Jovanovic v Law Society of Tasmania
[2005] TASSC 105
•9 November 2005
[2005] TASSC 105
CITATION: Jovanovic v Law Society of Tasmania [2005] TASSC 105
PARTIES: JOVANOVIC, Jon
v
LAW SOCIETY OF TASMANIA
BUGG, Timothy G
BARTLETT, Melanie B
DALY, M F
DIXON, P A
GRIFFITHS, P A
HOLT, Steven J
McMULLEN, Max
KIMBER, Phillip A
BARRY, Hugh
ADAMS, Harold John
PITT, Kass A M QC
UPCHER, J R
WILDING, C E
WILKINS L D
JACKSON, Phillip
MARTIN, Jan
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 86/2003
DELIVERED ON: 9 November 2005
DELIVERED AT: Hobart
HEARING DATE: 12 October 2005
JUDGMENT OF: Underwood CJ
CATCHWORDS:
Procedure - Supreme Court procedure - Tasmania - Practice under the Rules of Court - Proceedings in lieu of demurrer - Application to strike out statement of claim on grounds that it discloses no reasonable cause of action – Whether statutory provisions give rise to a duty of care .
Sullivan v Moody (2001) 207 CLR 562; Sutherland Shire Council v Heyman (1985) 157 CLR 424; Graham Barclay Oysters Pty Ltd v Ryan and Ors (2002) 211 CLR 540, applied.
Jovanovic v Law Society & Ors (No 2) [2003] TASSC 65; Spaulding v The Law Society of Tasmania [2004] TASSC 1, followed.
Aust Dig Procedure [274]
REPRESENTATION:
Counsel:
Plaintiff/Respondent: In Person
Defendants/Applicants:
(1st – 6th, 8th, 9th, 12th, 13th, 16th and 17th): D J Gunson SC
Solicitors:
Plaintiff/Respondent: In Person
Defendants/Applicants:
(1st – 6th, 8th, 9th, 12th, 13th, 16th and 17th): Gunson Williams
Judgment Number: [2005] TASSC 105
Number of paragraphs: 42
Serial No 105/2005
File No 86/2003
JON JOVANOVIC v LAW SOCIETY OF TASMANIA, TIMOTHY G BUGG, MELANIE B BARTLETT, M F DALY, P A DIXON, P A GRIFFITHS,
STEVEN J HOLT, MAX McMULLEN, PHILLIP A KIMBER, HUGH BARRY, HAROLD JOHN ADAMS, KASS A M PITT QC, J R UPCHER, C E WILDING,
L D WILKINS, PHILLIP JACKSON, JAN MARTIN
REASONS FOR JUDGMENT UNDERWOOD CJ
9 November 2005
The issues
The applicants seek the following orders upon an amended interlocutory application filed on 24 November 2003:
(i)The plaintiff give security for costs in the sum of $20,000.
(ii)The security be provided within 28 days.
(iii)The action be stayed until security is given.
(iv)The action be dismissed if security is not given within 28 days.
(v)The statement of claim dated 28 March 2003 be struck out and judgment entered for the applicants upon the grounds that the statement of claim discloses no reasonable cause of action.
Mr D J Gunson SC, who appeared for the applicants, submitted that I should determine the last issue first, and that if the applicants succeed on that issue, there will be no need to determine the other issues raised by the interlocutory application. I shall proceed accordingly.
Some background
The plaintiff, a self-represented litigant, commenced proceedings in Action No 86/2003 by the issue of a writ on 4 March 2003. The writ named seventeen defendants. Appearances were entered by one firm of solicitors for all, except the tenth and eleventh defendants. There is no material to prove that the tenth and eleventh defendants have been served with the writ and the issues presently for determination do not affect them.
The statement of claim is dated 28 March 2003. Although the heading names only 16 defendants, it pleads allegations against all but the tenth and eleventh defendants.
On 9 April 2003, a defence was filed on behalf of all but the tenth, eleventh, fourteenth and fifteenth defendants. On 18 June 2003, a defence was filed on behalf of the last two-mentioned defendants. Both defences are in identical terms and conclude with a plea that the statement of claim does not disclose a cause of action.
