Kowalski v Mitsubishi Motors Australia Staff Superannuation Fund Pty Ltd - [2006] SASC 159

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
KOWALSKI v MITSUBISHI MOTORS AUSTRALIA STAFF SUPERANNUATION FUND PTY LTD
[2006] SASC 159
Judgment of The Honourable Chief Justice Doyle
1 June 2006
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT
Application to have an order granting the respondent leave to proceed revoked - whether there is a real question to be tried - whether the question to be tried re-agitates issues the subject of a declaration that the respondent is a vexatious litigant - significant defects in Mr Kowalski's statement of claim - leave to institute proceedings must be refused having regard to the defects in Mr Kowalski's statement of claim - application allowed - order revoked.
Supreme Court Act 1935 (SA) s 39; Workers Rehabilitation and Compensation Act 1986 (SA); Supreme Court Rules 1987 (SA) r 5, r 67.03, r 67.04, r 7.03, r 7.05; Supreme Court Act 1981 (UK) s 42, s 42(3), s 42(4); Civil Procedure Rules 1981 (UK) o 32 r 6, referred to.
Jones v Vans Colina [1997] 1 All ER 768, distinguished.
Mitsubishi Motors Australia Ltd v Kowalski [2005] SASC 154; Skysing (1996) 135 ALR 29; Johnson v Valks [2001] WLR 1502; Ewing v Office of the Deputy Prime Minister [2006] 1 WLR 1260, discussed.

KOWALSKI v MITSUBISHI MOTORS AUSTRALIA STAFF SUPERANNUATION FUND PTY LTD
[2006] SASC 159
Civil

DOYLE CJ: On 19 April 2005 a Judge of this Court made an order restraining Mr Kowalski from instituting proceedings against Mitsubishi Motors Australia Ltd (“MMAL”) or any corporation related to MMAL without leave of the Court: Mitsubishi Motors Australia Ltd v Kowalski [2005] SASC 154 (“Mitsubishi v Kowalski”). The order was made in exercise of the power conferred by s 39 of the Supreme Court Act 1935 (SA).
On 19 April 2006 a Master of this Court gave Mr Kowalski leave to institute a proposed action in the District Court against MMAL Staff Superannuation Fund Pty Ltd. I will refer to the defendant as “the Trustee”, because evidence before me establishes that the Trustee is trustee of the superannuation fund in respect of which Mr Kowalski wished to make a claim. The Trustee is a corporation related to MMAL.
Mr Kowalski duly instituted those proceedings.
The Trustee has applied for an order revoking the grant of leave. It submits that leave should not have been granted. First, because the proceedings were instituted without any reasonable ground and because the Statement of Claim is vexatious. Second, because the claim is an attempt to raise matters already raised and dealt with in proceedings between Mr Kowalski and MMAL.
Background
It is necessary to summarise the circumstances in which the issue before the Master arose.
I will refer on occasions to the reasons in Mitsubishi v Kowalski, because they conveniently record some relevant matters.
Mr Kowalski was employed by MMAL. He stopped working in August 1991, claiming that work related injuries meant that he was unfit for work.
I gather that he received some payments of compensation under the Workers Rehabilitation and Compensation Act 1986 (SA) (“the Compensation Act”). However, the reasons in Mitsubishi v Kowalski indicate that Mr Kowalski’s entitlement to compensation was the subject of many disputes between Mr Kowalski and MMAL, and the subject of numerous decisions made under the Compensation Act by the Workers Compensation Appeal Tribunal and others. Mr Kowalski also brought an unsuccessful claim for damages against MMAL.
As time went by Mr Kowalski made a number of claims in respect of six different injuries, occurring between December 1986 and December 2003: Mitsubishi v Kowalski at [62].
In February 1992 Mr Kowalski made a claim to the Trustee, described as a “total disablement claim”, for a payment from the “Mitsubishi Motors Australia Staff Superannuation Fund” (“the Fund”). That claim was accepted as entitling him to a payment on the basis of “total and temporary disablement”, but not on the basis that he was “totally and permanently disabled”.
