Thomas v RMB Lawyers

[2021] NSWDC 417

District Court

New South Wales

Medium Neutral Citation:

Thomas v RMB Lawyers [2021] NSWDC 417

Hearing dates:

01 June 2021

Date of orders:

01 June 2021

Decision date:

01 June 2021

Jurisdiction:

Civil

Before:

Neilson DCJ

Decision:

Proceedings dismissed.

Catchwords:

Practice and Procedure – Application by defendant to dismiss proceedings – Statement of claim discloses no arguable cause of action and seeks relief that can not be provided – Pleading is one that defendant could not plead to.

Legislation Cited:

Succession Act 2006

Uniform Civil Procedure Rules 2005

Cases Cited:

Regie Nationale Des Usines Renault SA v Zhang (2002) 210 CLR 491

Category:

Procedural rulings

Parties:

Applicant – RMB Lawyers
Respondent – Peter John Thomas

Representation:

Applicant – Grey (YPOL Lawyers)
Respondent – In person

File Number(s):

2021/00065955

Publication restriction:

Nil.

Judgment

1. HIS HONOUR: This is an application by the defendant pursuant to UCPR 13.4. That rule provides this:

“(1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:

(a) the proceedings are frivolous or vexatious, or

(b) no reasonable cause of action is disclosed, or

(c) the proceedings are an abuse of the process of the Court,

the Court may order that the proceedings be dismissed generally or in relation to that claim.

(2) The Court may receive evidence on the hearing of an application for an order under subrule (1).”

These proceedings were commenced by the plaintiff by a statement of claim filed on 4 March 2021 here at Nowra. The defendants are those trading as RMB Lawyers.

2. From the evidence before me, the following can be gleaned. The plaintiff, Mr Peter John Thomas, is the father of the late Benjamin Lyle Thomas who died tragically on 5 May 2019 at the age of 17 years. Benjamin had no spouse or de facto spouse and had no issue. He died intestate. The beneficiaries of his estate under the Succession Act 2006 are his parents, Darlene Marie Head and the plaintiff, Peter John Thomas. Ms Head is Benjamin’s mother. According to what Mr Thomas has told me today, he and Ms Head are still married but have not cohabitated for the last 18 years.

3. The Supreme Court of this State granted letters of administration of the estate of Benjamin Lyle Thomas on 25 November 2019. The inventory of property attached to the grant of letters of administration indicates that the sole asset of the estate was the deceased’s superannuation which was valued at $97,200. As at 1 July 2019, Benjamin’s superannuation account with Prime Super amounted to $2,088.72. His superannuation cover provided life insurance. That provided a benefit to his estate of $95,200. Those two sums together with investment returns, less insurance fees and administration fees were paid to the estate on 8 January 2020. The total sum remitted to the estate was $97,805.89.

4. The defendants were retained to act for the estate by initially Ms Head and then by Ms Head and the plaintiff. Sometime in May 2019, Ms Head attended upon the office of the defendant in, probably, Nowra. That led to their sending to Ms Head and the plaintiff a letter bearing date 30 May 2019 acknowledging their instructions to act for the estate of Benjamin. It was RMB Lawyers who obtained the grant of letters of administration. Notes of a meeting made on 22 August 2019 indicated that the plaintiff raised at that meeting, which was initiated to sign the application for administration of the deceased’s estate and the affidavits necessary to support that application, a problem about taxation. The note is this:

“Peter asked about the tax implications and I noted that as parents, he and Darlene are not dependants and would face the same tax liability as when they received the superannuation of their previous son. Peter was not happy with this and asked if there was any way the tax paid could be associated with his and Darlene’s own TFNs so they can claim tax deductions/offsets. I noted that I am not an accountant and couldn’t advise.

However, I said that I would investigate the matter and advise Peter if there was any way we could have the payment go [to] them individually for them to pay the tax and claim deductions etc under their own tax returns.”

That file note was made by Mr Paul Ell who was either a partner or employed solicitor in the firm.

5. The superannuation proceeds from Prime Super were sent by Prime Super to RMB, to the defendants, and were placed, it would appear, in their trust account. On 22 January 2020, the defendants retained Waldie & Co, a firm of accountants to “prepare any necessary individual taxation returns and estate taxation returns.” I presume that means any individual taxation return for the deceased and any estate income tax return. A file note made by Mr Ell on 28 January 2020 indicated that Mr Michael Waldie of Waldie & Co of Kiama had completed the tax assessment using the 2020 tax rates and advised that the assessed tax liability was $21,331.85. Mr Waldie’s fee was $330. On 28 January 2020, a distribution of part of the estate was made. $35,596.08 was paid to each of Ms Head and the plaintiff. They acknowledged receipt of those legacies on 28 January 2020.