On 4 July 2003, the seventh, fourteenth and fifteenth defendants applied for summary judgment against the plaintiff. An order to that effect was made on 4 August 2003.
Currently therefore, there remain twelve defendants, all of whom are applicants for the orders sought on the amended interlocutory application. The first defendant is the Law Society, a body corporate by virtue of the Legal Profession Act 1993 ("the Act"), s4. For convenience, I shall refer to the first defendant as "the Law Society". The second to sixth, eighth, ninth, twelfth and thirteenth to sixteenth defendants were, and are, legal practitioners. For convenience, I shall refer to these defendants collectively as "the legal practitioners". The seventeenth, and last, defendant is also a legal practitioner. She was the Executive Director of the Law Society and I shall refer to her as "the Executive Director".
The statement of claim concerns a complaint that the plaintiff made to the Law Society at the end of 1999 about the alleged conduct of a Sydney solicitor, Mr Barry, the tenth defendant. The statement of claim alleges that the legal practitioners comprised the investigations committee appointed pursuant to the Act, s65(1). The defences admit this allegation, except with respect to the three legal practitioners who obtained judgment on 4 July 2003, but with respect to some, it is pleaded they were not members of the Committee for the whole of the period between the lodgement of the plaintiff's complaint and its determination.
In essence, the plaintiff's claim is that the Law Society and the legal practitioners failed to investigate his complaint, treated it as worthless and dismissed it. He alleges that the facts pleaded give rise to several causes of action and entitle him to recover damages. The contention of the Law Society, the legal practitioners and the Executive Director, is that the statement of claim does not disclose any cause of action against any of them, could not, by amendment, plead a cause of action against any of them, and should be struck out and judgment entered against the plaintiff.
The statement of claim
Paragraph 1 pleads immaterial background facts.
Paragraph 2 asserts that the Law Society is a statutory authority with the "conflicting responsibilities of representing the interests of the legal profession and policing its members by (inter alia) investigating, prosecuting and sitting in judgment of its errant members".
Paragraphs 3 – 14 plead, with respect to the legal practitioners, except the second defendant, that each is or was:
(i)a legal practitioner;
(ii)an officer of this Court;
(iii)a member of the Law Society; and
(iv)a member of the Society's investigations committee "which had a statutory duty to properly investigate and deal with the plaintiff's complaint in accordance with law".
Paragraph 15 alleges that the Executive Director was the Executive Director of the Law Society and that she had the day to day responsibility:
(i)for administering "the Legal Practitioners Act" [sic];
(ii)"to ensure" that the members of the investigations committee "adhered to their statutory duty to properly investigate and deal with the plaintiff's complaint".
Paragraph 16 alleges that on 19 November 1999 the plaintiff made a complaint (to whom is not pleaded) about the conduct of Mr Barry, a solicitor from Sydney and "legal practitioner and officer of the Court".
Paragraphs 17 – 21 allege that the plaintiff and another were directors of a company called D W and I M Tapping Pty Ltd, and that the advice of Mr Barry was sought with respect to that company recovering funds invested with Tasmanian Trustees and the "retention" of the title to some processing equipment. It is alleged that Mr Barry acted in a conflict situation and that his advice was misleading and given negligently.
Paragraph 22 pleads that on 25 November 1999 the complaint was made to the Law Society.
Paragraph 23 pleads immaterial facts.
Paragraphs 24 and 25 plead that the Law Society admitted that the defendants had not undertaken an investigation of the complaint, and that on 2 October 2002 it advised the plaintiff that "the response from Mr Barry clearly identifies the fact that you and the other parties including Mr Adams [the eleventh defendant] had inter-related business transactions and the response from Mr Barry is regarded as being plausible, and consistent with what occurred, and this complaint is therefore dismissed".
Paragraphs 26 – 52, the balance of the statement of claim, are set out under the heading "Particulars", but it is not clear of what these paragraphs are particulars, so it is appropriate to consider them, both as particulars of some unspecified preceding paragraph or paragraphs, and as paragraphs separate from, and additional to, the preceding paragraphs. These "Particulars" can be regarded as falling into nine sets of three paragraphs. Each set deals with an alleged cause of action. The first and second paragraphs of each set are pleaded against the Law Society and the legal practitioners. The third paragraph in each set is pleaded against the Executive Director.
