Mathews, R.G.H. v Australian Telecommunications Corporation
[1990] FCA 275
•4 Jun 1990
"
JUDGMENT NO. ?.5...%..%
IN THE FEDERAL COURT OF AUSTRALIA )
)
QUEENSLAND DISTRICT REGISTRY ) NO. G16 of 1990 1 GENERAL DIVISION ) BETWEEN :
RUSSELL GORDON HAIG MATHEWS and RUSSELL GORDON HAIG MATHEWS as Trustee for NO. 1 T.I.P.S. OFFICE TRADING UNIT TRUST
Applicant
AND:
AUSTRALIAN TELECOMMUNICATIONS CORPORATION, MEL WARD, Manauinq Director. STAN MOON, Comuany Secretarv. IAN ROW. Cor~orate
Solicitor. JAMES HOLMES . Actinq Comoanv Secretarv, GEOFFREY COHEN, Senior Partner, Arthur Andersen & Co., JOHN BORROWS. Manauina Partner Australia. Arthur Andersen & Co., ARTHUR ANDERSEN & CO. ia firm)
Respondents
MINUTE OF ORDER
SPENDER J.
4 JUNE 1990
BRISBANE
THE COURT ORDERS THAT:
(1) the application be dismissed;
(2) Russell Gordon Haig Mathews, Kula Holdings Pty Ltd and Aah-Rem Pty Ltd pay the costs of the proceedings, including reserved costs, up to, but not including, 1 May 1990, such costs to be taxed if not agreed.
(3) Russell Gordon Haig Mathews pay the costs of the proceedings, including reserved costs, after and including 1 May 1990, such costs to be taxed if not agreed.
Settlement and entry of orders is dealt with by
Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
PUEENSLAND DISTRICT REGISTRY ) NO. G16 of 1990 ) GENERAL DIVISION 1
BETWEEN:
RUSSELL GORDON HAIG MATHEWS and RUSSELL GORDON HAIG MATHEWS as Trustee for NO. 1 T.I.P.S. OFFICE TRADING UNIT TRUST
Applicant
AND :
AUSTRALIAN TELECOMMUNICATIONS CORPORATION, MEL WARD, Manaainq Director, S TAN MOON, Com~anv
Secretarv. IAN ROW. Cor~orate
Solicitor. JAMES HOLMES . Actinq
Com~anv Secretarv, GEOFFREY COHEN,
Senior Partner, Arthur Andersen & Co..
JOHN BORROWS, Manaaina Partner
Australia, Arthur Andersen & Co.,ARTHUR ANDERSEN & CO. fa firm)
Respondents
SPENDER J.
BRISBANE
4 JUNE 1990.
EX TEMPORE REASONS FOR JUDGMENT
This is a notice of motion to dismiss an application to the Court, on the basis that no reasonable cause of action is disclosed, or that the proceeding is vexatious, or is otherwise an abuse of process of the Court. It is brought under 0. 20 r. 2 of the Federal Court Rules in relation to an amended application and an amended statement of claim sought to be filed by the applicant, Mr Mathews.
- L
Order 20 r. 2 provides that:
" Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding -
(a) no reasonable cause of action is disclosed; (b) the proceeding is frivolous or vexatious; or (C) the proceeding is an abuse of the process of the Court,
the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding. "
That rule deals with a proceeding generally, or any specific claim in the proceeding. There is also a rule dealing with pleadings which is in similar terms; 0. 11 r. 16 This is mainly designed to ensure compliance with the rules of pleading.
The power to strike out a pleading or a proceeding is discretionary and the cases consistently emphasise the need for this power to be exercised sparingly and with caution.
The difficulty surrounding this particular
application is exacerbated by the fact that Mr Mathews is an
unrepresented applicant, and the proceedings thus far illustrate the great difficulties that that situation produces, not only to the applicant in attempting to do his complaint justice, but also to other parties and to the court itself.
