Perera v Genworth Financial Mortgage Insurance Pty Ltd t/a Genworth

Case •

[2015] NSWSC 1357

•

18 September 2015

No judgment structure available for this case.

Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Perera v Genworth Financial Mortgage Insurance Pty Ltd t/a Genworth [2015] NSWSC 1357
Hearing dates:11 September 2015
Date of orders: 18 September 2015
Decision date: 18 September 2015
Jurisdiction:Equity
Before: Slattery J
Decision:

Leave not granted to the Plaintiff to file his proposed Amended Statement of Claim. Plaintiff’s Statement of Claim struck out. Plaintiff ordered to pay Defendant’s costs of the proceedings.

Catchwords: CIVIL PROCEDURE – application to strike out statement of claim – application to oppose filing of amended statement of claim – whether pleadings disclosed any cause of action – duty of care not to cause pure economic loss – duty of care not to negligently inflict nervous shock – whether potential plaintiff may owe duties to potential defendant and associated entities not to commence proceedings negligently – defamation – requirement to plead allegedly defamatory imputation – requirement to give particulars of identification of the plaintiff.
Legislation Cited: Uniform Civil Procedure Rules 2005, rr 13.41A, 14.28(1)(a) and (b)
Cases Cited: Beach Club Port Douglas P/L v Page (2005) 1 Qd R 307
Business Computers International Ltd v Registrar of Companies [1988] Ch 229
Commonwealth v Verwayen (1990) 170 CLR 394
Cabassi v Vila (1940) 64 CLR 130
D’Orta-Ekenaike v Victorian Legal Aid (2005) 223 CLR 1
Genworth Financial Mortgage Insurance Pty Ltd v Hodder Rook & Associates Pty Ltd [2010] NSWSC 1043
Hodder Rook & Associates Pty Ltd v Genworth Financial Mortgage Insurance Pty Ltd [2011] NSWCA 279
Jain v Trent Stategic Health Authority [2009] 1 AC 853
John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1
Laferla v Birdon Sands Pty Ltd (2005) Aust Tort Reports 81-876
Moorabool Shire Council v Taitapanui (2006) 14 VR 55
Perre v Apand Pty Ltd (1999) 198 CLR 180
Category:Consequential orders (other than Costs)
Parties: Plaintiff: Madura Perera
Defendant: Genworth Financial Mortgage Insurance Pty Ltd trading as Genworth
Representation:

Counsel:
Defendant: E. Holmes

  Solicitors:
Plaintiff: in person
Defendant: D. Hanger
File Number(s):2014/320843
Publication restriction:No

Judgment

  1. The plaintiff, Mr Madura Perera, is a valuer. In these proceedings he sues a mortgage insurer, Genworth Financial Mortgage Insurance Pty Ltd trading as Genworth for damages for: (1) negligently inflicted economic harm; (2) defamation; and (3) negligence causing nervous shock. Genworth seeks by motion filed on 30 January 2015 to strike out Mr Perera’s current pleading (“the Statement of Claim”).

  2. Mr Perera seeks leave to file an amended pleading (“Amended Statement of Claim”). Genworth argues that the proposed Amended Statement of Claim suffers from the same deficiencies as the original Statement of Claim and that leave to file it should not be granted. The practical contest between the parties is about the merits of the proposed Amended Statement of Claim.

  3. Mr Perera and Genworth have been involved in litigation before. Mr Perera held interests in Hodder Rook & Associates Pty Ltd (“Hodder Rook”), a corporate provider of professional valuation services until that company went into liquidation. Genworth sued Hodder Rook in this Court’s Commercial List for the allegedly negligent valuation of two properties, one at Cabramatta and the other at Ashcroft. At a trial at first instance Einstein J found in Genworth’s favour and found that Hodder Rook was negligent: Genworth Financial Mortgage Insurance Pty Ltd v Hodder Rook & Associates Pty Ltd [2010] NSWSC 1043. But the Court of Appeal granted leave to Hodder Rook to appeal on the basis of a denial of procedural fairness to Hodder Rook and ordered a re-trial: Hodder Rook & Associates v Genworth Financial Mortgage Insurance Pty Ltd [2011] NSWCA 279. The re-trial never took place. Hodder Rook went into liquidation and its liquidator declined to pursue the litigation further.

