)any claims with respect to emotional stress and reputational harm.
[5]See the comments at footnotes 1 and 3 of these reasons.
Proposed amended statement of claim
On 1 October 2020, I made orders providing Mr Hind with a further opportunity to file a proposed amended statement of claim. The proposed pleading filed by Mr Hind on 26 October 2020 failed to adequately address the matters raised in my ruling of 1 October 2020, and the law firm once again opposed leave being granted. At a hearing on 12 November 2020, I made orders referring Mr Hind to the Victorian Bar Pro‑Bono Scheme for assistance in drawing a pleading.
My remarks in ‘Other Matters’ in the orders made on 12 November 2020 included the following:
A.The plaintiff should have a further opportunity to put forward a proposed further amended statement of claim (“FASOC”) which pleads the facts required to establish a viable cause of action against the defendant with respect to its conduct of Rigby Cooke proceeding with sufficient clarity to enable the defendant and the Court to know the case that the defendant has to meet at trial. The proceeding has not yet reached the stage where a conclusion can be made that the plaintiff is unable to put forward an acceptable pleading.
B.In the interests of certainty, I shall strike out the amended statement of claim filed 5 August 2019 in its entirety, with no right of reinstatement, but will refrain from entering judgment in favour of the defendant with respect to the plaintiff’s claims concerning the County Court proceeding until after the plaintiff’s current application has been finalised.
…
F.In preparing the FASOC, the plaintiff’s attention (and, if applicable, the attention of counsel) is directed to my ruling of 1 October 2020 (in particular, paragraphs 7, 8, 10, 11, 12, 13, 17, 18, 19, 20, 21, 23 and 25 of the 1 October 2020 ruling), along with the submissions filed by the defendant on 30 September 2020 and on 11 November 2020.
G.I would make the further following observations regarding what needs to be addressed in the FASOC. First, the FASOC needs to address the following questions:
–What were the terms of the retainer between the plaintiff and the defendant?
–What duties did the terms of the retainer impose upon the defendant?
–What was the nature and the value of the plaintiff’s claim in the Rigby Cooke proceeding?
–What was the defendant required to do to maximise the value of the plaintiff’s claim in the Rigby Cooke proceeding that it failed to do?
–What were the financial consequences of the defendant’s failure to fulfil its duties?
Further, the plaintiff is reminded to focus upon the value of his claim against Rigby Cooke which was said to have been impaired by the defendant’s negligence, rather than the losses suffered by him as a consequence of the conduct of others, such as financiers and brokers. Further, it is not necessary for the plaintiff to include in the FASOC the evidence he intends to rely upon at trial. He should err on the side of brevity: if insufficient detail has been provided, the defendant can request further and better particulars.
Mr Hind’s application to file a further amended statement of claim was returnable again on 17 December 2020. In the meantime, Mr Hind obtained assistance in preparing a draft further amended statement of claim from Mr Gronow QC (‘Gronow version’), but given some confusion about filing deadlines, Mr Hind also prepared a draft further amended statement of claim himself (‘Hind version’) and signalled that he wished to rely on the Hind version rather than the Gronow version, although at the hearing on 17 December 2020, Mr Hind suggested that he could prepare a hybrid of the two versions.
The law firm continued to oppose the filing of the draft further amended statement of claim. In its written submissions filed on 16 December 2020, the day before the hearing, the law firm submitted that, given Mr Hind had signalled that he intended to rely upon the Hind version, leave to amend should not be granted on the basis that the Hind version:
(a)remains confusing and defective as a pleading;
(b)does not disclose material facts necessary to constitute the alleged cause of action for breach of fiduciary duty (or any cause of action in negligence, if that is alleged);
(c)contains allegations which are contrary to the contents of an affidavit previously sworn by Mr Hind and other documents; and
(d)is inconsistent with the Gronow version.
The law firm’s submissions then went on to refer to the established principles applicable to the striking out and amendment of pleadings, as follows (omitting citations):
(a)an amendment which is futile because it is obviously bad in law will not be allowed; nor will it be allowed if it is defective as a pleading and would be liable to be struck out if it was in an original pleading;
(b)where there has been a failure to state all material facts, not merely to give sufficient particulars thereof, the proper course is to strike out the offending pleading, with liberty to amend, rather than order particulars; and
(c)if the objectionable parts of a statement of claim are so intertwined with the rest of the pleading that separation is difficult, the appropriate course of action is to strike out the whole of the statement of claim.
