Siemer v Official Assignee

[2013] NZHC 513

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-1709 [2013] NZHC 513

BETWEEN  V R SIEMER Plaintiff

ANDOFFICIAL ASSIGNEE First Defendant

ANDK FARDELL Second Defendant

Hearing:         18 February 2013

Counsel:         Plaintiff in person

D Salmon and I Hikaka for First Defendant
Appearance of Second Defendant excused

Judgment:      18 March 2013

JUDGMENT OF BREWER J

This judgment was delivered by me on 18 March 2013 at 4:00 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

SOLICITORS

Lee Salmon Long (Auckland) for First Defendant Gilbert Walker (Auckland) for Second Defendant (Copy to Plaintiff in person)

SIEMER V OFFICIAL ASSIGNEE & ANOR HC AK CIV-2010-404-1709 [18 March 2013]

Introduction

[1]      The plaintiff seeks judicial review of a decision of the first defendant not to assign to the plaintiff the right to pursue the proceeding  VR  & JC Siemer and Paragon Services Ltd (struck off) v Fardell (the Proceeding).1

[2]      The plaintiff’s claim is set out in a second amended statement of claim dated

17 December 2012.   At a hearing on 18 February 2013, I granted the plaintiff’s

application to add, as a ground of review, the following:2

Unreasonableness

The first defendant’s refusal to assign was unreasonable in the Wednesbury

sense.

Background

[3]      The plaintiff was adjudicated bankrupt in November 2008.  At that time he was a plaintiff in the Proceeding.  He is now the only plaintiff in the Proceeding.3

[4]      The claims in the Proceeding are set out in a third amended statement of claim dated 12 February 2007.  The defendant is named as Robert Fardell, a lawyer who gave advice to the plaintiff.  Mr Fardell died in 2005 so the second defendant as executrix of Mr Fardell’s estate was substituted as the defendant.

[5]      The plaintiff’s claim against Mr Fardell’s estate relates to advice given to him in his capacity as the managing director of Paragon Services Ltd.  The context as pleaded was action taken by another director of Paragon (appointed by a company holding 55% of the shares in Paragon) which were considered by the plaintiff to be hostile to the interests of Paragon and to the interests of himself and JC Siemer as

shareholders in Paragon.

1      HC Auckland CIV-2003-404-005782.

2      Siemer v Official Assignee HC Auckland CIV-2010-404-1709, 18 February 2013.

3      Paragon Services Ltd was struck off the Companies Register on 22 June 2009. An order striking

out JC Siemer’s claim was sealed on 9 August 2010.

[6]      The plaintiff pleads in the Proceeding that in reliance on Mr Fardell’s advice he and JC Siemer instructed Mr Fardell to issue proceedings and obtain an order appointing Michael Stiassny as the receiver of Paragon.4    The plaintiff then pleads that this advice was negligent in a number of respects.  The judgment sum sought is

$969,021.10 plus interest.

[7]      The third amended statement of claim contains a further cause of action.  It is that Mr Fardell owed the plaintiff a fiduciary duty which was breached.  The nub of the  pleading  is  conflict  of  interest  arising  from  Mr Fardell’s  professional  and personal relationship with Mr Stiassny.

[8]     Once the plaintiff was adjudicated bankrupt, the first defendant became responsible for his estate. As a result, the first defendant had to decide:

(a)       Whether the Proceeding vested in the first defendant;

(b)      If it did, whether the first defendant should continue the Proceeding in

the plaintiff’s name pursuant to s 42 of the Insolvency Act 1967; and

(c)       If the decision was not to continue the Proceeding, whether the first defendant should assign it to the plaintiff.

[9]      On 25 August 2009, the first defendant decided:

(a)       That the Proceeding did vest in the first defendant; and

(b)      The  first  defendant  would  not  continue  the  Proceeding  in  the

plaintiff’s name; and

(c)       The first defendant would not assign the Proceeding to the plaintiff. [10]      It is this last decision to which the plaintiff objects.  He seeks:

4      Third amended statement of claim, at para 26.

(a)       An order by the Court to set aside the first defendant’s refusal to assign, replaced with an order assign the claim against the second defendant to the plaintiff due to the first defendant’s demonstrated bad faith.

(b)       Alternatively,  a  finding  by  the  Court  that  the  first  defendant’s mistakes of fact were elementary to the decision not to assign sufficient to order assignment of the claim against the second defendant to the plaintiff.

