Re Michelides; Ex Parte Chin [No 2] - [2010] WASC 169

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RE MICHELIDES; EX PARTE CHIN [No 2] [2010] WASC 169

CORAM: KENNETH MARTIN J

HEARD: 17 JUNE 2010

DELIVERED : 8 JULY 2010

FILE NO/S: CIV 1903 of 2008

MATTER :Application pursuant to s 36 of the Magistrates Court Act 2004 for review order

EX PARTE
NICHOLAS NI KOK CHIN
Plaintiff
AND
TIMOTHY ROBIN THIES
First Defendant
PAUL CHUNG KIONG CHIN
Second Defendant

Catchwords:

Application for security for costs - Unsatisfied judgment debts - Discretionary considerations - Inherent weakness in plaintiff's application for relief under s 36 Magistrates Court Act 2004 (WA)

Legislation:

Magistrates Court Act 2004 (WA), s 35, s 36
Rules of the Supreme Court 1971 (WA), O 25
Transfer of Land Act 1893 (WA), s 138B

Result:

Application for security for costs granted

Category: B

Representation:

Counsel:

Plaintiff:     In person
First Defendant            :     Mr S Ellis
Second Defendant        :     No appearance

Solicitors:

Plaintiff:     In person
First Defendant            :     Mr S Ellis
Second Defendant        :     In person

Case(s) referred to in judgment(s):

Re An Application under the Magistrates Court Act 2004; Ex parte Bartholomew [2008] WASC 52
Re An Application under the Magistrates Court Act 2004; Ex parte Brecker [2007] WASC 151
Re Michelides; Ex parte Chin [2008] WASC 256
Thies v Chin [2010] WASC 111
Thompson v Lane [2005] WASC 281

KENNETH MARTIN J:

Overview

The first defendant brings an application for security in this matter pursuant to O 25 of the Rules of the Supreme Court 1971 (WA) (RSC) under its chamber summons of 13 May 2010. Relevantly, he seeks orders that:
2.[T]he plaintiff do give security for the first defendant's costs of the proceedings in the sum of $38,000 by payment of that amount into Court, and that in the meantime all further proceedings be stayed.
3.Order 5 of the Orders made by Hasluck J on 7 November 2008 staying Magistrates Court proceedings FR 944 of 2007 be discharged to the extent necessary to enable the first defendant to permit finalisation of the taxation of the first defendant's bill of costs in those proceedings and enforcement of the first defendant's entitlement to recover costs.

The history and background concerning this matter are somewhat convoluted. At root however, it seems that these proceedings concern a claim by the plaintiff against the first defendant for the return of $6,000 which was a component in a compromise payment of $11,500 received by the first defendant in 2007. The plaintiff is on the roll of legal practitioners in and for the State of Western Australia, although he does not hold a current practice certificate. He is also the subject of orders by the Legal Practice Board (which he has unsuccessfully challenged) preventing him from practising law on his own account. I referred to those matters in my reasons for decision in Thies v Chin [2010] WASC 111. By reference to O 25, the poverty of a plaintiff is not a basis for the ordering of security. Nor is the likely inability of a plaintiff to meet costs which might be awarded against him. Subject to those general matters RSC O 25 r 2(g) provides that security can be ordered where a plaintiff relevantly:
[I]s in default in respect of any costs ordered to be paid by him in any proceedings previously brought by him against the same defendant or another defendant for substantially the same cause of action or in relation to substantially the same subject matter;
By reference to O 25 r 3, the granting of security is at the discretion of the court and the court is to take into account the prima facie merits of the claim and other matters.
The first defendant, who is a solicitor, has sworn an affidavit of 12 May 2010 in support of the application for security. Paragraphs 2 to 15 set out the first defendant's expressed concerns which underlie the security application. In all the circumstances, I am satisfied that this is an appropriate matter in which an order for security for costs should be made against the plaintiff for reasons which I will explain below. In my view, there should be an order that the proceedings be stayed unless the plaintiff pays into court the amount of $20,000 as security for the costs of this action. Before briefly indicating the reasons for that decision, it is necessary for me to provide a brief background.

