Stanizzo v Badarne

[2014] NSWSC 689

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Vincent Francis Stanizzo v Muhammad Badarne & Ors [2014] NSWSC 689

Hearing dates:

29 April 2014

Decision date:

29 May 2014

Jurisdiction:

Equity Division

Before:

Robb J

Decision:

(1)Order under UCPR r 13.4 that the claims pleaded by the plaintiff against the first and second defendants, or one of them, in pars 30 to 49 and 62 to 78 of the statement of claim be summarily dismissed.

(2)Order under UCPR r 14.28 that the balance of the plaintiff's statement of claim be struck out as against the first and second defendants.

(3)Order under UCPR r 14.28 that the statement of claim be struck out as against the fourth defendant.

(4)Direct the plaintiff, if the plaintiff wishes to apply for leave to file an amended statement of claim in relation to the claims that have not summarily been dismissed by order (1) to serve on the first, second and fourth defendants, or so many of those defendants against whom the plaintiff wishes to continue his proceedings, a draft amended statement of claim by 4 PM on 19 June 2014.

(5)Direct each of the defendants upon whom the plaintiff serves a draft amended statement of claim to advise the plaintiff whether the defendant opposes the plaintiff being given leave to file the draft amended statement of claim, and if so the reasons for the opposition, by 4 PM on 3 July 2014.

(6)Order the plaintiff to pay the costs of the first and second defendants in relation to the claims made in the paragraphs of the statement of claim referred to in order (1).

(7)Order the plaintiff to pay the costs of the first, second and fourth defendants of the notices of motion filed by them on 8 and 11 November 2013, including the hearing on 29 April 2014.

(8)Order that otherwise the costs of the proceedings to date be reserved.

(9)Stand the proceedings over for directions before Robb J on 9 July 2014 at 9:30 AM

Catchwords:

PRACTICE AND PROCEDURE - summary dismissal - strike out - no material facts capable of supporting a cause of action
PRACTICE AND PROCEDURE - communications from parties to presiding judge's chambers - practice to be followed

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Akki Pty Ltd v Martin Hall Pty Ltd (1994 -1995) 35 NSWLR 470
Ken Tugrul v Tarrants Financial Consultants Pty Ltd (in liquidation) [2013] NSWSC 1971
R v Fisher [2009] VSCA; (2009) 22 VR 343

Category:

Interlocutory applications

Parties:

Vincent Francis Stanizzo (plaintiff)
Muhammad Badarne (first defendant)
Good Legal Pty Ltd (second defendant)
Adbul Karim Charmand (third defendant)
Nasser Aouad (fourth defendant)

Representation:

Counsel: In person (plaintiff)
Mr JR Young (first and second defendants)
Mr S Maybury (fourth defendant)
Solicitors: Justice Lawyers (plaintiff)
Good Legal Lawyers (first and second defendants)
HWL Ebsworth (fourth defendant)

File Number(s):

2013/291210

Judgment

1. The active parties in these proceedings are all solicitors.

1. The plaintiff is Mr Vincent Francis Stanizzo. The first defendant is Mr Muhammad Badarne. The fourth defendant is Mr Nasser Aouad. The second defendant (Good Legal) is an incorporated legal practice, the principal of which is a Mr Lagopidis. At one time Mr Badarne conducted his practice under a fee sharing arrangement with Mr Stanizzo. Subsequently he practised with Good Legal.

1. The third defendant, Mr Abdul Karim Charmand, was at one time a client of Mr Stanizzo, and later a client of Good Legal. Mr Stanizzo, and then Good Legal, acted for Mr Charmand in proceedings that he initiated against Mr Aouad. Mr Charmand has not taken an active part in these proceedings.

1. There are before the court two notices of motion which seek orders for either or both summary dismissal of the plaintiff's claim, and the striking out of the statement of claim. Mr Badarne and Good Legal filed their notice of motion on 8 November 2013. Mr Aouad filed his notice of motion on 11 November 2013.

1. Mr Stanizzo also filed a notice of motion on 8 April 2014. On the return date the notice of motion was stood over to 12 May 2014. The notice of motion seeks a number of summary judgment orders. Mr Stanizzo has foreshadowed an application for leave to amend his notice of motion.

1. On 28 April 2014 two letters written by Mr Stanizzo's solicitor dated 25 April 2014 were brought to my attention in chambers by my associate. The two letters were forwarded to my associate by Mr Stanizzo's solicitor, as attachments to an email dated 25 April 2014. One letter was addressed to my associate. The other was a copy of a letter addressed to the solicitors for Mr Aouad. I will have more to say below about the sending of these letters to my associate.

1. For present purposes it is sufficient to note that the letter to Mr Aouad's solicitors advised that Mr Stanizzo intended to seek leave to amend his statement of claim to join those solicitors as defendants, and that he would apply for an adjournment of Mr Aouad's notice of motion so that it could be heard at the same time as Mr Stanizzo's notice of motion. The letter addressed to my associate stated that the notice of motion filed by Mr Badarne and Good Legal could proceed. That letter also advised that counsel briefed by Mr Stanizzo was engaged in an ongoing murder trial, and that Mr Stanizzo would either brief alternative counsel, or appear for himself.

1. As it happened, Mr Stanizzo appeared for himself. Mr JR Young of counsel appeared for Mr Badarne and Good Legal, and Mr S Maybury of counsel appeared for Mr Aouad.

1. Mr Stanizzo advised the court of the difficulties he faced in unexpectedly having to represent himself, but he did not seek an adjournment of Mr Aouad's notice of motion, as foreshadowed in his solicitor's letter. He did not ask for the proceedings on the two notices of motion to be adjourned so that he could secure the representation of counsel.