With respect to the Law Society and the legal practitioners, each set relies upon the alleged failure to properly investigate the plaintiff's complaint, and the determination that the solicitors' explanation was plausible and consistent with what occurred, and claims that this conduct amounted to a specified cause of action and treatment of the plaintiff's claim "as a floccinalicinihilipilification". With respect to the Executive Director, each set relies upon the same matters as are relied upon against the Law Society and the legal practitioners and specifies the same cause of action, but alleges that her breach constituted a failure to ensure that the Law Society and the legal practitioners did not treat the plaintiff's complaint as a floccinalicinihilipilification. For those not familiar with this word, the Shorter OED relevantly defines its meaning as the action or habit of estimating as worthless.
Accordingly, the first set of three paragraphs allege that the Law Society and the legal practitioners breached their statutory duty by failing to properly investigate the plaintiff's complaint and breached their statutory duty in the determination they made, and that the Executive Director breached her statutory duty in failing to ensure that the other defendants did not treat the plaintiff's complaint as a floccinalicinihilipilification.
The remaining eight sets assert that the conduct amounted to:
(i)a breach of a duty of care;
(ii)a failure to abide by the rules of natural justice;
(iii)a failure to follow due process;
(iv)negligence;
(v)a failure to act in good faith;
(vi)a failure to accord administrative fairness;
(vii)a failure to avoid racial discrimination; and
(viii)unreasonable action in accordance with the Wednesbury test.
Although the statement of claim refers throughout to the Legal Practitioners Act, that Act was repealed by the Act, which commenced on 31 December 1994. However this defect could easily be cured by an amendment. Further, although the statement of claim, pars27 – 52, pleads allegations against the applicants/defendants, there are no facts pleaded against the second applicant/defendant, Mr Timothy Bugg, to assert that he is a legal practitioner, that he is an officer of the Court, and that he had anything to do with the Law Society or the investigations committee. It would appear that this omission is probably in the nature of an oversight and could also be cured by an amendment. Finally, the statement of claim contains material which is not appropriate for inclusion in a statement of claim that is bound by the Supreme Court Rules 2000 to plead only material facts. However, for the purpose of this application, I shall proceed upon the basis that the statement of claim does properly plead the essence of the plaintiff's allegations as I have described them above.
The statement of claim does not particularise the damage that the plaintiff suffered, but during the course of submissions he told me that the damage suffered by him from the failure to investigate his complaint and from treating it as worthless was:
"I would not have been charged with the offence in respect of which I was later found guilty because the money which Tapping and I were accused of stealing was actually misappropriated by McMullen and Perpetual Trustees."
I interpolate that the record of this Court shows that on 11 February 2005, the plaintiff was convicted of three counts of stealing and on 18 April 2005, sentenced to a term of imprisonment. The criminal pleadings show that the money stolen was money held in trust for investors by D W & I M Tapping Pty Ltd, a company of which the plaintiff was a director. It will be a long stretch to establish a compensable causal link between any failure to investigate a complaint about a solicitor between 1999 and 2002 and the treatment of that complaint as worthless, and the prosecution and conviction of the plaintiff for crimes. However I will put that to one side for the moment.
Duty of care and statutory duty
The principal argument in support of the strike-out application was that the alleged failure to investigate the plaintiff's complaint and the alleged treatment of it as worthless could not constitute either a breach of a common law duty of care or a statutory duty because, in the circumstances pleaded, none of the applicants owed the plaintiff a duty of care and the statutory obligations relied upon did not give the plaintiff a right to sue for damages in the event of a breach.
The Act, s57, provides (inter alia) that any person may make a complaint against a legal practitioner and s58(1) provides:
"(1) The Council must investigate a complaint made under section 57."
The plaintiff relied heavily upon the fact that the subsection was couched in mandatory terms and submitted that a failure to comply with its provisions entitled him to be compensated for any loss suffered as a result of that failure. In his argument, the plaintiff referred at length to Graham Barclay Oysters Pty Ltd v Ryan and Ors (2002) 211 CLR 540 and pointed out, quite correctly, that unlike the relevant provisions of the Act, the statutory power in that case was discretionary. The submission was that a fortiori, a duty of care arose from a mandatory statutory duty. This submission is attended by a misunderstanding of legal principle.
