Johnstone, Raymond Marshall v Casual Life Furniture Pty Ltd

[1997] FCA 1268

FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE - application to strike out statement of claim - allegation of tort of conspiracy - allegation of misleading and deceptive conduct - whether statement of claim identifies material facts which constitute the causes of action - application to stay proceedings - claim for unpaid barrister’s fees - whether Federal Court inappropriate forum - whether claim pursued for an improper purpose

Federal Court Rules, O 11 rr 2, 9

Lonhro Ltd v Shell Petroleum Co Ltd (No 2) [1982]AC 173, cited
Little v Law Institute of Victoria [1990] VR 257, applied

RAYMOND MARSHALL JOHNSTONE v
CASUAL LIFE FURNITURE PTY LTD
VG 548 OF 1997

TAMBERLIN J
SYDNEY  (HEARD IN MELBOURNE)
24 NOVEMBER 1997

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 548  of   1997

BETWEEN:	RAYMOND MARSHALL JOHNSTONE APPLICANT
AND:	CASUAL LIFE FURNITURE PTY LTD RESPONDENT
JUDGE:	TAMBERLIN J
DATE OF ORDER:	24 NOVEMBER 1997
WHERE MADE:	SYDNEY (HEARD IN MELBOURNE)

THE COURT ORDERS THAT:

1. Paragraphs 9 to 16 inclusive of the Amended Statement of Claim be struck out.

1. The proceedings be permanently stayed against the respondent.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 548 of 1997

BETWEEN:	RAYMOND MARSHALL JOHNSTONE APPLICANT
AND:	CASUAL LIFE FURNITURE PTY LTD RESPONDENT

JUDGE:	TAMBERLIN J
DATE:	24 NOVEMBER 1997
PLACE:	SYDNEY (HEARD IN MELBOURNE)

REASONS FOR JUDGMENT

This Notice of Motion filed on 7 November 1997 by the respondent, Casual Life Furniture Pty Ltd (“Casual”), seeks to strike out paragraphs 4, and 6 to 16 inclusive, of the applicant’s Amended Statement of Claim (“ASC”) and a further order that that the proceedings in this Court be permanently stayed.

The ASC states that the applicant is a barrister who in 1992 was briefed by Mr Joseph Guss (“Guss”), solicitor, to act for Casual.  The applicant carried out work for Casual and charged a fee of $8,430, which is said to be reasonable.  Guss failed to pay the moneys whereupon the applicant obtained judgment in the Magistrates’ Court against Guss for that sum plus interest at 13.2% under the Penalty Interest Rates Act 1983 (Vic).The ASC claims that the reason judgment was recovered against Guss and not Casual was because of a Victorian Bar Council ethical rule, which it is said, prevented a barrister recovering fees against a client until the solicitor had first become bankrupt  This rule, it is claimed, ceased to apply since the coming into operation of the Legal Practice Act 1996 (Vic).

There were appeals by Guss against the judgment but these were unsuccessful.  Nevertheless, the fees were not paid.  The ASC further alleges that Guss, with the assistance of Casual, tried to avoid being served with a bankruptcy notice.  No specific facts are pleaded of Casual’s alleged conduct in this respect.  Guss is a director of Casual.  The ASC then alleges that having been served with a bankruptcy notice, Guss tried to set it aside.  This was unsuccessful.  There was an appeal to the Full Court of the Federal Court.  Judgment on that appeal was handed down on 13 November 1997.  The appeal was dismissed.

It is then alleged that all these steps were taken by Guss because the time for the applicant to make a claim under the Limitation of Actions Act 1958 (Vic) would expire so that the applicant could not recover the moneys against Guss or Casual. There is then an allegation that Casual knew of these aims of Guss and conspired at all times with Guss to avoid paying anything to the applicant for the work which he had done.

It is further alleged that in so acting Casual acted in a misleading or deceptive way contrary to s 52 of the Trade Practices Act 1974 (Cth) or s 11 of the Fair Trading Act 1985 (Vic).As a result of misleading or deceptive conduct by Casual and Guss the applicant claims he suffered loss and damage composed in part of the initial judgment for $8,430, together with party-party costs thrown away and solicitor-client costs incurred by the applicant which were also thrown away.

There is then an allegation, in the alternative, that Casual and Guss committed the tort of conspiracy with the intent of causing loss and damage to the applicant.

The applicant claims the sum of $8,340 for his fees plus interest.  There is also a further generalised rolled up claim for a total amount of $350,000.

Statement of Claim

Casual submits that the pleading is deficient because it does not allege the material facts, including any overt acts on the part of Casual, which are relied on to sustain the conclusion that there was a conspiracy.

Order 11 r 2 of the Federal Court Rules requires that a pleading of a party must contain a statement in summary form of the facts relied on.  The purpose of pleading is to define the issue with sufficient specificity to inform the other parties in advance of the case they have to meet.  The pleading is intended to identify the material relied on as constituting the cause or causes of action which are said to constitute the case for the relief sought.  Particulars and statements of evidence are no substitute for proper pleadings.  The pleading must disclose facts which can reasonably give rise to the cause of action asserted.

The gist of the tort of conspiracy was stated by Lord Diplock in Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173 at 188-189 as follows:

“The gist of the cause of action is damage to the plaintiff; so long as it remains unexecuted the agreement, which alone constitutes the crime of conspiracy, causes no damage; it is only acts done in execution of the agreement that are capable of doing that.  So the tort, unlike the crime, consists not of agreement but of concerted action taken pursuant to agreement.”