Mr Aouad's notice of motion

1. When Mr Stanizzo was asked to outline his response to the defendants' notices of motion, he said in relation to Mr Aouad's notice of motion that, upon reading Mr Maybury's written submissions dated 23 April 2014, Mr Stanizzo realised that the pleading of his statement of claim was defective, and he would need to seek the court's leave to file an amended statement of claim. Mr Stanizzo also said that he had noticed that Mr Maybury also stated in par 12 of the submissions that the notice of motion filed by Mr Aouad seeks an order that the pleading against Mr Aouad be struck out pursuant to UCPR r 13.4. Mr Maybury said, in par 13, that the reference to the preceding being 'struck out' was an error, as UCPR r 13.4 provides for the summary dismissal of a claim, and that is what Mr Aouad seeks. To the extent necessary Mr Aouad would seek to amend the notice of motion to correct the error. Mr Stanizzo said that, until he read this part of Mr Maybury's submissions, he had proceeded under the misapprehension that Mr Aouad was only seeking to strike out his statement of claim. He submitted that, as the true position had only recently come to his notice, and he was bereft of legal representation, it would be unfair to permit Mr Aouad's notice of motion to be amended in a way that would allow him to prosecute a summary dismissal application on 29 April 2014, when the notice of motion came on before me for hearing.

1. The expression "struck out" is generally understood to refer to the excision of all or part of a pleading on the ground that it does not comply with the rules of pleading. It is not understood to refer to an order that summarily dismisses a claim or defence. A lawyer who was familiar with the terms of UCPR r 13.4, or who read that rule in response to receiving Mr Aouad's notice of motion, should understand that the rule in fact empowers the court to dismiss proceedings, and not to strike out all or part of a pleading. UCPR r 14.28 is the rule that enables the court to strike out the whole or any part of a pleading in the circumstances specified in the rule.

1. After submissions by Mr Stanizzo and Mr Maybury, I ruled, however, that it would not be fair on Mr Stanizzo to permit Mr Aouad to amend his notice of motion and proceed immediately with his summary dismissal application. I took that course principally because the expression "struck out" had such a well understood meaning that its use was likely to cause misunderstanding, even by experienced legal practitioners, if it was intended to refer to a summary dismissal application. In the circumstances, it would not be justified for me to reject Mr Stanizzo's claim that he had misunderstood the effect of the notice of motion. Furthermore, as the consequences of the summary dismissal of a claim may be more serious than the striking out of the statement of claim, which often leads to leave being given to replead, I should be solicitous of Mr Stanizzo's position, because of his lack of notice of the true position, and the absence of counsel to advise and appear for him. Mr Maybury contested the issue, but, after putting his submissions, accepted the outcome graciously.

1. The position was therefore reached, on Mr Aouad's notice of motion, that the only application that could proceed was the application to strike out Mr Stanizzo's statement of claim, Mr Stanizzo had already conceded that the pleading was inadequate, and he would need to seek leave to file an amended statement of claim. Consequently, the only issue that remained alive on Mr Aouad's application was whether the circumstances justified the court's giving Mr Stanizzo liberty to file an amended statement of claim, after it ordered that the present statement of claim be struck out. There was also a question whether subsidiary orders should be made to control the process under which Mr Stanizzo would be permitted to file a new statement of claim, to ensure that any pleading that he filed complied with the pleading rules, and disclosed a reasonable cause of action.

Mr Badarne's and Good Legal's notice of motion

1. That left the court to deal with the notice of motion filed by Mr Badarne and Good Legal. It will be convenient to defer the identification of the issues raised by that notice of motion, until after the structure of Mr Stanizzo's statement of claim has been considered.

1. The form of Mr Stanizzo's statement of claim is unconventional. It consists first of a statement of the relief claimed in 23 paragraphs. That is followed by the formal parts of the statement of claim. Stapled to the back of the document, as if by afterthought, is a nine page document that contains 79 allegations of fact, and an additional claim for relief.

1. In the first 29 paragraphs of the statement of claim Mr Stanizzo makes introductory allegations against the defendants, and then sets out a claim against the defendants that arises out of the proceedings that Mr Charmand prosecuted against Mr Aouad. That is followed by seven paragraphs under the heading "Misappropriation of trust funds"; 13 paragraphs under the heading "Boumelhem"; 12 paragraphs under the heading "Mazzone"; 13 paragraphs under the heading "Release of withdrawal of caveat"; and finally five paragraphs under the heading "Theoharidis".

1. In par 23 Mr Stanizzo pleads that, on 30 July 2010, he and Mr Badarne entered into a deed of settlement. In the following pars 24 to 27 Mr Stanizzo alleges breach of the deed of settlement by Mr Badarne.

1. It was this deed of settlement, however, which was the principal basis of Mr Badarne's claim for summary dismissal of parts of Mr Stanizzo's claim against him. In short, Mr Badarne submits that each of the claims pleaded in the statement of claim under the headings "Misappropriation of trust funds", "Boumelhem", "Release of withdrawal of caveat", and "Theoharidis" should summarily be dismissed, because each claim has plainly been released by the terms of the deed of settlement. Mr Badarne also submits that a number of Mr Stanizzo's claims are statute barred, and that on the facts no cause of action is capable of arising. Mr Badarne's principal argumentis, however, based upon the deed of settlement.

1. Mr Badarne also submits that the residual parts of the statement of claim suffers from fatal pleading defects, and should be struck out.