It is beyond doubt that a statutory body such as the Law Society and a group of persons appointed pursuant to a statutory power may come under a common law duty of care in relation to both the exercise and the omission to exercise the statutory powers and functions. With respect to the former, see, for example, Caledonian Collieries Ltd v Speirs (1957) 97 CLR 202, and with respect to the latter, Sutherland Shire Council v Heyman (1985) 157 CLR 424. However, it does not follow that the mere existence of a statutory power will give rise to a common law duty upon either the exercise, or the omission to exercise, that power to take reasonable steps to avoid the risk of foreseeable harm to the plaintiff or a member of a class of persons to which the plaintiff belongs. See Sutherland Shire Council (supra) at 500. This is so even if the statutory provision is couched in mandatory terms.
The question always is, does the nature or purpose of the legislation give rise to an inference that the common law duty of care is excluded? In Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1, Gaudron J said at 19:
"Legislation establishing a statutory body may exclude the operation of the common law in relation to that body's exercise or failure to exercise some or all of its powers or functions. Even if the legislation does not do so in terms, the nature or purpose of the powers and functions conferred, or of some of them, may be such as to give rise to an inference that it was intended that the common law should be excluded either in whole or part. That is why distinctions are sometimes drawn between discretionary and non-discretionary powers, between policy and operational decisions and between powers and duties. Where it is contended that a statutory body is not subject to a common law duty in relation to the exercise or non-exercise of a power or function because of the nature or purpose of that power, what is being put is that, as a matter of implication, the legislation reveals an intention to exclude the common law in relation to the exercise or non-exercise of that power." [References omitted.]
In Sullivan v Moody (2001) 207 CLR 562 at 582, the joint judgment came to the conclusion that statutory duties imposed upon officers of the Department of Community Welfare in South Australia to investigate and report on allegations that children had suffered and were under threat of serious harm, were inconsistent with the existence of any common law duty of care owed to those suspected of being the source of that harm. Their Honours said, at par62:
"It would be inconsistent with the proper and effective discharge of those responsibilities that they should be subjected to a legal duty, breach of which would sound in damages, to take care to protect persons who were suspected of being the sources of that harm. The duty for which the appellants contend cannot be reconciled satisfactorily, either with the nature of the functions being exercised by the respondents, or with their statutory obligation to treat the interests of the children as paramount. As to the former, the functions of examination, and reporting, require, for their effective discharge, an investigation into the facts without apprehension as to possible adverse consequences for people in the position of the appellants or legal liability to such persons. As to the latter, the interests of the children, and those suspected of causing their harm, are diverse, and irreconcilable."
The difficulties of finding a unified approach to the identification of a duty of care in the case of an exercise, or failure to exercise, a statutory duty, have troubled the appellate courts of this country for some time. These difficulties are set out at length in the judgment of the Full Court of the Federal Court in the Graham Barclay Oyster case, reported (2000) 102 FCR 307 at 312 – 321. In his judgment in that case on appeal to the High Court, Kirby J referred to the difficulties apparent in the earlier decisions, and said at 617:
"Only one unarguable principle emerges from the earlier decisions, reflected in the Federal Court's analysis [of the earlier cases which searched for a unifying principle]. It is the self-evident one that any duty of a public authority at common law must be compatible with the legislative powers conferred, and duties imposed, on that authority cf Sullivan v Moody (2001) 75 ALJR 1570 at 1576 [36], 1577 [41]; 183 ALR 404 at 411, 412. It must conform to the apparent purpose of the legislature relating to the authority carrying out its duties according to statute Graham Barclay Oysters Pty Ltd v Ryan (2000) 102 FCR 307 at 320-321 [18]-[21] per Lee J, 391 [307] per Lindgren J, 455 [582] per Kiefel J. As Lindgren J said in the Federal Court, the search for what the law expects must commence 'with a close examination of the relevant legislation' Graham Barclay Oysters Pty Ltd v Ryan (2000) 102 FCR 307 at 391 [307]. As Kiefel J expressed it, 'the principal focus must be upon the statutes which confer power on those entities' Graham Barclay Oysters Pty Ltd v Ryan (2000) 102 FCR 307 at 455 [582]."
