Re Rules of the Supreme Court 1971 (WA)
[2019] WASC 263
•23 JULY 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: RE RULES OF THE SUPREME COURT 1971 (WA); EX PARTE NIKOLOFF [2019] WASC 263
CORAM: HILL J
HEARD: 4 JULY 2019
DELIVERED : 23 JULY 2019
FILE NO/S: CIV 1804 of 2019
MATTER: An application under the Rules of the Supreme Court 1971 (WA) seeking leave to file and issue a writ of summons
EX PARTE
NADIA NIKOLOFF
Plaintiff
Catchwords:
Practice and procedure - Application for leave to file and issue writ of summons - Whether writ an abuse of process or frivolous or vexatious - Where writ discloses no cause of action
Legislation:
Rules of the Supreme Court 1971 (WA), O 67 r 5
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | In person |
Solicitors:
| Plaintiff | : | In Person |
Case(s) referred to in decision(s):
Blakeney v Blakeney [2016] WASCA 76
Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187; (2001) 69 NSWLR 558
Central Exchange Ltd v Anaconda Nickel Ltd [2002] WASCA 94
Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460
Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2000] WASC 178
El Sayed v El Hawach [2015] NSWCA 26; (2015) 88 NSWLR 214
Hurley v McDonald's Australia Ltd [1999] FCA 1728
Jones v Skyring [1992] HCA 39; (1992) 109 ALR 303
Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68
Perpetual Trustees Victoria Ltd v Allen [2012] WASC 258(S)
Re Hoffman (2004) 187 FLR 263; [2004] WASCA 238
Re Rules of the Supreme Court 1971 (WA); Ex parte Gates [2018] WASC 213
RHG Mortgage Securities Pty Ltd v Elektra Purchase No 19 Ltd [2009] NSWSC 258
Roberts v Gill & Co [2010] UKSC 22; [2011] 1 AC 240
Royal Botanic Gardens & Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45
Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84
South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 1541; (2000) 177 ALR 611
Spira v Commonwealth Bank of Australia [2003] NSWCA 180; (2003) 57 NSWLR 544
Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107
United Group Rail Services Ltd v Rail Corp (NSW) [2009] NSWCA 177; (2009) 74 NSWLR 618
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534
HILL J:
On or about 15 April 2019, the applicant, Ms Nadia Nikoloff, attempted to file a writ of summons at the registry of the Supreme Court. A registrar directed that the writ not be accepted for filing without leave of a judge having been first obtained under O 67 r 5 of the Rules of the Supreme Court 1971 (WA) (the Rules).
On 7 May 2019, Ms Nikoloff filed an ex parte originating motion seeking leave to file and issue the proposed writ. By the originating motion, Ms Nikoloff asserts she has a claim for damages against a financial institution arising from the 'unlawful sale of property' and stress caused, and seeks the return of the titles of properties.
Ms Nikoloff is a self‑represented litigant. She is an accountant who, I understand, has no formal legal training. In determining this application, I have considered the proposed writ together with the affidavits that Ms Nikoloff has filed to assess whether it discloses a viable cause of action which, with appropriate amendment, could be put into a proper form.[1]
[1] Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, 536 ‑ 537.
Even after having given Ms Nikoloff due allowance as a self‑represented litigant, I am satisfied that the proposed writ would be an abuse of the process of the court and would be a frivolous and vexatious proceeding. For the reasons set out below, I refuse the application seeking leave to file and issue the proposed writ.
Factual background
Ms Nikoloff's application was supported by nine affidavits; four filed on 8 May 2019,[2] one sworn 29 April 2019,[3] which was tendered as an exhibit at the hearing before me, one filed 26 June 2019[4] and three filed on 11 July 2019.[5] None of the affidavits address the factual basis for the claim set out in the proposed writ. Most of the documents referred to in this judgment are annexed to the proposed writ which was tendered and marked as an exhibit during the course of the hearing.
[2] Affidavit of Nadia Nikoloff In the Beginning; Affidavit of Nadia Nikoloff Bendigo and Adelaide Bank Have Experienced No Loss; Affidavit of Nadia Nikoloff Unconscionable Interest Rate Increases; Affidavit of Nadia Nikoloff Adelaide Bank Misleading Information.
[3] Affidavit of Nadia Nikoloff My Claim.
[4] Affidavit of Nadia Nikoloff Guarantor for Primestar Investments.
[5] Affidavit of Nadia Nikoloff I Object; Affidavit of Nadia Nikoloff Clarifying; Affidavit of Nadia Nikoloff Loan Agreement.
The proposed writ includes both what is said to be a statement of claim as well as an indorsement of claim which sets out the relief claimed by the applicant. I observe that in its current form, the 'Statement of Claim' does not comply with the Rules, O 20 r 2 and O 20 r 8. I also note that the relief claimed by the applicant includes a claim for damages for 'defamation of character'. For this reason, pursuant to the Rules, O 6 r 3, the applicant should not have included a statement of claim indorsed on the proposed writ.
I have not included the name of the proposed defendant in my reasons. In my view, it is not necessary to identify them in order for these reasons to be read and understood. The proposed defendant is identified in both the affidavits and the proposed writ. The proposed defendant is not before the court, is unaware of these proceedings and has not been able to answer the allegations. In my view, in these circumstances, it would be unfair to name the proposed defendant.
The proposed writ alleges that the applicant is the registered proprietor of three properties (one in Victoria and two in Lynwood, Western Australia) and is the former registered proprietor of a further property in Lynwood, Western Australia. Notwithstanding this, I understand from the applicant that the registered proprietor of each of the properties is Primestar Investments Pty Ltd in its capacity as trustee.[6] In these reasons, I will refer to the three properties in Lynwood, Western Australia as the Lynwood Properties.
[6] ts 2.
The purchase of these properties was financed by loans entered into with a financial institution under two separate loan agreements. The loan account number for the Lynwood Properties was 40276289 YX04 (Lynwood Loan Account).[7] The loan account number for the Victorian property was 40276289 YZ03 (Victorian Loan Account).[8]
[7] Draft Writ of Summons dated 15 April 2019, Attachment 5. The applicant refers to this loan as loan account number 071512553.
[8] Draft Writ of Summons, dated 15 April 2019, Attachment 3. The applicant refers to this loan as loan account number 071446966.
