Karam v Palmone Shoes Pty Ltd (No 3)
[2016] VSC 228
•20 May 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2009 09926
IN THE MATTER OF an application by Lennon Mazzeo pursuant to s 16 of the Vexatious Proceedings Act 2014 (Vic)
| AKRAM KARAM | Plaintiff |
| v | |
| PALMONE SHOES PTY LTD | Defendant |
---
JUDGE: | J FORREST J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 19 April 2016 |
DATE OF JUDGMENT: | 20 May 2016 |
CASE MAY BE CITED AS: | Karam v Palmone Shoes Pty Ltd (No 3) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 228 |
---
PRACTICE AND PROCEDURE – Extended litigation restraint order – No reasonable basis for frequently commencing or conducting vexatious proceedings – Vexatious Proceedings Act 2014 (Vic).
---
APPEARANCES: | Counsel | Solicitors |
| For Lennon Mazzeo | Mr S McCredie | Lennon Mazzeo |
| For CTT Legal | Ms P Toop | CTT Legal |
| For Aloe & Co Pty Ltd | Mr J Aloe | Aloe & Co Pty Ltd |
| For the Plaintiff | No appearance | |
| For the Defendant | No appearance |
HIS HONOUR:
Introduction
Mr Karam obtained a judgment against Palmone Shoes Pty Ltd (Palmone) in this Court in 2010.[1] During the course of that litigation he engaged six firms of solicitors, including Aloe & Co, Clark, Maxwell & Taylor, and Lennon Mazzeo.
[1]Karam v Palmone Shoes Pty Ltd [2010] VSC 82 (‘2010 judgment’).
Notwithstanding his success, Mr Karam has become immersed in multiple pieces of litigation and appeals arising out of that decision. One of those is his claim against Lennon Mazzeo in this Court for professional negligence. Another relates to an order obtained in that firm’s favour for a portion of the award of damages from the 2010 judgment, on the basis that it had an equitable lien over the fruits of the judgment.
Lennon Mazzeo, pursuant to the Vexatious Proceedings Act 2014 (Vic) (the Act), now wants to bring a halt to the prospect of more ancillary fights and appeals, and have the professional negligence claim dealt with as soon as is practicable. Orders were made on 5 April 2016 to ensure that Mr Karam was put on notice of Lennon Mazzeo’s application.
One of the purposes of the Act is to enable a Court to limit the proceedings that a litigant can bring where the claim(s) which he or she is initiating or maintaining is found to be vexatious. In circumstances where such an order is made, the litigant retains the right to seek leave of the Court to pursue a claim, but only where there is compliance with Part 8 of the Act.
For the following reasons, Lennon Mazzeo is entitled to the orders sought which will prevent (absent leave of the Court) any further agitation by Mr Karam of the correctness of the orders in relation to the lien, and any ancillary appeals associated with Mr Karam’s professional negligence case. I have also made orders bringing that case on for hearing of a summary judgment application by Lennon Mazzeo at the end of June.
Background to the application
For the purpose of this determination, I adopt the statement of facts of Nettle JA and the table annexed to the decision of the Court of Appeal.[2]
[2]Karam v Palmone Shoes Pty Ltd [2014] VSCA 148.
The substantive parts of Mr Karam’s asthma and cancer proceedings against Palmone
These two claims were heard together and determined by T Forrest J in the 18 January 2010 decision. Mr Karam obtained judgment for $196,315 in the asthma proceeding. The cancer proceeding was dismissed. Mr Karam’s appeal to the Court of Appeal in the cancer proceeding was dismissed and his application for special leave to the High Court was refused on 8 September 2011.
The claim by Mr Karam against Aloe & Co Ltd
Mr Karam issued this professional negligence claim in May 2013. He then sought summary judgment. The application for summary judgment was dismissed in turn by Zammit AsJ, Cavanough J and the Court of Appeal. On 13 November 2012, the High Court refused special leave.
On 12 December 2012, Pagone J gave summary judgment for Aloe & Co with costs. An application by Mr Karam to set aside that judgment was dismissed by Hargrave J and the Court of Appeal. Special leave to appeal to the High Court was refused on 12 March 2014.
The claim for costs by Clarke, Maxwell & Taylor
In August 2011, Clark, Maxwell & Taylor (now Clark Toop and Taylor) sued Mr Karam for its costs for the asthma and cancer claims. In June 2012, Mr Karam brought an application to strike out that claim. This was dismissed by the Magistrates’ Court and, in turn, on judicial review by Beach JA.
