Sgargetta v Hayes
[2016] VSC 150
•13 April 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROFESSIONAL LIABILITY LIST
S CI 2016 00062
| ELLIOT DANIEL SGARGETTA | Plaintiff |
| v | |
| PAUL HAYES & JOEL SILVER | Defendants |
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JUDGE: | MACAULAY J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 April 2016 |
DATE OF JUDGMENT: | 13 April 2016 |
CASE MAY BE CITED AS: | Sgargetta v Hayes |
MEDIUM NEUTRAL CITATION: | [2016] VSC 150 First revision (12 May 2016) |
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PRACTICE AND PROCEDURE — Summary judgment application — Advocates’ immunity — No real prospect of success — Merits of the case — Granted — Civil Procedure Act 2010 (Vic) ss 62, 63 and 64.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Plaintiff appeared in person | |
| For the Defendants | Ms A J Golding | DLA Piper Australia |
TABLE OF CONTENTS
Introduction and summary............................................................................................................... 1
Background......................................................................................................................................... 2
Mr Sgargetta’s dispute with the NAB........................................................................................ 2
Decision of Judge Cosgrave........................................................................................................ 4
Court of Appeal hearing and decision...................................................................................... 5
Steps taken after the Court of Appeal’s decision..................................................................... 9
Principles for summary judgment................................................................................................ 13
Advocates’ Immunity....................................................................................................................... 13
Anshun estoppel.............................................................................................................................. 18
Abuse of process............................................................................................................................... 21
Merits.................................................................................................................................................. 23
Conclusion......................................................................................................................................... 25
HIS HONOUR:
Introduction and summary
Elliot Sgargetta, an indefatigable litigant, feels aggrieved that two barristers appearing for him pro bono in the Victorian Court of Appeal failed to argue a point that he believes would have won his case. Instead, he lost. The question for me is whether the claim he has brought against those barristers has got any real prospect of succeeding or should be dismissed now without going to trial. In my view it should be dismissed now.
Paul Hayes and Joel Silver (the defendants) represented Mr Sgargetta (the plaintiff) in the Court of Appeal on 27 May 2014 on an appeal by Mr Sgargetta against a decision of a County Court judge. The trial judge had granted the National Australia Bank possession of Mr Sgargetta’s property and ordered him to pay $440,441.19 plus interest due under a mortgage.[1] Mr Sgargetta failed on his appeal.[2] His application for special leave to appeal to the High Court was dismissed.[3]
[1]National Australia Bank Limited v Sgargetta [2014] VCC 48.
[2]Sgargetta v National Australia Bank Limited [2014] VSCA 159 (‘Court of Appeal Reasons’).
[3]Sgargetta v National Australia Bank Ltd [2014] HCASL 234.
By this proceeding he sues his barristers alleging, in substance, that in breach of various duties they wrongfully abandoned an argument they were instructed to put to the Court of Appeal or, at least, they failed to correct a misapprehension by the Court that they had done so. A similar claim made against them at the Victorian Civil and Administrative Tribunal (‘VCAT’) was summarily dismissed.[4]
[4]Sgargetta v Hayes (Legal Practice) [2015] VCAT 1490 (‘the VCAT proceeding’).
Mr Hayes and Mr Silver have applied for summary judgment against Mr Sgargetta relying upon ss 62 and 63 of the Civil Procedure Act 2010 (Vic) (‘Civil Procedure Act’) and r 23.01(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Supreme Court Rules’). The questions arising from the way the application was argued are whether Mr Sgargetta’s claim lacks any real prospect of success:
(a) because the defendants have an immunity under the principles of Giannarelli v Wraith,[5] confirmed in D’Orta Ekenaike v Victoria Legal Aid;[6]
[5](1988) 165 CLR 543 (‘Giannarelli’).
[6](2005) 223 CLR 1 (‘D’Orta Ekenaike’).
(b) because Mr Sgargetta is estopped from maintaining the claim under the principle in Port of Melbourne Authority v Anshun Pty Ltd;[7]
(c) because the proceeding should be stayed as an abuse of process; or
(d) on the merits of the case.
[7](1981) 147 CLR 589 (‘Anshun’).
As I will now explain, they succeed on their first and last grounds.
Background
Numerous court and tribunal decisions precede this action. Because of the grounds upon which the defendants apply for summary judgment, it will be necessary to describe some of them in a little detail. Before doing so, it is best to first explain the overall story as briefly as is necessary. This chronological narrative is gleaned from earlier judgments in proceedings between Mr Sgargetta and the NAB and Mr Sgargetta and the barristers.
Mr Sgargetta’s dispute with the NAB
In 2007, the NAB made a home loan to Mr Sgargetta secured by a mortgage over a property at Kalorama. In October 2008, Mr Sgargetta sold the property to his wife, settlement of the sale due on 1 December 2008. In its reasons for judgment given in 2014, the Court of Appeal succinctly described how the dispute began and what happened next:[8]
[8]Court of Appeal Reasons [124]-[130].
This dispute began because NAB made a mistake. It told Mr Sgargetta that on a sale of the security property he would have to pay out less than the correct payout figure. It corrected that mistake very shortly prior to the due date for settlement of that sale. The sale was pursuant to a contract Mr Sgargetta had made with his wife before either of the payout figures, correct or incorrect, had been provided.
Mr Sgargetta reacted to the correction of NAB’s initial mistake by reporting NAB to FOS, cancelling the settlement, and ceasing all payments on the loan.
Because Mr Sgargetta ceased all payments on the loan the debt escalated significantly.
NAB delayed recovery proceedings for a period which is, at least in part, unexplained.
After NAB took recovery proceedings, a settlement deed was entered into containing terms which were, on one view, favourable to Mr Sgargetta. But he was unable or unwilling to comply with a term of that deed which required him to provide to NAB a conditional letter of approval for finance on terms acceptable to NAB by a specified date. The parties negotiated but could not reach a new agreement, although comparatively little separated them.
