Le v Spicer

[2021] VCC 1858

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-19-06064

Xam Le and Austviet International Pty Ltd (ACN 006 959 173)	Plaintiffs
v
Nicole Spicer and Spicer Lawyers Pty Ltd (ACN 138 986 311)	Defendants

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JUDGE:	Judge Woodward
WHERE HELD:	Melbourne
DATE OF HEARING:	15 November 2021
DATE OF RULING:	25 November 2021
CASE MAY BE CITED AS:	Le & Anor v Spicer & Anor
MEDIUM NEUTRAL CITATION:	[2021] VCC 1858

RULING

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	P Lithgow	KCL Law
For the Defendant	A Singh	Elvin Lawyers

HIS HONOUR:

Applications and orders

1By amended summons filed 23 August 2021, the defendants seek judgment or alternatively a stay of the proceedings against the plaintiffs pursuant to Rule 23.01 of the County Civil Procedure Rules 2018 (Vic) (“Rules”) on the basis that the plaintiffs’ claim is an abuse of the processes of the court. The defendants submit that, by this proceeding, the plaintiffs are seeking to relitigate issues that have already been determined by Incerti J in Austviet International Pty Ltd v DPP [2021] VSC 2010 (“Austviet v DPP”). They argue that the proceeding amounts to a collateral attack on her Honour’s judgment and comes with the real risk that it will bring the administration of justice into disrepute.

2On 29 October 2021, the plaintiffs issued a summons for leave to amend their statement of claim, seeking to add paragraphs 14 to 18 comprising allegations relying on s51 of the Confiscation Act 1997 (Vic) (“Confiscation Act”). During oral submissions, counsel for the plaintiffs Mr Lithgow indicated that the plaintiffs may also revisit paragraph 13 of the statement of claim. After hearing both applications on 15 November 2021, I ordered that the defendants’ application be dismissed, gave leave to the plaintiffs to amend their statement of claim and made consequential orders. I said that as the defendants’ application raised some novel issues it was appropriate that I publish brief reasons. These are those reasons.

Background facts

3The background facts are not relevantly in dispute. The first plaintiff (“Xam”) is and was at all relevant times the sole director and sole shareholder of the second plaintiff (“Austviet”). From about 19 June 2003, Austviet became the sole registered proprietor of the property at 283 Station Road, Albanvale (“property”).

4On 11 August 2010, various restraining orders were made in the Supreme Court of Victoria under the Confiscation Act 1997 (“Confiscation Act”), including a restraining order over the property (“Restraining Order”). The Restraining Order was made on the basis of charges that had been laid against Thi Nho Em Le (“Thi Le”), who is Xam’s sister-in-law. One of the purposes of that Restraining Order was to restrain the property for automatic forfeiture under Division 2 of Part 3 of the Confiscation Act.

5In August 2010, the plaintiffs retained the second defendant (“Spicer Lawyers”) to provide advice about the proceedings under the Confiscation Act. The first defendant (“Ms Spicer”) was the solicitor with the carriage of the files.

6The property was sold by public auction on 12 August 2010 and the net proceeds of sale, namely $276,094.23, were retained by the Asset Confiscation Office and remained restrained under the Confiscation Act in place of the property.

7On 22 November 2013, Thi Le pleaded guilty to trafficking a commercial quantity of heroin, which is a Schedule 2 offence under the Confiscation Act.

8No exclusion application was made seeking to exclude the property or the net proceeds of sale from the Restraining Order and, consequently, by operation of s35 of the Confiscation Act, the net proceeds of sale of the property were automatically forfeited to the Minister 60 days after Thi Le’s plea of guilty and conviction on 22 November 2013, namely 21 January 2014.

9On 19 November 2014, Ms Spicer advised Xam and Austviet that the net proceeds of sale of the property had been forfeited by reason of Thi Le’s conviction and that Austviet had no other option available to it to seek exclusion of the forfeited amount. Ms Spicer has accepted that she failed to advise Austviet that it could attempt to seek leave to make an application for an exclusion order from forfeiture under s51(1) of the Confiscation Act, which would have required Austviet to satisfy the requirements of ss51(3) and 51(5) of that Act.

10On 16 December 2019, Xam and Austviet commenced this proceeding. The proceeding is a claim founded in negligence and/or breach of retainer. More particularly, the plaintiffs will allege in their proposed amended statement of claim that the defendants:

(a)   failed to apply for an exclusion order in respect of the property within 60 days of the conviction of Thi Le (that is, before 21 January 2014); and

(b)   wrongly advised the plaintiffs in November 2014 that there was no further option provided for under the Confiscation Act to seek exclusions of the property from forfeiture.