6. A copy of the trust income tax return for the financial year ended 30 June 2020 is before me. It was signed on behalf of the estate by Ms Head on 10 February 2020. She of course was one of the administrators of the deceased’s estate and the person who had initially retained RMB Lawyers.

7. Much has been made today by the plaintiff of the fact that Ms Head was at the time distraught by the death of her child. That must be seen in the context of there being no evidence available from Ms Head as to her state of mind at that time. However, it must be pointed out that this income tax return was signed nine months after the unfortunate death of Benjamin.

8. By notice dated 17 April 2020, the Australian Taxation Office advised that the amount of tax payable by the estate was $21,331.85 which was to be paid by 23 November 2020. There was then a further distribution of the estate. This was a distribution of the residue of the estate, the final distribution. That was signed by each of Ms Head and the plaintiff on 29 April 2020 which indicates that the income tax demanded by the ATO had been paid to the ATO as had the moneys payable to Waldie & Co for preparing the income tax return. The final distribution to each of Ms Head and the plaintiff was $819.33.

9. On p 83 of exhibit AW1, part of exhibit 1-1 before me is a receipt from the ATO acknowledging payment of $21,331.85 on 23 April 2020. The plaintiff was aggrieved by the moneys paid to the ATO. He sought assistance initially from the defendants but according to him, they were dismissive of his complaints about their having paid the income tax demanded.

10. An annexure to the plaintiff’s affidavit of 19 May 2021 is a letter from Bosco Chartered Accountants of Nowra. That says this:

“Peter contacted our office 12 May 2020 regarding a 2020 tax return for the estate of Benjamin Lyle Thomas that was lodged by Waldie & Co acting on instructions from RMB Lawyers.

At the time, he assisted in lodging Benjamin’s 2019 personal tax return. We also advised Peter that as we would need to prepare for an objection/amendment to the original 2020 estate tax return, that this would take a period of time. COVID 19 was a major issue at the time and was playing havoc with our internal workflows. As such, Peter decided to contact the ATO directly regarding the 2020 estate tax return.

Peter contacted our office again August 2020 asking for us to take back over the matter but due to COVID 19 and the programs we had to help roll out in response to the pandemic, we could not guarantee timeframes for workflows.

As such, we still have not had a chance to amend/object to the original 2020 tax return lodged by Waldie & Co.”

11. The plaintiff personally pursued the question of the income tax paid by the estate by a notice issued on 11 November 2020. The plaintiff appears to have recovered $114.15 of the tax paid. By notice bearing date 16 November 2020, the plaintiff recovered $21,217.20 plus interest on an overpayment of $43.66 leading to the payment to him of $21,261.36. So, if my mathematics be correct, which is always problematic, the plaintiff has recovered from the ATO all of the tax which was initially paid to the ATO pursuant to the work done by RMB Lawyers and Waldie & Co.

12. The statement claim makes this claim for relief:

“1. Maximum allowable compensation by the District Court of NSW.

2. An audit of all work done in other deceased estates on the grounds of social and community improvement and wellbeing.

3. All costs as I have attempted mediation through the Community Justice Centre. I have also emailed a managing partner directly with no response either.”

I interpret the first claim for relief as being a claim for $750,000 in damages being the maximum jurisdictional level of this Court at the current time. Even were I to limit the second prayer for relief to an audit of all work done by the defendant in other deceased estates, then I would still have a problem in identifying the period during which such “audit” was sought. In any event, the plaintiff has no standing to initiate proceedings on behalf of estates of which he was not either an administrator or an executor. Furthermore, the limitation period must be observed.

13. The plaintiff in his affidavit said this about his second prayer for relief:

“On issue 2, the District Court has the authority to make policy. In fact, it is one of the three main functions of the Court. The public issue protection and subjugation of society through the law is a function of all courts.”

I must point out that under our system of government, the courts do not make policy. The adjective deriving from the word policy is politic and the persons who deal in policy are called politicians. Politicians function in Parliament, they do not function in the courts. The Court cannot make policy, only the Executive can do so. The Court has to administer justice according to law. It must apply the law of the land. This Court has no power to initiate an inquisitorial audit of work done by any firm of solicitors for any clients of their class. The second prayer for relief is struck out.

14. The third prayer for relief is really a claim ancillary to the first claim. It is not necessary to claim costs because costs follow the event. In any event, I would point out that on the evidence available, the plaintiff approached a Community Justice Centre which wrote to him a letter bearing the date 23 November 2020. It is this:

“We wrote to the manager of RMB Lawyers on 3 November 2020 and 13 November 2020 advising that you would like to arrange mediation. To date, we have no reply to these letters, therefore we are assuming that they do not wish to arrange mediation with you.

As mediation requires the willing participation of both parties to a dispute, we regret that we are unable to proceed further, and suggest you consider other options to resolve the matters.