The applicant asserts that the interest rate charged by the financial institution in respect of each of the loan agreements was excessive and that the financial institution did not 'behave in good faith and with integrity.' The basis for this assertion, as was explained to me by the applicant in oral submissions, was that the difference between the Reserve Bank of Australia (RBA) cash rate and the interest charged to her was not maintained by the financial institution. That is, over the course of the loans, the RBA cash rate has gone down but the gap between the RBA cash rate and the interest rate charged by the financial institution as well as the repayments have increased. The applicant asserted that this was a breach of her understanding of the agreement.
In 2017, the applicant asserted to the financial institution on a number of occasions that the interest rate it was charging was excessive in comparison to the RBA cash rate. The financial institution maintained that it was charging an appropriate interest rate for the loan product which was a 'Lo Doc variable interest' product.
The financial institution issued a notice of default dated 18 January 2018 (Notice of Default) in respect of the Lynwood Loan Account. The Notice of Default required the default to be rectified by 1 March 2018.[9] As the default was not rectified by that date, the financial institution exercised its rights under the mortgage to take possession of the properties and, in respect of one of the Lynwood Properties, to enter into a contract for sale.[10] The other Lynwood Properties were tenanted. The financial institution issued notices to the tenants on 24 July 2018.[11] It is these notices that are asserted to be defamatory of the applicant.
[9] Draft Writ of Summons dated 15 April 2019, Attachment 7.
[10] Draft Writ of Summons dated 15 April 2019, Attachment 14.
[11] Draft Writ of Summons dated 15 April 2019, par 11, Attachment 9.
The applicant denies there was a default on the Lynwood Loan Account due to her assertion that the interest rate charged by the financial institution was excessive.[12] On this basis, she asserts that the financial institution was not entitled to take these steps. It appears that at some stage the applicant stopped answering calls from the financial institution or opening mail because of her distress about the situation.[13]
[12] Draft Writ of Summons dated 15 April 2019, par 23.
[13] Affidavit of Nadia Nikoloff In the Beginning sworn 3 April 2019, par 10.
Following the exercise of the Notice of Default, the financial institution commenced proceedings against Primestar Investments Pty Ltd by way of writ of summons in this court.[14] The writ of summons came to the attention of the applicant who sought to file a memorandum of appearance.[15] The memorandum of appearance was rejected for filing by the court[16] on the basis that, pursuant to the Rules, O 12 r 1(2), a defendant which is a body corporate may not enter an appearance in an action or defend the action otherwise than by a practitioner. The applicant deposed that since that date, she has attempted to retain solicitors to defend those proceedings but has not been able to do so.[17]
[14] Affidavit of Nadia Nikoloff My Claim sworn 29 April 2019, par 1.
[15] Affidavit of Nadia Nikoloff My Claim sworn 29 April 2019, par 2.
[16] Affidavit of Nadia Nikoloff My Claim sworn 29 April 2019, par 3.
[17] Affidavit of Nadia Nikoloff My Claim sworn 29 April 2019, par 7.
Following the rejection of the filing of the memorandum of appearance, the applicant stated that she decided to seek to raise a counterclaim as guarantor. This was also rejected by the court. The applicant deposed that: [18]
I am now raising a claim in the name of Nadia Nikoloff the guarantor and sole director of Primestar Investments Pty Ltd ATF Nadia One Investment Trust.
I state that this claim is in response to [the proceedings commenced by the financial institution] …
[18] Affidavit of Nadia Nikoloff My Claim sworn 29 April 2019, pars 14 and 15.
The original affidavits filed by the applicant in support of her application did not attach the loan agreements, the guarantee or copies of the certificates of title for each of the properties. Prior to the hearing of this matter, the applicant was invited to adduce further evidence. In response to that invitation, the applicant filed the guarantee in respect of the Lynwood Properties and the loan agreement in respect of the Victorian property.[19] At the hearing of this matter, the applicant stated that she had been unable to locate the loan agreement for the Lynwood Properties but confirmed that the loan agreements were in almost identical terms.[20] I have proceeded to determine the application on this basis.
[19] Affidavit of Nadia Nikoloff Guarantor for Primestar Investments filed 26 June 2019; Affidavit of Nadia Nikoloff Loan Agreement filed 11 July 2019.
[20] ts, p 17.
I note that on the affidavits that were originally filed, there was conflicting evidence as to first, who the borrower is (that is, Primestar Investments Pty Ltd or Ms Nikoloff) and second, whether the applicant is a borrower in her own right or only a guarantor of the borrower's obligations under the loan agreements. The application for hardship relief which is part of Attachment 5 of the proposed writ[21] states that the borrower is 'Ms Nadia Nikoloff' although the covering letter is addressed to Primestar Investments Pty Ltd. Attachments 7[22] and 14[23] to the proposed writ state that Primestar Investments Pty Ltd is the borrower under the loan agreements and the applicant is the guarantor of these loan agreements. The subsequent affidavits of the applicant[24] clarified the position by annexing some of the relevant agreements. The loan agreement for the Victorian property is in the name of 'Primestar Investment Pty Ltd ACN 119 268 405 ATF Nadia One Investment Trust'.[25] In respect of the Lynwood Properties, the guarantee provided by the applicant states that the borrower of the funds for the Lynwood Properties is 'Primestar Investments Pty Ltd ACN 119 268 405 in its own right and as Trustee for Nadia One Investment Trust'.[26]
[21] Letter from Australian First Mortgage Pty Ltd to PrimeStar Investments Pty Ltd dated 5 October 2017 and attachments.
[22] Letter from Dentons to Primestar Investments Pty Ltd dated 18 January 2018.
[23] Letter from Dentons to the applicant dated 17 August 2018.
[24] Affidavit of Nadia Nikoloff Guarantor for Primestar Investments filed 26 June 2019; Affidavit of Nadia Nikoloff Loan Agreement filed 11 July 2019.
[25] Affidavit of Nadia Nikoloff Loan Agreement filed 11 July 2019, Attachment 1.
[26] Affidavit of Nadia Nikoloff Guarantor for Primestar Investments filed 26 June 2019, Attachment 3.
Legal principles to be applied under Order 67 rule 5
Order 67 r 5 of the Rules provides:
(1)If any writ, process, motion, application or commission, which is presented for filing, issue or sealing appears to the registrar to be an abuse of the process of the Court or a frivolous or vexatious proceeding, the registrar shall refuse to file or issue such writ, process, motion, application or commission without the leave of a judge or a master first had and obtained by the party seeking to file or issue it.