The claim by Mr Karam against Lennon Mazzeo
Mr Karam sued Lennon Mazzeo for professional negligence in 2014. The proceeding has been stayed and adjourned on numerous occasions between August 2014 and the present time. The basis for the stay has been the asserted need to await the decision in the statutory compensation claim made by Mr Karam. It is unclear as to when that claim will be heard.[3]
[3]See [15] below.
Lennon Mazzeo’s application for summary judgment is now fixed for 28 June 2016 before an Associate Justice of this Court.
The statutory compensation claim of Mr Karam against Palmone
This claim relates to weekly payments for medical expenses sought by Mr Karam in respect of his asthma condition. It was issued in the Magistrates’ Court in 2008 and subsequently raised to the County Court.
Mr Karam sought summary judgment in the Magistrates’ Court. That application was dismissed by Magistrate Wright; the appeal to this Court was dismissed by Daly AsJ. In turn, that decision was confirmed by Macaulay J and the Court of Appeal. The High Court refused special leave to appeal in November 2012.
The proceeding itself remains extant. The last order made was by Judge Wischusen earlier this year when his Honour vacated the hearing date as a result of Mr Karam’s failure to attend a medical examination. A directions hearing was held yesterday.
The costs orders in the cancer and asthma cases
Determining the award of costs in this case has been complicated. Not only because there was one successful and one failed claim; the provisions of the Accident Compensation Act 1985 (Vic) also played a part. Ultimately, in precis, the following orders were made in February 2010 by T Forrest J in relation to costs:
(a) Mr Karam to pay Palmone’s costs on the cancer claim.
(b) A declaration that Lennon Mazzeo had a lien over the proceeds of the judgment sum.
(c) A declaration that Aloe & Co had a lien over the proceeds of the judgment sum, but which did not include any legal fees relating to the cancer claim, but included disbursements in the cancer claim, as well as costs and disbursements in the asthma claim.
(d) The judgment sum was to be paid into Court.
Mr Karam appealed the costs orders. In May 2011, Mr Karam was granted leave to appeal those orders. The Court of Appeal dismissed the appeal in June 2014. At that hearing, Mr Karam’s applications that the judgments in the cancer proceeding, the asthma proceeding, and in the summary dismissal before Pagone J were procured by fraud, were dismissed. Special leave to the High Court in relation to the costs orders and the fraud allegations was refused on 10 December 2014.
In May 2014, Mr Karam’s application for an order that the funds paid into court be paid out to him was dismissed by Zammit AsJ. The appeal against that order to Ginnane J was dismissed, as was the application to reinstate the appeal.
In August 2015, Lansdowne AsJ made orders, inter alia, that a fixed amount of 57.47% of the funds paid into Court be paid to Aloe & Co; and 42.53% be paid to Lennon Mazzeo. Each firm, through its partners, provided an undertaking to repay the money into Court, if so required.
Mr Karam filed a notice of appeal against Lansdowne AsJ’s orders on 24 August 2015. Leave was refused by the Court of Appeal.
Relevant parts of the Act
Section 3 of the Act defines ‘vexatious proceedings’ as including the following:
vexatious proceeding includes the following—
(a) a proceeding that is an abuse of the process of a court or tribunal;
(b) a proceeding commenced to harass or annoy, to cause delay or detriment, or for another wrongful purpose;
(c) a proceeding commenced or pursued without reasonable grounds;
(d) a proceeding conducted in a way so as to harass or annoy, cause delay or detriment, or achieve another wrongful purpose.
Sections 16, 17 and 20 of the Act read as follows:
16 Application for extended litigation restraint order
(1)Subject to subsection (2), any of the following persons may apply to a Court or VCAT for an extended litigation restraint order against a person—
(a) the Attorney-General;
(b)if the person has commenced or conducted a vexatious proceeding against another person, that other person;
(c) a person with a sufficient interest in the matter.
(2)A person referred to in subsection (1)(b) or (c) must not apply for an extended litigation restraint order—
(a)without leave of the Court of the jurisdiction in which the order is sought; or
(b)if the order is sought in respect of proceedings in VCAT, without leave of VCAT.
(3)A Court or VCAT may grant leave to apply for an extended litigation restraint order if the Court or VCAT is satisfied that—
(a) there is merit in the application; and
(b)the making of the application would not be an abuse of process.
17 Court or VCAT may make extended litigation restraint order
(1)A Court or VCAT may make an extended litigation restraint order against a person if the Court or VCAT is satisfied that the person has frequently commenced or conducted vexatious proceedings—
(a) against a person or other entity; or
(b) in relation to a matter.
Note
The Magistrates' Court may also make an extended litigation restraint order that relates to intervention order legislation under section 19.