In the same case, Gummow and Hayne JJ said, at 596 – 597:
"The existence or otherwise of a common law duty of care allegedly owed by a statutory authority turns on a close examination of the terms, scope and purpose of the relevant statutory regime. The question is whether that regime erects or facilitates a relationship between the authority and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence.
Where the question posed above is answered in the affirmative, the common law imposes a duty in tort which operates alongside the rights, duties and liabilities created by statute. In some instances, a statutory regime may itself, in express terms or by necessary implication, exclude the concurrent operation of a duty at common law. An example is provided by Sullivan v Moody (2001) 75 ALJR 1570; 183 ALR 404."
With respect to the statutory obligations of the Law Society and the Investigations Committee, it is clear that they are designed to maintain high professional standards for those who practice the law and those who require the services of legal practitioners, as well as to protect the public at large. The exercise of these statutory obligations calls for a fearless, impartial and objective investigation and inquiry into the matters complained of and, if appropriate, the taking of, or referral for, disciplinary action. Such an investigation may require a close and fearless scrutiny of the actions and conduct of both the person making the complaint and the person against whom the complaint is made. Merely to state that proposition makes it abundantly clear that the imposition of a common law duty to take care not to expose either the complainant or the person in respect of whom the complaint has been made to the risk of foreseeable harm would be inconsistent with the proper and effective discharge of those obligations.
This point has been litigated in this Court before.
In Jovanovic v Law Society & Ors (No 2) [2003] TASSC 65, the learned former Chief Justice held that no common law duty of care arose from the exercise, or failure to exercise, the statutory powers conferred upon the Australian Securities and Investments Commission. After referring to Sullivan v Moody (supra), his Honour said at par123:
"In my view there is neither a duty of care on the part of ASIC to the plaintiff in respect of the institution or conduct of its investigation, nor any fact pleaded from which a breach of duty could be established. See also Yuen Kun Yeu v Attorney General Hong Kong [1988] AC 175."
The reasoning that led the learned Chief Justice to that conclusion is apposite to the plaintiff's claim against the Law Society and the legal practitioners in this action. A claim very similar to the present one was made by Mr Spaulding in Spaulding v The Law Society of Tasmania [2004] TASSC 1. Like the plaintiff in this case, Mr Spaulding alleged that he suffered damage as a result of the Law Society failing to properly investigate a complaint. The learned Master struck out the plaintiff's claim against the Law Society upon the basis it disclosed no cause of action. The Master referred to Jovanovic v The Law Society & Ors (No 2) and said, with respect to the claim in negligence, at par12:
"It would be incompatible with the object of protecting the public by suppressing dishonourable conduct and practices if, for example, investigations were to be conducted with the risk that a practitioner unsuccessfully prosecuted as a result of a negligent investigation should have a remedy against the investigator in damages. Similarly, it would not be compatible with the efficient undertaking of its general functions if the Law Society owed a private duty of care to a complainant. Where a practitioner acts negligently; breaches of fiduciary duty or commits an act of fraud and a client suffers damage the client can be expected to have a remedy against the practitioner directly without the intervention or assistance of the Law Society. It is possible to decide that there was no duty of care without a trial and simply on the basis of the nature of the allegations in the proposed statement of claim. Mr Spaulding put forward no reason and I can think of no reason why ASIC should not have a duty of care in investigating for the protection of the public allegations of corporate misconduct whilst the Law Society should be subject to negligence claims in its investigation for the protection of the public of allegations of professional misconduct. Both authorities have a regulatory function conferred by statute with an investigating and prosecuting power with an object of protecting the public. Accordingly I accept Mr O'Farrell's submission based on the analogy with ASIC that no duty of care existed so as to afford to Mr Spaulding a cause of action in negligence against the Law Society."
An appeal against the Master's decision was dismissed by me.