(2)In the case of a motion or an application ordinarily returnable before a master in chambers, an application for leave to file or issue such motion or application shall be made to a master in chambers.
(3)In all other cases, an application or commission shall be made to a judge in chambers.
(4)Applications for leave under subrules (2) and (3) shall be made ex parte and shall be supported by affidavit.
There are two main reasons for the requirement for leave of a master or judge to file a writ of summons which appears to a registrar to be an abuse of process or a frivolous or vexatious proceeding. First, it reinforces the inherent power of the court to protect itself from the unwarranted waste of its time and resources, and second, to avoid the loss that would otherwise be suffered by those required to defend actions which lack any substance.[27]
[27] Jones v Skyring [1992] HCA 39; (1992) 109 ALR 303, 312.
Order 67 r 5(1) does not set out the criteria I am to apply in determining whether to grant or refuse leave to file or issue the proposed writ. However, from the express words used in the Rule, it is clear that I should only refuse leave to file or issue the writ if I am satisfied that the writ would be an abuse of process or a frivolous or vexatious proceeding.[28] In considering this issue, I adopt the same approach as that used in the exercise of the power of summary dismissal elsewhere in the Rules.[29]
[28] Perpetual Trustees Victoria Ltd v Allen [2012] WASC 258(S) [23].
[29] Re Rules of the Supreme Court 1971 (WA); Ex parte Gates [2018] WASC 213; Perpetual Trustees Victoria Ltd v Allen [23].
Vaughan J in Ex parte Gates undertook a comprehensive review of the meaning of each of the terms 'abuse of process' and 'frivolous' or 'vexatious' as follows:[30]
[30] Ex parte Gates [24] - [33].
[The] terms [frivolous or vexatious proceedings] have acquired a technical legal meaning in the present context as opposed to the more generalised way in which [the applicant] approached the phrases found in O 67 r 5(1).
There is considerable overlap between the concepts of 'abuse of process' and whether a proceeding is 'frivolous' or 'vexatious'. The expressions are often used in conjunction or interchangeably.
What amounts to an abuse of the court's process is insusceptible of a formulation comprising closed categories. It extends to all categories of case in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Abuse of process occurs in any circumstance in which the use of the court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. However, the onus of satisfying the court that there is an abuse of process is a heavy one. The power to dismiss proceedings as an abuse of process should be exercised with caution and only in the most exceptional or extreme case.
In Rogers v The Queen McHugh J observed:
Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute.
Subsequently, in Ridgeway v The Queen, Gaudron J referred to 'abuse of process' in terms that included within the concept the notion of proceedings that are frivolous, vexatious or oppressive. Her Honour's observations bear repeating:
The powers to prevent an abuse of process have traditionally been seen as including a power to stay proceedings instituted for an improper purpose, as well as proceedings that are 'frivolous, vexatious or oppressive'. This notwithstanding, there is no very precise notion of what is vexatious or oppressive or what otherwise constitutes an abuse of process. Indeed, the courts have resisted, and even warned against, laying down hard and fast definitions in that regard. That is necessarily so. Abuse of process cannot be restricted to 'defined and closed categories' because notions of justice and injustice, as well as other considerations that bear on public confidence in the administration of justice, must reflect contemporary values and, as well, take account of the circumstances of the case. That is not to say that the concept of 'abuse of process' is at large or, indeed, without meaning. As already indicated, it extends to proceedings that are instituted for an improper purpose and it is clear that it extends to proceedings that are 'seriously and unfairly burdensome, prejudicial or damaging' or 'productive of serious and unjustified trouble and harassment'. (citations omitted)
Proceedings will constitute an abuse of process if they are clearly doomed to fail or are plainly unsustainable.
In the context of an application to strike out a claim or pleading the terms 'frivolous' and 'vexatious' have often been used interchangeably. For example, an action is frivolous if it is obviously (or plainly) unsustainable and an abuse of the process of the court. It may for the same reason be categorised as vexatious.
An action is frivolous when it is not worthy of serious consideration, is insupportable in law, discloses no cause of action or is groundless. So too a matter that is without substance or is fanciful is frivolous. The term is apt to describe proceedings in which the plaintiff's claim is so obviously untenable that it cannot possibly succeed or in which there is no serious question to be tried. An action is vexatious if it has no reasonable prospects of success. The term has also been said to be apt to describe an action which is a sham and which cannot possibly succeed.
Apart from the hopeless case - those that are obviously untenable or manifestly groundless - an action may be vexatious due to the motive of the litigant. Proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought. So too proceedings are vexatious if they are brought for collateral purposes.
A proceeding will also be vexatious if it is productive of serious and unjustified trouble and harassment. (citations omitted)
Applicant's claim
In oral submissions, Ms Nikoloff sought to explain why the draft writ was not an abuse of process or vexatious or frivolous. She submitted that she had been unable to file a memorandum of appearance to defend the proceedings commenced by the financial institution against Primestar Investments Pty Ltd and that this was the only action that she could take to advance the claim she believes exists. Ms Nikoloff disputed the implication that her claim is frivolous or vexatious and deposed that her claim was 'based on the facts and contract law'.[31]
[31] Affidavit of Nadia Nikoloff I Object sworn 11 July 2019, pars 1 and 2.
I accept that Ms Nikoloff genuinely believes that there is a claim and that she considers there is a proper basis upon which to seek redress. However, this does not answer the question that I am required to determine, namely whether Ms Nikoloff's proposed writ would be an abuse of process of the court or a frivolous or vexatious proceeding.
The applicant's primary complaints about the conduct of the financial institution are in relation to two matters: first, the increase of interest rates and second, the taking possession of and subsequent sale of one of the Lynwood Properties.
These claims arise in connection with the contracts with the financial institution pursuant to which funds were advanced for the purchase of the four properties. In considering whether the applicant's claim is an abuse of process or frivolous or vexatious, it is necessary for me to consider four matters: first, which agreement or agreements the financial institution has sought to enforce; second, whether the applicant is a party to that agreement or agreements or otherwise has standing to bring a claim in respect of that agreement; third, whether the financial institution was entitled to charge the interest it did; and fourth, whether it was entitled to take the steps it did following the issue of the Notice of Default in January 2018.