Principal facts

1. It is convenient at this point to set out the principal facts that are relevant to the determination of this dispute.

1. The first concerns the terms of the settlement reached in relation to the dispute between Mr Charmand and Mr Aouad. The parties to those proceedings entered into an agreement on 26 February 2010, which contained the following terms:

"1 The Defendant agrees to pay to the Plaintiff and the Plaintiff agrees to accept the sum of $150,000.

2 The payment referred to in paragraph 1 hereof is to be paid within 28 days hereof by way of cheque payable to "Good Legal Pty Ltd Trust Account".

3 The parties agree to short minutes being made in the terms of the document attached and marked "A" and will sign that document accordingly."

1. In due course the following orders were made in terms of the short minutes contained in annexure A:

"1 There be a verdict and judgment for the Defendant.

2 The Defendant pay the Plaintiff's costs of the proceedings as agreed or assessed."

1. Secondly, Mr Stanizzo and Mr Badarne entered into the deed of settlement on 30 July 2010. The deed of settlement contained a number of recitals including:

"4) There has been over the last two (2) years unresolvable issues between the parties in connection to some of such matters in relation to the recovery and/or enforcement of payment of outstanding fees due and payable to the firm...

6) The parties have had such discussions not only in the matter of Mazzone but also all matters which have been the subject of complaint or previous discussions and the parties have agreed to resolve their differences as set out hereunder."

1. The relevant terms of the deed of settlement were as follows:

"A. [Stanizzo] is entitled to keep for his absolute use and benefit all fees recovered or recoverable in the matter Abdulkarim Charmand v Aouad Supreme Court No 20110/2007 ("the Charmand matter") to the exclusion of Badarne;

B. Badarne shall take all necessary steps to recover all or any outstanding fees in all matters which he had brought into the firm including the matters listed in schedule A annexed hereto and subject thereto [Stanizzo] shall and hereby assigns all his interest of recovery in such and all matters to Badarne on the following terms:

i) That any fees recovered by Badarne above the amount of fifteen thousand dollars ($15,000) shall be divided between the parties equally.

ii) Badarne will keep a proper record of the all such fees recovered from time to time and provide [Stanizzo] (within seven days) with a copy of such record.

iii) Badarne and [Stanizzo] will liaise with each other as to what appropriate action shall be taken in each matter, if any;

iv) [Stanizzo] shall pay Badarne the sum of five thousand dollars $5000 out of the fees received from the defendant in the Charmand matter;

v) [Stanizzo] shall grant access to the files relating to such matters as and when required.

C Apart from any law cover claims the parties hereby release each other of any liability to each other and each party waives and abandons any right whatsoever that he has or may have had against the other arising out of Badarne's association with the firm..."

Summary dismissal claims by Mr Badarne and Good Legal

1. It will be convenient to deal with Mr Badarne's and Good Legal's summary dismissal claims first. As noted, they only seek that relief in relation to some of the claims made by Mr Stanizzo in his statement of claim. Each of the summary dismissal claims can be dealt with completely upon the basis that claim is barred because it has been released by the deed of settlement dated 30 July 2010.

Misappropriation of trust funds claim

1. The claim pleaded under the heading "Misappropriation of trust funds" is a claim against Mr Badarne for $220,000 plus interest as from 3 August 2009. The claim relies on events that are pleaded to have occurred between 21 May 2007 and, by inference, 3 August 2009. Mr Stanizzo pleads that Mr Badarne caused a sum of $220,000, that Mr Stanizzo received into his trust account from clients, to be paid out to assist Mr Badarne to purchase a house property, when in fact the money had been paid to Mr Stanizzo on account of future legal fees payable to Mr Stanizzo. Mr Stanizzo pleads that the clients called upon Mr Stanizzo to account for the $220,000 "if Mr Stanizzo refused to provide a withdrawal of caveat relating to the property of Golden Valley Auction House Pty Ltd (see paragraphs 43-55 below)."

1. Paragraphs 43 to 45 of the statement of claim concern the claim made under the heading "Boumelhem". That claim has nothing to do with any withdrawal of caveat, or the property of Golden Valley Auction House Pty Ltd. As noted, there is another claim that is pleaded under the heading "Release of withdrawal of caveat". That claim does contain an allegation about a caveat that Mr Stanizzo lodged against the title to a property owned by Golden Valley Auction House Pty Ltd. Mr Stanizzo alleges that one of the directors of that company, Mr Michael Ayoub, required that Mr Stanizzo's caveat be withdrawn. Mr Ayoub was a person alleged in Mr Stanizzo's pleading to have been associated with the payment of the $220,000 into Mr Stanizzo's trust account. There is, therefore, some connection between the claim under the heading "Misappropriation of trust funds" and the claim under the heading "Release of withdrawal of caveat". Between the two claims, however, there is no allegation that Mr Stanizzo paid $220,000 to anyone, or that Mr Stanizzo has otherwise lost that amount of money.

1. It appears from the statement of claim that all of the facts relevant to the "Misappropriation of trust funds" claim occurred, and Mr Stanizzo's cause of action was complete, before 30 July 2010. The claim satisfies the description of "any liability...that he has or may have had against the other arising out of Badarne's association with the firm" in clause C of the deed of settlement. It has been released by the deed of settlement and, accordingly, should be dismissed.