Background

The proceedings were commenced by the plaintiff's originating motion of 24 July 2008. The notice of originating motion seeks an order nisi for a writ of certiorari in respect of certain orders made by Magistrates Michelides and Musk. The order nisi for certiorari as sought, was expressed on the originating motion in these terms against Magistrate Musk in FR 944 of 2007:
[T]hat she has no jurisdiction to re‑enter and set aside the duress - vitiated Consent Judgment Order of Registrar Wilde entered into by the parties in FR 417 of 2007 on 7.6.2007 when the dictates of her conscience should have been otherwise (the Wilde's consent order);
The writ of certiorari sought against Magistrate Michelides was expressed in these terms on the originating motion:
Magistrate Michelides in FR 417 of 2007 that he has no jurisdiction to deal with the Wilde's order upon an appeal by the Applicant under s 29 of the Magistrates Court Act 2004 in accordance with the direction of Commissioner Herron despite the following facts:
(Four matters (i) to (iv) are then set out).
In addition, prerogative relief was sought against Commissioner Herron acting as a judge of the District Court of Western Australia in District Court Appeal 6 of 2008, raising various matters including alleged pre‑judgment and other matters.
It is quite apparent that the asserted claims for prerogative relief against Magistrate Musk and Magistrate Michelides are wholly misconceived. Section 35 of the Magistrates Court Act 2004 (WA) specifically states that prerogative relief is not available against magistrates. Furthermore, there is no basis to obtain prerogative relief against a Commissioner of the District Court in respect of the decision in Appeal 6 of 2008.
However, there is some basis pursuant to s 36 of the Magistrates Court Act, to obtain relief against magistrates where an error of jurisdiction can be shown - which might have grounded prerogative relief were it available.
The originating motion filed by the plaintiff was assessed by Hasluck J on the basis that insofar as Magistrates Musk and Michelides were concerned, the application would be treated as a claim for relief under s 36, rather than on the wholly misconceived basis it had been drawn seeking prerogative relief.
The plaintiff filed three affidavits in support of his ex parte application for what was assessed under s 36 to be 'show cause' relief against Magistrates Michelides and Musk, in respect of their decisions FR 417 of 2007 and FR 944 of 2007 respectively. The affidavits were of 23 July, 29 August and 18 September 2008. The application to show cause was heard by Hasluck J on 19 August 2008. His Honour delivered reasons for decision on 7 November 2008. It is important to remember that the reasons for decision were published after an ex parte hearing and led ultimately to the making of show cause orders pursuant to s 36.
In the course of his comprehensive reasons (at [95]), Hasluck J outlined several case authorities about s 36: Thompson v Lane [2005] WASC 281; Re An Application under the Magistrates Court Act 2004; Ex parte Brecker [2007] WASC 151, Beech J and Murray J's decision in Re An Application under the Magistrates Court Act 2004; Ex parte Bartholomew [2008] WASC 52. After reviewing those authorities, Hasluck J observed at [97]:
In other words, the structure of the legislative framework suggests that s 36 provides, as the name of the order suggests, a form of review which is directed principally to matters of jurisdiction and procedure. It is not intended to replicate the relief available on appeal by way of a rehearing of the evidence and factual matters in controversy at the original hearing.
From the comprehensive reasons, it is apparent that in the end, Hasluck J was troubled by one issue, see reasons [136] ‑ [138]. His Honour said at [138]:
There is therefore evidentiary materials before me to suggest that the contractual relationship between the parties was brought to an end as at 22 February 2005, being three months after the costs agreement was signed in early November 2004. It is not clear to me on these materials how it came about that thereafter the respondent was able to keep rendering further bills progressively which amounted in the end to a total figure close to $25,000. There is also the question of whether the costs agreement was subject to a collateral contract of the kind contended for by the applicant (said to have been effected by the respondent's letter to the applicant dated 3 November 2004) whereby time costs bills were to be approved by the applicant.
His Honour clarified those observations at [139] emphasising (axiomatically) that he had only heard one side of the story on the ex parte application. His Honour referred to transcripts of various hearings which he had reviewed, indicating that his concern was by reference to the fact that:
[A]t no stage does it seem that any information or answer was provided to any of the courts as to how it came about that a claim for legal costs could be increased so dramatically in respect of comparatively uncomplicated civil proceedings, and in circumstances where the clients had purported to terminate the retainer [139].