  4. Mr Perera now says that his reputation and income as a professional valuer have been gravely affected by Genworth’s conduct in a number of different ways that are the subject of his Statement of Claim. But Genworth seeks by Motion dated 30 January 2015 to strike out the Statement of Claim, either under Uniform Civil Procedure Rules (“UCPR”) 2005, r 13.41(1)(a) or (b) or r 14.28(1)(a) or (b). Genworth contends that each of Mr Perera’s three pleaded causes of action is either frivolous, vexatious or discloses no reasonable cause of action, within UCPR, r 13.4(a) or (b) or discloses no reasonable cause of action or has a tendency to cause prejudice, embarrassment or delay in the proceedings, within UCPR, r 14.28(1)(a) and (b). For the same reasons, Genworth opposes the Court granting leave to file the Amended Statement of Claim. The two issues are complementary: the principles relevant to the Motion to strike out the Statement of Claim also apply to whether Mr Perera should have leave to file the Amended Statement of claim, in that leave to amend will not be given where the proposed amendments would be liable to be struck out: Commonwealth v Verwayen (1990) 170 CLR 394 at 456.

  5. In my view Genworth’s complaints about the Amended Statement of Claim are made out, as these reasons explain.

  6. Genworth’s strike out Motion was filed on 30 January this year (“Motion”). It was finally heard before me in the Applications List on 11 September 2015 after the plaintiff had been afforded over 9 months of procedural opportunities to get his pleadings in order. The Motion originally came on before Stevenson J on 27 March 2015. Mr Perera was unrepresented before Stevenson J, as he was before me. Stevenson J stood the proceedings over with directions to allow Mr Perera to receive pro bono legal advice. The matter was heard before the Registrar for directions in April, May and June. But throughout this period Mr Perera apparently failed to obtain pro bono assistance. The strike out application was re-listed for hearing on 24 July 2015 before Kunc J in the Applications list. Kunc J gave Mr Perera time to amend his Statement of Claim before the Motion was heard. Mr Perera provided his Amended Statement of Claim on 7 August 2015 before the matter went back to the Registrar and was listed before me on 11 September 2015.

The Economic Loss Claim

  1. Mr Perera pleads his action for negligently inflicted economic loss between [17A] and [23] of the Amended Statement of Claim. He pleads (in [17A] and [18]) that on 18 March 2004 he conducted what is described as “the Bankstown Property” valuation and that on 10 December 2008 Genworth made a claim against him in respect of that valuation. The heart of the claim appears to be pleaded in [18A] to [22] (excluding material deleted from the original Statement of Claim and particulars), which provide as follows:

“18A.   Defendant has a duty to the plaintiff to not to claim ‘The Bankstown Property’ valuation negligent. Defendant owed plaintiff a duty of care to ensure that any negligent claim made against a valuation conducted by plaintiff has merit as such claim become part of the plaintiff’s history and has an adverse effect on plaintiff’s career.

20.   Subsequently on the 6 of September 2010, Defendant admitted that the negligent claim of ‘The Bankstown Property’ was an error.

[particulars omitted]

21.   Defendant also engage internal valuers and defendant should have made reasonable enquiries to find out whether the Bankstown valuation is negligent or not before making a negligent claim. Defendant breached the duty to the plaintiff by failing to take reasonable care.

22.   Defendant’s action resulted in economic loss to Plaintiff as the professional insurers refused to insure Plaintiff and/or any entity associated with Plaintiff due to ‘The Bankstown Property’ claim. Plaintiff’s lost is a direct result of defendants breach of duty.”