While there is a deep and natural desire to see that the interests of justice in every case are served, it has to be recognised that the interests of justice are not CO-extensive with the interests of an applicant. There is a degree of tension in a situation where a court has to deal with an unrepresented applicant advancing complex and difficult claims. One must acknowledge the difficulty attaching to attempts to comply with the requirements of the law and the need to ensure that the respondents receive no less than that to which it is entitled. The nature of these difficulties will be more apparent on a close reading (or even a not-so-close reading) of the amended application and the amended statement of claim in these proceedings.
On 1 May 1990, Mr Russell Gordon Haig Mathews filed what is headed as an Amended Application, and which claimed:
" On the grounds appearing in the accompanying
statement of claim the applicant claims:
1. damages pursuant to section 82 of the Trade
Practices Act 1974 arising out of contraventions of
sections 46, 52, 52A, 53 and 60 of the Trade
Practices Act 1974 amounting to $250,836,220.00
(two hundred and fifty million, eighty hundred &
thirty-six thousand, two hundred and twenty
dollars)
and/or
2. damages in the accrued juriediction in contract
for breach of condition in contract beina warrantv
pursuant to section 74(1) and/or 74(2)-of ~rad;?
contract generally, for tort, conspiracy to cheat Practices Act 1974 and/or in tort and/or tort and and/or defraud, wilful default deceit and fraud amounting to $250,836,220.00 (two hundred and fifty million, eighty hundred L thirty-six thousand, two hundred and twenty dollars)
and/or
3. injunction or injunctions pursuant to section 80
of the Trade Practices Act 1974 arising out of
contraventions of section 46, 52 52A, 53 and 60 of
the Trade Practices Act 1974 as determined by the
court. "It is immediately apparent that a claim in excess of
$250,000,000 calls for a degree of care in both the
formulation and quantification of that claim.
- 4
The accompanying document, called an Amended Statement of Claim, is a 23-page document with a number of paragraphs which are not continuously numbered. There are annexures to the Statement of Claim which, in aggregate, exceed two hundred pages. The document describes in detail the travails of Mr Mathews and entities associated with him, concerning the dealings of those entities and himself with Australian Telecommunications Corporation, which is the first of a number of named respondents.
It will be necessary to refer at some length to that document and annexures, but it has to be said at the outset that the document fails to comply with the requirements of
0. 11 rr. 2 and 3. Rule 2 provides that:
" (a) ... a pleading of a party shall contain, and contain only, a statement in a summary form of the material facts on which he relies, but not the evidence by which those facts are to be proved;..."
Rule 3 provides:
" A pleading shall be as brief as the nature of the
case admits.
I am, and have been, conscious of the difficulties facing Mr Mathews in relation to these matters, but non-compliance with these rules has led to the position that many unnecessary allegations have been pleaded. These would tend to prejudice, embarrass or delay the trial of the action. As such, the pleading is a pleading which is beyond the right of a party to advance.
- 5
A number of allegations which are wholly irrelevant to the nature of the relief claimed are advanced. These allegations raise issues that will necessarily involve expense, delay and trouble to the respondents.
On 5 February 1990, an application was filed on behalf of Mr Mathews and two companies, Aah-Rem Pty Ltd and Kula Holdings Pty Ltd, with Australian Telecommunications Corporation as the sole respondent. This application was accompanied by a statement of claim.
On 28 February 1990, the respondent filed a request for further and better particulars in the statement of claim. On 1 March, when the matter was first before the court, Mr Mathews appeared on his own behalf, and the respondent was represented by Miss M. Wilson of counsel.
I drew the attention of Mr Mathews to the provisions of 0. 4, r. 14, which provides in sub-rule 2 that:
corporation may not, without the leave of the Except as provided by or under any act, a court, commence or carry on any proceeding
otherwise than by a solicitor. "
The matter was adjourned for mention to 10 April 1990 so as to permit M r Mathews and the other applicants if need be to apply for legal assistance. I granted leave to file an amended application and an amended statement of claim before that date. On 10 April, Mr Mathews again appeared in
person and told me that he had asked a private law firm to
It should be noted that, in addition to Australian Telecommunications Corporation, a number of natural persons were described as respondents in these three documents.