Boumelhemm claim

1. The claim pleaded under the heading "Boumelhemm", who is alleged to have been a client of Mr Stanizzo's, concerns a number of amounts either paid out by Mr Stanizzo to counsel, or which are owing to counsel, or which were received by Mr Badarne from the client but not paid to Mr Stanizzo, or remain owing by the client to Mr Stanizzo. The dates upon which the claims made by Mr Stanizzo arose are not made entirely clear by the statement of claim. Mr Stanizzo pleads that he was misled by Mr Badarne into believing that the client had an obligation to pay counsel directly, when that was not the case, and the obligation was Mr Stanizzo's. Mr Stanizzo pleads that, on the basis of the misrepresentation that counsel's fees had been paid by the client, Mr Stanizzo released the sum of $26,838.41 to Mr Badarne. The date of the release is not pleaded. Mr Stanizzo pleads that' on 15 February 2011' he received invoices for fees due to counsel in the total sum of $23,828.75.

1. Mr Badarne and Good Legal tendered evidence on the summary dismissal application that established that Mr Stanizzo made a demand that Mr Badarne return the amount of $26,832.27 by letter dated 11 November 2009. Also, counsel issued an account rendered dated 8 September 2009 for $20,693.75 in respect of an invoice rendered on 10 June 2008. It should be noted that Mr Stanizzo pleads in par 14 of the statement of claim that he dismissed Mr Badarne from his employment on 24 August 2009. The point of that observation is that Mr Badarne could not have been involved in briefing counsel on behalf of the client for Mr Stanizzo after that date. Accordingly, although Mr Stanizzo pleads a claim as having been made by counsel by invoice dated 15 February 2011, and for fees totalling $23,428.75, and not $20,693.75, it is in my view clear that the claim arose out of a liability "arising out of Mr Badarne's association with the firm" for the purposes of clause C of the deed of settlement.

1. The other claims under the heading "Boumelhem" concern an amount of $4000 that Mr Stanizzo claims Mr Badarne received from the client during 2008, which ought to have been paid to Mr Stanizzo, and an unpaid invoice issued by Mr Badarne to the client for $71,720 on 25 June 2008. These claims clearly arose before the date of the deed of settlement, and also arose out of Mr Badarne's association with the firm. The Boumelhem claim therefore should be dismissed, as it has been released.

Release of withdrawal of caveat claim

1. I have mentioned the "Release of withdrawal of caveat" claim above. Mr Stanizzo pleads that Mr Badarne accepted a retainer by Golden Valley Auction House Pty Ltd on or about 7 August 2006 to act in a certain dispute. Mr Stanizzo pleads that, under the retainer, Mr Stanizzo was entitled to lodge a caveat on the title to the property that was in dispute in the proceedings to protect the recovery of his fees. He further alleges that on or about 20 November 2008, Mr Stanizzo handed to Mr Badarne a withdrawal of caveat, following a demand by the owner that the caveat be withdrawn. The withdrawal of caveat was handed to Mr Badarne on the basis that he was not entitled to release it unless the client and related companies executed a deed acknowledging liability and guaranteeing payment of the outstanding fees. Mr Stanizzo pleads that Mr Badarne delivered the withdrawal of caveat to the owner, without first obtaining the deed of acknowledgement and guarantee, which has caused Mr Stanizzo to suffer a loss.

1. Mr Stanizzo does not plead the date upon which Mr Badarne allegedly handed over the withdrawal of caveat, but it seems proper to infer that the event, if it occurred, occurred before 30 July 2010. In any event, it seems clear that the claim arises out of Mr Badarne's association with the firm. This claim should also be dismissed, because it has been released.

Theohardis claim

1. The final claim that is the subject of the summary dismissal application is the claim pleaded under the heading "Theohardis". Mr Stanizzo pleads that Mr Badarne accepted instructions on behalf of Mr Stanizzo to advise and act for this client in about early 2007, and that Mr Badarne continued to do so until his dismissal on 24 August 2009. In various ways Mr Stanizzo pleads that Mr Badarne failed to recover costs payable by the client over this period for the benefit of Mr Stanizzo, and also accepted a payment, believed to be about $25,000, without paying that sum to Mr Stanizzo. Mr Stanizzo also pleads that in about February 2007 Mr Badarne caused the client to enter into a settlement agreement in relation to the proceedings, without ensuring that provision was made for payment of monies payable to Mr Stanizzo out of the settlement proceeds. It is clear that all of the events upon which this claim is based occurred before the date of the deed of settlement, and constitute a claim against Mr Badarne arising out of Mr Badarne's association with the firm, which has been released by the deed of settlement.

1. I am satisfied that it is proper for the court summarily to dismiss each of these four claims, because each of the claims was released by Mr Stanizzo by the terms of the deed of settlement.

Strikeout claims by Mr Badarne and Good Legal

1. It is now necessary to consider the balance of the relief sought by Mr Badarne and Good Legal in their notice of motion, whereby they seek to have the balance of Mr Stanizzo's statement of claim struck out, on the basis that it does not plead good causes of action in relation to the remaining claims, which concern the Charmand and Mazzone matters.

Charmand claim

1. The Charmand claim is pleaded in pars 1 to 29 of the statement of claim (interspersed by a number of general allegations that are relevant to the whole of Mr Stanizzo's claim). The paragraphs that specifically concern the Charmand claim are pars 4, 5, 9-13, 15, and 17-29.

1. Mr Stanizzo pleads various acts of wrongdoing by Mr Badarne concerning the Charmand claim, but in so far as they give rise to a money claim by Mr Stanizzo, they depend, first, upon the allegation in par 21 that, on or about 2 March 2010, the Supreme Court made an order against Mr Aouad in favour of Mr Charmand (which must be taken to be a reference to par 1 of the 26 February 2010 settlement agreement). Mr Stanizzo pleads in par 22 that, notwithstanding this order, all four defendants have failed to pay Mr Stanizzo the costs that are due to him.