The affidavits before me indicate that this claim, and other claims, were assessed by SGIC Superannuation Services, providing advice to the Trustee, and were also dealt with by Mercer Campbell Cook and Knight, acting as Administrator of the Fund. This firm underwent several changes of name, and for convenience I will refer to it as “Mercer”.
The payments being made to Mr Kowalski from the Fund ceased on 19 February 1994, because according to Mercer he was entitled to “temporary disablement benefits” for no more than 24 months.
In March 1994 MMAL wrote to Mr Kowalski referring to his compensation claims. The letter stated in part:
As you continue to be unfit for your normal duties with us, your contract of employment with the company is frustrated. On that ground, your contract of employment with the company is now at an end, and accordingly you are no longer required to report for work.
With the letter was a cheque in payment of amounts that MMAL had determined were payable to Mr Kowalski.
Mr Kowalski wrote a number of letters in 1997 to the Trustee and to MMAL, complaining about the payment made to him from the Fund. In October 1997 Mercer wrote to Mr Kowalski asserting that when it was informed by MMAL in March 1994 that Mr Kowalski had ceased employment with MMAL, it had written to him, in May 1994, informing him that he was entitled to a “resignation benefit”, but not to any other payment from the Fund. The letter asserted that the relevant payment had been made to Mr Kowalski in August 1994, and went on by implication to deny any entitlement to a payment from the Fund on the basis of total and permanent disablement.
Over the years since then Mr Kowalski has continued to assert an entitlement to payment from the Fund which I take to be an entitlement under clause C7 of the Fund, which is headed “Total and Permanent Disablement Benefit”. For present purposes I do not need to decide which claim the claim invokes. He has made that claim in various forms, and has asserted the claim to the Trustee and by way of complaint to certain regulators about the conduct of the Trustee. The claim has been rejected or at least not accepted on each occasion.
Meantime, disputes over the payments of workers compensation were continuing.
In October 1998 Mr Kowalski and MMAL participated in a mediation in an attempt to resolve all outstanding issues: Mitsubishi v Kowalski at [132] and following. An agreement was entered into under which Mr Kowalski agreed to accept the sum of $200,000 “in full and final settlement of any entitlement he may have to superannuation, sick leave, compensation and damages arising out of or in the course of his employment with MMAL”: Mitsubishi v Kowalski at [149]. Clause 2.1 of the Agreement provided that of that amount, “The sum of $64,692.43 to be paid from the Superannuation Fund by way of an ill health benefit being the entitlement with respect to the period from 7 March 1970 to the date of cessation of his employment”. Other payments under the Agreement were made by MMAL.
Subsequently Mr Kowalski became dissatisfied. He believed that MMAL had not mediated with him in good faith. He embarked upon a further course of proceedings in which in various proceedings (mainly in the District Court and the Workers Compensation Appeal Tribunal) he sought to have set aside a consent order made after the mediation, and also to have set aside or declared ineffective parts of the Agreement with MMAL, in so far as those parts might prevent him from making further claims for workers compensation or for a payment from the Fund.
On 3 November 2005 Mr Kowalski wrote to the Trustee claiming a “Total and Permanent Disability Benefit”. The basis of the claim is not clear. It appears to be that the letter from MMAL of 16 March 1994, asserting that the contract of employment was frustrated, relied upon his continuing unfitness for his normal duties, and, I deduce, that this amounted to an assertion by MMAL that he was totally and permanently disabled, or at least sufficiently disabled to be entitled to the benefit claimed.
On 20 December 2005 solicitors for the Trustee informed Mr Kowalski that the Trustee had “previously considered and declined applications made by you for a TPD benefit”. On 24 February 2006 the solicitors again wrote to Mr Kowalski, this time asserting that the Trustee “has previously considered and declined your claim for a TPD benefit from the Fund arising from your employment to 16 March 1994 and including its cessation on that date”.
This is the claim that Mr Kowalski now asserts in the District Court proceedings.
The reasons in Mitsubishi v Kowalski canvass in some detail the history of disputes between Mr Kowalski and MMAL. The Judge summarises no less than 44 decisions by various persons, tribunals and courts relating to claims by Mr Kowalski arising out of alleged injuries suffered in the course of his employment with MMAL. The Judge found a number of these claims to be vexatious or to involve groundless claims or arguments. I treat his reasons as a convenient summary of the history of disputation between MMAL and Mr Kowalski.