His Honour also observed at [141] that the issue which troubled him was not clearly presented on the materials before him and that it was one of a number of issues underlying the applicant's general sense of grievance 'with many of his contentions being directed to the psychological state of the applicant and the presence of a caveat affecting the son's land'. See also his Honour's observations at [143] and [144].
On 7 November 2007 his Honour made various orders including that:
1.The application for review is granted and a review order is made in respect of each of the following decisions; that is, the decision of her Honour Magistrate Musk in the matter of FR 944/07 and that of his Honour Magistrate Michelides in the matter of FR 417/07 of the Magistrates Court at Fremantle, with the review order to be heard by a judge of the Supreme Court in chambers on a date to be fixed [152].
His Honour made no order in respect of the decision of Commissioner Herron in the District Court. It is obvious that there was no prospect of certiorari against Commissioner Herron's decision. The provisions of s 36 concerning magistrates have no application to the District Court judiciary.
His Honour's orders also provided for service of the materials including the order for review upon the first defendant. His Honour then granted a stay in these terms:
5.This review order operates as a stay of the proceedings specified in Order 1 until further order by this Court [152].
The matter eventually returned to Hasluck J on 17 June 2009 at which time the first defendant appeared and was represented by counsel. Orders were made joining the plaintiff's son, Paul Chung Kiong Chin as second defendant. His Honour's third order on 17 June 2009 required the first defendant to 'file and serve any affidavit he seeks to rely upon in respect of the matters in issue dealt with by the judgment hearing delivered 7 November 2008 within 21 days'.
His Honour made an order that the parties be at liberty to request that the matter be referred to a mediation pursuant to Pt VI of the Supreme Court Act 1935 (WA). Order 4 of his Honour's orders continued in terms:
In that event any further order or directions concerning the mediation are to be made by a registrar of the court on the basis that Paul Chin is to be represented at the hearing by the plaintiff as his father.
It will be seen from the component of order 4 set out above in relation to representation, that contrary to a submission put to me on a subsequent occasion by the plaintiff, Justice Hasluck did not grant him general leave to appear and represent his son. His Honour's order was expressly limited to representation for the purposes of the mediation.
In due course a mediation proceeded. Regrettably, given the small amount of money ($6,000) ultimately in issue, the mediation was unable to resolve matters between the parties. This is of concern not only because of the relatively small sum at issue, but because of the voluminous amount of written materials submitted, particularly from the plaintiff. The plaintiff's material was primarily directed towards his underlying grievance concerning a 2007 settlement with the first defendant in relation to the first defendant's unmet claim for legal costs against both him and Paul Chin over a lunch bar acquisition dispute in the District Court.
Nothing that I have seen indicates that the compromise amount of $5,500 contributed by Paul Chin towards that settlement is sought to be upset. Materials filed by the plaintiff, as I have observed, are lengthy concerning his claim for a repayment of $6,000. Moreover, they are in many places utterly incomprehensible. Aside from being prolix and repetitive, they are couched in emotive language inappropriate to be used by any person, let alone a legal practitioner. An undoubted sense of deep legal grievance against the first defendant, identified by Hasluck J, is most evident. But that, in my view, provides no justification whatsoever for the offensive language used repetitively in the plaintiff's affidavit materials and written submissions put to this court.
As envisaged under the 17 June 2009 orders of Hasluck J, the first defendant filed an affidavit on 6 October 2009 responding comprehensively to matters alleged by the plaintiff. This was not within the 21‑day framework the subject of Hasluck J's orders. However, the magnitude of the matters which the first defendant needed to deal with is obvious from the content of the responsive affidavit. It provides a detailed response to all the plaintiff's allegations. The plaintiff objected to the affidavit being relied upon on the basis that it had been filed outside the 21‑day framework of Hasluck J's orders. However, on 13 May 2010, having entered the matter in the CMC List, I extended time for the filing of the first defendant's affidavit. A comprehensive chronological response was justified against the innumerable grievances of the plaintiff scattered across three affidavits.