11Counsel for the plaintiffs Mr Lithgow explained that the plaintiffs’ claim in the proceeding is essentially a claim for the “loss of a chance” to seek to have the property (or the proceeds of its sale) excluded from automatic forfeiture or make a timely application for such an exclusion.

Supreme Court proceeding

12On 19 March 2020, Austviet commenced a proceeding in the Supreme Court of Victoria, seeking leave pursuant to s51 of the Confiscation Act to make an application for orders under s52 of the Act to exclude its interest in the proceeds of the sale of the property from automatic forfeiture. As the plaintiffs noted in their submissions, this application was many years out of time. The application was contested by the Director of Public Prosecutions for Victoria (“DPP”) and heard by the Honourable Justice Incerti on 11 March 2021. Judgment in Austviet v DPP was delivered on 4 May 2021.

13Her Honour’s detailed reasons in Austviet v DPP include a more comprehensive summary of the background facts and set out the relevant provisions of the Confiscation Act in full. In oral submissions, Ms Singh for the defendants helpfully explained the background to the regime for confiscation provided for in the Confiscation Act, emphasising the various cascading time limits imposed on any party seeking to avoid the automatic confiscation applying to the more serious “schedule 2 offences” under the Act. Among other things, Ms Singh noted ss49 and 50 of the Confiscation Act referred to in paragraph 13 of the plaintiffs’ statement of claim related to schedule 1 offences, and therefore had no application on the facts of this case.

14For present purposes it is sufficient to note that s51 of the Confiscation Act provides that a person (other than the accused) may seek to have property that has been automatically forfeited excluded from forfeiture (and returned to the applicant), subject to (relevantly) ss51(2) to (5), which provide as follows (noting that s51(5A) is not relevant):

“(2)The application must, subject to subsection (3), be made before the end of the period of 60 days commencing on the day on which the property is forfeited to the Minister.

(3) Subject to subsection (5A), the court that made the relevant restraining order may grant a person leave to apply after the end of the period referred to in subsection (2) if it is satisfied that the delay in making the application is not due to neglect on the part of the applicant.

(4) An application for an order under section 52 must not be made by a person who was given notice of –

(a)proceedings on the application for the relevant restraining order; or

(b)       the making of the relevant restraining order –

except with the leave of the court that made the relevant restraining order.

(5) Subject to subsection (5A), the court may grant a person leave under subsection (4) to make an application if the court is satisfied that the person’s failure to seek to have that person’s interest in the property excluded from the relevant restraining order was not due to neglect on the part of the applicant.”

15The defendants submit (and I agree) that the purpose of ss(3) and (5) is to provide an additional bar in circumstances where the applicant was aware of the existence of the Restraining Order but took no timely steps to have property excluded from restraint under s20 of the Confiscation Act. Incerti J summarised the effect of s20 of the Confiscation Act as follows (footnotes omitted) (Austviet v DPP at [65]):

“Pursuant to s 20, a person claiming an interest in property the subject of a restraining order other than the accused, can apply for that interest to be excluded from the restraining order’s operation. Such an application must be made within 30 days of service of notice of the making of the restraining order, if notice was required, or within 30 days of the restraining order being made. As provided in s 20(1B), the Court may extend the period in which an application for exclusion may be made ‘if it is in the interests of justice’ to do so. However, it may not extend the period in respect of property that has been forfeited under the Act.”

16In relation to the effect of s51, her Honour held that (Austviet v DPP at [70]):

“Thus, in circumstances where the person had notice of the restraining order, the Court is required to consider their conduct in relation to two distinct periods: before (s 51(5)) and after (s 51(3)) automatic forfeiture. The applicant is required to prove, on the balance of probabilities, that they were not neglectful during both those times.”

17Other findings by her Honour that assist a more complete understanding of these applications and their outcome can be summarised as follows:

(a) Her Honour was satisfied that on balance of probabilities Xam was personally served with the Restraining Order on 12 August 2010 and the order was explained to him at that time, at [89].

(b) With the assistance of the defendants, Xam and his wife and related entities applied for exclusion under s20 of the Confiscation Act of a number of other properties and ultimately negotiated for the release of those properties from the effect of restraining orders. However, no such application was made in relation to the property at Albanvale or the Restraining Order, at [27].

(c)   By email dated 8 April 2013, the applicant’s conveyancer, Mr Bullard, wrote to the first defendant and referred to, among other things, a restraining order affecting the property (“the Bullard email”), at [28].