1. I am satisfied that, in the preceding paragraphs, Mr Stanizzo has properly pleaded a basis for being entitled to receive from Mr Charmand any unpaid costs to which Mr Stanizzo was entitled, that accrued during the time when Mr Badarne acted for Mr Charmand in the proceedings, before Mr Badarne was dismissed by Mr Stanizzo, and took Mr Charmand as a client to Good Legal. Mr Stanizzo has clearly enough alleged that he claims to be entitled to the particular form of lien over the proceeds of Mr Charmand's settlement that was discussed by Windeyer J in Akki Pty Ltd v Martin Hall Pty Ltd (1994 -1995) 35 NSWLR 470.

1. The question is whether Mr Stanizzo has satisfactorily pleaded a claim against Mr Badarne and Good Legal that each or both of them are liable to him for failing to ensure that fees owing to Mr Stanizzo were paid out of the settlement monies.

1. In par 19 Mr Stanizzo alleges against Mr Badarne a breach of rule 29 of the Solicitors Conduct and Practice Rules by, among other things, failing to advise or instruct Mr Charmand to arrange for Mr Stanizzo's right to costs to be secured. Mr Stanizzo does not plead any facts and circumstances that would permit a finding at trial that Mr Charmand would have acted in accordance with any such advice or directions, so that Mr Stanizzo has suffered loss as a result of Mr Badarne's conduct.

1. Paragraph 22 is a bare allegation that, notwithstanding the court's 2 March 2010 order, the defendants have failed to pay Mr Stanizzo the proper costs due to him. No allegation is made that either defendant received any part of Mr Charmand's settlement monies, or that they had any opportunity to ensure that those moneys were not paid out to Mr Charmand, without any legitimate claim by Mr Stanizzo first being honoured. The statement of claim does not identify the factual basis of the defendants' alleged liability

1. As mentioned above, Mr Stanizzo pleads the existence of the 30 July 2010 deed of settlement in pars 23 and 24. He pleads the terms of the deed of settlement in clause B, which I have set out above; however, he has done so in a way that expressly treats the Charmand proceedings as one of the matters dealt with in clause B. I will return to this aspect of the statement of claim shortly.

1. On the basis that clause B of the settlement deed covered the Charmand matter, Mr Stanizzo pleads in par 27 that Mr Badarne has taken none of the steps listed in sub-pars (i), (ii) or (iii) of the clause. Of these allegations, the claim that Mr Badarne "has taken no or no sufficient, steps to recover from Charmand directly, or from the proceeds of the settlement of the Action, costs and disbursements due to Stanizzo", is the most significant, as it is not clear how any failure to report to Mr Stanizzo or consult with him would have led to any different outcome.

1. In my view, in the present case, it is not an adequate pleading for Mr Stanizzo simply to assert that Mr Badarne has taken no, or no sufficient, steps to recover costs and disbursements owed to Mr Stanizzo from Mr Charmand, or the settlement monies that were payable to him. It must be noted that the Charmand settlement happened on 26 February 2010. The settlement sum was required to be paid within 28 days. The deed of settlement was made months later on 30 July 2010. Mr Stanizzo should plead the steps that Mr Badarne was able to take, and when he was able to take them, before alleging that they were not taken. As the claim is pleaded at present, it does not disclose the facts upon which Mr Stanizzo wishes to rely. It does not identify the actual failures alleged against Mr Badarne. The broad allegation that has been made is too general.

1. I therefore conclude that all of the claims pleaded against Mr Badarne concerning the Charmand matter have not properly been pleaded, and that part of the statement of claim should be struck out.

1. At this point I should record that Mr Young, on behalf of Mr Badarne and Good Legal, put an argument that the part of Mr Stanizzo's claim based upon the deed of settlement was legally misconceived, as it was based upon an untenable construction of the deed. As I understand it, Mr Young's point was that this aspect of Mr Stanizzo's Charmand claim was legally hopeless, and Mr Stanizzo should not be given leave to replead it.

1. Mr Young argued that the Charmand claim was the subject of clause A and not clause B at all. As I understand it, that was essentially because clause A was concerned with a matter as to which Mr Stanizzo was to be entitled to keep the whole of any fees recovered, and clause B concerned only matters as to which any fees recovered were to be split on the basis set out. This summary does not do justice to Mr Young's submission.

1. I indicated to Mr Young during the course of argument that I was disinclined to decide the question of the proper construction of the deed of settlement in this respect on a summary application. That was partly because Mr Stanizzo did not have the benefit of counsel to represent him. Mr Young's submission may well be right, but I did not think that was sufficiently clear to justify a summary decision on the issue. I note that the Charmand matter is not listed in schedule A, but then clause B contains the words "including the matters listed in schedule A" (emphasis added). It may have been intended that the Charmand matter should be excluded from the operation of clause B if it was not a matter that Mr Badarne had "brought to the firm". I note that Mr Stanizzo alleges in par 9 that Mr Badarne brought the Charmand matter to the firm in about January 2007.

1. In my view Mr Stanizzo is entitled to plead, if he can, a proper cause of action arising out of the Charmand matter in relation to the operation of clause B of the deed of settlement.

1. It is now necessary to address the question of whether Mr Stanizzo has pleaded a proper cause of action against Good Legal in relation to the Charmand matter. In addition to the allegations made against Mr Badarne, Mr Stanizzo pleads in par 20 that, at all material times, Good Legal has had actual or constructive notice of the matters upon which the claim against Mr Badarne is based, and is vicariously liable for the conduct of Mr Badarne. He also pleads in par 28 that, as Mr Badarne has been an employee or agent of Good Legal since about August 2009, Good Legal is liable for the wrongful acts of Mr Badarne in that capacity.