While leave had been granted to file an amended statement of claim on two previous occasions, such leave does not and did not extend to the joinder of other persons . That question seems quite subsidiary however to the primary question of whether, on the basis of the amended application and the amended statement of claim, together with the voluminous material referred to by the latter document, the provisions of 0. 20 r. 2 or, alternatively, 0. 11 r. 16 ought to apply to
the application or to the pleading.
The amended application deletes the two corporate entities who were CO-applicants in the original application. As to whom might be the appropriate applicant, paragraph 1 of the "Amended Statement of Claim" is in these terms:
" Rusaell Gordon Haig Mathews is the proper and sufficient applicant in this application. He is the head of the RH group, consisting of Rusaell Hathewe, a number of companies of which Ruasell
trusts, which together had a number of
Hathews is the managing director and a numher of
registrations and licences, offered services to the public and owned property for expansion. Telecom has lifted the corporate veil on a number of those companies of which Russell Mathews is a director and dealt with those entities and Ruseell Gordon Haig Mathews as one and stated that they can look behind subscribers to determine the responsible person. One of those companies with which Telecom has so dealt was AAH-REM PTY LTD which is the trustee of the No1 T.1.P.S Office Trading Unit Trust. Telecom so dealt with the group also. Telecom has ascribed characteristics of the company AAH-REM Pty Ltd to Ruesell Gordon Haig Mathews personally. Telecom has stated that they will not connect a phone ever to Rusaell Gordon Haig Mathews or to any company of which he Fe a director while an amount is outstanding against the company AAH- REH Pty.Ltd. of which he is a director."
- 8
M r Mathews thus alleges that Telecom, "lifted the
corporate veil", particularly in relation to its conduct concerning the provision of telephone services to companies with which he is associated. He states that Telecom has indicated to him that it will not connect a phone to any company of which he is a director while any amount is outstanding against any company with which he is associated. He says that he is therefore entitled, on his own behalf, or on behalf of all the various entities, companies and trusts with which he is associated, to bring these proceedings.
This threshold assumption is fatal.
The fundamental basis of the statement of claim appears from paragraphs 3, 4, and 5 of the amended statement of claim. Shortly put, Kula Holdings Pty Ltd owns premises at 56-58 Thuringowa Drive, Kirwan, in Townsville. AAH-REM Pty Ltd, which was the trustee then for No.1 T.I.P.S. Office Trading Unit Trust, leased those premises and was provided with telephone services through the said owner, Kula Holdings
premises were supplied by the respondent whom I will refer to Pty Ltd. The two telephone services connected to those as "Telecom" . AAH-REM Pty Ltd as trustee for No. 1 T. I .P.S. Off ice Trading Unit Trust trading as TIPS (standing for Tax Investment Planning Services) commenced business as a tax accountant and financial planner in those premises in June
1985 and a telephone was connected having the number 736 711.
- 9
That number was advertised in the yellow pages and in other sources and, sometime later, another telephone number 736 816 was connected to the office.
In February 1987 Mr Mathews contacted the Townsville
District Telecom office to request that the second number be
cancelled. The disconnection was effected on 24 February1987. However, the rotary link with the prime group number 736 711 was not broken. This omission had serious repercussions for the business. Incoming calls to the main number 736 711 were directed via the rotary link to the telephone number 736 816 which was disconnected. It meant that in most cases callers of the primary number would receive no answer. It was only when two incoming calls were received simultaneously that the primary number would ring.
