Neale v Mahony (No. 2)

[2018] NSWSC 1253

Supreme Court

New South Wales

Medium Neutral Citation:	Neale v Mahony (No. 2) [2018] NSWSC 1253
Hearing dates:	10 August 2018
Date of orders:	10 August 2018
Decision date:	10 August 2018
Jurisdiction:	Common Law
Before:	Davies J
Decision:	1. Refuse leave to Plaintiff to file Amended Statement of Claim. 2. Statement of Claim dated 22 March 2017 dismissed pursuant to UCPR r 13.4. 3. Plaintiff to pay Defendant’s costs of the proceedings.
Catchwords:	CIVIL PROCEDURE – pleadings – reasonable prospects of success – professional negligence claim - where plaintiff had two opportunities to plead a reasonable cause of action – proceedings dismissed
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Neale v Mahony [2018] NSWSC 1046
Texts Cited:	Nil
Category:	Procedural and other rulings
Parties:	James Woodward Neale (Plaintiff) John Francis Mahony (Defendant)
Representation:	Counsel: In person (Plaintiff) A Maroya (Defendant)   Solicitors: Self-represented (Plaintiff) Yeldham Price O'Brien Lusk (Defendant)
File Number(s):	2017/88092
Publication restriction:	Nil

Judgment

1. I gave judgment in respect of a notice of motion filed by the defendant on 9 March 2018 which claimed summary dismissal of a proceedings commenced by the plaintiff on 22 March 2017. I dismissed all but one aspect of the statement of claim: Neale v Mahony [2018] NSWSC 1046.

2. The one matter that I gave leave to the plaintiff to re-plead concerned particular (d) of the particulars of negligence in para 8 of the statement of claim. That particular read: "Failing to lodge caveats when strongly advised by Ralph Notley of counsel and the plaintiff to do so."

3. In respect of that particular, I said this in my earlier judgment:

[44]   Particular (d) concerns a failure to lodge caveats when advised by Mr Notley of counsel that Mr Mahony should do so. As best I can understand this claim, Mr Notley in an email of 15 June 2012 asked Mr Mahony whether caveats had been lodged over the Avon Road properties and said that, if they had not, Mr Mahony should consider whether caveats should be lodged. Mr Neale, of course, was the registered proprietor of the Avon Road properties, but it seems that the purpose of lodging the caveats was to enable him to receive notice by a Lapsing Notice when the Bank was ready to sell that property.

[45]   Mr Neale appeared to accept that he would have needed to remove the caveat whether on receipt of a Lapsing Notice or after a hearing but, being on notice that the property was about to be sold, he would, unlike what happened with the Yatala Road property, be in a position to ensure that the Bank marketed and sold the Avon Road property at a fair price. Instead of that, it appears that the Bank was able to sell that property without any notice to him. Implied in all of this, although not expressly stated, and certainly not pleaded, was the suggestion that this property was also sold at under-value.

[46]   Although this claim seems a very tenuous claim, and it is certainly not pleaded properly in the statement of claim, I am conscious of the fact that the statement of claim was filed on 22 March 2017 and it seems likely that the Avon Road property was sold some time in 2011 or 2012. That being so, if I was to dismiss the present proceedings because this claim is not properly pleaded, Mr Neale may become statute barred from pursuing it. That is a significant consideration where he is acting for himself.

[47]   I consider in those circumstances that the fairest course is to permit that claim to go forward, to strike out the present pleading of that claim, but give leave to Mr Neale to file an amended statement of claim that properly pleads that matter. It may be necessary to scrutinise carefully any revised pleading before it is allowed to be filed, to ensure that the issue in fact involves a reasonable cause of action.

4. I then stood the hearing of the notice of motion over part heard to today to consider any amended statement of claim the plaintiff wished to file.