(d) Her Honour noted that the Bullard email was sent eight months before the proceeds of the sale of the property were forfeited and that, on a plain reading of the email, Mr Bullard provided information to Xam and the first defendant about a restraining order relating to the property, at [95].

(e)   A call for the attachments to the email went unanswered and they were not otherwise before the Court, at [93] to [95]. There was some suggestion (based on evidence from the bar table) that this may have been because Mr Bullard had been unable to access the electronic attachments (at [94]) (presumably because of COVID restrictions).

(f)    On 19 November 2014, there was a conference with the first defendant at the second defendant’s offices, attended by Xam, his wife and a family friend, during which the first defendant advised in effect that no further option existed under the Confiscation Act to make an application to the Court to recover the property, at [29].

(g)   The first defendant’s memorandum summarising the conference included the following, at [30]:

“My files and correspondence (electronic and paper) do not show this restraining order [relating to the property] as having been provided to our office by our clients or otherwise prior to this date [19 November 2014].  Xam said he did not think he has a copy of the restraining order previously and did not think he had provided us with it.

…

I advised Xam that he should seek independent legal advice as to whether his solicitors at Spicer Lawyers and/or Anthony [Bullard] were in any way negligent in failing to make application for exclusion from the restraining order/automatic forfeiture within the relevant time framework.”

(h) The evidence before Incerti J included affidavit material deposing to very significant logistical difficulties that the DPP would face in responding to the application should her Honour determine to give leave under s51 of the Confiscation Act, at [38] to [40].

(i)    Although it was not necessary for her Honour to decide the issue directly, she noted that it was open to her to consider additional factors on a finding of neglect (by application of the decision of Osborne J in Morizio (Supreme Court of Victoria, Osborn J, 27 June 2009)). Austviet would have “faced the barrier of countervailing considerations, such as the considerable prejudice to the [DPP] caused by the passage of time” (being those mentioned in (h) above), at [85].

18Against this background her Honour held as follows, at [97] to [99] in relation to the application of s51(5) (emphasis added):

“As at 8 April 2013 Xam Le and Ms Spicer were in receipt of Mr Bullard’s email and attachments.  There is no evidence from Xam Le as to what instructions he provided or what advice he received after the 8 April 2013 email. Ms Spicer’s evidence is also silent as to Xam Le’s instructions in relation to the issue of applying for any exclusion of the applicant’s interest from the restraining order. The evidence is simply silent as to Xam Le’s instructions or any steps taken by him.

The problem is that on the state of the evidence I cannot determine whether the delay was due to Ms Spicer’s inaction or Xam Le’s neglect.  I have found that Xam Le was personally served on 12 August 2010 and therefore was aware of the restraining order.  He was also aware of the Bullard email and its attachments.  There is insufficient evidence to explain why the application was not made in relation to the property while there were applications made in relation to other properties in which the applicant had an interest, and that were ultimately returned to the applicant. There are gaps in the evidence which would require me to speculate on what, if any, instructions Xam Le gave to Ms Spicer. In the absence of the attachments or any evidence in relation to the content of those attachments, I am again required to speculate on what was provided to Ms Spicer by Mr Bullard and what Ms Spicer’s knowledge was at that point in time in relation to the property and any restraining orders.

In conclusion, the applicant has failed to discharge its onus to explain its omission to bring any application for its interest in the property or the proceeds from the operation of the restraining order from 12 August 2010 until 22 March 2014, and in particular from 8 April 2013 until 22 March 2014.”

19On Austviet’s application under s51(3) her Honour concluded as follows (at [101], [109] and [110]):

“Xam Le does not provide any evidence to explain why there was a delay from 19 November 2014 until 19 March 2020, six years later, when the current application was filed with this Court….

…

The applicant chose to commence proceedings against Spicer Lawyers in the County Court of Victoria on 16 December 2019.  Given counsel’s comments and the further delay in bringing this application until March 2020, it appears that the applicant has taken this step to mitigate its loss for the purpose of the claim against Ms Spicer and Spicer Lawyers.

Whatever the reasons are for the applicant bringing this current application, I consider the evidence relied upon by the applicant is insufficient to satisfy the Court under s 51(3) of the Act that its delay in failing to apply for exclusion of its interest in the proceeds from forfeiture by the application expiry date was not due to neglect on the applicant’s part.”