Mr Thies' affidavit of 6 October 2009 (which is in two volumes) provides a seriatim response. In particular, it emerges from Mr Thies' affidavit how it was that he came to render his invoice to the plaintiff on 22 January 2007 in the amount of $11,021.78 on an itemised basis, replacing an earlier lump sum bill for $3,500. He also issued a further invoice 5045 (see pars 100 and 101 of Mr Thies' affidavit). Mr Thies deals with circumstances in which he received a 21‑day notice pursuant to s 138B of the Transfer of Land Act 1893 (WA) in respect of a caveat which he had lodged concerning a charge for unmet legal fees over land owned by Paul. This notice became the subject of proceedings CIV 1112 of 2007 which saw Templeman J in February 2007, extend the duration of the caveat in those proceedings, but on the orthodox basis that the disputed legal fees at the heart of that dispute, be resolved elsewhere. The place for resolution of those matters was the Fremantle Magistrates Court. In due course, the resolution of issues concerning the accounts of the first defendant against the plaintiff and the second defendant (the first defendant's former clients), gave rise to the actions FR 417 and FR 944 of 2007 involving Magistrates Michelides and Musk respectively.
The history in respect of the Fremantle Magistrates proceedings is set out in the reasons for judgment of Hasluck J in Re Michelides; Ex parte Chin [2008] WASC 256. It is also ascertainable in the reasons for judgment of Commissioner Herron in respect of the plaintiff's appeal against those decisions to the District Court. The District Court appeal was ultimately dismissed by Commissioner Herron and there has been no further appeal.
It is necessary to recount this background in order to appreciate the somewhat convoluted challenges in respect of what ultimately was a dispute over legal fees due to the first defendant. See also pars 115 to 118 of Mr Thies' affidavit.
The plaintiff's limited success based on s 36 before Hasluck J in August 2008 was obtained in circumstances where his Honour heard one side of the argument. That self‑evident observation is necessary, since at one hearing concerning this matter, I rather obtained the impression from the plaintiff that he thought he had successfully obtained final relief from Hasluck J and that there now was little further that he needed to do in the matter. This is plainly not the case. Hasluck J's ex parte show cause orders of November 2008 were made in the absence of Mr Thies' affidavit of 6 October 2009 providing comprehensive explanations and insight into a series of dealings which ran between October 2004 until October 2009.
What emerges from the affidavit of Mr Thies and obviously was not considered by Hasluck J, is the fact that in reaching the 2007 settlement as regards disputed legal fees claimed by the first defendant, that the plaintiff had the benefit of assistance from an independent solicitor, Mr Ozich. These matters are comprehensively dealt with between pars 149 and 203 of Mr Thies' affidavit explaining how the ultimate settlement amount of $11,500 was confirmed by the plaintiff's email of 29 June 2007. At par 159 of his affidavit, Mr Thies refers to an email he received which contained scanned copies of:
(a)a fax to the Fremantle Magistrates Court (apparently signed by Mr Chin);
(b)a Form 42 Acceptance of Offer of Settlement (apparently signed by Mr Chin and Paul);
(c)the proposed settlement deed (apparently signed on every page by Mr Chin and Paul).
The settlement deed was, in due course, executed by all parties.
On 18 April 2007, the first defendant received cleared funds in the amount of $11,500 paid by cheque into his bank account (see pars 165 ‑ 675 of the affidavit). At par 169 of his affidavit, the first defendant says:
From my perspective, the settlement which I reached with Mr Chin and Paul was a genuine compromise of my entitlement to remuneration under the retainer agreement. $11,500 was less than I considered I was entitled to, although I also recognised the risks associated with litigation and the effort and expense to which I would be put if I took the matter to hearing. Another factor in my decision to compromise FR 417 of 2007 was Mr Chin's behaviour in making what I considered to be baseless and improper allegations about me to the Legal Practitioners Complaints Committee, the Police, the judiciary, its staff and others. (I note that the Legal Practitioners Complaints Committee dismissed Mr Chin's complaint, as discussed above, and I have not been interviewed by the Police). These complaints caused me distress and inconvenience, even though I considered that the complaints and allegations were without foundation and I was confident that I had done nothing wrong. I compromised the claim in an attempt to bring finality to my dealings with Mr Chin.
The finality sought by the first defendant in April 2007 is yet to be realised. At par 193 the first defendant explained circumstances as at '21 June 2009 [sic 2007]' indicating that Mr Chin was seeking to resile from the terms of the settlement deed.
From all this it is apparent that if the plaintiff's application pursuant to s 36 of the Magistrates Court Act is to proceed further, that it must be directed towards some proper procedural or jurisdictional error arising out of the decisions of the two magistrates. It is clear that the s 36 procedure is not to degenerate into a de facto appeal process. Therefore, it cannot be a de facto appeal challenge against the decision of Commissioner Herron in the District Court rejecting the plaintiff's appeals against the decisions of Magistrates Michelides and Musk.