Long and detailed communication occurred between Mr
Mathews and Telecom in response to this unfortunate situation.Part of this communication was concerned with the significance
in the circumstances, if any, of the provisions of section 101 of the Telecommunications Act 1975. Section 101 provides
that:" Proceedings do not lie against the commission, an officer or employee of the Commission, a person acting for or on behalf of the Commission under a contract with the Commission or an employee of such a person in respect of any loss or damage suffered by a person -
(a)
by reason of any default, delay, error, omission or loss, whether negligent or otherwise, in the transmission or delivery of a telecommunications message by the Commiseion; or
(b)
by reason of any default, delay, error or omission, whether negligent or otherwise, in respect of the provision, maintenance or operation of a telecommunications service. "
The position in relation to the two telephone numbers is set out in Exhibits F and G to an affidavit of Mr David Michael Bowden filed 31 May 1990. In relation to the telephone service 736 711, Exhibit F suggests that the service was temporarily disconnected on 19 May 1987 for non-payment of a telephone bill and indicates - although the correctness of this, as I understand it, may be disputed - that the service was disconnected on 9 October 1987 for non-payment of the account. In relation to the telephone service 736 816, that was disconnected on 20 February at the customer's request, according to Exhibit G.
The statement of claim asserts that from 1 August 1988, an agreement had been entered into with Telecom, the precise nature of which is at the crux of the claim by whoever is the appropriate applicant. The nature of the agreement, however, despite questioning of Mr Mathews cannot be discerned
either from the statement of claim or from the bar table. If I understand Mr Mathews correctly, he is not asserting that the agreement was that he would accept by way of compensation whatever amount was determined by an independent business analyst appointed to act in respect of his claim; that is to say, the claim in respect of damage suffered as a result of the disconnection of the telephone number 736 816 and its consequent effect on the operation of
the remaining number 736 711. This is crucial in relation to the claim which is advanced against the firm, Arthur Andersen and CO, and a number of partners and employees of that firm. They were the independent business analysts appointed by Telecom to advise on the quantum that ought to be offered by way of compensation for the error relating to the disconnection.
The statement of claim asserts that there was a breach of contract attending the disconnection of the rotary link from 28 February, with consequential losses. What are called "Particulars of Aggravated Losses" are set out at fulsome length, but in part, the claim is calculated in this way: a franchise agreement was proposed and it was claimed that 1200 branches Australia wide and up to 6 businesses in each centre would make a possible 7200 individual franchises within Australia. Mr. Mathews deposed that the number of individual franchises would grow exponentially with the number of branches doubling every month.
After various items were attributed to this
progress, the particulars conclude that:
" 2.. .As Russell Mathewa himself had control of this whole process, all of the benefits would have accrued to him either directly or indirectly, but eventually, the benefit would be to him personally. Each franchise would need to gross approximately $100,000 a year to be viable. Each one can. The franchise fee of 15% would capitalise to a value of approximately $150,000 per franchise. That is the value to the franchisor, namely myself. 4096
franchieee with a capital value of $150,000 each
would equate to a total aggregate capital value of
$614.4 Million.
3. In the interest of conservatism the applicant
reduces its claim for aggravated damages to $250
million. "
So far as the various causes of action in the statement of claim are concerned the document itself has to be looked at in full: no summary can properly do justice to the validity of the claim that it is truly vexatious. There is an element of personal loss to Mr Mathews claimed. This is in respect of a property at 13 Explorer Street, Toowong. However, the statement of claim alleges no causative connection between the personal loss and any conduct of Telecom or of Arthur Andersen and CO, or of its partners or employees, save that it seems to be suggested that Mr Mathews' personal financial situation was detrimentally affected as a consequence of the corporate difficulties experienced as a result of the disconnection, which in turn led to his having to dispose of his property at a loss. The particulars are scant however, if not non-existent, in respect of this aspect of the matter.
It is to be noted that Kula Holdings Pty Ltd is not an applicant. A number of properties held by it as trustee for one or other trusts is particularised in the statement of claim, but no details of the loss suffered by the disposal of those properties appear. Neither is the company, Aah-Rem Pty Ltd, which on its face seems to be the one to suffer the loss (if indeed loss was suffered). Telecom supplied these services to the owner of the premises, Kula Holdings Pty Ltd. The basis of any liability by Telecom to anybody other than
- 13
the subscriber does not appear from the statement of claim.
