Kingsfield Holdings Pty Ltd v Lawfirst Pty Ltd

[2022] WASC 161

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   KINGSFIELD HOLDINGS PTY LTD -v- LAWFIRST PTY LTD [2022] WASC 161

CORAM:   MASTER SANDERSON

HEARD:   19 APRIL 2022

DELIVERED          :   11 MAY 2022

PUBLISHED           :   11 MAY 2022

FILE NO/S:   CIV 2167 of 2021

BETWEEN:   KINGSFIELD HOLDINGS PTY LTD

First Plaintiff

JEFFREY STEWART LEE

Second Plaintiff

AND

LAWFIRST PTY LTD

Defendant

Catchwords:

Practice and procedure - Application for striking out part of plaintiffs' claim - Turns on own facts

Legislation:

Nil

Result:

Summary judgment for each defendant

Category:    B

Representation:

Counsel:

First Plaintiff	:	JS Lee
Second Plaintiff	:	JS Lee
Defendant	:	SF Popperwell

Solicitors:

First Plaintiff	:	Bayview Legal
Second Plaintiff	:	Bayview Legal
Defendant	:	Popperwell & Co

Case(s) referred to in decision(s):

Kingsfield Holdings Pty Ltd v Rutherford [2016] WASC 117

Kingsfield Holdings Pty Ltd v Sullivan Commercial Pty Ltd [2021] WASC 289

MASTER SANDERSON:

1. This was the defendant's application to strike out certain parts of the plaintiffs' amended statement of claim (ASOC).  The defendant conceded the plaintiffs' pleading disclosed one cause of action.  However, the defendant says there were a number of causes of action pleaded which had no prospect of success.  They sought to have these causes of action struck out with no leave to replead.  At the conclusion of the hearing, I indicated I would make orders in terms sought by the defendant.  These are my reasons for that decision.

2. The relevant facts, as disclosed by the ASOC, were as follows.  The plaintiffs in these proceedings were separately plaintiffs in two actions in this court in which each sought damages arising from the same allegedly defamatory utterance made in January 2012 on Rottnest Island.  These actions I will refer to as the 'Defamation actions'.  The words spoken by the defendant in both actions, a Mr Ivan Rutherford, were:

   Quokka Joe's café had been closed following a health inspection of the café last week.

3. Mr Rutherford was at all material times a director of Abellio Pty Ltd, which was a lessee of business premises on Rottnest Island.  In the Defamation actions there was a positive finding by the trial judge, the words complained of were uttered by Mr Rutherford.  That is an important fact and it is central to the determination of the issues in this case.  Counsel for the plaintiffs accepted his clients were bound by the finding of the trial judge with respect to the words spoken.  Consequently, no matter which sought to impinge the judicial determination the words had been uttered by Mr Rutherford can be maintained.

4. The first plaintiff in this action was the plaintiff in CIV 1106 of 2013.  It was the owner and operator of the business trading as Quokka Joe's Café referred to in the spoken words.  The second plaintiff was the plaintiff in CIV 1147 of 2013.  He is, and was at all material times, the sole director and shareholder of the first plaintiff.  When the writs were issued to commence the Defamation actions the plaintiffs were represented by Avedon Lee.  Avedon Lee was the trading name of the law practice operated by Mr Lee, the second plaintiff in this action.  In or about August 2014, Slater & Gordon assumed conduct of the actions for the plaintiffs until Avedon Lee reassumed conduct in about April 2015.  Between the date the proceedings commenced until just prior to Slater & Gordon's retainer ending, Mr Jason MacLaurin of counsel, was retained for the plaintiffs.  After Avedon Lee resumed acting, until about mid August 2015, Mr Fraser Robertson of counsel, was retained for the plaintiffs.

5. The Defamation actions were tried together before Kenneth Martin J over three days in November 2015.  Reasons were delivered on 11 April 2016:  Kingsfield Holdings Pty Ltd v Rutherford [2016] WASC 117. Both actions were dismissed. His Honour found the plaintiffs had failed to make good any of the alleged defamatory imputations. This was his Honour's key finding. He also found Mr Lee had not been identified as an object of the publication. The present plaintiffs were ordered to pay Mr Rutherford's costs. The defendant in this action which trades as Bennett + Co, was the law practice on record for the plaintiffs in the defamation actions when they went to trial. Mr Martin Bennett appeared as counsel. Bennett + Co's retainer commenced on or about 27 August 2015.