The plaintiff to date has been unable to assist me at all in terms of what jurisdictional challenges he would seek to raise at an inter partes hearing by reference to s 36, bearing in mind that the matter is not in the nature of an appeal. In his oral submissions to me, the plaintiff has, in a loose sense, articulated his grievance based upon duress and unconscionability relating to the circumstances in which he paid $6,000 to the first defendant towards the aggregate settlement of $11,500. The plaintiff now seeks to resile from that 2007 settlement.
Unlike Hasluck J, I have now been able to receive two sides of the story. It is very apparent that the plaintiff will face a difficult, if not impossible, task in demonstrating a jurisdictional error satisfying the requirements of s 36.
Essentially, the plaintiff would need to attack the bona fides of the first defendant in respect of the legal fees claimed that preceded the ultimately lesser compromise amount. I am still to be persuaded that embarking upon that attack would fall within the purview of establishing an arguable jurisdictional error for the purposes of s 36. If it does, it would seem to require the first defendant's bona fides to be challenged in terms of the amounts claimed under invoices for services rendered to the second defendant and the plaintiff. To my mind, what can be distilled from all this is the following:
(a)the inherent weakness in the plaintiff's case;
(b)the potential for considerable time and resources to be expended in the process of an attack by the plaintiff upon the first defendant's bona fides, including through cross‑examination; and
(c)the potential for the first defendant, who is represented by independent counsel, to incur significant irrecoverable costs associated with his unavoidable participation in a defence of what is likely to be an unfocused series of challenges traversing back across events as far back in time as the settlement of 2007 or even his engagement as a solicitor acting for the plaintiff and the second defendant, in October 2004.
In these circumstances, it does not seem to me to be unreasonable for the first defendant to seek to secure his position. Moreover, there would appear to be a considerable amount of unmet legal costs incurred in respect of the unsuccessful challenges brought by the plaintiff in various proceedings to date, which is explained in the first defendant's affidavit of 12 May 2010. In particular, the costs of the unsuccessful appeal in the District Court before Commissioner Herron have generated unmet legal costs as a result of Western Legal barristers and solicitors representing the first defendant as the respondent. The amount of $5,921.42 was taxed and allowed by Registrar Hewitt. Those costs remain outstanding and unmet by the plaintiff. The attempts of the first defendant to pursue other costs in his favour arising out of the proceedings in the Fremantle Magistrates Court have been interrupted by order 5 of the stay orders of Hasluck J in November 2008 to which I have referred.
I also note in par 14 of the first defendant's affidavit, the reference to a telephone conversation with the plaintiff of 2 October 2009 in which the first defendant alleges that the plaintiff said to him in response to his request for payment of his costs taxed on the unsuccessful District Court appeal: 'You won't get anything from me even if you win'.
It is clear that the criteria to enliven this court's jurisdiction under O 25 r 2(g) in respect of the unmet costs award concerning the District Court proceedings are met.
In the exercise of discretion, I consider it necessary and proper here to protect to some extent the first defendant against the costs generated by resisting any further progression of this application under s 36 which, on the face of it, currently seems to me to be threadbare in terms of potential merit. I am well cognisant of a policy consideration against stifling a party's rights via a security application, but the oppressive nature of the convoluted materials routinely assembled and filed by this plaintiff, the relatively small amount, $6,000, at issue and a doggedly obsessive nature of the plaintiff's approach to this litigation (notwithstanding the court's efforts to facilitate a resolution by mediation) strongly suggest to me that this is an appropriate case for security to be ordered.
If the matter proceeds, there will obviously need to be a proper focus upon identifying an arguable jurisdictional issue for the purposes of pursuing an inter partes application for relief under s 36. The plaintiff's prolix affidavits and submissions do not to date, meet that requirement; see for instance the affidavit of the plaintiff of 12 May 2010 (of some 140 pages).
If the matter were to proceed to a hearing, it seems to me that it would not occupy less than two days and there would be cross‑examination of the first defendant at least by the plaintiff. In all those circumstances, the amount of $20,000 (which is less than what is sought by the first defendant) seems to me to be a reasonable figure.
I will order that the action be stayed unless the amount of $20,000 is paid into court at a time not later than 48 hours after the publication of these reasons. At this stage, I will not vary Hasluck J's order 5 to his orders of 7 November 2008, but I grant liberty to the first defendant to apply further in that respect, should future events prove it necessary to pursue that application.