In respect of the first issue, it is clear that the financial institution sought to increase the interest rates under the terms of the loan agreements.
In relation to the second issue, on the evidence before the court, I find that the applicant was not a party to either of the loan agreements. This is for the following reasons. First, the express terms of the loan agreement for the Victorian Property provide that the borrower is Primestar Investments Pty Ltd as trustee for the Nadia One Investment Trust. Second, the guarantee for the Lynwood Properties provides that the debtor is Primestar Investments Pty Ltd in its own right and as trustee for the Nadia One Investment Trust. Third, in the draft writ of summons the applicant has described herself as 'Guarantor and sole director Primestar Investments Pty Ltd'. Fourth, the correspondence from the applicant to the financial institution dated 5 September 2017, 13 September 2017 and 29 November 2017 was sent by 'Primestar Investments Pty Ltd ITF [sic] Nadia One Investment Trust' and signed by the applicant on behalf of Primestar Investments Pty Ltd. Fifth, the correspondence from AFM dated 5 October 2017 was addressed to Primestar Investments Pty Ltd. Sixth, the Notice of Default issued by the financial institution and dated 18 January 2018 was addressed to Primestar Investments Pty Ltd as Borrower. Seventh, the correspondence from the applicant to the real estate agent and the property presenter appointed to sell one of the Lynwood properties dated 13 August 2018 was signed by the applicant as guarantor and director of Primestar Investments and the response from the financial institution's solicitors dated 17 August 2018 referred to the applicant as guarantor and Primestar Investments Pty Ltd as borrower.[32]
[32] Draft Writ of Summons dated 15 April 2019.
At law, a company is a separate legal entity separate from the legal persons who become associated for its formation or who are its members.[33]
[33] Austin R P and Ramsay I M, Ford, Austin and Ramsay's Principles of Corporations Law (17th ed, 2018) [4.140].
As the applicant is not a party to the loan agreements, she is not entitled to sue on the loan agreements or raise any complaint about the performance of the loan agreements by the financial institution.[34] The fact that she is the sole director of the party to the loan agreements does not alter this position.
[34] Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460, 478 (Barwick CJ); Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107, 115 (Mason CJ & Wilson J), 127 ‑ 128 (Brennan J), 163 ‑ 164 (Toohey J).
The applicant also referred to the fact that Primestar Investments Pty Ltd owned the properties as trustee of the Nadia One Investment Trust. She deposed that she was 'the sole beneficiary of this trust'. This is not reflected by the terms of the trust deed which is a fairly standard form of discretionary trust conferring broad powers on the trustee. The trust deed provides that the applicant is the only Specified Beneficiary.[35] The trust deed also includes a broad definition of 'General Beneficiary' which extends to, inter alia, the parents, brothers, sisters, and spouse of any Specified Beneficiary.[36] There is no evidence before me as to whether there are any other individuals who would qualify as a General Beneficiary under the trust deed.
[35] Affidavit of Nadia Nikoloff Guarantor for Primestar Investments filed 26 June 2019, Attachment 2, Item 2 of the Schedule.
[36] Affidavit of Nadia Nikoloff Guarantor for Primestar Investments filed 26 June 2019, Attachment 2, cl 1.1.
At law, the general position is that it is the trustee who is entitled to commence actions against a third party and not the beneficiaries of a trust.[37]
[37] Heydon JD and Leeming MJ, Jacobs' Law of Trusts in Australia (8th ed, 2016) [20-56].
There is some uncertainty as to whether and in what circumstances the beneficiary of a discretionary trust can commence proceedings against a third party if the trustee refuses to do so.[38] In El Sayed v El Hawach,[39] the court reviewed the authorities considering the standing of beneficiaries to institute proceedings. Relevantly, the court stated: [40]
[38] Blakeney v Blakeney [2016] WASCA 76 [84].
[39] El Sayed v El Hawach [2015] NSWCA 26; (2015) 88 NSWLR 214.
[40] El Sayed v El Hawach [30] - [59].
Although the parties at first instance and on appeal approached the issue on the basis that their researches disclosed no authority on whether a discretionary object … might in special circumstances bring a derivative proceeding, there is ample authority for the proposition.
The reserved decision of Young CJ in Eq in Highland v Labraga is squarely on point. The question was whether proceedings brought by Mrs Highland, who was one of many possible beneficiaries under a trust, but of whom his Honour said that 'it would not take a jury long to find that, in practice, she would probably be its principal beneficiary', had standing to bring proceedings (the proceedings were in probate, but his Honour said that that was immaterial). Young CJ in Eq, as he then was, approached the question by reference to chancery practice, an area in which that judge's views are to be accorded considerable weight. After referring to a beneficiary's right to bring derivative proceedings in special circumstances, his Honour said at [16] and [19]:
In my view one can marry the two principles I have been discussing and say that a beneficiary (or at least a prominent beneficiary) under a discretionary trust may bring a derivative action to enforce the trust's rights where there exists substantial impediment to the trustee prosecuting the proceedings.
…
I would note that my view that Mrs Highland had standing is in line with modern authority on the subject of access to the courts that it is wiser not to block actions on technical points of standing, but rather to strike out unmeritorious proceedings if they arise.
In Deutsch v Deutsch, there was separate consideration of the question of standing by persons who 'for the most part' were 'mere objects of discretionary trusts' to bring a claim of breach of duty to the corporate trustee in circumstances where the trustee was deadlocked. Hargrave J considered at [41] that:
In my opinion, Robert and the other plaintiffs have sufficient standing to bring the main proceeding against Erwin, alleging breaches of his fiduciary duties to the corporate trustees. This is because each of the corporate trustees is deadlocked. Clearly, Erwin would not authorise the corporate trustees to bring proceedings against him personally.
Although it was said that the proper course would have been to appoint a new trustee with power to act, that did not prevent the determination of the proceedings brought by the beneficiaries on their merits.
In Pearson v Cmr of Taxation a Full Court of the Federal Court considered whether Mrs Pearson, who was one of two 'primary beneficiaries' of the Jancy Trust, could bring a derivative action (an appeal from a decision by the Administrative Appeal Tribunal adverse to the trustee). The decision concerned the income of the trust estate, and the provisions in the trust deed concerning capital are not disclosed by the court's reasons. As to income, the trustee had an absolute discretion to distribute income to a wide class of beneficiaries, in default of which the trustee held income on fixed trust for Mrs Pearson and the other primary beneficiary. That is to say, the position of Mrs Pearson appears to have been relevantly comparable to that of a 'named beneficiary' under the BSD Trust.