6. The plaintiffs' pleaded case in the Defamation actions was that the words were spoken by the defendant in a conversation with a Mr Peter Duffield.  Mr Duffield was a director of Sullivan Commercial Pty Ltd which was retained by the Rottnest Island Authority as its leasing agent.

7. Subsequent to the failure of the Defamation actions, the plaintiffs launched further proceedings which I will refer to as the 'Conspiracy action' (CIV 2270 of 2020).  In those proceedings the plaintiffs alleged they were misled into commencing and maintaining the Defamation actions by the fraudulent conduct of seven defendants who, it was alleged, acting in pursuit of a common design, caused the plaintiffs to suffer loss and damage by becoming liable for costs, including their own costs, of the Defamation actions.  The claims against five of the defendants were brought to an end when Allanson J entered summary judgment in the defendants' favour:  Kingsfield Holdings Pty Ltd v Sullivan Commercial Pty Ltd [2021] WASC 289.

8. The relevant defendants in the Conspiracy action were Sullivan Commercial and Mr Duffield, Mr Rutherford, the defendant in the Defamation actions, and the Rottnest Island Authority and its former CEO, Paolo Filippo Amaranti.  (Proceedings were never served on the other two defendants and they can be left to one side).

9. In the Conspiracy action, the plaintiffs alleged that on 23 January 2012 officers of the Department of Health attended at Quokka Joe's Café and conducted a food safety assessment.  One of the officers who attended was a Scott Whiddon.  Mr Lee told Mr Whiddon that the café might close early that day in which case he would attend to some of the issues of non‑compliance with health and safety regulations that had been raised by the inspectors.  None of the inspectors had required the café to close.  Shortly after the inspection, Mr Whiddon informed the manager of the Food Unit, Mr Goodchild, of the inspection and that Mr Lee had told him the café might close early that day in which case Mr Lee would attend to some issues of non‑compliance that had been raised.  The café did not close earlier than the normal closing time.

10. Mr Goodchild communicated to Mr Amaranti that Mr Lee had said the café might close early on 23 January.  Mr Amaranti communicated those matters to Mr Duffield.  On 31 January 2012, Mr Goodchild sent a letter to the present plaintiff in relation to the inspection.  That letter, signed by Mr Duffield, informed the plaintiffs that it had been advised that the café had been closed following a health inspection the previous week.  The letter asked the present plaintiff to confirm whether the inspection had taken place and to provide a copy of any health notices issued in relation to the café.

11. Following receipt of the letter from Mr Duffield, the plaintiffs instructed solicitors who wrote to Mr Duffield and asked him to identify the source of the early closure information.  The plaintiffs alleged that not later than 2 May 2012 the defendants agreed to combine in a common design with the intention of causing detriment to the plaintiffs by unlawful means or alternatively for the sole or predominant purpose of causing detriment to them.  On 2 May 2012, solicitors for Mr Duffield advised Mr Lee by email that Mr Rutherford had provided the early closure information to Mr Duffield.  Following a letter from the present plaintiffs' solicitors dated 26 June 2012, Mr Rutherford informed the present plaintiffs' solicitors he had not imparted the early closure information to anyone.  On or around 20 August 2012, a solicitor for Sullivan Commercial (and Mr Duffield) said to Mr Lee he was instructed that Mr Rutherford was the source of the early closure information.  At a meeting on 28 August 2012, Mr Rutherford told Mr Lee, in relation to the email of 2 May 2012, he had not said anything about early closure to Mr Duffield.

12. On 17 December 2012, the present plaintiffs commenced proceedings against Sullivan Commercial seeking orders for pre‑action discovery relating to the letter of 31 January 2012 and any early closure information.  On 23 January 2013, Mr Duffield swore an affidavit in the pre‑action discovery in which he said that Mr Rutherford had imparted the early closure information to him in late January 2012.  The Defamation actions were commenced in reliance on the representations that had been made to the plaintiffs by the solicitors for Mr Duffield and Sullivan Commercial on 2 May 2012 and 20 August 2012 and by Mr Duffield in the affidavit of pre‑action discovery.