After a trial and the delivery of detailed reasons by the trial judge, NAB obtained judgment for the full amount it alleged to be due, obtained judgment for possession of the property, and obtained an order for costs against Mr Sgargetta.
Mr Sgargetta then appealed. He had the assistance of pro bono counsel.
The pro bono counsel referred to in that passage are, of course, the defendants. The case now brought against Mr Hayes and Mr Silver centres upon their conduct in respect of an argument concerning the ‘conditional letter of approval for finance’ required under the settlement deed.
The parties entered into the settlement deed while the hearing of a summary judgment application by the bank was imminent. Under the deed, made 5 February 2013, the bank agreed to adjourn the hearing of its application, then fixed for 1 March 2013, upon satisfaction of three conditions. Two of those conditions became contentious. Relevantly, the bank’s agreement was conditioned this way:
2.1NAB will agree to adjourn the hearing of its Summons, provided the following conditions are complied with, time being of the essence:
(a)By 5.00 pm on 25 February 2013 Mr Sgargetta must provide to NAB’s solicitors, Gadens Lawyers, a conditional letter of approval for finance on terms acceptable to NAB and for an amount equal to or greater than $299,000;
(b)By 5.00 pm on 15 April 2013 Mr Sgargetta must:
(i) pay NAB the sum of $299,000 in cleared funds; and
(ii)withdraw his Defence and Counter Claim in the Proceedings …
Although by that time the bank was claiming a substantially greater sum, under the deed of settlement it was prepared to accept $299,000, which was the figure it had mistakenly notified to Mr Sgargetta as the amount owing in October 2008, over four years earlier. The deed then continued by stipulating in clause 3:
If Mr Sgargetta defaults under clause 2 above, or any other terms of this Deed, time being of the essence, NAB will immediately be entitled to proceed with the hearing of its Summons and the Proceedings generally.
By 1 March 2013 the parties were in dispute whether the first condition — set out in clause 2.1(a) (‘the letter condition’) — had been fulfilled. The NAB informed the court it wished to proceed with its summary judgment application. At an adjourned hearing on 8 March 2013, Mr Sgargetta’s position was that the settlement deed remained operative (implying that the letter condition had been satisfied) and that he would be making the payment to fulfil the second condition — set out in clause 2.1(b) (‘the payment condition’) — within time. The NAB maintained it was too late for any payment to be made as the deed was no longer on foot given the letter condition had not been satisfied.
The NAB’s application was further adjourned to 20 March 2013 but it was not heard on that date. In those circumstances, the NAB accepted that the matter should simply go to trial in August 2013. As later found by the Court of Appeal in circumstances described below, on the day of that further adjournment counsel for Mr Sgargetta (neither Mr Hayes nor Mr Silver) tendered to NAB’s counsel a bank cheque for $299,000. The tender was rejected. The tender took place between counsel outside of the court room.
Decision of Judge Cosgrave
The matter came on for trial before Judge Cosgrave. In ultimately upholding the NAB’s claim and rejecting Mr Sgargetta’s counterclaim, his Honour rejected an argument that the letter condition was void for uncertainty and severable (‘the void and severable argument’). In doing so, his Honour applied the principle enunciated by the High Court in Meehan v Jones.[9] The judge also held that the bank had acted honestly and reasonably in rejecting certain documents that had been supplied to it by Mr Sgargetta before 1 March 2013 as documents purporting to satisfy the letter condition. As for performance of the payment condition, the trial judge rejected evidence that a tender of $299,000 had been made on 20 March 2013 in purported compliance with the payment condition.
[9](1982) 149 CLR 571, 589-590 (Mason J, with whom Wilson JJ agreed) (‘Meehan v Jones’).
Judgment in favour of the NAB was delivered on 17 February 2014. A notice of appeal was filed 16 April 2014. The appeal was heard 27 May 2014 and the Court of Appeal’s decision dismissing the appeal was published on 30 July 2014.
Court of Appeal hearing and decision
Of the numerous grounds of appeal challenging the findings made by the trial judge only two are relevant for present purposes. One challenged the judge’s finding that Mr Sgargetta had not complied with the letter condition; the other challenged his Honour’s finding that Mr Sgargetta had not complied with the payment condition. Mr Hayes and Mr Silver were retained only days before the appeal, their services secured under the Victorian Bar Pro Bono Scheme. The notice of appeal had been prepared earlier by another barrister who was also provided under that scheme.
Turning first to the issue of the payment condition, Mr Hayes and Mr Silver managed to persuade the court that it should admit fresh evidence on the appeal concerning the tender of the $299,000 at the County Court on 20 March 2013. Whereas the trial judge addressed an argument that the tender had allegedly been made in open court — finding that none had been made — the fresh evidence was to the effect that the tender was made outside of the court room. On that fresh evidence, the Court of Appeal found in favour of Mr Sgargetta on the payment ground. That conclusion then made its decision on compliance with the letter condition critical to the outcome of the appeal. Ultimately it concluded that issue in favour of the NAB, holding:
Upon the failure of the appellant by 5.00 pm on 25 February 2013 to provide to NAB’s solicitors a conditional letter of approval for finance on terms acceptable to NAB for an amount equal to or greater than $299 000, NAB was entitled to proceed with the hearing of its summons and the proceedings generally. That is what it then did. The fact that upon the hearing of the summons leave to defend was granted alters nothing. NAB was entitled to proceed with the proceedings generally, and it did so.[10]
[10]Court of Appeal Reasons [94].
The pivotal nature of the finding that Mr Sgargetta had breached the deed by failing to fulfil the letter condition was highlighted by what the court went on to say about its finding in respect of the payment condition:
In our view if the appellant had not been in breach of the deed, what occurred on 20 March 2013 would have either constituted conduct equal to performance of cl 2.1(b), or have unequivocally demonstrated that the appellant was willing and able to perform, as the appellant’s counsel submitted.
Given our conclusion that he was then in breach, that conclusion has no significance.
On this issue we have reached a conclusion different from that of the trial judge, although that different conclusion does not affect the outcome. Our conclusion is different because we have fresh evidence which was not before him.