Emmett J (as his Honour then was) expressed a preliminary view that Mrs Pearson could bring the proceedings at [48]:
I can see no policy reason as to why a derivative action should not be available to a beneficiary in respect of an appeal to the Federal Court under the Administration Act. Rather than require a multiplicity of proceedings, where the Federal Court has adequate equitable jurisdiction, there are good policy reasons why a beneficiary should be entitled to bring a derivative action in the name of the beneficiary against the Commissioner by way of enforcing the right of appeal of a trustee, so long as the trustee is joined as a respondent.
However, in circumstances where it had not been shown that the trustee had been asked to do so and had refused, his Honour considered that it was clear that the proceeding would not be permitted to continue, and so refrained from expressing a concluded view: at [48]–[52]. The other members of the Full Court, Tamberlin and Mansfield JJ, followed the same approach: at [12]–[14].
The Jersey Royal Court in In the matter of X (Trust) went so far as to make an order that the objects of a discretionary trust which brought a derivative action should have their costs borne out of the trust fund. The court rejected at [23] the proposition that there was a general principle that a discretionary object had a right to bring a derivative action at the expense of the trust fund, but proceeded on the basis that there was standing.
What was held in Lewis v Condon on appeal, and in the reserved first instance decisions of Highland v Labraga (No 2) and Deutsch v Deutsch, and said in obiter dicta by a full court in Pearson v Cmr of Taxation, aligns with principle. … Once it is acknowledged that a beneficiary of a fixed trust may, albeit in special circumstances, bring a derivative action, there would seem to be no sound basis for concluding that in no circumstances could a discretionary object be permitted to bring a derivative action.
None of the foregoing, and nothing in Lewis is to be read as authorising a discretionary object to commence derivative proceedings on behalf of a trustee in the absence of special circumstances. (footnotes omitted)
That is, a beneficiary of a trust may bring proceedings against a third party in special circumstances. In determining whether there are special circumstances, 'the underlying question is whether the circumstances are sufficiently special to make it just for the beneficiary to have the remedy'.[41]
[41] Roberts v Gill & Co [2010] UKSC 22; [2011] 1 AC 240 [46].
The special circumstances on which the applicant relies is her inability to retain solicitors to act for the trustee and the rejection by the court of a memorandum of appearance sought to be filed by the applicant on behalf of the corporate trustee.
In my view, neither of these matters comprise special circumstances which entitle the applicant to commence proceedings against the financial institution. This is for the following reasons. First, there is no evidence before me to support an allegation that the trustee company has refused to take action against the financial institution. In fact, the evidence is to the contrary; that is, the trustee company wishes to raise these claims but has not been able to do so without appointing solicitors. Second, there is no evidence before me as to the financial situation of the trustee company which demonstrates the trustee does not have the financial capacity to pay the costs of a solicitor. Third, there is insufficient evidence before me to demonstrate that the trustee company has been denied or unable to obtain representation by a legal practitioner. In this regard, it is not clear whether the trustee company has not been able to retain solicitors or is unwilling to retain solicitors on the commercial terms proposed by the solicitors.[42] Fourth, the court was correct to reject the memorandum of appearance as there is no inherent power under the Rules to permit the entry of appearance in or defence of proceedings by a corporation without a solicitor.
[42] ts 3.
In Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd, Hasluck J considered whether a defendant corporation could appear without a solicitor under the Rules, O 12 r 1(2). He held that: [43]
[T]he words of O 12 r 1(2) are quite explicit: 'Except as expressly provided by any Act, a defendant to such an action which is a body corporate may not enter an appearance in the action or defend it otherwise than by a solicitor.' The corollary to this is to be found in O 4 r 3(2). This rule provides that 'except as expressly provided by or under any Act a body corporate may not begin or carry on any such proceedings otherwise than by a solicitor'… I am of the view that a Judge of the Supreme Court in this State does not have power to dispense with the explicit requirements of the rules with the result that, even in exceptional circumstances, an individual is not at liberty to take a step in the action on behalf of a company.
[43] Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2000] WASC 178 [24] and [47]. See also Re Hoffman [2004] WASCA 238; (2004) 187 FLR 263.
In Molnar Engineering Pty Ltd v Burns, Smithers J said: [44]
The accessibility of the courts to any citizen unconditionally, in this respect, is regarded as fundamental to the system of justice under the Crown. That ready accessibility to the courts should be available to a juristic person is no doubt similarly fundamental. However, it has been regarded as appropriate that when a trader decides to use the corporate form in which to carry on his business for the advantages flowing therefrom his accessibility to the courts as plaintiff and his appearance as a defendant should be made conditional.
[44] Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68, 75.
I respectfully agree with these comments. Having purchased the properties in the vehicle of a corporate trustee, the applicant can only access the courts through the appointment of a solicitor to act for the corporate trustee.
For these reasons, the applicant, both in her capacity as the sole director of the corporate trustee and as a beneficiary of Nadia One Investment Trust, cannot commence proceedings directly against the financial institution. Any proceedings in connection with the loan agreement must be commenced by Primestar Investments Pty Ltd.
While this finding is sufficient to dispose of the application in its entirety, I have considered below, if I am wrong on the question of standing, the issues raised by the applicant in respect of the terms of the loan agreement and the steps taken by the financial institution.
In relation to the third issue, the applicant's contention is that she entered into a loan agreement which allowed the financial institution to charge an interest rate 4.2% above the cash rate for the term of the loan agreement.[45] This is not what the express terms of the loan agreement provide. The loan agreement provides that the annual percentage rate payable in respect of the loan was the 'Lo Doc variable annual percentage rate'.[46] At the time of entry into the agreement, the interest rate was 6.79%.[47] The loan agreement expressly provided that the annual percentage rate could be changed without the consent of the applicant. Specifically, the loan agreement provided that: [48]
Except to the extent that it is stated in Section A to be fixed for a period, we may change an annual percentage rate under this contract at any time. You will be informed of the change under 2.3.
[45] ts 14.
[46] Affidavit of Nadia Nikoloff Loan Agreement sworn 11 July 2019, Attachment 1, Section A.
[47] Draft Writ of Summons, dated 15 April 2019, Attachment 2.