The law firm’s submissions then went on to make detailed criticisms of the Hind version, as follows:
(a)as noted above, the Hind claim (which appears to be based largely on allegations of breach of fiduciary duty) differs markedly from the Gronow claim (being based entirely on alleged negligence and devoid of any allegation of breach of fiduciary duty). The inconsistency is unexplained, but the Court may readily draw an inference that Mr Gronow QC considered that there was no basis to plead any allegation of breach of fiduciary duty;
(b)although usually no affidavit in support is required for a pleading amendment at an interlocutory stage, it remains a matter for the Court’s discretion as to whether an amendment ought to be permitted, and an affidavit ‘may be necessary in a difficult case, or if there has been great delay, or if there is a suspicion of bad faith, or if there is a direction to that effect’;
(c)given the above inconsistencies and the scandalous nature of certain allegations, if the Court were minded to allow the proposed amendments in whole or in part, first it should require an affidavit from the plaintiff to substantiate the factual basis for the amendments proposed in the Hind version; and
(d)otherwise, if the Court were to permit the proceeding to continue in respect of such confusing allegations, an oppressive burden would be cast upon he defendant to determine precisely what wrongdoing is alleged.
For completeness, the law firm went on to make a number of criticisms of the Gronow version, as follows:
(a)certain paragraphs of the Gronow version are defective, including paragraphs 7, 8 and 10, and the defendant reserves the right to make further submissions if the plaintiff seeks to rely upon that version;
(b)Mr Gronow QC has not put his name on the proposed pleading, and there are significant questions as to whether there is a factual basis for certain allegations, including that:
(i)the plaintiff had good prospects of success at trial in the Rigby Cooke proceeding (given that counsel retained in the proceeding advised that without funding and further significant attendances the claim was unlikely to succeed at trial, and otherwise given that the plaintiff himself has previously alleged that the case was improperly prepared); and
(ii)the net value of the claim was in the region of $4.5 to $5.5 million;
(c)otherwise, as noted above, the Gronow version is inconsistent with the Hind version, and with previous versions of the proposed pleading. Accordingly, if the Court were minded to grant leave in respect of the Gronow version (which is not sought by the plaintiff), first it should require an affidavit from the plaintiff to substantiate the factual basis for the amendments proposed in the Gronow version.
Finally, while the law firm noted that the question of whether Mr Hind should have a further opportunity to prepare a further amended statement of claim was a matter for the discretion of the Court, it submitted that it continues to suffer ongoing prejudice as a result of Mr Hind’s inability to plead a viable cause of action against it, namely:
(a)it is incurring substantial costs as a result of repeated court attendances;
(b)up to around 15 years have now elapsed since certain events the subject of the Rigby Cooke proceeding; and
(c)the claim against the defendant is a claim for professional negligence, and its continued existence is an intangible factor affecting the defendant’s reputation.
Accordingly, the position as at 17 December 2020 was as follows:
(a) the law firm had obtained summary judgment with respect to Mr Hind’s claims against it concerning the County Court proceeding, although for the reasons referred to in paragraphs 5 and 6 of these reasons, judgment had not been formally entered in favour of the law firm;
(b) there had been three further hearings since the first reasons were delivered on 23 July 2020;
(c) Mr Hind had prepared two versions of a proposed further amended statement of claim, along with the Gronow version;
(d) I had given increasingly prescriptive directions regarding what ought to be included in a further amended statement of claim (see paragraphs 10 and 12 of these reasons;
(e) the law firm maintained that both the Hind version and the Gronow version were defective; and
(f) while the law firm’s submissions to the effect that Mr Hind should not be given further indulgences to enable him to prepare a proper pleading have not been strongly pressed to date, the tone of its more recent submissions indicated that its patience is wearing thin, and the law firm submitted that the Court’s patience should soon be exhausted as well.
At the hearing on 17 December 2020, counsel for the law firm elaborated on his written submissions, emphasising the following matters:
(a) the inconsistencies between the various versions of the proposed further amended statement of claim, and between the current iterations of the pleading, and the affidavits sworn by Mr Hind in the past;
(b) the inclusion of scandalous and unparticularised allegations in the Hind version;
(c) the absence of any causal relationship between the alleged breach of duty and the loss claimed by Mr Hind. The claimed loss of an investment opportunity bears no relationship to the law firm’s conduct of the Rigby Cooke proceeding;
(d) further, there is a fundamental inconsistency between the allegation in the Gronow version that the law firm advised Mr Hind to compromise the Rigby Cooke proceeding on disadvantageous terms in circumstances where Mr Hind had a meritorious claim against Rigby Cooke, and the allegation in the Hind version that the case against Rigby Cooke was poorly prepared; and
(e) the law firm relied upon the memorandum sent by counsel briefed for the trial of the Rigby Cooke proceeding when handing back their briefs, which stated that Mr Hind’s claims in the Rigby Cooke proceeding would be unsuccessful unless Mr Hind raised sufficient funds to prepare the case for trial and obtain further evidence in support of the law firm’s contention that Rigby Cooke proceeding was compromised for a reasonable amount, as it was a matter of salvaging what could be recovered from a sinking ship.