Because the appellant had not complied with cl 2.1(a) of the deed, subject to the unconscionability issues, NAB was entitled to adopt the position it did and to respond as it did to the proffered bank cheque.[11]
[11]Court of Appeal Reasons [95]–[98].
At this point it is necessary to say something further about the fate of the argument before the Court of Appeal about the letter condition, in particular about the void and severable argument. Before the hearing of the appeal — and before Mr Hayes and Mr Silver had been retained — Mr Sgargetta had filed his own written submission on 2 May 2014. Upon being retained in late May, Mr Hayes and Mr Silver filed a supplementary written submission. That submission was apparently directed to arguments concerning the fresh evidence about the tender of the $299,000 and that the payment condition had been satisfied.
So, at the hearing of the appeal, the court had before it the notice of appeal, two written submissions (authored by different people) and it also heard the oral submissions of Mr Hayes and Mr Silver. So far as this proceeding is concerned, the critical ground of appeal was interpreted by the court to be that the trial judge had erred:
in finding that the appellant [Mr Sgargetta] had not complied with his obligation to provide to NAB by 25 February 2013 ‘a conditional letter of approval for finance on terms acceptable to NAB for an amount equal to or greater than $299,000’.[12]
[12]Court of Appeal Reasons [73](a).
In relation to that ground, the Court of Appeal summarised the trial judge’s findings this way:
The trial judge … closely analysed the documentation that was supplied to NAB and also the communications associated with that documentation. Applying Meehan v Jones, he dismissed the argument that the relevant provision of the deed was void for uncertainty. He found that NAB had ‘acted honestly in not accepting that the alleged conditional letters of offer from the financiers complied with’ the deed.[13]
[13]Court of Appeal Reasons [70].
In the passage from Meehan v Jones cited by the Court of Appeal,[14] Mason J was considering a sale of land contract that was conditional upon the purchaser ‘receiving approval for finance on satisfactory terms and conditions in an amount sufficient to complete the purchase’. It had been argued that the condition was void for uncertainty. His Honour rejected the argument. At pages 589-590 his Honour upheld the clause on the basis that courts should be astute to adopt a construction that preserves the validity of contracts and, further, to strike it down would frustrate the expectations of the parties to it. Nonetheless, his Honour said that such a condition did not confer a discretionary option to avoid the contract on the party required to obtain the finance. That party was only relieved from the contract if, despite acting honestly and reasonably, it was unable to obtain the finance. It is plain that analogous reasoning applied to a contract requiring one party to accept something to be supplied by the other (for example, as in Mr Sgargetta’s case, a letter of approval of finance on satisfactory or acceptable terms).
[14](1982) 149 CLR 571, 589-590.
It followed that at least three arguments could potentially have been mounted to the Court of Appeal in support of the critical ground:
·That clause 2.1(a) of the deed was void for uncertainty, was severable and should be severed from the deed;
·Even if not void, the documents produced by Mr Sgargetta in purported compliance with the condition were documents that satisfied the description of letters of approval for finance on terms acceptable to the NAB;
·Alternatively, the NAB did not act honestly and reasonably in rejecting the document so proffered as letters that were on terms acceptable to it.
In the context of the case before the Court of Appeal, the obvious application of the principle in Meehan v Jones was to preserve the validity of the condition in clause 2.1(a) but to impose on the NAB the obligation to act honestly and reasonably in considering any document proffered to it in purported compliance with the condition.
It was in these circumstances that the Court of Appeal asked Mr Hayes to clarify which arguments as notified in the grounds of appeal and set out in the two written submissions were being pressed, and upon what basis. At various points during the hearing of the appeal, the members of the court (Whelan JA and Santamaria JA) questioned Mr Hayes on that subject. On the hearing before me, several pages of transcript (not the whole of it) were tendered as evidence containing these discussions.[15] However they may be interpreted, the upshot of them was set out at [7] of the Court of Appeal’s reasons where the court said:
One ground of appeal that was expressly abandoned by the appellant’s counsel on the hearing of the appeal (after the matter was raised) was that one of the clauses in the deed of settlement, which required the appellant to provide a conditional letter of approval of finance on terms acceptable to NAB, was void for uncertainty and was severable. We have accordingly given no further consideration to that ground.[16]
[15]Exhibit PAR 7 to the affidavit of Peter Rashleigh sworn 2 February 2016.
[16]Court of Appeal Reasons [7].
Later in its reasons, under the heading ‘Whether appellant provided a conditional letter of approval acceptable to the NAB’, the court said:
In its written submissions dated 14 May 2014, NAB addressed the question whether cl 2.1(a) was void for uncertainty and whether it required that NAB act ‘honestly or honestly and reasonably’. It addressed the question whether, if cl 2.1(a) was void, it was severable. As indicated, at the hearing of the appeal counsel for the appellant abandoned the contention that cl 2.1(a) was void for uncertainty. Given the decision in Meehan v Jones, the concession was properly made.[17]
[17]Court of Appeal Reasons [80].
Aside from the argument that the letter condition was void and severable, the Court of Appeal went on to deal with the other two arguments described in paragraph 22 above. At [27] and [81]–[87] of its reasons, the Court of Appeal held that the trial judge was ‘clearly correct’ in finding that the documents proffered by Mr Sgargetta to the NAB were not letters of approval of finance, and that the NAB had acted honestly and reasonably in finding them unacceptable.
The whole focus of Mr Sgargetta’s claim against the defendant barristers in this case is upon their apparent abandonment of the first of the three arguments about the letter condition: that is, that the whole condition was void. As will be seen, Mr Sgargetta’s claims in their various manifestations are that Mr Hayes and Mr Silver breached duties to Mr Sgargetta by abandoning the void and severable argument, or if they did not do so, by not taking some step after the Court of Appeal’s reasons were published to correct the misapprehension the court gained that they had done so. Mr Sgargetta alleges that these breaches of duty (to be identified more fully below) caused him to suffer loss and damage, now put (without any particularisation or further elucidation) at $4,220,000. Mr Sgargetta claims declarations that the defendants had breached various duties and compensation for the loss he suffered.