1. It follows from the conclusion that the claim against Mr Badarne is not adequately pleaded, that it has not adequately been pleaded against Good Legal, as that firm's liability is said to be vicarious.

1. However, there are additional reasons why Mr Stanizzo's claim has not properly been pleaded against Good Legal. As a matter of law, Good Legal cannot be vicariously liable for the actions of Mr Badarne just because it has actual or constructive notice of those actions. In a claim such as the present, in my view, the pleading is defective because it does not allege any facts or circumstances that could support a finding that Good Legal had the actual or constructive notice alleged. Furthermore, I can see no basis for the claim alleged that Good Legal could be vicariously liable for the actions of its employee, Mr Badarne, if he failed to perform his obligations under the settlement agreement, which was between himself and his former employer.

1. It is in my view highly doubtful that Mr Stanizzo will be able to plead any proper cause of action against Good Legal in relation to the Charmand claim.

Mazzone claim

1. The Mazzone claim is also a claim by Mr Stanizzo that is based upon an alleged failure by Mr Badarne to comply with clause C of the deed of settlement, to ensure that Mr Stanizzo received costs due to him from a judgment in favour of the client. Mr Stanizzo alleges that the judgment was given on 6 May 2010. Originally the client was a client of Mr Stanizzo, but after the dismissal of Mr Badarne, Mr Stanizzo alleges the client terminated his retainer and the matter was continued by Good Legal.

1. The difference between this claim and the Charmand claim is that the Mazzone matter is listed in schedule A to the deed of settlement, so that it is clear that clause B applies to it.

1. Again, in par 59 of the statement of claim, Mr Stanizzo makes substantially the same bare allegation that Mr Badarne has failed to take the necessary steps to recover costs, that he made in par 27 concerning the Charmand matter. The pleading contains the same defect in that it does not plead the material facts upon which the alleged breach is based.

1. This aspect of the statement of claim should also be struck out.

1. Mr Stanizzo alleges in par 61 that Good Legal has had actual or constructive notice of the matters pleaded, and is vicariously liable for the conduct of Mr Badarne. For the same reasons as I have given above, no basis is disclosed for Good Legal having the actual or constructive notice alleged. Nor is there any basis alleged for the claim that Good Legal is vicariously liable for any failure by Mr Badarne to comply with the deed of settlement.

Claim against Mr Aouad

1. It is appropriate that I make some observations about the case pleaded in the statement of claim against Mr Aouad. As I have noted above, Mr Stanizzo conceded that it was necessary for him to replead his claim against Mr Aouad. Accordingly, I will make an order striking out the statement of claim against Mr Aouad. The present statement of claim contains the same defects, in so far as it relates to the claim against Mr Aouad, as I have identified above concerning the claims against the other active parties. However, if it be possible, the pleading is worse in relation to Mr Aouad. He is only party to the Charmand claim. The only part of the statement of claim that seeks to identify the basis of Mr Aouad's liability is par 22, which alleges that, notwithstanding the order made by the Supreme Court in favour of Mr Charmand, "all four defendants have failed to pay Stanizzo his proper costs then due to him". It could not be clearer that the statement of claim does not allege material facts capable of supporting a cause of action against Mr Aouad. It plainly does not follow from the fact that a defendant agrees to pay a sum of money to a plaintiff in settlement of the plaintiff's claim, that the defendant is liable to any previous solicitor of the plaintiff, to whom legal costs remain outstanding, if the defendant does not take steps that have the positive result of ensuring that the previous solicitor's costs are paid out of the settlement monies.

1. As I have also noted above, Mr Aouad wanted to amend his notice of motion to make it plain that he was applying for an order for summary dismissal of Mr Stanizzo's claim against him. That application miscarried because of the accidental deficiency in the way the notice of motion had been drafted, and the fact that Mr Stanizzo found it necessary to represent himself. If Mr Stanizzo repleads his claim against Mr Aouad, Mr Aouad will be entitled to renew his application for summary dismissal of Mr Stanizzo's claim. I will not permit Mr Stanizzo to file a new statement of claim unless he pleads his case strictly in accordance with the rules of pleading, and the draft amended statement of claim discloses a reasonable cause of action against Mr Aouad. Even if Mr Stanizzo is able to plead a good cause of action, Mr Aouad may still be able to prove facts that have the effect of defeating Mr Stanizzo's claim, so Mr Aouad may still be entitled to an order for the summary dismissal of the claim. I observe that the likelihood that Mr Stanizzo has a good claim against Mr Aouad is not high, and Mr Stanizzo would be well advised to ensure that, if he wishes to continue his claim against Mr Aouad, he has a sound legal and factual basis for doing so.

1. I add that it appears Mr Stanizzo may still be entitled to his costs on a party/party basis under order 2 made by the court in the Charmand proceedings, if he seeks to recover those costs from Mr Aouad in an effective way.

Communications to presiding judge's associate

1. It is appropriate that I deal in these reasons for judgment with an action taken on behalf of Mr Stanizzo that I regard as being extremely inappropriate. It involved communications being sent to my associate, effectively the day before the hearing, without the prior consent of the other parties, and in the case of Mr Bardarne and Good Legal, without them being given any notice of the communications having been made.

1. On Anzac Day, 25 April 2014 at 5:09 PM, Mr Stanizzo's solicitor sent an email to my associate, which attached a letter to my associate dated 25 April 2014, a copy of a letter of the same date to the solicitor for Mr Aouad, and a proposed amended notice of motion. In due course I marked a copy of the email and the two letters MFIs 1, 2 and 3 respectively. At the end of the hearing, counsel for Mr Aouad tendered the letters into evidence on the issue of costs.

