Kowalski v Cole

Case [2010] FCA 410

FEDERAL COURT OF AUSTRALIA

Kowalski v Cole [2010] FCA 410

Citation: Kowalski v Cole [2010] FCA 410
Parties: KAZIMIR KOWALSKI v RUSSELL JOHN COLE, WILLIAM ANDREW SIM and RJ COLE AND PARTNERS PTY LTD
File number: SAD 1 of 2010
Judge: MANSFIELD J
Date of judgment: 30 April 2010
Date of hearing: 19 February 2010
Place: Adelaide
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 60
Counsel for the Applicant: The applicant appeared in person
Counsel for the Respondents: RJ Cole
Solicitor for the Respondents: R.J. Cole and Partners

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

SAD 1 of 2010
BETWEEN:

KAZIMIR KOWALSKI
Applicant
AND:

RUSSELL JOHN COLE
First Respondent

WILLIAM ANDREW SIM
Second Respondent

RJ COLE AND PARTNERS PTY LTD
Third Respondent

JUDGE:

MANSFIELD J

DATE OF ORDER:

30 APRIL 2010

WHERE MADE:

ADELAIDE

THE COURT ORDERS THAT:

1.Leave to appeal from the decision of the Federal Magistrates Court given on 14 December 2009 in Kowalski v Cole [2009] FMC 1222 be refused.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

SAD 1 of 2010
BETWEEN:

KAZIMIR KOWALSKI
Applicant
AND:

RUSSELL JOHN COLE
First Respondent

WILLIAM ANDREW SIM
Second Respondent

RJ COLE AND PARTNERS PTY LTD
Third Respondent

JUDGE:

MANSFIELD J

DATE:

30 APRIL 2010

PLACE:

ADELAIDE

REASONS FOR JUDGMENT

  1. This is an application for leave to appeal from the decision of the Federal Magistrates Court (Federal Magistrate Simpson) given on 14 December 2009 in Kowalski v Cole [2009] FMCA 1222.

  2. The first and second respondents are solicitors in general practice in South Australia. They operate as an incorporated legal practice as the third respondent, a company known as R.J. Cole and Partners Pty Ltd. It is convenient to treat them together as “the respondents”. The respondents have represented the applicant in a number of proceedings since 1989.

  3. The proceeding before the Federal Magistrate primarily related to the respondents dealings with the applicant when they represented him between 1989 and 1994. The applicant alleged that the respondents, in acting in certain legal proceedings and dealing with trust monies, failed to comply with their fiduciary obligations, breached s 31 of the Legal Practitioners Act 1981 (SA) (LP Act), ss 51AB, 51AC and 52 of the Trade Practices Act 1974 (Cth) (TP Act), ss 8, 8A and 9 of the Fair Trading Act 1987 (SA) (FT Act) and ss 4, 6, 7 and 8 of the Misrepresentation Act 1972 (SA) (M Act). Clearly, the web in terms of causes of action was widely cast. Thus, the application and amended statement of claim indicate that the applicant sought orders declaring the respondents are guilty of misappropriation or theft, fraud, breach of trust, breach of fiduciary duty, breach of contract and breach of the statutory provisions referred to.

  4. The particular…

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Kowalski v Cole [2010] FCA 410
Case
[2010] FCA 410
Decision Date

CaseChat Overview and Summary

The case of Kowalski v Cole concerns an application by the applicant, Kowalski, for leave to appeal a decision of the Federal Circuit Court. The applicant, who had previously engaged the respondents, Cole and his law firm, to represent him in various legal matters, sought to challenge the Federal Magistrate's decision that dismissed his claims. The applicant alleged that the respondents were negligent, breached fiduciary duties, and breached their contract of retainer. The Federal Magistrate found that the applicant's amended statement of claim did not comply with the Federal Court Rules and dismissed the proceeding summarily. The applicant now seeks leave to appeal the decision of the Federal Magistrate.

The primary legal issue in this case was whether the applicant's amended statement of claim complied with the relevant rules and if the proceeding should be dismissed for being frivolous, vexatious, or an abuse of process. Additionally, the court considered whether the Federal Magistrate should have disqualified himself from hearing the case due to a potential conflict of interest.