Steps taken after the Court of Appeal’s decision
After the Court of Appeal published its reasons for dismissing Mr Sgargetta’s appeal, Mr Sgargetta took several other steps.
First, Mr Sgargetta applied to the Court of Appeal to stay the original County Court order for possession of land pending the outcome of an application for special leave to appeal to the High Court. On 22 August 2014, the Court of Appeal (Osborn and Beach JJA) refused the application.[18] One of the foreshadowed grounds relied upon to constitute the exceptional circumstances required for the stay was ‘negligence and serious problems for the self-represented in the completeness of addressing all matters’.[19] In rejecting this ground, their Honours said:
The basis on which counsel represented the appellant is set out clearly at paragraphs 5 and 6 of the Court of Appeal decision. In turn, the decision resolves not only matters addressed by counsel but also matters which were neither abandoned nor the subject of counsel’s submissions but raised by Mr Sgargetta’s grounds.[20]
[18]Sgargetta v NAB [2014] VSCA 189 (‘Stay Reasons’).
[19]Stay Reasons [10].
[20]Stay Reasons [12].
Secondly, on 11 December 2014 the High Court dismissed an application by Mr Sgargetta for special leave to appeal the Court of Appeal’s substantive decision.[21]
[21]Sgargetta v National Australia Bank Ltd [2014] HCASL 234.
Thirdly, having failed to obtain a stay from the Court of Appeal, Mr Sgargetta took another course. That course was later described by Priest JA when he refused to direct the Registrar of the Court of Appeal to accept a notice of appeal from a further decision of Judge Cosgrave made 11 December 2014.[22] His Honour’s description of that further course was as follows:
Despite his lack of success in the Court of Appeal, the applicant sought the same relief in the County Court. Furthermore, he attempted to file a writ against two of NAB’s witnesses (one of whom was counsel for the NAB at the time of the alleged tender of the cheque), claiming $3.8 million in damages as the result of their alleged perjury and unconscionable and misleading conduct. He further contended that their acts vitiated the previous trial and that a new one should be had. The Registrar of the County Court refused to seal the writ, however, on the grounds that the proposed writ would be irregular or an abuse of process.
On 11 December 2014, Judge Cosgrave dismissed an application for stay and a retrial, and upheld the Registrar’s refusal to seal the writ.
…
On 30 December 2014, the applicant sought to file an application for leave to appeal from Judge Cosgrave’s decision of 11 December 2014. Whatever other manifold criticisms that could be made of the purported grounds of appeal, it is plain that they attempted to traverse issues that had already been determined adversely to the applicant when he first endeavoured to appeal to this Court.
The Deputy Registrar refused to accept the application for leave to appeal for filing, on the basis that it was incompetent. An email exchange ensued between the applicant and the Deputy Registrar. It was made clear to the applicant that he would have to submit a fresh application.
On 19 January 2015, the applicant attempted to file a second application for leave to appeal to this Court, which, it might be observed, was virtually identical to his first application. The Deputy Registrar refused to accept the second application for filing …[23]
[22]Sgargetta v National Australia Bank Ltd [2015] VSCA 289. Judge Cosgrave’s decision is National Australia Bank v Sgargetta [2014] VCC 1883.
[23]Sgargetta v National Australia Bank Ltd [2015] VSCA 289 [12]–[13], [15]–[17].
Mr Sgargetta’s application to the Court of Appeal to direct the registrar to file his notice of appeal from Judge Cosgrave’s further decision was filed on 22 June 2015 and dismissed on 21 October 2015. Priest JA concluded that:
In my opinion, the applicant’s new application for leave to appeal is nothing more than an attempt to relitigate matters which have previously been determined adversely to him. His attempt to do so cannot be countenanced.[24]
[24]Ibid [25].
Fourthly, also in December 2014, Mr Sgargetta launched a proceeding in VCAT against Mr Hayes and Mr Silver. The nature of that proceeding is important as it is the foundation for Mr Hayes and Mr Silver’s argument in this application insofar as it relies upon Anshun estoppel and abuse of process. I will detail the claim further below when I return to those two grounds. For now, it is enough to say that the application was a claim for damages caused by the alleged abandonment of various grounds of appeal when the barristers appeared before Whelan and Santamaria JJA on 27 May 2014. The causes of action relied upon were brought under the Australian Consumer Code for misleading and deceptive conduct and unconscionable conduct as well as for breaches of duty alleged to arise under the Legal Profession Act 2004 (Vic) (‘Legal Profession Act’). The application expressly disavowed making any claim in negligence.
The VCAT proceeding was heard by Senior Member Smithers in August 2015 and dismissed under s 75 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (‘VCAT Act’) on 21 September 2015.[25] Section 75 of the VCAT Act gives VCAT the discretion to dismiss a proceeding if it is considered to be frivolous, vexatious, misconceived or lacking in substance, or otherwise an abuse of process, or if it is obviously hopeless and bound to fail.
[25]Sgargetta v Hayes (Legal Practice) [2015] VCAT 1490.
As Member Smithers stated:
The main point which Mr Sgargetta relies on is that the Court of Appeal decision of 30 July 2014 by Whelan and Santamaria JJA stated that certain arguments advanced by Mr Sgargetta in written submissions of 2 May 2014 were abandoned by counsel on his behalf during the course of argument when the appeal came to be heard, and that this was contrary to his instructions. Had these arguments not been abandoned, Mr Sgargetta contends, he would not have lost his case in the Court of Appeal.[26]
[26]Ibid [4].
In concluding the case against Mr Sgargetta, Member Smithers said:
I find that Mr Sgargetta’s claims against his pro bono counsel under ss 18, 20 and 21 of the ACL are barred by advocates’ immunity. Also, I determine that the claims under s 20 and s 21 are doomed to failure as unconscionability will not be able to be made out. The claims are dismissed under s 75 of the VCAT Act.