13. In the Conspiracy action, the plaintiffs also pleaded the following collateral matters.  First, it was alleged in February and March 2014 at mention hearings in the Fremantle Magistrates Court on charges brought against Abellio by the Health Department, Mr Duffield appeared and announced himself as 'Peter Smith', a manager of Abellio or one of its businesses.  Second, the Department of Health did not take steps to recover fines of $100,000 imposed on Abellio in relation to those charges.  Third, on 20 April 2015, Ms Delsar (a Health Department officer) gave evidence on the hearing of charges against the present plaintiffs in which she said, incorrectly, Mr Whiddon had not been present at the inspection on 23 January 2021.  On 26 June 2018, in its notice of a decision on a freedom of information application by the second plaintiff, the Department of Health said, incorrectly, that Mr Whiddon did not travel to Rottnest Island on 23 January 2012.

14. There was further uncontested evidence before Allanson J.  Mr Rutherford, in an affidavit, deposed that in a day in January 2012 he said to Mr Duffield words to the effect that the café had closed following a health inspection the previous week and that he had been told that by Mr Henderson.  He said further he had never discussed the matter with Mr Amaranti.  Mr Duffield filed an affidavit in which he deposed that on 31 January 2012, Mr Rutherford told him words to the effect that the café had been closed following a health inspection the previous week.  An affidavit was filed by Peter Frederick Smith in which he deposed that he appeared for Abellio in the Fremantle Magistrates Court on the relevant dates.  Mr Amaranti filed an affidavit deposing that he had no recollection of receiving any communication from Mr Goodchild about the health inspection of the café and he had no recollection of any communication with Mr Duffield concerning the inspection or anything that occurred as a result of it. 

15. His Honour concluded the plaintiffs had adduced no evidence to support the pleaded allegations that Mr Amaranti communicated any information to Mr Duffield.  He also found there was no evidence that Mr Duffield's representations about the source of his information were false or that the admissions of Mr Rutherford and the evidence Mr Duffield and Mr Henderson gave at the trial of the Defamation actions was false.  His Honour concluded the allegations made by the plaintiffs did not arise above conjecture and speculation.  On that basis he dismissed the claim.

16. To summarise then, the plaintiffs in the Defamation actions, based their claim sparely on the allegation that Mr Rutherford had uttered the allegedly defamatory words.  The trial judge found that was the case.  Subsequent to publication of his Honour's reasons (and perhaps even before the matter went to trial) the plaintiffs formed the view there had been a conspiracy.  That conspiracy was to the effect Mr Rutherford had not in fact been the person who uttered the allegedly defamatory words.  The conspiracy involved at least five persons, all of whom were nominated as defendants in the Conspiracy action.  The Conspiracy action failed because there was nothing in the evidence which could support the plaintiffs' claims.  So the plaintiffs in this action are not in a position to maintain:

    (1)the words uttered were not uttered by Mr Rutherford; and

    (2)there were some conspiracy between certain individuals to hide the fact the words were not uttered by Mr Rutherford.

17. Turning then to the plaintiffs' ASOC, it must be said it is not an easy document to navigate.  As I mentioned above, the form of the ASOC was not the focus of the defendant's application.  But it is difficult to draw out from the pleading precisely what is alleged against the defendant.  It is clear the plaintiffs say there was a retainer between the plaintiffs and the defendant.  There was an implied term in the retainer that the defendant would exercise all reasonable skill, care and diligence in acting for the plaintiffs.  It is pleaded these obligations extended to 'the conduct of proceedings and any settlement negotiations'.  It is also pleaded the defendant owed fiduciary duties to the plaintiffs (par 10A).  Paragraphs 11 through to 42 recount the history of the Defamation actions and it would seem the Conspiracy action.  For present purposes the only paragraph that is relevant is par 33.  It reads as follows:

    In the course of two telephone conversations between Mr Henderson and Mr Lee on 18 August 2014 and 1 September 2014, Mr Henderson denied Mr Rutherford's claim that he was his source of the Spoken Words.  The Second Plaintiff made contemporaneous notes of these conversations and provided them to the Defendant in or about early September 2015, (the Notes).