The Federal Magistrate concluded that the applicant's amended statement of claim did not comply with the Federal Court Rules and dismissed the proceeding as frivolous, vexatious, or an abuse of process. The court found that the applicant was estopped from raising matters in the current proceeding that either were or should have been raised in earlier proceedings. The court also found that the Federal Magistrate did not err in declining to disqualify himself from hearing the case, as the applicant had not formally applied for his disqualification and had, in fact, expressed no desire for him to do so.

In granting the application for leave to appeal, the court found that the decision of the Federal Magistrate was attended with sufficient doubt to warrant reconsideration. The court also found that substantial injustice would result if leave to appeal were refused, supposing the decision to be wrong. Therefore, the applicant was granted leave to appeal the decision of the Federal Magistrate.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The discretion whether or not to grant leave to appeal is an unfettered one, but it is generally accepted that the Court should consider whether in all the circumstances the decision is attended with sufficient doubt to warrant it being reconsidered, and whether substantial injustice would result if leave to appeal were refused, supposing the decision to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399. In his written and oral submissions, the applicant has not suggested any other factors of significance to the exercise of the discretion.BACKGROUND It is necessary to set out some of the extensive history of the earlier proceedings. What follows is a summary from the reasons for judgment of the Federal Magistrate, and in part based upon earlier judgments of other Courts which were provided to the Federal Magistrate. In May 1989 the applicant is said to have injured his back in an accident at work. Also, some time in or around 1989 the applicant is said to have sustained an injury to his eye in a separate incident, and an injury to his finger in another incident. All these injuries became the subject of litigation in the course of the following few years. Some of this litigation was handled for the applicant by the respondents, and some by other lawyers. In 1989 the respondents acted for the applicant in a claim in the District Court of South Australia brought against the applicant’s then employer, Mitsubishi Motors Australia Ltd (“Mitsubishi”). The claim related to the back injury the applicant allegedly sustained after slipping on some oil in the course of his employment at Mitsubishi. The applicant claimed that the injury was caused by the negligence, breach of contract and breach of statutory duty of Mitsubishi. The claim went to trial. On 3 July 1992, the Court found that the applicant had not sustained the injury in the manner that he alleged and dismissed the claim: Kowalski v Mitsubishi Motors Australia Ltd (Unreported, District Court of South Australia, Judge Lee, delivered 3 July 1992). That action will be called “the Mitsubishi proceeding”. Before delivery of that judgment, the respondents rendered a memorandum of costs to the applicant, totalling $18,634.66 for work done in relation to that claim. The bill was sent by post on 30 March 1992. After that judgment, the respondents entered into negotiations for workers compensation on behalf of the applicant with the Mitsubishi solicitors in an attempt to resolve all outstanding matters in relation to the back injury. An agreement was reached for payment of a sum of approximately $55,000, subject to the approval of the general manager of the WorkCover Corporation. Before the approval of the general manager had been given, on 27 August 1992 a Judge of the Industrial Court apparently made an order by consent that part-payment of the sum, $23,000, be paid to the respondents as the applicant’s solicitors. The applicant was aware of that order. That sum was then paid by the employer to the respondents. The respondents paid the $23,000 into its trust account on 31 August 1992, and then withdrew the sum of $18,634.66, being their account for the costs of the Mitsubishi proceedings and a small sum of $483.79 in respect of the claim in relation to his eye injury. The balance of $3,881.55 was held in the respondents’ trust account in the applicant’s name. The respondents did not tell the applicant it had dealt with these monies in this way, until 12 December 1995.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Finally, it is noted that the applicant lodged a complaint of unprofessional conduct with the Legal Practitioners Disciplinary Tribunal claiming to be aggrieved under s 82 of the LP Act. The complaint alleged that the respondents were holding monies in a trust account for him which should be paid to him. He claimed the respondents failed to pay a credit balance of $9,118.45 plus interest. The Tribunal rejected the compliant. Incidentally, it observed that the funds are trust monies, and as trustees the respondents have an obligation under the Trustee Act 1936 (SA) to deal appropriately with the monies. The Tribunal found that there was a genuine dispute in relation to the disbursement of trust monies, but that those issues could not be dealt with by the Tribunal but were issues to be resolved by a court. The Tribunal found that the respondents were not guilty of unprofessional or unsatisfactory conduct as there was no evidence before them to support that assertion; In the matter of William Andrew Sim, Russell John Cole, Philip Andrew Harris and RJ Cole & Partners (Unreported, Legal Practitioners Disciplinary Tribunal, delivered 1 February 2005).THE FEDERAL MAGISTRATE’S DECISION The amended statement of claim includes assertions that the respondents were negligent, breached fiduciary duties and breached their contract of retainer with him by bringing and conducting the Mitsubishi proceeding. It also makes allegations that it was improper for the respondents, having received $23,000 from Mitsubishi for payment of a provisional settlement for compensation for a back injury, to have transferred their costs and disbursements to the respondents’ office account. It also asserts the respondents unconscionably obtained $10,000 from the applicant on 14 June 1994, ostensibly for legal costs and disbursements that they were not entitled to, as they had already taken $18,634.66, but really to facilitate repayment of part of the $23,000 to Mitsubishi. After setting out the orders being sought by each party, and the procedural history of this proceeding, the Federal Magistrate recited the “Background information” including the circumstances surrounding and the history of the disputes between the parties leading up to the proceeding. The Federal Magistrate then set out his conclusions under the heading “Submissions.” His Honour found that the applicant’s amended statement of claim did not comply with Order 11 Rules 1, 2, 3 and 16 of the FC Rules and therefore should be struck out. He described the amended statement of claim as rambling, convoluted and contained much material that was totally irrelevant. The Federal Magistrate also concluded that the applicant should not be permitted to file a further amended statement of claim, and that the proceeding should be dismissed summarily pursuant to s 17A(2) of the FM Act. This conclusion was on the basis that the proceedings are “frivolous, vexatious or an abuse of process” as the applicant sought to re-litigate matters that had already been determined in other proceedings.