Interspersed amongst Mr Sgargetta’s written and oral submissions were statements to the effect that various aspects of his case were wrongly decided by the County Court and Court of Appeal. Unfortunately, his case has reached the end of the line. He has sought leave to appeal to the High Court against the Court of Appeal’s decision, but that was refused. He can go no further.[27]
[27]Ibid [65], [66].
But Mr Sgargetta did go further. However, he did not seek to appeal Member Smithers’ decision to the Supreme Court, as he might have done.[28] Rather, on 12 January 2016, Mr Sgargetta issued a writ in this Court making the claims against Mr Hayes and Mr Silver that have prompted them to make the application now before me.
[28]VCAT Act s 148.
I now turn to their application.
Principles for summary judgment.
Under s 63 of the Civil Procedure Act the court may give summary judgment if satisfied that a claim has no real prospect of success. Despite there being no real prospect of success, under s 64 the court may nevertheless order the matter to proceed to trial if satisfied that it is not in the interests of justice to dismiss the proceeding summarily or that the dispute is such that only a full hearing on the merits is appropriate.
In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd[29] the Court of Appeal construed the test in s 63, stating that:
(a)the test is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success;
(b)the test is to be applied by reference to its own language and without paraphrase of, or comparison with, the ‘hopeless’ or ‘bound to fail’ test;
(c)the test is more liberal than the ‘hopeless’ or ‘bound to fail’ test; and
(d)the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried.[30]
[29](2013) 42 VR 27.
[30]Ibid 40 [35].
Advocates’ Immunity
The defendants argued that Mr Sgargetta’s claim against them should be properly characterised as a claim in negligence. Being so characterised, they submitted it is not actionable because it squarely attracts the immunity for advocates as pronounced in Giannarelli and D’Orta Ekenaike. The reason why the nature of the claim attracts that immunity, they argued, is that the conduct alleged against them, if it was wrongful at all, was their in court conduct of the appeal as advocates: conduct that unquestionably attracts the immunity.
In my view, for reasons which I will explain, this submission should be accepted and is sufficient to determine the whole application in favour of the defendants.
Even allowing for the fact that Mr Sgargetta is not a lawyer, his statement of claim filed in the proceeding, which he prepared, makes it sufficiently clear that his claim centres upon the alleged misconduct of Mr Hayes and Mr Silver in not sufficiently pressing the void and severable ground of appeal when conducting the appeal in court. The following is a summary of the claim as pleaded:
(a) Mr Sgargetta alleged (paragraphs 1–5) that:
(i) He was represented in the Court of Appeal on 27 May 2014 by the defendants;
(ii) As Australian legal practitioners and barristers, the defendants owed him various duties (said to be ‘fiduciary duties’ derived from conduct and practice rules);
(iii) Those duties included duties to ensure that none of the grounds of appeal were abandoned, that the Court of Appeal was aware of the need to decide the merits of all grounds and that, should there be any misapprehension about that need, to inform the court of that misapprehension as soon as the defendants became aware of it.
(b) He further alleged (paragraph 15) that the defendants were expressly instructed not to abandon the void and severable ground.
(c) Next he alleged (paragraphs 6–8, 11–13) that, in breach of their duties, the defendants failed to ensure that all of the grounds of appeal were decided but, most particularly, abandoned the void and severable ground.
(d) He next alleged that, upon publication of the judgment, Mr Sgargetta ‘alerted [Mr Hayes] to address paragraph 7 of the judgment’[31] but Mr Hayes failed to act upon his requests (paragraphs 9, 10).
(e) Finally, he alleged (paragraphs 14, 16) that, as a result of the defendants’ breaches, the Court of Appeal did not address the void and severable ground thereby causing Mr Sgargetta to suffer $4,220,000 of loss.
[31]In paragraph 7 of its reasons, the court noted that counsel had abandoned the void and severable ground.
Although the pleading does not, in terms, define the nature of the causes of action said to arise from these factual complaints, Mr Sgargetta identifies the legal bases for his claims by listing ‘legislations and codes of conduct’ which the defendants supposedly breached. They are the:
·Legal Profession Act 2004 – Sections 4.2.2, 4.2.2(1), 4.2.2(2)(b) and (c), 4.4.3, 4.4.4 and 4.4.6.
·Professional Conduct and Practice Rules 2005 – Rule 1, 1.1, 12, 12.1, 12.2, 12.3, 13, 13.1, 13.2, 13.2.1, 13.2.2, 13.2.3, 13.3, 14, 14.1, 14.2 and 14.12.
·Legal Profession Uniform Law Application-Conduct Rules 2015 – Solicitors Rule. 4, 6, 7 and 8, Barristers Rule. 35, 49, 50, 51.
·Civil Procedure Act 2010 – Sections 14, 17 and 21.
·Wrongs Act 1958 – Sections 43, 50 and 59.
It is clear from paragraph 4 of Mr Sgargetta’s statement of claim that the professional conduct rules that he relies upon, as in force in 2014,[32] are rule 11 (must seek to advance and protect the client’s interests) and rule 20 (must take all necessary steps to correct any misleading statement made by the barrister to a court as soon as possible after the barrister becomes aware that the statement was misleading). The other two duties alleged in paragraph 4, namely ‘to act with reasonable care expected of a professional’ and ‘to follow a client’s lawful instructions’, are not to be found in the conduct rules but more aptly describe common law duties either in tort or contract.
[32]Although Mr Sgargetta’s claim refers to the Professional Conduct and Practice Rules 2005, and to other conduct rules made in 2015, the operable conduct rules to which the defendants were subject in May 2014 were the Victorian Bar Council, Practice Rules – Rules of Conduct (effective 22 September 2009) made pursuant to the Constitution of the Victorian Bar for the purposes of s 3.2.9(2) of the Legal Profession Act as in operation at that time.