5. The plaintiff has now prepared an amended statement of claim. That statement of claim claims $10 million, but says that there are issues of proportionate liability involving other parties. As best I can understand the pleading, there are two or possibly three claims asserted against the defendant. The first particularly reflects para (d) in the earlier form of the statement of claim.

6. From what is now pleaded, it appears that my understanding about the time of the occurrence of these events was in error. I had thought that the events might have occurred in 2011 and 2012. It was for that reason that I was anxious to ensure that, if there was a claim in respect of the failure to lodge caveats, the plaintiff would not be statute barred from bringing that claim, by a dismissal of the proceedings. According to the amended pleading, the relevant events occurred in 2014 and 2015.

7. The first claim asserts that, on Mr Notley's advice, Mr Mahony ought to have lodged caveats over the Pymble property. It asserts that he failed to do so, and that a contract of sale was entered into by the receivers to sell the property. Before that sale could be completed, Mr Mahony is said to have written to the receivers' lawyers on 16 May 2014 to complain about the sale price and the fact that the property had not been auctioned. The amended statement of claim then pleads that those lawyers replied within a day or two to say that the sale contract had been rescinded.

8. It is apparent therefore that, although the plaintiff may well be able to establish a breach of retainer or breach of duty of care, no damage was sustained from that breach.

9. The second cause of action appears in paras 8 to 11 of the proposed amended statement of claim. The pleading there says that the plaintiff instructed Mr Mahony again to lodge caveats after the sale contract had been rescinded. The pleading asserts that Mr Mahony lodged those caveats in mid May 2014. However, lapsing notices served by the receivers are alleged to have been served at the plaintiff's home in Fox Valley Road, Wahroonga, at a time after he had vacated those premises. He pleads that the lapsing notices were left under the door of that property and did not come to his attention. He pleads that thereafter, the receivers entered into a further contract and sold the property at what he asserts was an under value.

10. It is apparent from that pleading that no breach on Mr Mahony's part is alleged. The damage that the plaintiff claims he suffered came not from any act or omission of Mr Mahony, but from the service of the lapsing notices at a property where the plaintiff no longer lived, and in circumstances where those lapsing notices did not come to his attention.

11. Perhaps associated with that cause of action, or perhaps amounting itself to a third cause of action, the plaintiff pleads in paras 15 and 16 of the proposed amended statement of claim that the plaintiff subsequently heard that the Pymble property had been sold. He pleads that Mr Mahony obtained title searches which showed that the sale had been settled and the titles transferred on or about 18 January 2015. He pleads further that he then instructed Mr Mahony to repeat the process that he had previously used to complain of an under value sale and have the contract reversed. He pleads further that Mr Mahony took no action on those instructions.

12. The plaintiff does not indicate any basis upon which it would have been possible for Mr Mahony to act in any way that would have brought about a reversal of the settlement of those sales. If the power of sale had not been exercised properly but the title had been transferred to the purchaser, the plaintiff would only have had a claim in damages against the mortgagee, the receivers or both.

13. None of the causes of action pleaded discloses a reasonable cause of action, when consideration is had to the test in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. In those circumstances, and given that the plaintiff has had two opportunities to plead a proper cause of action, the defendant's notice of motion must be acceded to.

14. As I have said, I was concerned at the time of my first judgment that the plaintiff should not be shut out forever for making the claim in relation to the failure to lodge caveats. It is now apparent that the events of which he complains, where a loss has flowed, occurred in 2014 and 2015. If the plaintiff considers that he has, and can plead, a reasonable cause of action against Mr Mahony in relation to the issues set out in the proposed amended statement of claim, he will not be prevented from commencing fresh proceedings in that regard.

15. Accordingly, I refuse leave to the plaintiff to file the proposed amended statement of claim which I will mark as MFI 1 on the present application. The statement of claim filed 22 March 2017 is dismissed pursuant to r 13.4 Uniform Civil Procedure Rules 2005 (NSW). The plaintiff is to pay the defendant’s costs of the proceedings.

**********

Decision last updated: 13 August 2018