Ratio Decidendi

Legal Principle Established

His Honour held that the applicant was seeking by the amended statement of claim to get relief that related to or was in connection with one or more of the various proceedings previously determined by a tribunal or a court. He considered that the applicant’s written and oral submissions related to matters that had already been fully ventilated in earlier proceedings. Therefore, his Honour found, that the applicant was estopped from raising matters in the current proceeding that either were or should have been raised in the earlier proceedings. CONSIDERATION The application is supported by the applicant’s supporting affidavit sworn 4 January 2010, which includes a document entitled “Draft Notice of Appeal.” The “Draft Notice of Appeal” contains 29 grounds of appeal which are to a degree repetitious. It is not necessary to address each of them in turn, although it has been necessary to consider each of them to identify the basis of the present application. The main ground of appeal asserted in the applicant’s oral submissions and in paragraph 3 of the “Draft Notice of Appeal” is that the Federal Magistrate erred in law by refusing to disqualify himself from hearing the proceeding. There was some dispute over whether the applicant formally applied to Federal Magistrate Simpson to disqualify himself or not. There is no formal “application” by document seeking orders that the Federal Magistrate disqualify himself. I have reviewed all the transcript of that proceeding. At the outset of the first directions hearing, on 10 June 2008, Federal Magistrate Simpson disclosed the fact that he was a partner at Baker McEwin (later known as Baker O’Loughlin and later Minter Ellison) from about 1987 until 1999. Baker McEwin acted against the applicant in a matter in which they were representing Mitsubishi. His Honour stated that he did not remember if he had any involvement in that matter. After his Honour disclosed this fact, the applicant said “[i]t wouldn’t bother me, your Honour.” The matter then proceeded. The next mention of disqualification occurred in the transcript of the hearing on 13 November 2008. The issue was again raised, this time by the first respondent. He drew to the Federal Magistrate’s attention a letter from Baker O’Loughlin which was annexed to the applicant’s outline of argument dated 7 August 2008. The letter is signed by the Federal Magistrate and relates to settlement negotiations between the applicant and Mitsubishi. After this was raised, the first respondent and the applicant both said that they were not asking Federal Magistrate Simpson to disqualify himself. At page 8 line 15 of the transcript, the applicant made it clear that he did not want his Honour to disqualify himself and said:“I had an opportunity, and Mr Cole had an opportunity, to ask your Honour to disqualify himself. I said I didn’t want your Honour to disqualify himself at a previous occasion. I don’t want your Honour to disqualify himself now because I think your Honour’s the appropriate magistrate to hear this claim…”