Significantly, the alleged duty to correct any misleading statement made to a court is not expressed in the rules of conduct as a duty owed to a client. Rather, it is a duty to the court. It is the duty which, for example, may be engaged if a barrister appearing on a plea for a client in a criminal conviction realises that the court has been misled to believe that an offender has no prior convictions whereas in fact the offender has prior convictions. The duty is expressed that way to reduce the risk that a court does not proceed to make an order based upon such a misconception. But, once an order is made, even if upon the misconception, the order stands (subject to any appeal). The consequence of a breach of the ethical rule is that counsel may be disciplined.
At the hearing of the summary judgment application before me, Mr Sgargetta (appearing on his own behalf) explained it is the defendants’ post-judgment conduct that is his primary focus. But he also intended to press counsels’ in-court conduct of abandoning the void and severable ground or, as he put it, misleading the court into believing it had been abandoned. Mr Sgargetta’s allegation that counsel were under a duty to take steps to cure the court’s alleged misapprehension, after judgment had been pronounced, is somewhat novel. Although there is jurisdiction in a court to correct an administrative slip in an order,[33] such jurisdiction does not extend to re-addressing an entire substantive argument. An appeal to a higher court may potentially be available should it be shown that the court was in error in failing to address an argument, but there is no obvious avenue back to the court itself once judgment is given.
[33] See eg Supreme Court Rules r 36.07.
When repeatedly pressed, Mr Sgargetta could not suggest any avenue of address which the barristers ought to have pursued. Emails which he attached to his statement of claim as particulars of the defendants’ (specifically Mr Hayes) refusal to take action after the judgment was published, reveal that Mr Sgargetta wanted Mr Hayes to swear an affidavit for submission to the court explaining that he had not been instructed to abandon any argument. The emails demonstrate that Mr Hayes had (quite properly) declined to do so and had pointed out to Mr Sgargetta that the transcript of the appeal and the written submissions which were before the court fully addressed what had taken place.
One cannot help but conclude that Mr Sgargetta’s attempt to shift the focus of his claim against the defendants to the post-judgment conduct is an attempt on his behalf to evade the application of the advocates’ immunity principle. In my view there are two answers to that strategy. First, the immunity is attracted not only by in-court conduct but also by conduct which is intimately connected with in-court conduct. Although it may be novel, the post-court misconduct alleged against the defendants is inextricably connected with their conduct before the Court of Appeal. Precisely the same policy objection that justifies in-court immunity, namely the need for finality in litigation, would extend to justifying an immunity for the type of post-court conduct which Mr Sgargetta alleges in this case. Secondly, and in any event, the claim would have no real prospect of success on its merits as I will discuss further below.
There then arises the question whether advocates’ immunity extends to claims other than those made in negligence and, if not, whether it applies to all of the claims made in this proceeding.
In D’Orta Ekenaike the High Court made it clear that the advocates’ immunity to suit is not confined to claims made only in negligence.[34] The immunity does not exist due to an absence of a duty of care owed to the client by the advocate but, rather, because of public policy considerations derived from the judicial process being an aspect of government and from the need for finality in judicial decisions.[35] Recently, Bell J in this Court held that the immunity extends, for example, to a claim brought against lawyers for misleading and deceptive conduct in breach of s 9(1) of the Fair Trading Act 1985 so long as it concerned conduct in court or intimately connected with the conduct of the case in court.[36]
[34]D’Orta Ekenaike (2005) 223 CLR 1, 15 [26].
[35]Ibid 16-18 [31]–[36].
[36]Goddard Elliot (a firm) v Fritsch [2012] VSC 87 [834]–[838].
In the present case, Mr Sgargetta’s claim does not explicitly use the language of tortious duty and breach. Rather, as I have said, he alleged that ‘fiduciary’ duties were owed to him under the Professional Conduct and Practice Rules 2005. But, his reference to the sections in the Wrongs Act 1958 listed in his pleading suggest that at least one of the legal causes of action upon which he intends to rely at trial is a cause of action in negligence. So much was confirmed by Mr Sgargetta upon the application. His claim in negligence cannot be sustained in the face of Giannarelli and D’Orta Ekenaike.
As for the remaining alleged bases of duty, each of them presents insuperable problems to Mr Sgargetta in terms of their merits as I will show below. But even if they did not, each of the other bases of action is founded upon an allegation of misconduct in court or conduct that is so closely connected with conduct in court, so that they also must founder upon advocates’ immunity.
Anshun estoppel
The principles in relation to Anshun estoppel have been conveniently set out by Robson J in Re AWB Limited (No 10).[37] I gratefully repeat the first six of the principles his Honour there set out:
[37](2009) 76 ACSR 181.
(1)The Anshun principle gives rise to an estoppel distinct from abuse of process principles: Anshun.
(2)A second proceeding may be estopped under the Anshun principle where the cause of action raised is one which could have been raised in a previous proceeding where the same or substantially the same facts will arise for consideration in the second proceeding as in the first proceeding: Anshun; Gibbs v Kinna [1999] 2 VR 19 (‘Gibbs v Kinna’) and Zavodnyik v Alex Constructions Pty Ltd [2005] NSWCA 438 (‘Zavodnyik v Alex Constructions’).
(3)Such a proceeding will only be estopped, however, if it was unreasonable to defer reliance upon the cause of action: Anshun; Gibbs v Kinna.
(4)Anshun estoppel is not limited to circumstances where there may be conflicting judgments, although the risk of conflicting judgments would generally speaking satisfy the criterion of unreasonableness: Gibbs v Kinna; Zavodnyik v Alex Constructions Pty Ltd.
(5)In considering whether it was unreasonable for a plaintiff not to have relied on the cause of action raised in the second proceeding, the court should consider all the relevant facts, including the character of the previous proceeding, the scope of any pleadings, the length and complexity of the trial, any real or perceived difficulties in raising the relevant claim earlier and any other explanation for the failure to raise the claim previously: Gibbs v Kinna.
(6)The greater the extent of the overlap between the facts underlying each claim, the easier it is to argue that it was unreasonable not to raise the matter in the first proceeding: Zavodnyik v Alex Constructions Pty Ltd.[38]
[38]Ibid 227-8 [263].