The application for leave to proceed
It is plain enough that Mr Kowalski’s claim against the Trustee is for payment of a “Total and Permanent Disablement Benefit” from the Fund. It is the claim asserted in his letter of 3 November 2005.
The issue for the Master was whether there were reasonable grounds on which the proposed proceedings could be instituted. There had to be a tenable or possible claim disclosed by the proposed proceedings. That question had to be considered bearing in mind the reason why the restraining order was made against Mr Kowalski. The order was based on the Judge’s conclusions that Mr Kowalski had instituted 30 proceedings vexatiously, and that he had continued to attempt to re-litigate issues previously determined against him, on grounds which had been rejected on many occasions: at [278]. The Judge added that Mr Kowalski had demonstrated unwillingness or inability to accept decisions on claims that had been “conclusively and repeatedly determined against him”.
In that context, the issue before the Master had two facets. First, it was necessary to look at the claim itself. On its face did it appear to be tenable as a matter of fact and law, or to have a possible chance of success? It was appropriate to consider, in a preliminary manner, whether there appeared to be a tenable factual basis for the claim, as well as a tenable legal basis. Having regard to the context in which the application for leave was made, it was not sufficient to examine only the legal aspects of the claim made, treating as correct assertions of fact made by Mr Kowalski.
The second facet of the issue before the Master required, having regard to the circumstances that gave rise to the order, that he consider whether there was reason to think that the proceedings, if instituted, would give rise to the re-agitation of matters already decided between Mr Kowalski and MMAL or the Trustee. That is, would the proceedings be vexatious? This aspect is significant. The purpose of the restraining order would be defeated if the Court confined its attention to the proposed proceedings, without considering their relationship to other proceedings that caused the Judge of this Court to make the restraining order.
It was neither necessary nor appropriate for the Master to embark on a preliminary trial of the action. Nor was it necessary to require Mr Kowalski to outline his whole case, or to explain how he would meet each difficulty of fact and law that might confront him. However, while it is not possible to state with precision how the line was to be drawn, it was necessary to consider both facets of the issue identified by me, and to consider matters of fact and law. Otherwise, as I have said, the order will provide little protection to MMAL. To put it simply, it was not appropriate to accept Mr Kowalski’s assertions of fact without enquiry, and it was necessary to consider to some extent at least the relationship between the claim that he wished to make and other claims he had made.
It is no answer to this to say that if the Statement of Claim was defective, the Trustee was entitled to attack it in the District Court. The purpose of requiring leave to proceed is to provide a preliminary screening to prevent unsustainable or vexatious claims, as a matter of fact or law, being instituted.
The power to grant leave for the issue of proceedings by a person the subject of an order such as was made in Mitsubishi v Kowalski is one to be exercised with care, to ensure that it does not result in a perpetuation of a history of vexatious claims: Jones v Vans Colina [1997] 1 All ER 768 at 774. It is also necessary to bear in mind the considerations identified by Kirby J in Ex parte Skysing (1996) 135 ALR 29 at 31-32. As he said, it is a serious thing to shut a person out from the courts, and one must not assume that there is no point with merit, previously undetected.
The only relevant material before the Master was an affidavit from Mr Kowalski to which he exhibited the proposed Statement of Claim. I am prepared to assume that the Master had regard as well to the reasons of the Judge in Mitsubishi v Kowalski. Mr Kowalski did not set out to establish the background facts upon which he relied, and made no reference to other proceedings between him and MMAL or the Trustee.
I consider that this material was insufficient to support a grant of leave to proceed. The Master should have refused to grant leave.
First of all, the proposed Statement of Claim suffered from a number of significant defects. The central claim is a claim in contract against the Trustee on the basis that the Trustee “had agreed to provide the Plaintiff with a Total and Permanent Disablement Benefit of 5 times the Plaintiff’s Superannuation Salary”. It should have been apparent that it was unlikely that the relationship between the Trustee and Mr Kowalski was a contractual one, bearing in mind that the claim was made under a superannuation fund. The assertion of a contractual claim should not have been accepted at face value. I add that the material before me indicates that the relationship between Mr Kowalski and the Trustee was probably that of potential beneficiary and trustee of a superannuation fund. The Statement of Claim does not plead the material facts that would support a claim for the benefit claimed. It does plead the letter of March 1994, but in a manner that leaves the significance of that letter unclear. The Statement of Claim does not refer to any of the provisions of the Fund giving rise to the asserted entitlement, or to the basis upon which the entitlement arises. It includes an embarrassing and vexatious plea that the Trustee had “refused to comply with its statutory, legal and fiduciary obligations to” Mr Kowalski, and so was in breach of its contract with Mr Kowalski.