(2)In determining whether it is satisfied of the matters specified in subsection (1), a Court or VCAT may take into account any matter it considers relevant, including but not limited to any of the following—
(a)a proceeding commenced or conducted by the person, or an entity controlled by the person, in any Australian court or tribunal;
(b)the existence of an order made by an Australian court or tribunal against the person, or an entity controlled by the person, including—
(i) a litigation restraint order; or
(ii) an acting in concert order; or
(iii) a vexatious proceeding order;
(c)any other matter relating to the way in which the person conducts or has conducted litigation.
(3)A Court or VCAT may take into account a matter referred to in subsection (2) that relates to a proceeding commenced or conducted before, on or after the commencement of this section.
(4) A Court or VCAT may make an extended litigation restraint order—
(a) on its own motion; or
(b) on an application under section 16.
…
20Content of extended litigation restraint order made by Supreme Court
(1)An extended litigation restraint order made by the Supreme Court against a person may direct that the person must not do either or both of the following for the period specified by the Supreme Court—
(a)continue a proceeding in a Victorian court or tribunal against a person or other entity named in the order, or in respect of a matter described in the order, without leave of—
(i) the Supreme Court; or
(ii)the Victorian court or tribunal in which the proceeding is being heard;
(b)commence a proceeding in a Victorian court or tribunal against a person or other entity named in the order, or in respect of a matter described in the order, without leave of—
(i) the Supreme Court; or
(ii)the Victorian court or tribunal in which the proceeding is to be commenced.
(2)An extended litigation restraint order made by the Supreme Court may include any other direction or order that the Supreme Court considers appropriate.
(3)Without limiting subsection (2), the Supreme Court may direct that the person who is subject to the order may commence or continue a specified proceeding in a Victorian court or tribunal.
The Act (in contrast to its predecessor), via s 16, allows an interested party other than the Attorney-General to make an application for a litigation restraint order. That interested party must satisfy two requirements for a court to grant leave to make the application, as follows:
(a) there must be merit in the application; and
(b) and the application must not be an abuse of process.
Assuming leave is granted, then a Court must determine whether the litigant has commenced or conducted vexatious proceedings within the meaning of the criteria set out in s 3 of the Act.
Orders sought by Lennon Mazzeo
Lennon Mazzeo seeks leave to make an application for an extended litigation restraint order in the following terms:
(a) Mr Karam must not continue in, or commence any appeal from, proceeding SCI 2009 9926 (the asthma claim) against Lennon Mazzeo without leave of the Supreme Court.
(b) Mr Karam must not commence any proceeding, including instituting any appeal, against Lennon Mazzeo without leave of the Supreme Court or the Victorian court or tribunal in which the proceeding is commenced for a period of five years.
Analysis
This is, as far as I am aware, the first occasion in which a party to litigation has sought to invoke the Act to quarantine itself against the persistent litigation of a vexatious opponent.
I am satisfied that Lennon Mazzeo, by virtue of the lien in its favour, and Mr Karam’s proceeding against the firm, has a sufficient interest in seeking an extended litigation restraint order against Mr Karam.
The first step then is to determine whether leave should be granted to make the application pursuant to s 16(3) of the Act. In some cases, endeavouring to restrict a party’s rights to pursue legitimate avenues of challenge or appeal may constitute an abuse of process. But this is not such a case.
In relation to the first order sought, Mr Karam has been to the High Court in relation to the costs orders, including the Lennon Mazzeo lien. He has failed to have the monies in court paid out to him and has run out of avenues of appeal. There is nowhere else to go. Lennon Mazzeo has waited five years to realise the fruits of its lien.
In relation to the second order sought, Mr Karam will have his day in Court contesting Lennon Mazzeo’s summary judgment application. If he does so successfully, then there will be a trial. If he fails, then the order will prevent him appealing unless he satisfies the conditions of Part 8 of the Act. He will, in that situation, need to demonstrate that the appeal is not vexatious.[4]
[4]Section 56 of the Act.
This application does not constitute an abuse of process – nor does any restriction on his ability to litigate other claims against Lennon Mazzeo, given that the firm’s only involvement with Mr Karam arises out of this proceeding. I am also satisfied that there is merit in the application and therefore leave should be given. The reasons for doing so need little elaboration, but I will set them out when dealing with the next issue.
It is now necessary to determine whether Mr Karam has frequently commenced or conducted vexatious proceedings. He most certainly has. Mr Karam’s litigation history in relation to his asthma and cancer claims (relevant matters for the purpose of s 17(2) of the Act) are patently vexatious within the meaning of s 3 of the Act.
Mr Karam has frequently commenced and prolonged proceedings without any reasonable basis. I am also satisfied that he has done so to delay and cause detriment to many of those who have been involved in the handling of his claims. The following is a snapshot of the criticisms that courts have made of Mr Karam’s litigious forays.