[48] Affidavit of Nadia Nikoloff Loan Agreement sworn 11 July 2019, Attachment 1, Section D, cl 2.2.
Clause 2.3 of the loan agreement provided that notice of a change in the annual percentage rate could be given by either advertising in a newspaper or writing to the applicant on or before the date of the effect of the change.
The proposed writ does not allege that the financial institution did not comply with its notice obligations under the loan agreement or that any variation to the interest rate was not in accordance with the terms of the loan agreement. The applicant acknowledges that the loan agreement gives the financial institution an unfettered discretion to increase interest rates[49] but asserts that first, the interest rate being charged is unconscionable and second, that a term of the contract should be reasonable and equitable.
[49] Affidavit of Nadia Nikoloff Loan Agreement sworn 11 July 2019, par 3.
The conduct of the financial institution acting in accordance with the terms of the loan agreement does not, without more, constitute unconscionable conduct.[50] It is necessary that there be some other circumstance other than the outcome of the operation of the terms of the contract which renders reliance on its terms unfair. There is no evidence before me as to any such circumstance.
[50] Hurley v McDonald's Australia Ltd [1999] FCA 1728 [24] - [31].
There is no express term in the loan agreement which requires the financial institution to consider the impact of any interest rate change on the applicant, including whether the impact is, in the applicant's words, 'reasonable and equitable'. As such, this could only be a term of the loan agreement if it could be implied as a term of the agreement.
The question of whether a term of good faith will be implied as a term of a contract remains an open question in Australia.[51]
[51] Royal Botanic Gardens & Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 [40]; Central Exchange Ltd v Anaconda Nickel Ltd [2002] WASCA 94; Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84, 91 ‑ 98; Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187; (2001) 69 NSWLR 558; United Group Rail Services Ltd v Rail Corp (NSW) [2009] NSWCA 177; (2009) 74 NSWLR 618.
In Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd,[52] the court considered an express term that obliged the parties to deal with each other in good faith. Pullin JA, with whom Newnes JA agreed, summarised the case law concerning the meaning of the phrase 'good faith' in a contractual context in the following terms: [53]
[52] Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222; (2010) 41 WAR 318.
[53] Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [48] - [57].
Much more has been written about the meaning of the phrase in the cases. I will refer to some of the most important of those cases. In Renard Constructions (ME) Pty Ltd v Minister for Public Works, Priestley JA, after reviewing the law in the United States and Australia and referring to developments in the United Kingdom and Canada, considered that there was a strong case in Australia for accepting a good faith obligation similar to that prevailing in Europe and the United States.
Sir Anthony Mason, in an address given at the University of Cambridge in 1993 … discussed the question of whether an obligation of good faith should be implied in every contract, and then went on to consider the 'concept of good faith'. He referred to the United States Uniform Commercial Code and the Restatement Of Contracts, Second, and said that it was 'by no means clear' what 'good faith' in the context of American provisions meant, but he said it was probable that the concept embraced no less than three related notions, namely:
(1)an obligation on the parties to cooperate in achieving the contractual objects (loyalty to the promise itself);
(2)compliance with honest standards of conduct; and
(3)compliance with standards of conduct which are reasonable having regard to the interests of the parties.
Sir Anthony added that, in his address, he would use '"good faith" mainly in the sense of loyalty to the promise itself and as excluding bad faith behaviour' and that he would 'avoid becoming enmeshed in the American arguments about what "good faith" means.'
In 1998, in Alcatel Australia Ltd v Scarcella, the question arose as to whether the duty of good faith was to be implied by law in the commercial contract in question. Sheller JA wrote the reasons with the other members of the court agreeing. The bulk of the reasons concern the question about whether a term was to be implied at law and the conclusion was that such a term could be implied. That aspect of the judgment is not relevant in this case. Sheller JA did not spend much time discussing the content of the duty but he did quote Mason J's address and the three aspects which Sheller JA stated that Sir Anthony said were 'probably' involved. It appears that Sheller JA treated the well-known implied term obliging parties to cooperate in achieving the objects of the contract (see Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd) as being an aspect of the obligation of good faith, adding that:
Sir Anthony Mason said that such cases come close to a recognition of the good faith doctrine described as 'loyalty to the promise itself' (368).
In 2001, Parker J in Central Exchange Ltd v Anaconda Nickel Ltd, dealing with an interlocutory application for pre-action discovery, noted the submission of the plaintiff that there was an implied 'term of good faith'. Reference was made to Alcatel and subsequent decisions which applied Alcatel. As to the content of the obligation, Parker J referred to the Sir Anthony Mason address and noted a submission to him that good faith involved the three 'related notions' to which Sir Anthony referred. Parker J said that rather than spend more time on the issues, because he was dealing with an interlocutory application 'hardly suited to the full analysis of a possible major development in the law of contract', he would proceed to consider what the consequences would be if there was an implied term of good faith. His Honour reached the conclusion that there was no unreasonable conduct on the part of the defendant and dismissed the application. On appeal, in Central Exchange Ltd v Anaconda Nickel Ltd, the same approach was taken. The appeal was dismissed. Malcolm CJ referred to Parker J's preparedness to approach the matter on the basis of 'an assumption that a term that the respondent would deal with the appellant in good faith was to be implied' [19]. Steytler J, with whom Wallwork J agreed, also made the assumption and dealt with the matter on the assumption that a term of good faith was to be implied, but 'without deciding that question'.
By the time the Full Court dealt with the Central Exchange case, the New South Wales Court of Appeal had once again said something on the topic in Burger King Corporation v Hungry Jack's Pty Ltd. The dispute in that case arose out of a franchise agreement. At [169]–[173], Sheller, Beazley and Stein JJA discussed the content of the duty of an implied term requiring good faith to be displayed by the contracting parties. The Mason lecture was again referred to. Their Honours concluded that a term of 'reasonableness' and 'good faith' should be implied [183]. The content of the duty of good faith was the content referred to in the Mason address.