18. Paragraphs 43 through to 52 provide further background material and apart from making reference to the Notes they are of no real relevance.  By par 53 the plaintiffs plead the second plaintiff considered that if the source of the allegedly defamatory material was not Mr Rutherford it was necessary to discontinue the action.  There then follows further material which appears to pick up the Conspiracy action.

19. By par 67 it is pleaded that on 5 November 2015 an offer was made in the Defamation actions by solicitors acting for Mr Rutherford.  The offer was what is colloquially known as a 'walk away offer' - that is to say, the action would be dismissed with no order as to costs.  It is the plaintiffs' position the defendant did not provide any advice on that offer.  At least by implication, it is alleged by the plaintiffs the defendant should have advised the plaintiffs to accept that offer.  In not providing that advice, it is said the defendant was negligent or in breach of its retainer and as a consequence the plaintiffs have suffered loss and damage.  Counsel for the defendant accepted it was open to the plaintiffs to maintain that cause of action against the defendant.

20. Paragraphs 75 through to 83A appear under the subheading 'Filing of Wrong Statement from Henderson'.  It is difficult to know at what point these paragraphs are directed.  But what can be said is this.  Insofar as it is alleged that at trial Mr Bennett did not make proper use of the Note that claim must fail.  It is covered by advocate's immunity.  During the course of his submissions, counsel for the plaintiffs accepted that to be the case.  So however these paragraphs are to be interpreted, they do not advance the plaintiffs' claim at all.  The same can be said of pars 84 through to 89.  They appear to attack Mr Bennett's conduct of the trial.  It is not open to the plaintiffs to raise that plea.

21. Paragraph 89 alleges the defendant was negligent.  Particulars are provided.  The particulars found in paragraphs 89.2, 89.4, 89.5, 89.9 (there are two paragraphs 89.9 and both are referenced) although they all refer to the same matter are proper pleas.  They allege negligence in relation to the settlement offer.  But the rest of the particulars of negligence relate to conduct of the trial or are totally irrelevant.  They cannot stand.  Paragraph 89A deals with alleged breaches of fiduciary duty.  That too is a paragraph which cannot stand.  What is being alleged here is a breach of contract or negligence in tort.  There is no issue in relation to breach of fiduciary duty.

22. During the course of his submissions, counsel for the plaintiffs seem to suggest the plaintiffs may have had a cause of action arising from a failure of the defendant to advise the plaintiffs to discontinue the Defamation actions on the basis Mr Rutherford had not uttered the words complained of.  That cause of action does not appear in the present pleading.  In my view, it would not be open to the plaintiffs to maintain such a claim.  There is a finding that Mr Rutherford uttered those words.  To suggest it was negligent to maintain an action on the basis in fact Mr Rutherford did not utter those words would be, on the face of it, a collateral attack on the findings of Kenneth Martin J.  However, at present there is no such plea and if the plaintiffs did make such a plea, the pleading would have to be considered on its merits.  My views are to be seen as no more than a guide on this issue and it is certainly not my intention to shut the plaintiffs out from such a plea.

23. In conformity with the minute of proposed orders filed on behalf of the defendant I would make the following orders:

    1.The following in the Amended statement of claim be struck out:

    a.paragraphs 6B, 6C, 6D, 10A, 10B, 12, 13, 15, 16, 28 to 66, 74 to 87, 89.3, 89.6, 89.7, 89.8, 89.10, 89.11, 89.13 and 89A;

    b.the words:

    i.'with an advice on evidence or provide them' in paragraph 72;

    ii.'failed to provide an advice on evidence as referred to in Consolidated Practice Directions 2009 4.4.1.1. or' in sub-paragraph 89.1;

    iii.'Personal injury to credit and reputation' in paragraph 93

    c.paragraphs 1B and 2 of the prayer for relief.

    2.The plaintiffs pay the defendant's costs of the application including reserved costs to be taxed if not agreed.

24. Having made those orders it does seem to me what remains of the ASOC would benefit from redrafting.  That is a matter for counsel for the plaintiffs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

AH

Associate to Master Sanderson

11 MAY 2022