Trustrum v The Law Society& Ors [2005] TASSC 20, was another case in which a claim for damages for breach of a duty of care was brought against the Law Society on the basis that the Law Society failed to investigate, or properly investigate, a complaint made to it. Also joined in this action were a number of legal practitioners who were alleged to be the investigations committee at the material time. To borrow an expression from the law of criminal evidence, there is a striking similarity between Mr Trustrum's statement of claim and the statement of claim of the plaintiff in this action, even down to the use of the word "floccinalicinihilipilification". Evans J struck out the statement of claim in that case upon a basis not material for present purposes. However he went on to say obiter dicta at par7:
"Central to the plaintiff's claim for damages against the defendants is the alleged failure to properly investigate his complaint against Mr Wootton and the proposition that by reason of such statutory duties as are imposed referable to the investigation of a complaint, the defendants were subject to a duty of care to the plaintiff. In Spaulding v Law Society of Tasmania [2004] TASSC 1, Master Holt concluded that the imposition of a duty of care on the Society to a complainant in respect of the investigation and prosecution of a complaint against a legal practitioner pursuant to the Law Society Act 1962 would be incompatible with the objects of that Act and accordingly no such duty was owed to a complainant. The Law Society Act was repealed by the Legal Profession Act 1993. The plaintiff's complaint to the Society is governed by the latter Act, under which the Society, and any investigation committee established pursuant to s65 of that Act, have certain roles in relation to the investigation of complaints by members of the public concerning legal practitioners. In Mentyn v Law Society of Tasmania (No 2) [2004] TASSC 127, Blow J considered whether a breach by the Society or a member of an investigation committee of any statutory duty imposed by the Legal Profession Act gave rise to a private cause of action by a complainant for damages for breach of statutory duty or negligence. He concluded that it did not, for the reasons explained by Master Holt in Spaulding. Accordingly, an additional reason for striking out the plaintiff's statement of claim is that there is no foundation for the duty of care that is central to the claims he advances against the defendants."
Accordingly, I am clearly of the view that the statement of claim as against the Law Society and the legal practitioners, insofar as it is based upon an alleged breach of a common law duty of care and a breach of statutory duty, should be struck out as it discloses no cause of action and the defect cannot be cured by any amendment.
The Act, s14, empowers the Council of the Law Society to appoint an Executive Director. His or her duties are spelled out in that section. Relevantly they are to carry out all instructions from the Law Society and the Council of the Law Society and to perform all duties imposed upon the Executive Director by the Act. With respect to complaints, the only statutory duties imposed upon the Executive Director are those set out in the Act, s57, which provides:
"(1) Any person or the Society may make a complaint against a practitioner.
(2) A complaint ¾
(a)is to be made in writing; and
(b)is to contain particulars with respect to the matter complained of; and
(c)is to identify the person against whom the complaint is made and the person making the complaint; and
(d)if compensation is claimed, is to specify to the best of the applicant's knowledge any pecuniary loss incurred; and
(e)is to be lodged with the Executive Director of the Society.
(3) The Executive Director is to take all reasonable steps to ensure that a person who wishes to make a complaint is given such assistance as is necessary to enable that person to make the complaint in accordance with this section.
(4) On receipt of a complaint, the Executive Director is to ¾
(a)make a record of the date on which the complaint was received; and
(b)furnish a copy of the complaint to the Legal Ombudsman."
There is a further statutory obligation imposed on the Executive Director by the Act, s85, but that refers to an inquiry by the Legal Ombudsman and is not relevant to these proceedings. The Act does not impose on the Executive Director the duties that are pleaded against her in the statement of claim, par15, and there is no plea that the Law Society or its Council instructed her to carry out the duties pleaded against her in that paragraph. Accordingly, no duty of care can be said to arise from the failure of the Executive Director to carry out her statutory obligations.
With respect to the remaining alleged causes of action that I have listed in par22 of these reasons, the allegation of negligence fails because no duty of care arises and the balance all belong to the field of administrative law. Even if the necessary facts had been pleaded to support any one of them, they do not entitle the plaintiff to recover damages as is sought by the statement of claim.
For these reasons the plaintiff's statement of claim against all the applicants discloses no cause of action and no amendment can cure the defects. The application to strike it out succeeds. It is ordered that the statement of claim against the first to sixth, eighth, ninth, twelfth, thirteenth, sixteenth and seventeenth defendants be struck out and judgment entered for them against the plaintiff with costs to be taxed.
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