In 2004, in Expectation Pty Ltd v Pinnacle VRB Ltd, there was a contract containing an express term requiring the parties to a 'Letter Agreement' to 'negotiate in good faith to close the transactions contemplated in this Letter Agreement'. The trial judge found that the defendant had not breached the term requiring the parties to negotiate in good faith. Steytler J wrote the reasons with the other members of the court agreeing. His Honour referred to the trial judge's reasons which noted that the obligation of good faith involved the three related notions referred to in the Mason lecture. In the context of a duty of good faith in relation to negotiations, Steytler J noted the trial judge's observation that 'the term would be breached by the abandonment of the process of negotiation in the sense of a failure to do what was reasonably required if the defendant was to remain loyal to the promise it had made' [43] … Later, Steytler J said [45] that the trial judge was fully cognisant of the fact that the good faith term would be breached by failure 'to take reasonable action to negotiate the agreement'.
In another case referred to by the parties, Overlook Management BV v Foxtel Management Pty Ltd, Barrett J accepted that the content of the duty of good faith was as explained in the Mason lecture. Barrett J noted [64] that there was 'some overlap' with the term implied by law to do everything necessary to enable the other party to have the benefit of the promise in a contract. His Honour observed that the more substantial and separate content of the duty of good faith itself would therefore seem to lie in the second and third limbs of Sir Anthony's formulation, that is adherence to standards of conduct which are 'honest, as well as being reasonable having regard to the parties' interests'. His Honour noted [65] that that meant that it became necessary to inquire about the extent to which selflessness is required. He added [65]:
It must be accepted that the party subject to the obligation is not required to subordinate the party's own interests, so long as pursuit of those interests does not entail unreasonable interference with the enjoyment of a benefit conferred by the express contractual terms so that the enjoyment becomes (or could become) … 'nugatory, worthless or, perhaps, seriously undermined'.
Finally, reference should be made to the recent decision in 2009 of United Group Rail Services Ltd v Rail Corporation of New South Wales, which the trial judge cited in this case. Allsop P wrote the reasons in that case with the other members of the court agreeing. As part of a dispute resolution clause, the parties expressly agreed to undertake 'genuine and good faith negotiations' to resolve disputes arising from the performance of a fixed body of contractual rights and obligations. An issue was whether the agreement was incomplete. Allsop P reviewed the authorities. At [65], Allsop P said that an obligation to undertake discussions about a subject in an 'honest and genuine attempt' to reach an identified result is not incomplete. He then added '[i]t may be referable to a standard concerned with conduct assessed by subjective standards, but that does not make the standard or compliance with the standard impossible of assessment'. His Honour noted that '[w]hat the phrase "good faith" signifies in any particular context and contract will depend on that context and that contract', but that a number of things could be said, namely that '[t]he phrase does not, by its terms, necessarily import, or presumptively introduce, notions of fiduciary obligation' and '[n]or does it necessarily import any notion or requirement to act in the interests of the other party to the contract' [70].
The particular agreement under consideration there led Allsop P to conclude that the agreement carried with it 'a requirement to bring an honestly held and genuine belief about their mutual rights and obligations and about the controversy to the negotiations, and to negotiate by reference to such beliefs' [72]. He said that a party would not be entitled to 'pretend to negotiate' in order to drive the other party into an expensive arbitration that it believes the other party cannot afford and concluded:
It is sufficient to say that the standard required by the notion of genuineness and good faith within a process of otherwise tactical and self-interested behaviour (negotiation) is rooted in the honest and genuine views of the parties about their existing bargain and the controversy that has arisen [73].
I have already referred to the Aiton case, the relevant passages of which were set out in the trial judge's reasons.
Many other authorities and learned articles were referred to, but they were all thoroughly reviewed in the more recent cases and particularly in Allsop P's reasons for decision in The United Group Rail Services case. In my view, it is unnecessary to add to the already voluminous material dealing with the subject given that the natural and ordinary meaning is straightforward. (footnotes omitted)
Murphy JA made a number of observations about the concept of good faith in a contractual setting and, on the subject of Sir Anthony Mason's proposition that good faith embraces three notions, said: [54]
Whilst I would, with respect, agree that the three notions referred to by Sir Anthony Mason may in a general sense be regarded as illustrating related aspects of the concept of 'good faith', it is nevertheless important, in my view, to bear in mind the following matters. The first is that they are 'notions' which are 'related' to each other. It would be wrong in my view to regard them as, in effect, statutory criteria, each to be interpreted in its own right, and then applied independently of the other. The second and related matter is that the assessment of what is 'reasonable having regards to the interests of the parties' in the third notion, will itself in my view be informed by the identification of the 'contractual objects' and the scope of the obligation 'to cooperate in achieving [those] objects' with which the first notion is concerned, having regard to the proper construction of the contract as a whole. In this sense, the reference to the 'interests' of the parties in the third notion is to be understood as a reference to the 'legitimate' interests of the parties. The third is that the question for the court, in this case, is ultimately one of the proper construction of the contract, according to recognised principles. It would not, it seems to me, be appropriate, as at times the appellant's submissions tended to suggest, to substitute the interpretation and application of a predetermined and external formula for the process of construction of the terms of the contract.
[54] Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [92].
I have reservations about whether a term obliging the financial institution to exercise its powers and discretions under the loan agreement reasonably and in good faith would be implied as a term of the loan agreement. However, given the nature of the application before me, I am prepared to assume in the applicant's favour for the purposes of this application that the financial institution owed an obligation to the applicant to act reasonably and in good faith in exercising any discretion or power under the loan agreement.
This, however, does not mean that the implied term would operate 'so as to restrict decisions and actions, reasonably taken, which are designed to promote the legitimate interests of a party'.[55] This is particularly the case in respect of the exercise of unilateral rights, powers or discretions which are conferred by a contract.[56] In this regard, it is well established that a duty of good faith does not require a party to subordinate its own interests so long as this does not render the express contractual terms nugatory or worthless.[57]
[55] South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 1541; (2000) 177 ALR 611 [394] (Finn J).
[56] Spira v Commonwealth Bank of Australia [2003] NSWCA 180; (2003) 57 NSWLR 544 [49] - [50].
[57] RHG Mortgage Securities Pty Ltd v Elektra Purchase No 19 Ltd [2009] NSWSC 258 [168].
In considering whether the content of any duty to exercise its powers and discretions under the loan agreement reasonably and in good faith would be implied into the loan agreement, I will proceed on the basis that the duty includes the three matters identified by Sir Anthony Mason as referred to by Pullin and Murphy JJA in Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd.[58] This would require the financial institution to cooperate in achieving the contractual objects of the loan agreement, to comply with honest standards of conduct, and to comply with standards of conduct which were reasonable having regard to the interests of the party.