Here, the defendant barristers rely on the claims brought against them at VCAT, dismissed by Member Smithers under s 75 of the VCAT Act, as constituting the earlier proceeding in which the causes of action now raised could have been raised or where the same or substantially the same facts arose that will arise for consideration in this proceeding. It is true that in the VCAT proceeding Mr Sgargetta alleged the same matters of fact as he has raised in this proceeding. His complaints against the respondent barristers at VCAT (being Mr Hayes and Mr Silver) were set out in his statement of claim.[39] In summary, they were that:
·Clause 2.1(a) of the settlement deed (ie. the letter condition) was critical to Mr Sgargetta’s appeal in the Court of Appeal on 27 May 2014 (paragraphs 10 and 14).
·Mr Sgargetta’s argument in relation to clause 2.1(a) was not considered by the Court of Appeal because it determined that the barristers had abandoned the appeal ground in relation to it (paragraph 11).
·After judgment, Mr Hayes declined Mr Sgargetta’s request that he provide an affidavit to the court deposing that he was not instructed to abandon the void and severable argument and in fact had not abandoned it (paragraph 16).
[39]Exhibit PAR 2 to the affidavit of Peter Rashleigh sworn 2 February 2016.
The legal bases for Mr Sgargetta’s causes of action brought at VCAT were listed in a similar fashion to the way he has listed them in the statement of claim in this Court. They were listed as follows:
·Breaches of the Australian Consumer Law (‘ACL’) found in schedule 2 to the Competition and Consumer Act 2010 (Cth): that is, the prohibitions against misleading and deceptive conduct and unconscionable conduct found in ss 18, 20, 21, 22.
·Legal Profession Act 2005: ss 4.2.2, 4.4.3, 4.4.4 and 4.4.6.
·Professional Conduct and Practice Rules 2005: Rule 1, 14, 14.1 and 14.2.
The ACL is applied in Victoria under the Australian Consumer Law & Fair Trading Act 2012 (Vic) (‘ACL & FT Act’). VCAT and any court of competent jurisdiction has jurisdiction to hear a cause of action under the ACL as granted by s 224 of the ACL & FT Act.
In his statement of claim Mr Sgargetta stated, ‘this application is not an application made directly for negligence’. In context, that statement appeared to be a disclaimer that any claim for negligence was being made in order to avoid the operation of the advocates’ immunity. Mr Hayes and Mr Silver contend that at VCAT Mr Sgargetta could have brought (but chose not bring) a claim in negligence along with his other claims. They contend that once jurisdiction was attracted to VCAT in relation to the dispute, s 182(2) of the ACL & FT Act (found in chapter 8 of the Act) conferred jurisdiction on VCAT to determine any related cause of action in negligence.
I doubt that provision assists them. It confers additional jurisdiction on VCAT to deal with a related cause of action in negligence only if the tribunal has jurisdiction to deal with a ‘consumer and trader dispute’ under chapter 7. As I read the claim, and the way in which Senior Member Smithers dealt with it, the claim did not invoke VCAT’s jurisdiction to deal with a ‘consumer and trader dispute’ as defined in chapter 7 of the ACL & FT Act.
Because it has not been authoritatively established that VCAT has some other, general accrued jurisdiction,[40] I am not satisfied it could have entertained a claim in negligence. If that is right, there is a material difference between the two proceedings and the jurisdictions available to them. It could be difficult to make out the argument that it was unreasonable for Mr Sgargetta not to have relied upon a cause of action in negligence before VCAT.
[40]See Jason Pizer, Pizer’s Annotated VCAT Act (JNL Nominees, 4th ed, 2012) 111, citing Tucci v Victorian Civil & Administrative Tribunal [2010] VSC 425 (Cavanough J).
No argument was directed to the point whether Anshun estoppel can arise in a proceeding before a court due to an earlier proceeding at a tribunal such as VCAT.[41] Although not having the benefit of argument on that question, I think it probable that it can.[42] But given my conclusion on other grounds in this application and the problem an Anshun estoppel would face in any event, it is not necessary that I consider it further.
[41]In Morris v Riverwild Management Pty Ltd (2011) 38 VR 103, Weinberg JA noted (at [64]) that the question whether a decision of VCAT, in either its original jurisdiction or its review jurisdiction, is capable of giving rise to any form of estoppel, had not been definitively resolved. His Honour’s own view was that decisions of the Tribunal, at least in the exercise of its original jurisdiction, could give rise to cause of action and issue estoppels. Other members of the court did not expressly address the issue. However, it may well be that there is no similar uncertainty surrounding the availability of an Anshun estoppel (see [73]) which depends upon a different rationale.
[42]See Dennis Pearce, Administrative Appeals Tribunal (LexisNexis, 4th ed, 2015) [17.11].
If follows that I have not been satisfied that a cause of action in tort could have been raised at VCAT. Even if the principles in Anshun could give rise to an estoppel in this Court because of an earlier proceeding in VCAT, those principles alone would not deny Mr Sgargetta any prospect of success here insofar as he makes a claim in tort. I would decline to give summary judgment for the defendants on that ground.
Abuse of process
In Re AWB (No 10) Robson J also set out the principles relevant to abuse of process.[43] Essentially, proceedings can be stayed as an abuse of process if they are unjustifiably oppressive and vexatious, manifestly unfair or otherwise bring the administration of justice into disrepute among right thinking people.
[43](2009) 76 ACSR 181, 228-9 [264].
The defendants submitted that these proceedings are an abuse of process because:
(a) Mr Sgargetta made a deliberate choice not to appeal the VCAT orders but to institute a fresh proceeding in this Court;[44]
[44]Alleged to be implied from paragraphs 8 and 9(f) of Mr Sgargetta’s affidavit in opposition to the application sworn 22 February 2016 in which he pointedly states that his proceeding in this Court ‘is not an appeal of the VCAT orders’.