In his submissions at the hearing on 17 December 2020, Mr Hind did not expressly concede that the Hind version (or for that matter, the Gronow version) was defective, but said that, given that he had a viable claim against the law firm, he should be permitted a further opportunity to get his house in order. [6]
[6]I am paraphrasing Mr Hind’s submissions here and in the following paragraphs, and expressing them in somewhat different terms, but I believe I have recorded the thrust of his submissions correctly.
Mr Hind confirmed that his real cause of action against the law firm was in negligence, not for breach of fiduciary duty. It was never suggested to him by the law firm or counsel that the Rigby Cooke proceeding had no real prospects of success. Further, given that the law firm’s trust account records in evidence show that the law firm was paid nearly $160,000 between September 2013 and February 2014, the law firm’s allegation that it was not put in funds to conduct the trial should be rejected.
Mr Hind submitted that the causation issue was known about as early as 2012, when the Rigby Cooke proceeding was mediated. Rigby Cooke offered a paltry sum to settle, on the basis that Mr Hind had not demonstrated that Rigby Cooke’s conduct had caused him loss and damage. If the law firm had properly prepared the case and “pushed” the issue of causation and contributory negligence, he would have been able to compromise the Rigby Cooke proceeding for a decent sum, that is, enough to pay out the ATO, the debt on the family home, and perhaps some money left over to invest.
Mr Hind submitted that given that all of the relevant documents are on the law firm’s file, it does not matter how long ago the relevant events took place. The real issue is whether the Rigby Cooke proceeding was structured or pursued in such a manner that would result in a reasonable prospect of success.
As for the loss and damage suffered by him, it was the solicitor from Rigby Cooke who told Mr Hind that he could expect to walk away from the development with three to four apartments. Further, if Rigby Cooke had not been negligent, he would not have had the difficulties with the ATO which ultimately caused his bankruptcy.
Mr Hind submitted that it was not the law firm’s advice to settle that was negligent: rather, it was what happened, or did not happen, in the period leading up to the settlement negotiations shortly before the trial was to commence in March 2014. He queried why the issues of causation and contributory negligence were not pursued by the law firm and counsel briefed by the law firm along the way, suggesting that despite having been paid a lot of money, the law firm was not dedicated to recovering the money lost by him by reason of Rigby Cooke’s negligence regarding the financing of the development.
As for the question of whether the law firm had a conflict of interest, Mr Hind referred to a number of meetings he had with his solicitor and counsel where they expressed their concerns about pursuing Rigby Cooke, being a firm of solicitors.
Following the hearing on 17 December 2020, I made no orders of substance, but given that Mr Hind had not read the submissions served by the law firm the previous day, I provided Mr Hind with a further opportunity to file and serve further written submissions in support of his application to file and serve the Hind version. In his written submissions filed on 13 January 2021, Mr Hind submitted, in summary, as follows:
(a) he explained delays he experienced giving instructions to and receiving feedback from Mr Gronow QC, which led to him filing the Hind version prior to filing the Gronow version;
(b) he commented upon the law firm’s reliance upon the affidavit sworn by him in the Rigby Cooke proceeding on 3 October 2013, where Mr Hind deposed that the pending trial could not proceed because he had been unable to put his legal representatives in funds to conduct the trial;
(c) his claim against the law firm is based upon the law firm’s “conduct and lack of resolve” with respect to the paramount issues of causation and contributory negligence; and
(d) he stated as follows:
This proceeding whilst requiring further clarification for the plaintiff’s claims to have a prospect of success must be allowed to continue and not provide the opportunity for the defendant and the associates to absolve themselves from their responsibilities in the Rigby Cooke appointment that ultimately caused the plaintiff’s [sic] to not recover their substantial financial losses.
Mr Hind’s submissions included a number of annexures, as follows:
(a) correspondence between Mr Hind and the Court regarding the filing of the proposed further amended statement of claim and the pending hearing on 17 December 2020;
(b) a letter from the law firm to Mr Hind on 9 September 2013 seeking funds for the forthcoming trial of the Rigby Cooke proceeding;
(c) an extract from the law firm’s trust account showing deposits made to the law firm’s trust account on account of legal fees and disbursements for the conduct of the trial of the Rigby Cooke proceeding;
(d) an annotated version of the defence filed in the Rigby Cooke proceeding on 22 February 2011; and
(e) a further draft further amended statement of claim (‘January 2021 version’).
The law firm filed further submissions in reply on 25 January 2021. In these submissions, the law firm submitted, in summary, as follows:
(a) in his submissions, Mr Hind has effectively conceded that he was unable to comply with the law firm’s requirement that it have funds in trust to conduct the trial of the Rigby Cooke proceeding;
(b) accordingly, there is no basis for the allegation made in the Hind version that he was able to fund a trial commencing on 7 October 2013 or in March 2014; and
(c) Mr Hind’s concession that he was unable to fund the trial, and his acknowledgment that counsel returned their briefs owing to the lack of funds, and that no funds were available to brief new counsel, shows that there was no basis for the allegation that the law firm provided improper settlement advice: rather, Mr Hind was unable to fund the trial of the proceeding, and settled on the best terms that could be obtained in the circumstances.