  1. The Amended Statement of Claim continues from [22A] to [23] to set out contentions about the nature of professional indemnity insurance, and to explain the nature of the plaintiff’s loss. That loss is alleged to arise from the plaintiff being unable to procure professional indemnity insurance because of the number of claims that he must now disclose to potential professional indemnity insurers. As a result of failing to get insurance, the plaintiff pleads that he cannot now work as a valuer, has lost potential clients and income and must instead pursue career opportunities in a different discipline.

  2. In the course of argument the Court asked Mr Perera whether he could direct the Court to any authority that supported the proposition that he was pleading: that a potential plaintiff in proceedings, such as Genworth in the Commercial List proceedings before Einstein J, owed a duty of care to a potential defendant in such proceedings, such as Hodder Rook, or an associated person such as Mr Perera, not to bring the proceedings negligently. The Court asked during argument whether authority supported the notion that a plaintiff owed a duty to take reasonable care for the economic interests of such litigation adversaries. Mr Perera was unable to point to any such authority at the time.

  3. The existence of such a duty of care seems highly unlikely. The posited duty appears to be in tension with a citizen's right of free access to the courts. Moreover, such a duty would have a tendency to promote the re-litigation of suits and be contrary to the long recognised public interest in the finality of litigation: see Cabassi v Vila [1940] HCA 41; 64 CLR 130 and D’Orta-Ekenaike v Victorian Legal Aid [2005] HCA 12; 223 CLR 1.

  4. There are a number of categories of case in which claims for negligently inflicted pure economic loss have been recognised. In Moorabool Shire Council v Taitapanui (2006) 14 VR 55 at [71], Ormiston and Ashley JJA usefully summarised the effect of High Court authorities in this area such as Perre v Apand Pty Ltd (1999) 198 CLR 180; [1999] HCA 36 and described the categories of cases in which the Court may find that one party owes another a duty of care not to cause loss of a nature that is purely economic:

“[71]   The categories of case in which a duty of care with respect to pure economic loss is to be found are properly to be seen as special. Foreseeability of loss, and an unbroken chain of causation, are necessary elements, but by themselves are not sufficient. An additional element which must be present has been variously described as involving one or more of known reliance or dependence of the plaintiff; the assumption of responsibility by the defendant; or the control exercised, or exercisable, by the defendant over the circumstances affecting the plaintiff’s interests. What ultimately determines whether a duty of care arises is the character of the relationship between the plaintiff and the defendant. Matters such as those which we have just mentioned, and others, bear upon the resolution of that question in the particular circumstances of particular cases; though not all of those matters will be at the forefront in every case. The question to be answered is whether, having regard to the salient features of the particular case, the connection between the parties is sufficiently close — though not necessarily physically close — as to give rise to a duty of care. When the defendant’s acts or omissions arise in connection with the discharge of statutory duties or the performance of statutory functions, the statutory framework is itself a salient feature to which consideration must be given.

[72]   To those considerations should be added the following: Three policy considerations are pertinent in every case. First, that the effect of a decision should not lay a defendant open to claims which are indeterminate as to the class or number of potential claimants, time or amount. Second, that the effect of a decision should not be to unduly hinder ordinary commercial transactions (or, be inconsistent with normal business standards). Third, that a decision should not have the effect of intruding into another area of the law.

[73]   Also to be borne in mind is the fact that the pertinent law has been developed cautiously, incrementally, and by analogy. So, for example, in Perre v Apand Pty Ltd McHugh J said this:

‘… We have the established categories, a considerable body of case law and the useful concept of reasonable foreseeability. If a case falls outside an established category, but the defendant should reasonably have foreseen that its conduct would cause harm to the plaintiff, we have only to ask whether the reasons that called for or denied a duty in other (usually similar) cases require the imposition of a duty in the instant case.’”

  1. But the act of negligently causing purely economic, financial loss to a person associated with a company that is a defendant in proceedings by bringing proceedings against that defendant does not in itself breach any category of duty to take reasonable care to avoid financial loss, which Australian Courts presently recognise in this area. And it is difficult to understand how the existing categories could be extended to cover such a duty, consistently with principle.