Submissions and analysis

20In their submissions, the defendants have set out at some length the authorities discussing the principles to be applied in considering whether a proceeding amounts to an abuse of process. Those principles are not in dispute. In particular, I accept that it is an abuse of process to re-agitate issues in a separate proceeding which have already been finally determined in an earlier judgment, which has not been set aside, in that this amounts to a collateral attack on the earlier judgment.

21In applying those principles to the facts of this proceeding, the defendants identify what they describe as “central findings” by Incerti J in Austviet v DPP. The first is her Honour’s finding that Xam was personally served with the Restraining Order and had it explained to him. Clearly that finding was made and is likely to be relied on heavily by the defendants in their defence in this proceeding. However, this is an application that the proceeding be dismissed or stayed as an abuse of process, not a summary judgment application.

22The second “central finding” identified by the defendants is paraphrased as a finding that “Ms Spicer not advised of Restraining Order”. They submit that Austviet failed to persuade her Honour that it in fact provided the Restraining Order to the defendants before the time for making any application for exclusion (whether under s20 or under s51) had expired. They assert that on the state of the evidence, her Honour was not satisfied that Austviet had provided the Restraining Order to the defendants or provided instructions to take any action in respect of the Restraining Order, and then set out her Honour’s finding in the final paragraph of the extract under paragraph [17] above.

23Relying on these “central findings”, the defendants argue that for Austviet to succeed in this proceeding, “it must obtain a finding that it provided the Restraining Order to the defendants and gave instructions to her to make an application for exclusion, being a finding that the Supreme Court expressly refused to make”. Hence, the defendants submit, Austviet is seeking to re-litigate this issue in the this Court. However, in my view, the defendants have overstated what the plaintiffs must prove to maintain a claim against the defendants and have glossed over a key aspect of her Honour’s findings.

24Cleary, if the plaintiffs were able to show that they provided the Restraining Order to the defendants and gave instructions to her to make an application, the case against the defendants would be much stronger. Indeed, proof of those matters may have led Incerti J to reach a different conclusion in the proceeding before her. But that is not the end of the question. In my judgment, a reasonably arguable case against the defendants can be maintained if the plaintiffs can show that the first defendant was alerted to the existence of the Restraining Order in some other way.

25More particularly, if the plaintiffs can show that the Bullard email of April 2013 sufficiently alerted the defendants to the Restraining Order over the property, they will have reasonable grounds for the allegations in paragraphs 9 to 13 of the proposed amended statement of claim (subject to Mr Lithgow’s foreshadowed re-examination of paragraph 13).

26The circumstances of the defendants’ receipt of the Bullard email and any attachments, and what (if any) discussions were prompted by the email, will be critical to that issue. And the above passage from her Honour’s reasons leaves no doubt that her Honour made no findings on those important matters. Indeed, her Honour stated in express terms that the absence of evidence about these matters meant she could not determine “whether the delay was due to Ms Spicer’s inaction or Xam Le’s neglect”. This is the key part of her Honour’s reasons that the defendants gloss over in their submissions.

27Thus, at least on the questions surrounding the Bullard email, I agree with Mr Lithgow’s submission that it is incorrect to suggest that the judgment of Incerti J determines the factual disputes between the plaintiffs and the defendants in this proceeding. This is sufficient to dispose of the application.

28However, I am also satisfied that her Honour’s reasons do not finally determine the questions raised by paragraphs 14 to 18 of the proposed amended statement of claim. To my mind, Incerti J’s observations about delays after November 2014 at [85] and [110] leave open an argument on behalf of the plaintiffs that an application to the Supreme Court brought in or shortly after November 2014 might have been more favourably received. This, in turn, could support a loss of chance claim, albeit one that may be subject to a substantial discount.

29I am therefore satisfied that the defendants have failed to attain the high threshold necessary to support an order that the plaintiffs’ claims be dismissed as an abuse of process. As Dixon J observed in Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91:

“[B]ut once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss an action as frivolous and vexatious and as an abuse of process.”

30I note finally that Ms Singh for the defendant raised in oral submissions whether Xam was a proper plaintiff in the proceeding. This issue is not the subject of the specific orders sought by the defendants’ amended summons, nor is it foreshadowed in the defendants’ written submissions. I therefore will not make any formal finding or order on the question. However, I agree with Ms Singh that the basis for Xam being named as a plaintiff is far from clear, and the plaintiffs and their legal advisers would be well advised to consider whether there is a proper basis for his ongoing role as a party to the proceeding.

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Certificate

I certify that these 11 pages are a true copy of the judgment of His Honour Judge Woodward delivered on 25 November 2021.

Dated: 25 November 2021

Claire Findlay

Associate to His Honour Judge Woodward