The law firm submitted that the Court should not consider whether Mr Hind ought be allowed to file and serve the January 2021 version, as the provision of a further version of the further amended statement of claim was not contemplated during the course of the hearing on 17 December 2020.
The law firm submitted that the January 2021 version was only relevant to the question of whether the Court should now dismiss Mr Hind’s application to file and serve a further amended statement of claim, in the light of the ongoing prejudice suffered by the law firm by the continuation of this proceeding, or should provide Mr Hind with a further opportunity to replead his claims against the law firm with respect to the conduct of the Rigby Cooke proceeding.
Under cover of that objection, the law firm submitted as follows:
(a)the 8 January version appears to have been drafted in an attempt to reconcile elements of both the Hind version and the Gronow version;
(b)it is premised largely on alleged negligence in the conduct of the Rigby Cooke proceeding and therefore differs fundamentally from the Hind version (which appeared to allege breach of fiduciary duty regarding settlement advice), and the inconsistencies are unexplained;
(c)it continues to suffer from pleading defects, including as follows:
(i)it remains confusing;
(ii)it does not disclose material facts necessary to constitute the alleged cause of action for negligence; and
(iii)it contains allegations which are inconsistent with previous versions of the proposed claim, and those inconsistencies are unexplained;
(A)causation could only have been established by evidence to be adduced at trial, including any admissions made by Rigby Cooke. In a defended matter, causation could not have been established on the basis of pleadings or witness statements alone;
(B)contributory negligence was a defence for which Rigby Cooke bore the onus of proof at trial, not a matter to be disproved by the plaintiff before trial;
(iv)no material facts are alleged, or particulars are provided, to substantiate the allegation in paragraph 11 that the defendant pressured the plaintiff to enter into the relevant deed of settlement. In any event, this allegation is inconsistent with the assertions by the plaintiff in the Reply Submissions that are referred to above;
(v)there is inconsistency between the assertions in paragraph 10 of the 8 January version that the Rigby Cooke proceeding was not properly prepared for trial and the assertions in paragraph 11 that the defendant’s settlement advice was negligent. Similarly, there is inconsistency between the allegations in the 8 January version that the Rigby Cooke proceeding was not properly prepared for trial and allegations in the Gronow version that the defendant’s settlement advice was negligent because the plaintiff had good prospects of success at trial;
(vi)it is unclear whether paragraph 11 alleges only breach by the defendant of its duty of care or also breach of fiduciary duty. Otherwise, the allegation in that paragraph that the plaintiff should have been advised that he would have had good prospects of success at trial if (inter alia) causation had been demonstrated is artificial and contrived, given the above matters;
(vii)the loss and damage alleged in paragraph 12 remains in the nature of an ambit claim and lacks necessary material facts, and the claim for reputational harm remains misconceived; and
(d) paragraphs 17 and 19 are confusing and scandalous.
The law firm concluded its submissions as follows:
It remains the case that, despite multiple opportunities, the plaintiff has been unable to articulate any viable course of action against the defendant. The defects and deficiencies in the 8 January version are further factors that this Honourable Court may take into account in determining whether to dismiss the applicant’s application.
The law firm submitted that if I was inclined to grant leave to Mr Hind to file and serve the January 2021 version, it would seek a further hearing to make further submissions.
Discussion
Accordingly, the issues in the current application are as follows:
(a) whether Mr Hind should have leave to file a further amended statement of claim, either in the form of the Hind version, the Gronow version, or the January 2021 version;
(b) if so, whether the grant of leave should be conditioned upon, as suggested by the law firm, Mr Hind filing and serving an affidavit verifying the facts underlying his claims, and addressing the inconsistencies between the various versions of the further amended statement of claim put forward by Mr Hind; and
(c) if not, whether Mr Hind should have a further opportunity to file another proposed further amended statement of claim.
Prior to turning to the various versions of the proposed further amended statement of claim in more detail, I make the following observations:
(a) while I accept that, strictly speaking, no leave was granted to Mr Hind to file and serve the January 2021 version, I shall have regard to that document. It is not necessary for present purposes to hold a further hearing to enable the law firm to make more detailed submissions regarding its criticisms of the January 2021 version;
(b) I understand from the submissions made by Mr Hind during the course of the hearing on 17 December 2020 and the contents of the January 2021 version that Mr Hind does not wish to press his claim for breach of fiduciary duty. Despite the criticism made by the law firm in its submissions of that course of action, I cannot see how Mr Hind’s decision to refrain from pressing that claim prejudices the law firm;
(c) the law firm’s allegations of inconsistent conduct and/or pleading are somewhat overstated, and are really matters that would cause forensic difficulties for Mr Hind at trial, rather than being a basis for, or at least the sole basis for, shutting Mr Hind out of repleading his case; and
(d) I accept that there comes a point where a defendant to a proceeding should not be forced to incur the costs and suffer the inconvenience and other prejudice associated with responding to pleadings which do not disclose, or properly expose a viable cause of action. The question in the current application is whether that point has yet been reached.