1. I now appreciate that the email was sent, as well as to my associate, to the solicitors for Mr Aouad, to Mr Stanizzo, and to the barrister who had been briefed to appear for Mr Stanizzo on the hearing. It was not sent to the solicitor for Mr Bardarne and Good Legal.

1. Relevantly, the letter to my associate informed her that Mr Stanizzo intended to apply for an adjournment of Mr Aouad's notice of motion, so that it would be heard at the same time as Mr Stanizzo's proposed amended notice of motion. The letter contained a number of assertions relevant to the merits of the claim made in Mr Stantizzo's statement of claim, and also relevant to the issues raised by the defendants' notices of motion. It contained assertions that were disparaging of the credit of Mr Bardarne. It would be inappropriate for me to disclose the substance of the allegations in these reasons for judgment, and it is not necessary that I do so. The letter advised my associate that counsel briefed to appear for Mr Stanizzo would probably not be able to appear because he was currently in the middle of a murder trial. The letter advised that the notice of motion filed by Mr Badarne and Good Legal could remain in the list, and that Mr Stanizzo would either brief another counsel to appear for him, or appear in person.

1. The letter that was written on behalf of Mr Stanizzo to Mr Aouad's solicitors referred to the fact that Mr Stanizzo's notice of motion was listed for directions on 12 May 2014, and advised that Mr Stanizzo would make an application to amend his statement of claim to include Mr Aouad's solicitors as fifth defendants. It advised that Mr Stanizzo would seek an adjournment of Mr Aouad's notice of motion, so that the two notices of motion could be dealt with together. The letter threatened that Mr Stanizzo was considering lodging a complaint with the Legal Services Commissioner in relation to the conduct of a solicitor within the firm representing Mr Aouad.

1. The existence of these letters apparently came to the attention of the legal representatives of Mr Badarne and Good Legal fortuitously, as a result of some communication from the solicitors for Mr Aouad.

1. Counsel for Mr Badarne and Good Legal raised the question of the delivery of these communications to my associate at the beginning of the hearing of the notices of motion. After some discussion counsel informed me that Mr Badarne and Good Legal would not ask me to recuse myself by reason of the fact that my associate had received the letters.

1. Mr Badarne and Good Legal took this course after I had informed their counsel that the letters had been brought to my attention by my associate, and that I had reviewed them briefly for the purpose of working out what their significance was. I did not read them carefully, particularly when I realised that they contained material that ought not to have been put before the court at all, and a fortiori should not have been communicated to the court in the manner that occurred. In the circumstances Mr Badarne and Good Legal were entitled to proceed on the basis that I was aware of the contents of the letters.

1. I decided that it was not necessary or appropriate to recuse myself, partly because of the inconvenience and expense to which that course would put the parties; partly because I was confident that I could put the allegations made by Mr Stanizzo out of mind for the purpose of hearing strikeout and summary dismissal motions; and partly for the perhaps unusual reason that the allegations made were so extreme that no reasonable person would give credence to them without the clearest of evidence. I preserved the right of Mr Badarne and Good Legal to make a further application. In the event they did not do so.

1. It is necessary to remind Mr Stanizzo, his solicitor, and all legal practitioners to whose attention these reasons for judgment may come, that ethical rules and principles of the highest importance to the administration of justice apply to the circumstances in which parties or their representatives may communicate directly with the chambers of a judge appointed to hear any proceeding, and that the necessary procedures must be complied with punctiliously.

1. This problem has recently been considered by Kunc J in KenTugrul v Tarrants Financial Consultants Pty Ltd (in liquidation) [2013] NSWSC 1971. I refer in particular to his Honour's reference at [14] to the judgment of Redlich and Dodds-Streeton JJA in R v Fisher [2009] VSCA; (2009) 22 VR 343; at [15] to Rules A56 - A58 of the Revised Professional Conduct and Practice Rules 1995 (the Solicitors' Rules); and the equivalent rules applicable to barristers (at [16]).

1. I respectfully adopt his Honour's observations at [19] - [22] as to the approach that should be adopted in relation to communications with a judge's chambers. It is appropriate that I set out those paragraphs:

"[19] Email has done away with what might be thought to have been the last practical barriers to quick and easy communication with a judge's chambers. There are many types of communication, including by email, with a judge's chambers which can assist the parties and the court in achieving a just, cheap and quick resolution of proceedings (see s 56 of the Civil Procedure Act 2005 (NSW)). This can include the advance provision of material proposed to be relied upon in court.

[20] However, the natural and well intentioned desire on the part of legal practitioners to send a communication to a judge's chambers copied to all the parties, which, at first blush, might appear to promote the efficient conduct of proceedings must always be subordinate to the cardinal consideration that the impartiality of the judge must never be compromised (in fact or appearance) by communications sent without either the knowledge or consent of all parties. As I have said in para [17] above, sending such a communication with a disclosure of the other parties' lack of knowledge or lack of consent does not cure any impropriety.

[21] As a practical matter, and consistently with the principles and rules to which I have referred, I summarise the position as follows. There should be no communication (written or oral) with a judge's chambers in connection with any proceedings before that judge without the prior knowledge and consent of all active parties to those proceedings. Particularly in relation to written communications, given the ubiquity and speed of emails, the precise terms of any proposed communication with a judge's chambers should be provided to the other parties for their consent. There are four exceptions to this:

(1) trivial matters of practice, procedure or administration (eg the start time or location of a matter, or whether the judge is robing);

(2) ex parte matters;

(3) where the communication responds to one from the judge's chambers or is authorised by an existing order or direction (eg for the filing of material physically or electronically with a judge's associate); and

(4) exceptional circumstances.