[58] Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [49].
There is no evidence before me which supports any assertion that the financial institution did not cooperate to achieve the contractual obligations of the loan agreement, that they have not complied with honest standards of conduct or that they have not complied with standards of conduct which were reasonable having regard to the interests of the party. There is also no evidence to support an assertion that the financial institution's exercise of its discretion under the loan agreement to increase interest rates rendered the express contractual terms nugatory or worthless. This is for the following reasons.
First, at the date of entry into the loan agreement, the annual interest rate was 6.79%. This reduced over the term of the contract to a low of 6.34% in August 2015 before it started to increase again from September 2015. When the applicant objected to the increase in annual interest rates to 7.42%, the financial institution agreed to reduce the annual interest rate to 6.74% (which is less than the interest rate initially provided for under the loan agreement). Second, after the applicant raised concerns with the financial institution, the financial institution provided the applicant with an application for hardship assistance which she did not complete or submit.[59] Third, it is clear that the financial institution repeatedly attempted to discuss the account with the applicant prior to taking any steps to enforce its rights under the loan agreement. On her own admission, the applicant stopped opening mail from the financial institution or returning their calls.[60] Fourth, the financial hardship faced by the applicant was not caused by the increase in the annual interest rate but the drop in rental income received from the Lynwood Properties over the course of the loan agreement,[61] and her view that to sell the properties at that stage would not have been a good business decision.[62]
[59] Draft Writ of Summons dated 15 April 2019, Attachment 5.
[60] Affidavit of Nadia Nikoloff In the Beginning filed 7 May 2019, par 10.
[61] ts 13 - 14.
[62] ts 14.
In respect of the steps that were taken after the issue of the Notice of Default, the evidence before me is that the financial institution relied upon the applicant's failure to rectify the default under the Lynwood loan agreement set out in the Notice of Default. The Notice of Default issued by the financial institution dated 18 January 2018 was addressed to Primestar Investments Pty Ltd as borrower and the applicant as guarantor.[63] On its face, the Notice of Default:
(a)was given by the financial institution as credit provider under the Lynwood loan agreement, the guarantee and as mortgagee under the mortgage;
(b)was in relation to a default of the Lynwood loan agreement, the guarantee and mortgage and required the default to be remedied by paying an outstanding amount by 1 March 2018;
(c)stated that if the outstanding amount was not paid by 1 March 2018, then without the need to give any further notice:
(i)pursuant to the terms of the Lynwood loan agreement, the whole of the loan was immediately due and payable;
(ii)the financial institution could commence enforcement proceedings in relation to the default and repossession of the mortgaged properties may begin;
(iii)the financial institution proposed to exercise a power of sale in respect of the mortgaged properties; and
(iv)the financial institution could exercise all or any of the other rights under the Lynwood loan agreement, the guarantee, the mortgage, or at law.
[63] Draft Writ of Summons dated 15 April 2019, Attachment 14.
In correspondence to the applicant in answer to her objections to the steps taken by the financial institution to sell the properties, the solicitors for the financial institution stated that it had exercised its rights under the mortgage to take vacant possession of the properties.[64] There is no evidence before me which contradicts this and, accordingly, I accept that this is the case.
[64] Draft Writ of Summons dated 15 April 2019, Attachment 14.
On the basis of the above, I find that the actions of the financial institution in taking possession of the Lynwood Properties did not arise under the guarantee but under the mortgage. The mortgage is not in evidence before me.
I note that the proposed writ in its present form does not refer to the mortgage documents or raise any breach by the financial institution of its terms. For this reason, I do not consider that the proposed writ discloses a viable action against the financial institution in relation to the sale of the Lynwood Properties.
Disposition of application
Even allowing for Ms Nikoloff's status as a self-represented litigant, the draft writ does not comply with the basic requirements of the Rules, O 6 r 1. The document that was sought to be filed, with its numerous annexures, cannot be described as 'a concise statement of the nature of the claim made'.
All litigants, including self-represented litigants, are bound to comply with the Rules. As stated by Vaughan J in Ex parte Gates:[65]
The Rules of the Supreme Court are designed to enhance the efficiency and economy of litigation and reduce the unnecessary expenditure of private and public resources. The production of a writ with a concise statement of the nature of the claim made, in the sense of disclosing the causes of action relied on, suffices to give notice of the plaintiff's claim and the cause for that claim.
[65] Ex parte Gates [57].
In my view, this case is not one where the draft writ discloses a viable cause of action which, with appropriate amendment, could be put in a proper form. As the applicant has admitted, she has sought to file the writ of summons in response to the claim brought by the financial institution against Primestar Investments Pty Ltd. The applicant is not a party to the loan agreement and does not have standing to take action in relation to it. There is no evidence before me to support the assertion that the financial institution has sought to enforce the guarantee. For this reason, in my view, the applicant does not have a cause of action against the financial institution.
The applicant has not adduced any evidence in admissible form of the facts which might give rise to a cause of action against the financial institution. Order 67 r 5(4) of the Rules requires that the application for leave to file and serve a draft writ be supported by affidavit. This requires the applicant to depose to the facts which support the claim made by her.
In the circumstances, I am satisfied that Ms Nikoloff's proposed writ would be an abuse of the process of the court and would be a frivolous and vexatious proceeding.
There is no legal basis advanced for the claim, as Ms Nikoloff is not a party to the relevant loan agreements. As such, the proceedings are doomed to fail. For this reason, the writ would constitute an abuse of the process of the court.
Finally, allowing Ms Nikoloff to file the proposed writ in its present form would bring the administration of justice into disrepute. To permit the claim to proceed in these terms would not accord with the expectation that the court's resources will be used efficiently and economically. This requires parties and the court to conduct litigation promptly and efficiently in a manner consistent with the attainment of justice.
It follows from what I have said that if Primestar Investments Pty Ltd sought to file a writ which complied with the Rules, it would be necessary to assess that writ having regard to the matters raised in these reasons. However, in order for Primestar Investments Pty Ltd to file a writ, it will be necessary for it to comply with the Rules, O 4 r 3(2).
For these reasons, I refuse Ms Nikoloff's application. The order of the court will be that the application by ex parte originating motion dated 7 May 2019 for leave to file and issue a proposed writ of summons is refused.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MG
Research Orderly to the Honourable Justice Hill23 JULY 2019
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