It is possible to glean from the various iterations of the proposed further amended statement of claim and the submissions made by Mr Hind during the course of the hearings before me the basic thrust of the case Mr Hind wishes to bring against the law firm.
Mr Hind’s case, as best as I can discern it, is as follows:
(a) Mr Hind engaged Rigby Cooke to advise on the development project, in particular, the funding arrangements for the development project. The only asset Mr Hind had was the land itself, such that he needed to borrow most or all of the funds to develop the land. Given that the terms of the finance raised by Mr Hind did not allow for the capitalisation of interest (and Mr Hind had no other sources of funds to meet the interest payments), Mr Hind fell into difficulties, and the lender took control of the development project;
(b) accordingly, Mr Hind instructed the law firm to issue the Rigby Cooke proceeding, asserting that Rigby Cooke’s negligent advice regarding the funding of the development project caused him to suffer loss, in circumstances where Mr Hind expected that he would retain, as the “profit” on the development project, three to four of the twelve units in the development;
(c) Rigby Cooke defended the proceeding, on the basis that, among other things (including a general denial of any liability), Mr Hind was responsible for his own loss, in that he entered into a building contract for the development project in circumstances where the funding obtained did not cover the cost of construction;
(d) accordingly, the issues of causation and contributory negligence were front and centre in the proceeding, not only by reason of Rigby Cooke’s defence, which was filed on 22 February 2011, but because the issue of how Mr Hind put his claim for damages was also raised during the mediation in 2012, and at a directions hearing before Macaulay J in February 2013;
(e) Rigby Cooke’s successful application to join other parties as concurrent wrongdoers should also have alerted the law firm to the need to deal with the issue of who was responsible for Mr Hind’s losses;
(f) the law firm was aware that Mr Hind was dependent upon a favourable outcome in the Rigby Cooke proceeding in order to meet his obligations to the ATO, and that achieving a favourable outcome was dependent upon assembling persuasive evidence to establish that Mr Hind’s losses were caused by Rigby Cooke’s conduct, and to rebut Rigby Cooke’s allegations that those losses were caused by Mr Hind’s own negligence, or by the conduct of others;
(g) no such evidence was assembled in the months leading up to the first scheduled trial date in October 2013, despite the money already paid to the law firm and counsel, or the second scheduled trial date in March 2014, despite the further funds provided between September 2013 and October 2014;
(h) as a result, Mr Hind was in a disadvantaged position vis-à-vis Rigby Cooke leading up to the trial, and was forced to settle on less than advantageous terms by reason of the law firm failing to adequately prepare his case for trial;
(i) as a result, Mr Hind suffered loss, being the difference between what he would have been able to recover from Rigby Cook had the case been properly prepared (in such a manner as to prove his claim, and to rebut the defences advanced by Rigby Cooke), and the amount of the settlement sum; and
(j) while Mr Hind has some suspicions and concerns about the motivations of the law firm and counsel involved in his case, his real claim against the law firm is in negligence, not for breach of fiduciary duty.
The outline above is not intended to provide a basis for commenting upon the merits of Mr Hind’s claim, or to anticipate the nature and strength of any defences the law firm may have. That is not the focus of the current exercise. Rather, the focus of the current application is whether, having identified a viable cause of action, that cause of action has been properly pleaded, having regard not only to the rules of pleading, but also to the disadvantages faced by Mr Hind as a self‑represented litigant.
Turning first to the Hind version, I make the following observations:
(a) paragraphs 1 to 7 of the Hind version, while occasionally clumsily expressed, are largely unobjectionable;
(b) paragraph 8, which refers to the law firm’s fiduciary duty, is superfluous given Mr Hind’s agreement that his real cause of action is in negligence;
(c) paragraphs 9, 10 and 11 could be better expressed, but are largely unobjectionable;
(d) the allegations in paragraphs 12, 13 and 14, including the particulars, conflate the allegations of negligence with alleged breaches of fiduciary duty, and fail to clearly spell out the primary allegation against the law firm, which is to the effect that it was the law firm’s alleged failure to properly prepare Mr Hind’s case which led to Mr Hind being put in the position that he had no other choice but to accept the offer of $220,000 to compromise the Rigby Cooke proceeding shortly before trial; and
(e) while paragraphs 17 and 19 refer, at least in part, to the law firm ignoring correspondence from Rigby Cooke’s solicitors regarding causation and contributory negligence, thus alluding to the allegation that the law firm had failed to properly prepare Mr Hind’s case against Rigby Cooke, these paragraphs are confusing, and again seem to focus upon the law firm’s alleged breach of fiduciary duty.