[22] There are three other matters. First, any communication with a judge's chambers which falls into any of the categories set out in sub-paras [21] (2), (3) and (4) above should expressly bring to the addressee associate's or tipstaff's attention the reason for the communication being sent without another parties' knowledge or consent. Second, where consent has been obtained, that fact should also be referred to in the communication. Third, all written communications with a judge's chambers in relation to proceedings should always be copied to the other parties."

1. It is not necessary or appropriate that I offer my own detailed alternative observations to those made by Kunc J. However, it may be of some use for me to advert to a number of practical considerations, which underscore the need for scrupulous attention to be given to the manner in which communications are sent directly to a judge's chambers.

1. As Kunc J noted, it is a ubiquitous practice for the medium of the email to be used. That means that, in the absence of the email containing positive statements that identify the persons to whom the email has been sent, other than the judge's associate, the determination of that issue requires that the email addresses in the 'cc' and 'bcc' parts of the email heading be deciphered. That process may requires guesswork, as often email addresses are obscure as to the identity of the addressee. Further, it cannot always be assumed that the associate will have the court's file in chambers. If the file is not readily available, the associate will have difficulty working out the identities of the parties to whom a particular email must be sent, if all necessary recipients are to receive a copy. Even if the court's file is available, it can be a difficult exercise, in advance of appearances being announced for the parties at the commencement of the hearing, for the associate to work out with confidence who the relevant parties are, and who the legal representatives are.

1. If a party who contemplates sending an email communication directly to a judge's associate is not meticulous in stating in an obvious way who is entitled to receive copies of the email, and who has received those copies, it may not be possible for the associate to determine whether a proper approach has been adopted, having regard only to what appears on the face of the email.

1. Furthermore, it is not expected of a judge's associate that the associate will always be in a position to make a proper judgment as to whether or not it is appropriate for a particular communication, or attachment to a communication, to be brought to the attention of the judge. Associates have a right to the guidance of their judge. That has the result that, when communications are forwarded to an associate, there will always be a likelihood that the communication will be brought to the attention of the judge. Unless the judge adopts a procedure of refusing out of hand to receive and review all communications received in chambers from parties, which is not a practical or desirable course, there will always be a likelihood that the judge will receive and review a document that actually, or apparently, may compromise the impartiality of the judge. Judges are human and are no more able to divine the contents of documents without reading them, than are other people. The risk always is that, in an attempt to determine the significance of a document, the judge may not be able to avoid reading parts of the document that should not be read.

1. The act of a legal practitioner in communicating directly with a judge's chambers must not be viewed as some casual, post-modern opportunity to provide useful information, but is a step that must be taken with great care, lest the impartiality of the judge be carelessly compromised. Legal practitioners should discuss the proposal to communicate with the judge's chambers in advance with the representatives of all active parties. The consent to the proposal from all parties should be obtained. Copies of the communication should be sent to all concerned, at the same time as it is sent to the associate. If consent is not forthcoming, the suitability of the time-honoured approach of arranging with the associate for the matter to be re-listed should be considered. If urgency precludes that approach, any communication to the judge's chambers should explain the problem, without disclosing any information for which unanimous consent for disclosure to the judge has not been obtained, and appropriate directions sought from the judge.

1. Ultimately this is an ethical issue that depends upon legal practitioners taking the greatest of care to comply with their obligations. It is always possible that exceptional situations will arise, that will require a novel course to be adopted. That should not give rise to problems, provided that legal practitioners consider in a conscientious way how they should proceed.

1. I will make the following orders. I will not give Mr Stanizzo open leave to file an amended statement of claim in relation to those claims for which I do not make a summary dismissal order. I will give the defendants an opportunity to contest the adequacy of any draft amended statement of claim, before I make any order that gives Mr Stanizzo leave to file an amended statement of claim.

(1) Order under UCPR r 13.4 that the claims pleaded by the plaintiff against the first and second defendants, or one of them, in pars 30 to 49 and 62 to 78 of the statement of claim be summarily dismissed.

(2) Order under UCPR r 14.28 that the balance of the plaintiff's statement of claim be struck out as against the first and second defendants.

(3) Order under UCPR r 14.28 that the statement of claim be struck out as against the fourth defendant.

(4)   Direct the plaintiff, if the plaintiff wishes to apply for leave to file an amended statement of claim in relation to the claims that have not summarily been dismissed by order (1) to serve on the first, second and fourth defendants, or so many of those defendants against whom the plaintiff wishes to continue his proceedings, a draft amended statement of claim by 4 PM on 19 June 2014.

(5)   Direct each of the defendants upon whom the plaintiff serves a draft amended statement of claim to advise the plaintiff whether the defendant opposes the plaintiff being given leave to file the draft amended statement of claim, and if so the reasons for the opposition, by 4 PM on 3 July 2014.

(6)   Order the plaintiff to pay the costs of the first and second defendants in relation to the claims made in the paragraphs of the statement of claim referred to in order (1).

(7)   Order the plaintiff to pay the costs of the first, second and fourth defendants of the notices of motion filed by them including the hearing on 29 April 2014.

(8)   Order that otherwise the costs of the proceedings to date be reserved.

(9)   Stand the proceedings over for directions before Robb J on 9 July 2014 at 9:30 AM.

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Amendments

13 June 2014 - corrected paragraph numbering

Amended paragraphs: 27-81

Decision last updated: 13 June 2014