So far as the losses by Aah-Rem Pty Ltd are concerned, these appear to be under three heads. First, missed opportunities for the provision of tax and investment planning services because of the inability of clients to contact it. Secondly, there is said to be consequential losses in that the fall in business necessitated the sale of certain properties at a loss. Lastly, it is said there is the loss constituted by the inability to realise the potential franchising profits.
The next basis in the statement of claim relates to
an alleged breach of the warranties said to be relevant by
S. 74(1) and (2) of the Trade Practices Act 1974. In this
regard, there is a difficult question raised as to the nature
of the relationship between Telecom and a subscriber, in the
ordinary course, to a telecommunications service. It was
suggested by Miss Wilson, on behalf of Telecom, that it was a
statutory, and not a contractual, relationship. The matter is by no means easy. In John Fairfax &
Sons Ltd. v. Australian Telecommunications Commission [l9771
2 N.S.W.L.R. 400, there was a discussion as to whether the
duty to maintain equipment arises by statute or by contract. At 406, Moffitt P. said that, in respect of the right to maintenance:
" Whether the right be atatutory, or an implied term
in a contract. it is a ~rivate riaht...It is sufficient for to assume that the obligation is statutory."
He then said later:
... even although the rights and obligations of the
Commission and subscriber in relation to a service provided are statutory in nature, the point to be made is that they are private in character. The right to be paid the rent is a private right, as is the right to have the service maintained, when the rent is paid. In this regard, the quality of the right is not dissimilar to contractual rights in a commercial setting. That statutory rights can be private is clear in respect of rights conferred by
statute in other fields, as appears from the well- - -
known observations of Dixon J. in O'Connor v.
Brav Ltd. (1937) 56 C.L.R. 464, at pp. 477, 478.
It is a statutorv riaht of this nature to which
Stephen J. referred in Bradley v. The Commonwealth(1973) 128 C.L.R. 557, at DD. 586-594, 575, 576 in
' relation to provision postal servic&s to an individual. "
More recently, in Suatu Holdinas Ptv Ltd v. Australian Postal Cor~oration (1989) 86 ALR 5 3 2 , Mr Justice Gummow was concerned with the operation of S. 104 of the Postal Services Act 1975, which is in similar terms to s.101 of the Telecommunications Act 1975. The precise question of
characterisation raised by Miss Wilson did not have to be
resolved in that case. At 5 4 1 , Mr Justice Gummow said: W It is unnecessary to decide in the present
proceedings whether section 104(1) is to be
treated as if it constituted a defence or whether the applicant has to show 8. 104(1) does not apply before the applicant makes out the causes of action upon which it sues: cf. Elna ~ u s t ~ t v ~ t q v. International Comuuters (Aust) Ptv Ltd (~0.2 (1987) 75 ALR 271: 16 FCR 410 at 415. Althouah th:
statement of claim did not canvass a. 104(l<, the applicant was prepared to resist the respondent's strike out application as if the applicant had the burden of establishing that 8. 104 (1) did not
apply. "
That is not the case here.
The resolution of the question whether the
relationship is contractual or statutory strikes me as
- 1 5
important and difficult, and I would not, in these circumstances, be minded to make an order having the effect of striking out a proceeding or a pleading, which order depended on a resolution of that question adverse to the applicant.
As to the agreement which the statement of claim asserts was made in August 1 9 8 8 , it was argued for the respondent Telecom that there was no valid consideration for it. Telecom asserts also that the dealings were directed to the calculation of any ex gratia payment to be made by
Telecom . It seems to me that there is merit in the submission that no consideration for that alleged agreement appears, and that that which is particularised as consideration was merely a step in the carrying out of whatever be the precise agreement reached. However, the further submission by Telecom as to the nature of the dealings is directed to a factual matter.