Accordingly, I would not grant leave to file and serve the Hind version.
Turning now to the Gronow version, this version of the pleading is better expressed than the Hind version, and more conventionally structured. However, the Gronow version has some problems, namely:
(a) the allegations of negligence against the law firm focus upon the advice to settle the Rigby Cooke proceeding, not the preparation of Mr Hind’s case, which I understand from Mr Hind’s submissions to be his primary complaint against the law firm; and
(b) while this is not fatal as a pleading issue, the Gronow version refers to the value of the Rigby Cooke proceeding as being in the order of $4.5 million to $5.5 million, compared with the sum of $1.3 million to $1.5 million plus costs referred to in the Hind version.
That said, the law firm’s criticisms of the Gronow version are a little overstated. The law firm submitted that the allegation in the Gronow version to the effect that the advice to compromise the Rigby Cooke proceeding was negligent given that the Rigby Cooke proceeding had good prospects of success was inconsistent with Mr Hind’s allegation that the Rigby Cooke proceeding had poor prospects of success because it had been poorly prepared. However, while neither the Hind version nor the Gronow version sets out the allegation in full, what I understand Mr Hind’s case to be is that, as Mr Hind had a good claim against Rigby Cooke, the law firm did not undertake the work necessary to establish the matters pleaded in the Rigby Cooke proceeding, or to rebut the Rigby Cooke defences (presumably by assembling cogent and relevant evidence, and conveying the nature and quality of that evidence to those representing Rigby Cooke), so as to lead to Mr Hind being in the position of having no option but to settle cheaply. Using the metaphor adopted by counsel for the law firm in his submissions, there is no dispute that the ship was sinking, thus necessitating the salvage operation, but the question remains, who should bear the responsibility for the ship sinking: the law firm, Mr Hind, or perhaps both?
While I agree that the January 2021 version does not yet meet the standard of what would be an adequate pleading of Mr Hind’s claim against the law firm, in my view it represents a considerable improvement on previous iterations of the proposed further amended statement of claim.
The January 2021 version is reproduced in full below:
PROPOSED DRAFT SECOND FURTHER AMENDED STATEMENT OF CLAIM[7]
[7]Any typographical or grammatical errors are owing to the January 2021 version being reproduced as submitted.
1.The plaintiff is a 56 year old self representative.
2.The defendant is Ronsel Investment Pty Ltd, who previously traded as Ron Segal and Associates :
3.(a) a practicing legal practitioner under the legal profession act 2004.
(b)Holding itself out as having experience and expertise in negligence claims.
4.On the 17th of November 2010 the plaintiff signed and executed a cost agreement with the defendant under the legal profession act 2004 (“retainer”) the defendant to act as his solicitor in relation to a negligence claim against his former family solicitors Rigby Cooke Lawyers:
(a)In respect of a mortgage loan settlement and an agreement to develop the plaintiff’s long held family properties situated at and known as 63 - 65 Roseberry ave Preston , Victoria 3072 (“the project”); and
(b)For resulting substantial financial losses caused in part by the settlement of a loan from a company named Nobleplace Pty Ltd.
PARTICULARS
The retainer was partly oral, partly in writing, jointly expressed and implied. In so far as it was oral contained a number of conversations between the plaintiff and the defendant, between the period of 11th November 2010 until on or about late March 2014. In so far as there written correspondence between both parties, was implied to give efficacy to the agreement.
5. The implied terms of the retainer that: the defendant would:
(a) Act with due care, skill diligence and honesty,
(b)Conduct the proceeding as would be reasonably expected of a prudent legal practitioner experienced in a negligence claim ,
(c)All invoicing to be rendered properly and appropriately attributable to work as required for a negligence claim.
6.That further from the retainer, the defendant owed the plaintiff a duty of care.
7.Pursuant to the retainer the defendant commenced proceeding no. SCI 2010 06909 (“Rigby Cooke Proceeding”) against Rigby Cooke Lawyers by writ and statement of claim which was served o 21st December 2010.
8.In the Rigby Cooke proceeding the plaintiff made claims in negligence and breach of retainer against his former solicitors Rigby Cooke:
(a)In respect of a mortgage loan settlement and an agreement to develop the plaintiff ‘s family properties into 12 apartments situated at 63 - 65 Roseberry Ave Preston 3072 (“the project”) and
(b)For resulting substantial financial losses caused in part by the settlement of a loan from a company named Nobleplace Pty Ltd.
PARTICULARS
Copies of the plaintiff’s statement of claim and particulars in the Rigby Cooke proceeding, including the court books may be made available at the defendants expense.