On its face the Statement of Claim is fundamentally defective. Nor did Mr Kowalski put before the Master, by way of affidavit, material that would indicate that as a matter of fact the claim was tenable. A reference to the reasons in Mitsubishi v Kowalski indicates that there is a risk that this claim would involve re-agitating matters already determined. Even if the defects in the Statement of Claim were remedied, it was necessary for the Master to satisfy himself that there was a tenable argument that the claim did not involve re-agitating issues already decided.
At the hearing before me the Statement of Claim as filed in the District Court was tendered. There are some differences between the two documents, but the Statement of Claim as filed suffers from the same defects.
Other affidavits were tendered before me on each side. They establish, in a fair degree of detail, the dealings between Mr Kowalski and the Trustee, its agents and advisers. The material provides no answer to the deficiencies in the Statement of Claim.
It may be that before me the parties have gone to a level of detail that would not have been necessary before the Master, proceeding ex parte. However, because the basis of Mr Kowalski’s claim is unclear, it was difficult for the Trustee’s solicitors to know what was relevant.
For the purposes of this application it suffices for me to determine that leave to institute the proceedings should have been refused because of the deficiencies in the Statement of Claim.
It is not necessary to determine whether the claim that Mr Kowalski wishes to make is vexatious in the sense of involving a re-agitation of matters already decided. Nor is it desirable to do so, having regard to the uncertainty as to the precise basis of the claim.
Before me Mr Kowalski emphasised that this was the first time that he had claimed an entitlement to a payment from the Fund on the basis that he was totally and permanently disabled when, in March 1994, MMAL asserted that the contract of employment was at an end. He argued that previous decisions by the Trustee and its advisers related to claims that he was totally and permanently disabled in August of 1991 when he stopped work, or in early 1992 when he made a claim on the Fund, or in August 1992 when a decision was made to reject, or at least not to accept, a claim of total and permanent disability.
The correspondence put before me, with the Trustee, Mercer and others involved, reveals a rather complicated picture. Sometimes the focus is on the question of disability at the dates just referred to. The matter is complicated by the fact that Mr Kowalski’s entitlement was possibly affected by the terms of policies under which (I gather) the Trustee insured itself in respect of claims. The correspondence indicates that policies of insurance were terminated and replaced early in 1992, and again in 1997. Reference is made on occasions to documents not before me.
It is not necessary to decide whether the claim that Mr Kowalski now makes has in fact previously been determined in a manner that makes its continued assertion vexatious. It may be that although it has not been put to the Trustee in precisely the present form, it has already been put in substance. To what extent it is affected by judicial decisions is unclear. But until the basis of the claim is clear, there is no point in expressing a view on this matter. Any decision to permit Mr Kowalski to proceed on this claim would also need to take account of the impact of the Agreement with MMAL after the mediation, and of decisions by the Workers Compensation Tribunal relating to that Agreement.
For those reasons I consider that the Master erred. On the material before him leave to institute proceedings should have been refused.
Power to revoke leave
No submissions were put to me on the question of whether I have power to revoke the leave to proceed granted by the Master.
My assumption at the hearing was that I had that power. It is not uncommon for ex parte orders to be reviewed and revoked at the instance of a party to proceedings whose interests are affected by such an order, once the order comes to the party’s attention.
The interests of the Trustee are affected by the order made, and the grant of leave was made in relation to a matter on which the Trustee is in a position to provide the Court with relevant information.
The order was made on a Notice for Specific Directions issued by Mr Kowalski, the Notice having been given an action number. It was drawn up Mr Kowalski naming himself as plaintiff, the Trustee as defendant and expressed as an application for directions to be made on notice to the Trustee, although heard ex parte.