The major difficulty about this aspect of the matter however is in knowing what is the agreement which the applicant alleges was made. Such were not resolved by the questioning of Mr Mathews, which merely served to further obfuscate what was already difficult to understand.
In the absence of an assertion that the agreement
was to accept that which the independent business analyst
- 16
recommended as compensation, it seems to me that, as pleaded, no claim against Arthur Andersen and CO or the members or employees of that firm lies. There are frequent assertions that the reports were incompetently prepared, but no causal connection between any such departure from reasonable standards and loss suffered by the applicant or, indeed, by anybody, emerges from the pleadings.
Further, it was asserted that the parties were fraudulent and were involved in a conspiracy or engaged in misleading or deceptive conduct or unconscionable behaviour but, once again, the connection between that conduct and damage does not appear.
So far as S. 7 4 is concerned, the section gives no primary right to the Federal Court to award damages. 1n Hlertum v. Ahern ( 1 9 8 7 ) ATPR 4 0 - 8 2 3 , Wilcox J concluded that the Federal Court had no jurisdiction to entertain proceedings based solely on S. 7 4 . His Honour held that S. 8 2 , which
of a provision of Part V did not have the effect of giving a gives a person a right to damages for conduct in contravention person a cause of action for breach of the warranty imposed by S . 7 4 , but that any such breach involved a right to pursue the claim for breach of warranty in the ordinary courts. As the material annexed to the amended statement of
claim shows, the matter was the subject of correspondence
between Telecom and the Commonwealth Ombudsman and m Mathews.
- 17
In a letter dated 6 June 1989, the acting corporate secretary of Telecom wrote to the Ombudsman responding to a question raised by the Ombudsman as to the reason why Telecom's "ex gratia offer to Mathews of $15,745, which was the figure Arthur Andersen estimated as net loss of revenue in its second report, does not appear to allow for loss of good-will to Mr Mathews' business, which was previously addressed by Arthur Andersen in its initial report."
A number of matters is said by Telecom about that, including the statement that Arthur Andersen was retained by Telecom to provide an expert opinion as to Mr Mathews' alleged loss, and was not engaged to arbitrate the matter. The question of S. 101 immunity was referred to, and that, for the reasons expressed in the letter, the offer of $15,745 was final, and one which the acting corporate secretary asserted was totally defensible and reasonable, in all the circumstances.
For the reasons which I have indicated and, more particularly, from a detailed consideration of the document entitled "Amended Statement of Claim" filed on 1 May 1990, these proceedings ought to be dismissed. It is not for the court to make an applicant's case. I have, as best I can, attempted to meet the difficulties facing an unrepresented applicant. The results, thus far, have been that it would be unreasonable to call on any citizen, corporate or otherwise, to have to plead to this statement of claim. Nothing
- 18
reasonably emerges from it to suggest that there is a genuine
cause of action alleged which can be answered by a defence.
The alleged statement of claim, in my opinion, does tend to embarrass, prejudice, and delay the trial of the action. Many matters are alleged which are unnecessary. In my opinion, in the interests of justice, I ought to dismiss the proceeding.
I order that Russell Gordon Haig Mathews, Kula Holdings Pty Ltd and Aah-Rem Pty Ltd pay the costs of the respondents up to, but not including, 1 May 1990, to be taxed if not agreed. I further order that Russell Gordon Haig Mathews pay the respondents' costs incurred after and including 1 May 1990.
I certify that 11.1.; ,-:: , l ! : ! c 17 prcccding pages ;#:R a trllc c ? : : / oi :I1c rc3zcns for
j udq t t i~ r~ ! I I ~~ ( ! I~ I r f 1-11s ~{OI?~J:II 1
Mr .Il~-,l:r v !;pcndcr 34
I Associatq -
9, k JP, : .X L
Datecl 4 ) I - l f l ' l C
0