9.The plaintiff had a good claim at law in the Rigby Cooke proceeding with a net value of realistically $ 5.0 to$ 6.0 Million (“in todays values“) based on:
(a)The loss of financial interest in 11 of the 12 apartments constructed in the Preston project in addition to:
(b)Costs for additional expenses and opportunity costs for the 11 apartments of approximately $ 1.5 Million and
(c)Costs of approximately$ 170,000 relating to the sale of the family home at 151 Glenvale Road Donvale, Victoria 3111, along with
(d)Damages for reputational harm on the plaintiff resulting from being made unnecessarily bankrupt.
PARTICULARS
Further particulars of the plaintiff’s financial claim in the Rigby Cooke proceeding will be provided by an independent financial expert prior to trial.
10.The defendant by virtue of an act of negligence in the Rigby Cooke proceeding, breeched his duty of care by failing:
(a)To conduct the negligence claim expected of a prudent legal practitioner experienced in this type of proceeding, and
(b)By not presenting any form of causation and attribution of responsibility from the Nobleplace loan settlement to the plaintiff’s financial losses suffered, and
(c)By not presenting the issues of contributory negligence involving parties to the negligent act.
PARTICULARS
Further particulars of the plaintiff’s claim in the Rigby Cooke proceeding will be provided prior to trial.
11.Further to the defendants act of negligence, has breached his retainer and his duty where the defendant advised and pressured the plaintiff into executing a deed of settlement in the Rigby Cooke proceeding dated 20th March 2014 in which agreed to release 3 his claim for the sum of $220,000 which was substantially less than the claim in the Rigby Cooke proceeding worth and completely against the best interests of the plaintiffs.
PARTICULARS
A copy of the deed of settlement may be inspected and/ or a copy provided.
PARTICULARS OF NEGLIGENCE
The defendant negligently advised the plaintiff to execute the settlement deed and failed to advise the plaintiff properly or at all that in the Rigby Cooke proceeding:
(a)His claim was justifiable and worth in excess of $ 1.5 Million as of 20th March 2014, and
(b)The plaintiff had good prospects of success at trial had causation and contributory negligence been demonstrated, and
(c)The plaintiff had good prospects of success at trial in demonstrating the Nobleplace loan settlement was unworkable, unaffordable and at conflict with the plaintiffs instructions not to settle had the issue of interest capitalisation not been satisfactorily addressed, did ultimately cause the plaintiffs to suffer the financial losses on the Preston project, and
(d)The plaintiff should not have executed the deed of settlement in the form proposed, particularly in light from prior knowledge from mediation held on the 5th March 2014 that the sum of $220,000 was vastly inadequate, not in the plaintiffs best interests and would in all probability create financial hardship for the plaintiffs.
PARTICULARS
Further particulars of negligence will be provided prior to trial.
12.By of the defendants negligence and breach of retainer, the plaintiff has suffered loss and damages:
PARTICULARS
The plaintiff lost the value of his claim in the Rigby Cooke proceeding to a total of at least $ 1.5 Million as of 20th March 2014. Further he has lost other assets including the family home and additional opportunities costs in addition to reputation harm due to having been made bankrupt.
13.The plaintiff was declared bankrupt in the federal circuit of Australia on 22nd July 2014.
14.The plaintiff’s bankruptcy trustee was Mr David Henry Sampson.
15.The plaintiff was discharged from bankruptcy pursuant to S149 of the bankruptcy Act 1966or about 24th August 2017.
16.On or about 3rd April 2020 Mr David Sampson in his capacity as the plaintiff’s trustee in bankruptcy, vested his deed of assignment to the plaintiff in action being his rights of action against Ronsel Investments Pty Ltd and others arising from the facts pleaded in the statements of claim in this proceeding, copies of which were annexed to the deed.
PARTICULARS
A copy of the Deed of Assignment can be provided prior by arrangements.
17.The plaintiff pursues this negligence claim due to the defendants conduct in the Rigby Cooke proceeding, whereby a lack of resolve and it’s complete ignorance to the issues of causation and contributory negligence, when advised by the then defence in the Rigby Cooke proceeding, has severely impacted on the plaintiffs ability to achieve any degree for a successful outcome.
PARTICULARS
That the then defence in the Rigby Cooke proceeding raised the issues of causation and contributory negligence on at least two separate occasions, being 1st Defence Statement on the 22nd February 2011 and the Amended Defence to the second further Amended Statement of claim dated October 2012.
A copy of both documents may be made available by prior arrangement.
18.Pursuant to the plaintiff’s allegations of negligence by the defendant in the Rigby Cooke proceeding that the Deed of Settlement for $ 220,000 dated 20th March 2014 was ultimately a consequence of the defendant’s negligent prior conduct.
19.Pursuant to the defendant’s negligent conduct in the Rigby Cooke proceeding in relation to issues of causation and contributory negligence not being pursued nor attempted as would have reasonably expected by the plaintiff, has caused the plaintiff to be inappropriately invoiced combined with unnecessary bankruptcy and sale of the family home are consequences from the defendant in breeching his retainer..