(b) Senior Member Smithers found the plaintiff made a deliberate choice not to bring a claim in negligence in the VCAT proceeding;
(c) It would be manifestly unfair to the defendants for Mr Sgargetta to seek to re-litigate hopeless proceedings which attacked their professional reputations; and
(d) By these proceedings Mr Sgargetta is effectively seeking to appeal the judgment of the Court of Appeal in circumstances where leave to appeal to the High Court has been refused.
Although there may be considerable merit in the defendants’ argument on this point, I am not persuaded that I should allow summary judgment against Mr Sgargetta on this ground. First, as it did in relation to the operation of an Anshun estoppel, doubt about the ability of VCAT to hear and determine a claim in negligence causes me to doubt that it could be an abuse of process to bring a later claim in this court in tort. Secondly — while acknowledging that the scope for raising an abuse of process objection may be even wider than the scope for invoking Anshun estoppel — again, no argument was directed to the point whether it is an abuse of the process of a civil court to institute a proceeding which has previously been brought in a statutory tribunal.
I would decline to give summary judgment for the defendants on that ground.
I then turn to the remaining consideration of whether there are real prospects of success on the merits of the claim.
Merits
I find that Mr Sgargetta’s claim enjoys no real prospect of success on the merits. I hold that view for a number of reasons.
First, the case that the defendants in fact abandoned the void and severable argument is extremely weak.[45] All the passages of transcript to which Mr Sgargetta referred appeared to establish the opposite. On several occasions Mr Hayes told the court he was not instructed to abandon the argument. As I read the transcript, there was genuine scope for misunderstanding as to whether the void and severable argument was abandoned or maintained. In discussions between bench and counsel, a classification of arguments was made based upon whether, on a given ground, the two written submissions did or did not overlap, the written submissions were or were not supplemented by oral submissions, and whether a ground was explicitly abandoned. It seems to me that in their discussion on the critical ground counsel and the court may have been at cross purposes.[46]
[45]The defendants were content to conduct this application on the assumption that they had abandoned the argument although made it clear that should the issue proceed to trial, they would contend that they had not done so. These remarks are, therefore, based on my own observations of the foreshadowed evidence on the subject.
[46]See also the analysis of Member Smithers at VCAT on the same point at in the VCAT proceeding [2015] VCAT 1490, [25]–[27].
Secondly, counsel’s duty of care to a client must be framed having regard to counsel’s paramount duty to the court as expressed in professional conduct rules. More pertinently, that duty must take into account a legal practitioner’s ‘overarching obligation’ as imposed under the Civil Procedure Act: see s 16. Sections 12 and 13(2) make it plain that the legal practitioner’s duty, including to ‘narrow the scope of … issues in dispute unless it is not in the interests of justice to do so’,[47] is a duty that transcends a practitioner’s duty to act in accordance with the client’s instructions or wishes.[48] Bearing in mind the self-evident strength of the Meehan v Jones answer to the void and severable argument, the proposition that the barristers breached any duty owed to the client by not advancing that argument would enjoy no prospect of success.
[47]Civil Procedure Act s 23(b).
[48]See also the analysis of Deputy President Lulham on a similar point in Sgargetta v Thomas (Civil Claims) [2015] VCAT 357 (31 March 2015) [48].
Thirdly, despite saying they would give no further consideration to the void and severable argument, Whelan and Santamaria JJA did in fact consider the argument and made their views more than clear. By saying (at [80]) that in view of Meehan v Jones counsel’s abandonment of the void and severable argument was ‘properly made’, their Honours indicated that they had considered the relevant legal principle. Further, their Honours’ comment must in my opinion be taken to mean that they considered it would have been irresponsible of counsel to press the argument in view of the strength of the authority against it. What this means is that had counsel persisted in the argument, the argument would not have succeeded. Mr Sgargetta tried valiantly to persuade me that there had been a potential argument against the application of Meehan v Jones that had force,[49] but I was not persuaded.
[49]He did this by reference to a written submission which he read at the same time as displaying it on a screen in court. His written submission contained hypertext links to other documents which were displayed on the screen as he spoke. Because those other documents were not in evidence, I viewed them only for the purpose of understanding the nature of evidence and arguments that might be available to Mr Sgargetta should the matter proceed to trial (transcript, pp 35-6).
If Mr Sgargetta’s case against the defendants has no real prospect of success on the question of breach of duty, it has even less prospect on the question of causation or loss.
Fourthly, for the following reasons I accept the defendants’ arguments that the remaining claims are misconceived and have no prospect of success:
(a) Mr Sgargetta has no right of action against the defendants for alleged breaches of the Professional Conduct and Practice Rules in whatever manifestation they are relied upon. A breach of those rules may form a basis for a complaint under the Legal Profession Act, or may inform the content of a duty owed in tort, but it does not otherwise amount to a cause of action.
(b) Had there been any breach of an overarching obligation under the Civil Procedure Act, Mr Sgargetta’s remedy would have been to apply for an order under s 29 of that Act. Such an application would have had to be made to the Court of Appeal which heard the appeal: s 30(1). If necessary, an extension of time may have been sought within which to make the application. In any event, any breach of the Civil Procedure Act provisions identified by Mr Sgargetta do not enable him to sue Mr Hayes and Mr Silver as he has sought to do in this proceeding.
(c) The sections of the Legal Profession Act relied upon by Mr Sgargetta relate to disciplinary and civil complaints which are to be made to the Legal Services Commissioner.[50] No complaint has been made by Mr Sgargetta to the Commissioner. Even if one was made and the Commissioner was unable to resolve it, it would be referred for resolution to VCAT and not to this Court.[51] A breach of the provisions identified do not provide the basis for a cause of action in this Court.
[50]Legal Profession Act s 4.2.5.
[51]Legal Profession Act s 4.3.15.
Conclusion
In my opinion, the above matters demonstrate there is no real question to be tried. In the language of s 63 of the Civil Procedure Act, the claims made by Mr Sgargetta have no real prospect of success.
Having regard to the history of the matter, I am far from persuaded that I should exercise a discretion to allow the case to proceed under s 64 of the Civil Procedure Act despite there being no real prospect of success.
The proceeding will be dismissed with costs.
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