Please contact our office if you feel we can be of further assistance, would like information regarding alternate conflict resolution services.”

No one can be forced to mediate. However the plaintiff communicated with Community Justice incurred merely the cost of making a telephone call or sending an email or sending a letter or perhaps a combination of those means of communication. One might understand the managing partner of a large firm of solicitors with multiple offices throughout the Illawarra not responding to a querulous letter from a dissatisfied client. The third prayer for relief is struck out because it is ancillary to the only remaining claim which is the claim for damages.

15. It is extremely difficult to work out from the statement of claim for what the damages are sought. One might think that it is the cost to the plaintiff of making his own representations to the ATO in order to claw the money back. However, that is nowhere quantified and may be incapable of quantification.

16. However, what exactly is sought is quite unclear other than some retribution by the plaintiff for what he perceives was insulting behaviour to him by the defendant, which he alleges “spat in his face” which is clearly a metaphorical statement, and otherwise dealt abruptly with him but the plaintiff is a person who himself can act abruptly and loudly and dealing with him may have been somewhat difficult for officers of the defendant.

17. What the statement of claim does not disclose is any reasonable cause of action. One can discern an action for negligence in that RMB Lawyers did not do what the plaintiff himself did and clawed back the moneys that were paid to the ATO. However, negligence is an action in case rather than in trespass and damages must flow from the negligence. Since the plaintiff has covered the income tax paid, he has not suffered any loss. The loss can only be inconvenience and again, quantifying it is extremely difficult. However, the statement of claim is a discursive document containing 37 paragraphs, which recite things and make allegations which are inconsistent. For example, par 5 is this:

“The negligent act relates in entirety to the manner of disbursements and remittance of tax to a party not legally entitled in law to any of the assets of the deceased’s estate.”

This appears to be a reference to sending the tax demanded by the ATO to the ATO. But any estate must obey Federal law as well as State law and the Federal law can override State law. In any event, the estate of a deceased person must pay all debts of the estate which include income tax payable by the deceased or by his estate, that is, for income derived after the deceased’s death by the estate itself.

18. The vice in par 5 can be seen in par 8 which says this:

“Secondly, the whole of the intestate estate has not been distributed in accordance with section 128 of the Succession Act NSW 2006.”

The plaintiff appears not to realise that the estate must pay any lawfully recoverable income tax to the Commonwealth.

19. I have carefully considered the matter and I cannot discern any cause of action that can be pleaded to in this document. Another example is this. Paragraph 21 of the statement of claim is this:

“By not affording me procedural fairness, French CJ’s dictum of the High Court of Australia was breached. Calling me a liar, kicking me out of their offices in Nowra can hardly be defined as a dignified approach to an administrative decision especially when that administrative decision disadvantages a legally entitled beneficiary.”

I do not know whether someone at RMB called him a “liar” but that may be a term that he inferred from what was said to him. I doubt it extremely that he was actually “kicked out of their offices at Nowra”, that is, that force was applied to his person which would be trespass and an assault actionable in this Court as an assault and also something that would ground a complaint to the Police who could charge the person who assaulted him with assault. However, it probably is merely a reference to being asked to leave the offices of the defendant at Nowra. This was not any form of “administrative decision”. Administrative decisions are made by government bodies and by bodies which are not vested with judicial power, for example, at administrative review tribunals and the like.

20. As I said, the statement of claim that is pleaded is incapable of being pleaded to. It does not comply with the rules of Court but also it is now impossible to find any arguable cause of action considering that the plaintiff has recovered the income tax paid by the estate by Waldie & Co and RMB Lawyers.

21. In any event, as been pointed out by the defendant, the defendant was not responsible for preparing and lodging the relevant income tax return with the ATO. The plaintiff appears to believe that Waldie & Co, a firm of accountants, were merely employees of RMB Lawyers but that misrepresents the association between two professional organisations. RMB Lawyers retained Waldie & Co to prepare income tax returns on behalf of the estate. They did not “employ” Waldie & Co under any contract of service.

22. Furthermore, it is quite arguable that the whole of the proceedings are vexatious. Normally I apply the ancient maxim nemo debet bis vexari pro eadem causa when considering whether proceedings are vexatious, that is, whether it is a second action for the same reason. However, in Regie Nationale Des Usines Renault SA v Zhang (2002) 210 CLR 491 at [25], the plurality referred to vexatious proceedings as being proceedings that are productive of serious and unjustified trouble or harassment.

23. The current proceedings appear with the utmost respect to Mr Thomas to be merely a way of seeking to punish and therefore to harass the defendant for what he perceives to be their discourtesy to him and what he perceives to be their negligence.

24. For those reasons, the proceedings are dismissed. I order the plaintiff to pay the defendant’s costs.

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Decision last updated: 19 August 2021