20.The plaintiff is claiming:
a.Specific performance of the retainer
b.Damages and/or loss in addition to or in substitution for specific performanceDamages, alternatively equitable compensationc.Costs
d.Interest
e.Defamationf.For the purposes the aforesaid all necessary orders and directions as this honourable court deems appropriate
g.Such further or other relief as to this honourable court may deem appropriate
My comments on the January 2021 version follow.
Paragraphs 1 to 8 of the January 2021 version are on occasion clumsily expressed, but are otherwise largely unobjectionable.
The law firm has criticised the framing of the loss and damage claim in paragraphs 9 and 12, but, strictly speaking, all that is necessary for the pleading of a negligence claim is for Mr Hind to plead that he has suffered loss and damage: the explanation and the quantification of the damages claimed is desirable, but is really a matter for particulars.
The allegations in paragraphs 10, 11, 17, 18 and 19 of the January 2021 version are confusing in some respects, and do not fully or accurately expose what I perceive to be Mr Hind’s real case. In particular, once again, there is a tension between his allegation that the advice to settle prior to trial was negligent and the allegation that Mr Hind was forced to compromise the proceeding on disadvantageous terms because the law firm had failed to adequately prepare the proceeding for trial, presumably by failing to assemble evidence to support the contention that the losses suffered by Mr Hind were wholly, or at least substantially, caused by the negligence of Rigby Cooke, and rebutting the contention that Mr Hind was partly or even wholly responsible for his own losses. These allegations are, at least conceptually, mutually exclusive.
The law firm is correct to say that the question of whether the law firm had properly prepared the case could not be determined by the pleadings and witness statements alone. Of course, the valuation of Mr Hind’s claim in the Rigby Cooke proceeding and the adequacy of the law firm’s preparation of Mr Hind’s case could only properly be assessed following a trial of the Rigby Cooke proceeding. However, that does not preclude Mr Hind from contending, and adducing evidence (probably expert evidence) in this proceeding, to the effect that if the law firm had undertaken different steps at an earlier time, the prospect of Mr Hind obtaining a more favourable result either through negotiation or judicial determination would have been enhanced. After all, it is not uncommon in the proceedings of the current kind for the Court to be required to assess the likely value of a claim which has been said to have been diminished by the negligence of legal practitioners conducting the proceeding concerned. However, these are matters for evidence and argument at a trial.
The problem in the current case is that the various iterations of the proposed amended statement of claim do not properly expose the case Mr Hind seeks to advance at trial. In order to do so, Mr Hind needs to nail his colours to the mast as to what he says is the law firm’s negligent conduct: the preparation of the case, or the advice to settle? If it is the former, then the latter is a necessary consequence of the law firm’s conduct, not negligent conduct of itself. Also, if Mr Hind intends to contend that the law firm failed to reach the necessary standard of care as required for a solicitor in the position of the law firm, he needs to specify with more precision what the law firm should have actually done to meet that standard. Currently, these allegations are expressed in far too general and conclusionary terms. Put simply, what should the law firm have done that it didn’t do?
Once that exercise is completed to a satisfactory standard, it may be difficult for the law firm to maintain any objection to the pleading going forward. I accept that the law firm contends that the evidence available incontrovertibly demonstrates that the predicament that Mr Hind found himself in was one of his own making, and that may well be the case. However, the current application is not a summary judgment application. At this stage at least, the question at hand is whether Mr Hind is able to put forward a properly formulated pleading which discloses a viable form of action.
For completeness, while these are relatively minor matters, I agree with the submissions for the law firm that any reputational damage to Mr Hind is not compensable in a proceeding of this nature. Finally, the claims in the prayer for relief (paragraph 20 of the January 2021 version) for specific performance of the retainer and equitable compensation are not maintainable, and are therefore superfluous.
Conclusions and orders
As observed above, the January 2021 version does not yet meet the requirements of a proper pleading. However, it is a significant advance on previous versions, which supports my conclusion that Mr Hind should be given one last opportunity to get his house into order. Accordingly, I propose to make the following orders:
(a) by 4 pm on 5 March 2021, the plaintiff serve upon the solicitors for the defendant and provide to the Court a further proposed further amended statement of claim consistent with these reasons;
(b) the further hearing of the plaintiff’s application to file a further amended statement of claim be adjourned to a date to be fixed in the fortnight commencing 15 March 2021; and
(c) the parties’ costs be reserved for determination at a later date.
For completeness, I do not propose to order that Mr Hind file and serve an affidavit explaining the discrepancies between the various iterations of the proposed further amended statement of claim and other documents. The explanation for some of those discrepancies is readily ascertainable from the course this application has taken, and, as indicated earlier, that issue may be better pressed at trial.
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