  2. On the morning that this judgment was to be given, Mr Perera provided to the Court four authorities in which a duty of care was said to be owed on the part of one litigant to an opposing litigant, as to the manner in which the litigation is conducted. Those cases actually make clear that the law, both in Australia and in England, recognises no such duty of care. The first case Mr Perera referred the Court to was Business Computers International Ltd v Registrar of Companies [1988] Ch 229 (“Business Computers”), where at 240 Scott J (as his Lordship then was) stated that:

“control of litigation and of the various steps taken in prosecuting litigation lies in the court and the rules and procedures that govern litigation and cannot be sought via a tortious duty of care imposed on one party for the benefit of another”.

  1. The second case Mr Perera relied upon was Laferla v Birdon Sands Pty Ltd [2005] NTSC 12; Aust Tort Reports 81-876, in which Angel J held at [113] that Scott J’s statement in Business Computers had correctly summarised the law.

  2. Thirdly, Mr Perera referred the Court to Beach Club Port Douglas P/L v Page [2005] QCA 475; 1 Qd R 307 (“Page”). In that case the Queensland Court of Appeal applied Scott J’s statement in Business Computers and found that no duty of care is owed by a litigant to another as to the manner in which the litigation is conducted. In Page (at [27]) Jerrard JA emphasised that where a party has a right to strike out incurably bad litigation under the rules of court that it is difficult to sustain the notion of the vulnerability necessary to maintain a duty of care in this area.

  3. Finally Mr Perera referred the Court to Jain v Trent Stategic Health Authority [2009] 1 AC 853. In that case which Lord Scott, elevated to the House of Lords since his decision in Business Computers, delivered a speech affirming that decision, with which Baroness Hale and Lords Rodger, Carswell and Neuberger agreed. Lord Scott held at [35] that:

“where the preparation for, or the commencement or conduct of, judicial proceedings before a court, or of quasi-judicial proceedings before a tribunal such as a registered homes tribunal, has the potential to cause damage to a party to the proceedings, whether personal damage such as psychiatric injury or economic damage as in the present case, a remedy for the damage cannot be obtained via the imposition on the opposing party of a common law duty of care. The protection of parties to litigation from damage caused to them by the litigation or by orders made in the course of the litigation must depend upon the control of the litigation by the court or tribunal in charge of it and the rules and procedures under which the litigation is conducted.”

  1. As is indicated by the brief excerpts from those authorities set out above, none of the authorities to which Mr Perera referred the Court assist his argument. No tortious duty of care is owed by one litigant to proceedings to another litigant in the proceedings as to the manner in which the litigation is conducted.

  2. Equally, and for the same reasons expounded in the cases briefly referred to above, there could be no arguable duty of care owed by a litigant to an entity associated with an opposing litigant, such as is alleged here. It is difficult to see how a non-party such as Mr Perera could establish the necessary vulnerability to found the duty of care alleged. Presumably if a non-party to proceedings is sufficiently directly affected by litigation that the non-party is in a position to allege a duty of care is owed to them not to pursue groundless litigation, then the non-party should also have proper basis to be joined as a party to the proceedings in order to strike them out as being without grounds: see John Alexander’s Clubs Pty Ltd v White CityTennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [131] and [132].

  3. This part of the Amended Statement of Claim should be struck out and the proceedings in respect of it dismissed. It does not disclose a reasonable cause of action.