In Little v Law Institute of Victoria [1990] VR 257 at 271, Kaye and Beach JJ said:

“It follows that a statement of claim pleading tortious conspiracy must allege an agreement or combination between defendants to injure or harm the plaintiff, overt acts of the defendants in furtherance of the agreement or combination, and consequential injury or damage suffered by the plaintiff: see Bullen and Leake and Jacobs, Precedents of Pleading (1975), 12th ed, p341.”

In that case their Honours considered that the pleadings did not disclose a cause of action because the allegations of overt acts as pleaded were not capable of sustaining the conclusion that the predominant purpose of the respondents’ agreement was to injure the appellant in the practice of his profession.

In the present case the ASC does not set out the material facts as to the conduct of Casual which are said to give rise to the conspiracy by it with Guss.  There is a great deal said about the conduct of Guss.  There is an assertion in par 9 that Guss, with the assistance of Casual, tried to avoid being served with the bankruptcy notice but no material facts as to this characterisation of the conduct are spelt out in relation to what assistance Casual is alleged to have given.  In par 11 the assertion is that Guss is a director of Casual.  In par 13 it is said that Casual knew of the true aims of Guss and conspired with Guss. The allegation of conspiracy of course involves an allegation of law. It is permissible to raise a point of law under O 11 r 9 in the pleadings but this does not avoid the necessity for a proper pleading by way of identifying the material facts which are sought to be relied on to ground the point of law.  In addition, in the alternative, in par 16 of the ASC there is an allegation that Casual and Guss conspired to commit the tort of conspiracy with the intent of causing loss and damage to the applicant, but again there is no mention of any overt acts to substantiate this assertion.  Casual is left in the dark on the pleadings as to what it is said to have done which amounts to participation in an act or acts of conspiracy.

In relation to the s 52 claim there is simply a bare assertion that Casual acted in a misleading or deceptive way, but no material facts are pleaded to ground the allegation in relation to the conduct by Casual. There are no specific material facts pleaded which indicate the way in which any representation or conduct of Casual is claimed to be misleading or deceptive or to whom such conduct is said to be misleading or deceptive or as to any reliance, causation or detriment to the applicant which flowed from the conduct of Casual. Material facts in relation to a s 52 claim might include statements, documents, conduct or implications: see Sutton v AJ Thompson Pty Ltd (In Liq) (1987) 73 ALR 233. The allegations made in the present case are simply to the effect that Casual took unspecified steps to enable Guss and Casual to avoid payment of the applicant’s fees. This does not on its face support an allegation of misleading or deceptive conduct.

In my view, the failure to plead the material facts as to the conduct of Casual requires the conclusion that the ASC should be struck out in relation to both the allegations of conspiracy and misleading and deceptive conduct, including the claims under the Fair Trading Act.

However, there remains the claim in relation to the sum of $8,430 for barrister’s fees and for interest.  In relation to this claim the applicant has, in my view, set out sufficient material facts to support the allegation, as an arguable case, that such fees have been earned and remain unpaid.

Casual submits that the Court should not permit the claim for the barrister’s fees to proceed in this Court, given the small amount of that claim.  It submits that the appropriate course is to permanently stay the proceedings in this Court in relation to that claim but to make it clear that the stay is not intended to prevent the applicant from pursuing his claim against Casual in any other court such as the Magistrates’ Court or in County Court proceedings, whether by way of primary claim or by way of set off or cross-claim.

I agree.  I think this course is appropriate because there is no foundation for the case being brought or continued in this Court under the guise of a Trade Practices Act claim.  The material does not disclose any arguable case on the trade practices claim and the claim for barrister’s fees is not one which involves or requires the exercise of federal jurisdiction.

Improper purpose

Casual also submitted in the alternative that the Federal Court claim against it should be either struck out in its entirety or be stayed because it was being pursued for an improper purpose.  Reliance was placed on an affidavit filed by the applicant on 12 November 1997 which was cast in somewhat emotional, and in many respects, highly extravagant terms. In that affidavit the applicant alleged that his main reason for bringing the case in the Federal Court was to try to force Guss to ensure that he was paid out, rather than Guss opting for bankruptcy.  The applicant stated that he believed that Guss had plenty of available funds and that if Guss opted for bankruptcy the applicant would do the best he could to “drive his family mad with this case hanging over their heads all the time” until the case was concluded.

Notwithstanding the strong emotional outburst in his affidavit I am satisfied that the applicant has an arguable case against Casual in relation to the barrister’s fees and I would not dismiss the proceeding on the basis it was brought for an improper purpose.  The claim was not disputed as being unarguable in relation to the barrister’s fees.  I think it is reasonably clear that the applicant is seeking to recover his fees from one or other of the two parties at whose request it is alleged the work was done.

Leave to Amend

This is not a case where I consider that there is material before me which would justify granting leave for the plaintiff to amend the paragraphs of the ASC which relate to claims for conspiracy and misleading or deceptive conduct.  The material in the affidavit of Mr Johnstone does not, in my view, provide sufficient material to reach a conclusion that he has an arguable case in relation to either of these matters. Because the matter is not appropriate for determination by a Federal Superior Court I consider the proceeding should be permanently stayed as to the claim for barrister’s fees.

Accordingly, the orders I propose to make are these:

Paragraphs 9 to 16 inclusive of the Amended Statement of Claim are struck out.  The proceedings in relation to the claim for barrister’s fees are permanently stayed against Casual. 

There will be no order as to costs in view of the circumstances disclosed in the affidavit filed by Mr Johnstone.  The applicant is, of course, free to pursue these claims in the County Court or the Magistrates’ Court by way of claim or counter-claim or set off, as he may be advised.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin

Associate:

Dated:            24 November 1997

Counsel for the Respondent:	Mr M Stiffe
Solicitor for the Respondent:	Tony Hinz & Associates
Date of Hearing:	13 November 1997
Date of Judgment:	24 November 1997