There have been eight applications to the High Court for special leave to appeal various decisions of the Victorian Court of Appeal. In one of those, Heydon J said:
There is no balance, thought or judgment underlying the decision to make the application. The application does nothing but indicate afresh the inordinate extent to which the applicant has been wasting the time of the Victorian courts.[5]
[5][2012] HCASL 148.
Then, in December 2014, Bell and Gageler JJ said:
The applicant applies for special leave to appeal from the orders of the Court of Appeal of the Supreme Court of Victoria (Nettle and Whelan JJA and Almond AJA) dismissing his application for review of the Registrar's decision refusing to direct that each of a number of applications and two costs appeals be heard on separate days. The Court of Appeal concluded that there was nothing to be gained from the listing of the various applications on different days "apart from more delay and a further waste of scarce resources”.
The applicant does not have legal representation and the application falls to be determined under r 41.10 of the High Court Rules 2004(Cth). It was filed out of time. The applicant has not in terms sought an order that compliance with the time limit be dispensed with. Nonetheless, the applicant has filed an affidavit which provides a sufficient explanation for the short delay. However, for the reasons to be given, there is no utility in making an order enlarging the time in which to bring the application.
The applicant does not identify any matter that would warrant the grant of special leave to appeal from the Court of Appeal's determination of this matter of practice and procedure.
The application is dismissed.[6]
[6][2014] HCASL 204.
In Karam v Clark Toop and Taylor,[7] Beach JA commented as follows:
While Mr Karam did not appear this morning, it would appear from his communications with the Court, that he would like this proceeding to be adjourned yet again. However, this is the trial of the proceeding and a further adjournment of the proceeding would only add to the already disproportionate amount that has been incurred in costs in the prosecution, defence and conduct of this proceeding. A stark feature of the present litigation is that it appears to be being conducted by Mr Karam in complete disregard of the overarching obligations referred to in the Civil Procedure Act 2010, and in particular the obligation referred to in s 24 to use reasonable endeavours to ensure that legal costs are reasonable and proportionate to the complexity of the issues in dispute and the amount in dispute.
Further, and in any event, the present proceeding is completely without merit. There was no basis upon which Mr Karam was entitled to summary judgment against the solicitors in the Magistrates’ Court proceeding. Braun M was plainly correct when he refused Mr Karam’s first application for summary judgment. Judicial Registrar Johnston was plainly correct when he refused Mr Karam’s second application for summary judgment. And, with respect, Popovic M was plainly correct when she refused Mr Karam’s application for review of Judicial Registrar Johnston’s decision.
At no time during the protracted interlocutory skirmishes in this proceeding has Mr Karam ever identified a basis upon which he might conceivably obtain judicial review of any of the interlocutory orders and decisions made in the Magistrates’ Court proceeding. Further, there has been no want of procedural fairness to Mr Karam in the Magistrates’ Court proceeding; no jurisdictional error has been identified; and no error of law has been identified that has any prospects of being established. The proceeding is, and has been, a gross waste of scarce public resources. Put shortly, this must stop. Even if the parties (and by that I mean Mr Karam and the solicitors) are not investing any further resources in the proceeding, the Court must ensure that its resources do not continue to be wasted.[8]
[7][2014] VSC 104.
[8]Ibid [26] – [28] (citations omitted).
In Karam v Palmone Shoes Pty Ltd,[9] Nettle JA said:
Each of Mr Karam’s applications to set aside the judgments in the asthma proceeding and the cancer proceeding is procedurally incompetent.
…
In my view, Mr Karam’s application to set aside the Pagone J summary judgment also fails at the outset, if only because a substantially identical application has already been litigated up to the High Court and rejected at every level.[10]
[9][2014] VSCA 148.
[10]Ibid [30], [41].
Mr Karam’s driving force, it seems, is to right some perceived injustice he has suffered as a result of the 2010 decision of T Forrest J. As far as I can tell, his motives now are to harass, annoy, and cause delay to many who have been involved in that litigation. So far, he has succeeded in causing significant inconvenience and costs to those who acted for him in that proceeding. He has also caused considerable disruption of judicial resources in this State. One of the primary purposes of the Act is to prevent the wasting of the court’s time. Deserving litigants’ cases have been delayed by Mr Karam’s conduct. It must now be curtailed. Lennon Mazzeo should be free of Mr Karam’s incessant use of court processes to frustrate its ability to realise its lien.
Pursuant to my discretion under s 17(1) of the Act, I propose to make the orders sought by Lennon Mazzeo.
8
2
0