The Defamation Claim

  1. Mr Perera also alleges in the Amended Statement of Claim that he was defamed by a letter Genworth allegedly published on Friday, 13 December 2013 to Michelle Kearney of Police Bank Limited about a valuation said to have been conducted by Mr Perera at a property in Jordan Springs, New South Wales. The pleading sets out the allegedly defamatory letter, which letter nominates a particular borrower and Genworth as the mortgage insurer. The letter goes on as follows “we refer to your lender’s mortgage insurance (LMI) proposal regarding the below details”. Then the letter asks “we require the following items to continue processing and to provide a decision on the proposal”. Then below the heading “More Information” and the sub-heading “Security” and after a reference to the subject property, the following text appears:

“Our in-house valuers have advised the following:

Recommendation from our in-house valuers that you obtain a new valuer to complete a new report for their customer

Issues with the Report are:

This is a TBE – there is no tender price/check cost and no commentary about the contract

Risk ratings for improvements should be identified as 3 as per API Property Pro Guideline

All 3 Risking Ratings need comments as per API Guidelines – this has no comments

Is this a purchase its unclear as there is no detail on the sale recorded?

The additional comments – second paragraph – makes no sense.

The sales are all noted as superior and provide marginal assistance in understanding the subjects assessed value. All the sales are much larger in size and not comparable.

Please provide a new report or if no new report obtained, the above needs to be addressed and new amended report provided, which will need to go back to our in-house valuer”

  1. The 13 December 2013 letter then invites the addressee at Police Bank, Michelle Kearney, to contact one Ms Tracee Brignell, if the addressee needs further clarification.

  2. The balance of the pleading of the cause of action in defamation lies within very short compass. Paragraphs [25] to [26A] of the Amended Statement of Claim provide as follows. As with the previous cause of action, the material that has been deleted from the original Statement of Claim by the Amended Statement of Claim has been omitted from the text extracted below:

“25.   The letter states/implies that the Plaintiff is incompetent and recommended to be changed. Letter carry an imputation that ‘2) Risk Ratings for improvements should be identified as 3 as per API Property Pro Guidelines” implying that the Plaintiff is incorrect and implying that Plaintiff should not carry out valuations for Police Bank.

26.   Defendant published this letter in order to harm the reputation of the plaintiff.

26A.   “2) Risk Ratings for improvements should be identified as 3 as per API Pro Guidelines” is incorrect. Stating that a certain guideline that valuer fail to follow implies incompetence of the valuer. This implied meaning is known to financial industry lending workers.”

  1. UCPR, r 14.30 requires a Statement of Claim seeking relief in respect of the publication of defamatory matter to specify each imputation on which the plaintiff relies and to allege that the imputation was defamatory: r 14.30(2). Mr Perera does identify an imputation (in [25]), namely that he “is incorrect” and that he “should not carry out valuations for Police Bank”. But the pleading does not allege that those imputations are defamatory of the plaintiff as is required by the rule.

  2. But the alleged defamatory matter also does not anywhere identify the plaintiff. The Amended Statement of Claim sets out the whole letter. Because it does not refer to Mr Perera, the pleading must comply with UCPR, r 15.19(1)(d) and give particulars of identification of the plaintiff, together with the identity by reference to names and addresses of or a class of persons to whom any such particulars of identification were known. No indication is given anywhere in the pleading as to who would identify the plaintiff as the person defamed in the defamatory matter.

  3. This pleading is therefore embarrassing and should be struck out. Insofar as it pleads an action in defamation the Amended Statement of Claim will be struck out under UCPR, r 14.28(1)(a) and (b).

  4. But were it to be put to a contest the Court has grave doubts as to whether the alleged imputation pleaded even arises from the parts of the defamatory matter to which it is said to give rise: r 15.19(1)(e). Simply because the 13 December 2013 letter requires other facts to be identified in a future valuation, does not readily imply either that Mr Perera should not carry out valuations for Police Bank, or that he is incompetent. But the Court does not have to decide this issue.

The Claim for Negligent Infliction of Nervous Shock

  1. Mr Perera’s final claim is for damages for nervous shock, caused by an allegedly threatening phone call made to Mr Perera on 29 January 2014. The Amended Statement of Claim pleads the essentials of this cause of action between [27] and [28] as follows:

“27.   Property Services Leader of defendant on Wednesday, 29th January 2014 made a phone call to Valfirm Pty Ltd that appeared as a miss call in the call registry. Plaintiff rang the missed number and spoke to Property Services Leader of defendant. During this conversation, the Property Services Leader threatened to sue Plaintiff personally. Defendant’s actions resulted in a nervous shock that lead to psychiatric injury to the plaintiff.