I believe that it has been the practice of the Court to consider applications for leave to institute proceedings in such matters on an ex parte basis, but I believe that that practice has been on the assumption that it is open to the proposed defendant to apply to have the order set aside once the proposed defendant becomes aware of the order.
I have not found any rule in the Supreme Court Rules 1987 (SA) that bears specifically on the point, although there are some rules that might have some relevance: see r 67.03, r 67.04, r 7.03 and r 7.05. Some of those provisions might support an argument that the application for leave should not have been heard ex parte, because it affected the interests of MMAL. However, as I have said, I believe that the practice has been to deal with such matters ex parte.
While preparing my reasons I came across the decision of the Court of Appeal of England in Jones v Vans Colina [1997] 1 All ER 768. That case arose under s 42 of the Supreme Court Act 1981 (UK), a provision with some similarities to s 39 of the Supreme Court Act 1935 (SA). An order had been made that Mr Jones was not to institute proceedings without leave of the High Court. He obtained leave to proceed on an application made ex parte. The defendant then applied to have the grant of leave set aside. The Court of Appeal held that the High Court had no power to revoke the grant of leave. There appear to have been three reasons for the decision. The first was that order 32 r 6 of the English Civil Procedure Rules 1981 (UK) (stating that the Court could set aside an order made ex parte) could:
… only apply to an order made in proceedings in which the person seeking to have it set aside is either a party or entitled to be made one. The Court could not accede to an application made by a person who has no locus standi to make it. On an application under s 42(3) for leave to institute proceedings, the proposed defendant is neither a party to the application nor is he entitled to be made one.
The second reason was that in a number of cases there were dicta to the effect that a grant of leave could not be attacked, although there were dicta the other way. The third reason was that s 42(4) provided that no appeal lay against a refusal of leave to proceed, and because the only reference was to an appeal by the applicant, there was a statutory inference that “… the proposed defendant is not entitled to be made a party to the application …”.
That decision was apparently displaced, not long after, by a Practice Direction: see Johnson v Valks [2001] WLR 1502; [2001] All ER 450; Ewing v Office of the Deputy Prime Minister [2006] 1 WLR 1260.
I am not persuaded that I should follow the reasoning in Jones. I agree that the application for leave to institute the proceedings may not be an action for the purposes of r 5 of the Supreme Court Rules. Although the Notice for Specific Directions seems to have been treated as initiating proceedings, with the trustee as defendant, it may be that it did not do so. However, it is arguable that Mr Kowalski’s application should have been treated as made in Mitsubishi v Kowalski, being an application for leave under the order made in those proceedings. If that is so the application was a further step in those proceedings.
Be that as it may, and whether Mr Kowalski’s application is made under s 39 of the Supreme Court Act or pursuant to the terms of the order in Mitsubishi v Kowalski, the jurisdiction and power to grant leave is vested in the Court. A decision to grant leave is a judicial decision. The procedure is subject to the control of the Court. It accords with my understanding of practice to allow the application to be made ex parte: see Kowalski v Davison [2005] SASC 48 at [34]. It also accords with my understanding of practice that the judicial officer to whom the application is made has power to direct that the application be made on notice. In my view Mr Kowalski did not have a right to insist that the application be dealt with ex parte. Indeed, in my opinion this would have been a proper case to require him to give notice. But quite apart from that, I consider that the inherent power of the Court extends to allowing the Trustee to apply to have the order revoked. There is nothing in s 39 to the contrary. With all respect to Nourse LJ, who prepared the reasons in Jones v Vans Colina, I do not agree that the application was one to which the proposed defendant had no entitlement to be made a party. It may be that strictly the Trustee was not entitled to be made a defendant (because the application did not initiate proceedings), but on the other hand I consider that it was open to the Master to direct that the application be made on notice to the Trustee, and in that sense it had a sufficient interest in the proceedings to be entitled to be heard.
For those reasons I consider that I have power to make the order sought, exercising the inherent power of the court to grant or to refuse leave to proceed.
Conclusion
I order that the order of 19 April 2006 granting leave to Mr Kowalski to institute a proposed action in the District Court against Mitsubishi Motors Australia Staff Superannuation Pty Ltd be revoked.