27A.   Defendant was aware of the previous case where Plaintiff’s valuations were disputed and the final outcome that led to Plaintiff’s predicament. Defendant owed plaintiff a duty of care. Defendant has a duty of care to not injure Plaintiff by threatening to sue personally.

27B.   Defendant ought to have foreseen that plaintiff who has a history of a law suit might in the circumstances where a threat is made to sue personally will suffer a recognised psychiatric illness, if reasonable care were not taken.

27C.   There is a pre-existing relationship between the plaintiff and the defendant.

28.   On the night of 29th January 2014 and in the early morning of 30th January 2014, the plaintiff attempted suicide. Plaintiff was at this stage suffering from nervous shock. On the night of 30th January 2014 and in the early morning of 31st January 2014, the plaintiff made the second suicide attempt.”

  1. Following these paragraphs in the pleading the remaining paragraph [30] details the consequences of Mr Perera’s alleged suicide attempt.

  2. This part of the plaintiff’s Amended Statement of Claim is deficient. Mr Perera has failed to plead in any adequate form the basis upon which the defendant Genworth itself is responsible for the conversation between its property services leader and the plaintiff Mr Perera. One cannot tell from the pleading whether the defendant is said to have a non-delegable duty for the conduct of its property services leader. One cannot tell from the pleading whether the telephone conversation is said to have taken place in the course of the property services leader’s employment by the defendant or not, or whether indeed Genworth is said to be responsible for the conduct of this person in some form of principal-agent relationship.

  3. Instead an unspecified duty is pleaded in paragraph [27A] that Genworth has a duty of care not to injure Mr Perera by threatening to sue him personally, no doubt as distinct from suing Hodder Rook. I do not understand how a duty of care not to threaten to sue could arise, even if Genworth was aware that Mr Perera was connected with its previous law suit against Hodder Rook. Such a claimed duty would have similar problems to the duty of care said to lie behind the plaintiff’s first pleaded cause of action: see [10] and [11] above. Paragraph [27B] seems to advance contentions that assume that because of a prior lawsuit Genworth had a duty of care to exercise reasonable care before threatening to bring a lawsuit against a person associated with a defendant in prior litigation. But the underlying factual basis why Genworth should have any duty to take reasonable care in respect of Mr Perera is quite unclear.

  4. This part of the pleading should also be struck out under UCPR, r 13.14(1).

Conclusions and Orders

  1. There is no point in allowing Mr Perera any more time to repair his pleadings. He has already had 9 months to seek pro bono assistance and to amend his Statement of Claim. His failure to develop a maintainable pleading within that time compels the conclusion that there is no point in giving him any further time. The proceedings should be struck out now.

  2. The defendant Genworth has succeeded on its 30 January 2015 motion. Leave should not be granted to file Mr Perera’s Amended Statement of Claim. The Amended Statement of Claim over which these proceedings were fought was never filed, although it was contested. So the appropriate order is for the Court to refuse leave to file the Amended Statement of Claim and to strike out the existing Statement of Claim. Costs must follow the event (UCPR, r 42.1) and should be awarded against Mr Perera.

  3. The orders of the Court therefore will be:

  1. Refuse leave to the plaintiff to file his proposed Amended Statement of Claim;

  2. Strike out the Statement of Claim and dismiss the proceedings;

  3. Order that the plaintiff pay the defendant’s costs of these proceedings.

**********

Amendments

18 September 2015 - [10], citizens right to citizen's right


[12] does not in itself a breach to does not in itself breach


[15] McPherson JA to Jerrard JA


[15] litigationunder to litigation under


[16] Neugeberger to Neuberger

Decision last updated: 18 September 2015

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