(c)       Alternatively, a direction the first defendant make a determination on assignment of the claim to the plaintiff based upon relevant factors identified by this court among the factors previously relied upon by the first defendant in its decision.

[11]     The plaintiff’s grounds of review are error in law, breach of natural justice, failure to properly take into account relevant considerations, taking into account irrelevant considerations, procedural impropriety, mistake of fact, bad faith and, now, Wednesbury unreasonableness.

The nature of judicial review

[12]     The plaintiff has chosen to seek judicial review as his pathway to a remedy for the first defendant’s decision not to assign the Proceeding.  From a conceptual point of view, this is significant.   The point is made succinctly by  French J  in Aorangi School Board of Trustees v Ministry of Education:5

[C]ontrary to popular belief, judicial review is not an appeal.  It is not about the Court considering the information afresh and coming to its own views. Judicial review is primarily limited to an examination of the process, and if successful  usually  results  in  the  decision-maker  being  required  to  start afresh, as opposed to quashing the decision for all time.

[13]     The  Insolvency  Act  1967  (the  Act)  provides  a  more  direct  route  for challenging the decision:6

Appeal from decision of Assignee

If the bankrupt or any creditor or any other person is aggrieved by an act or decision of the Assignee, he may, within 21 days from the date of that act or decision or within such further period as the Court allows, apply to the Court, and the Court may confirm, reverse, or modify the act or decision complained of, and make such order as it thinks fit.

5      Aorangi School Board of Trustees v Ministry of Education [2010] NZAR 132 (HC), at [8].

6      Insolvency Act 1967, s 86.

[14]     This provision requires  a Judge to consider the merits of the Assignee’s decision on a de novo basis.  The focus of the assessment is on the reasonableness of the decision under all the circumstances.7     When examining reasonableness, the Judge must take into account the Assignee’s functions in administering the estate.

[15]     In  this  case,  however,  I  do  not  look  de  novo  at  the  merits  of  the  first defendant’s decision.  My task is to consider the appropriateness of the process he adopted.  That is not to say that I will ignore the merits.  The plaintiff concentrated his written and oral submissions on the unreasonableness of the first defendant’s decision.  But that is unreasonableness in the Wednesbury context.8   It is not what the Court might consider unreasonable in the circumstances; instead the examination is whether it can be shown that the decision was one that no reasonable person exercising the statutory powers of the first defendant could have come to.

The plaintiff ’s submissions

[16]     The plaintiff attacks the decision of the first defendant not to assign to him the  Proceeding  by taking  issue  with  the  reasons  for  the  decision.    These  were provided to the plaintiff by letter dated 4 March 2010 as follows:9

25.In coming to the decision not to assign the proceeding back to you, the Official Assignee primarily had regard to the weakness of the claim, which was discussed above.

26.There is also another factor that was taken into account. As you will be aware, the Courts have made clear that it would be improper for the Official Assignee to allow the assignment of claims that are vexatious and frivolous.  It is not his role to ‘traffic’ (as the Courts put it) in such litigation: Callis v Pardington (1996) BCSLR 211; 7

NZCLC 261, 21 (CA); Edmonds Judd v Hobbs [2000] 2 NZLR 135 (CA). As such the Official Assignee is operating under judicial constraints in respect of his discretion.

27.While the Official Assignee has tried to put out of his mind your attacks  on  the  judiciary  and  legal  system  in  general,  there  is  a concern that the proceeding (which, as stated, is weak with no real prospect of success) will be used by you as a platform to further your apparent antagonism to the judiciary and legal system.

7      I  respectfully  concur  with  Clifford  J  in  his  reconciliation  in  Rao  v  Official  Assignee

HC Wellington CIV-2006-485-004, 17 October 2007 of the Court of Appeal judgments.

8      Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223.

9      Email letter to the plaintiff from Chris Viljoen for Official Assignee dated 4 March 2010.

28.In  that  regard,  your  conduct  has  been  the  subject  of  significant adverse judicial comment.   In our experience, Judges are usually reluctant to comment adversely on the manner in which parties have conducted themselves.   You have, however, been the subject of repeated  and  regular  criticism.    You  have  also  been  found  in contempt  of  Court,  and  imprisoned  for  that  offence,  which  is  a serious matter which cannot be ignored.

29.You  also  suggested  during  our  meeting  that  one  of  the  Judges (Justice  Hammond)  will  be  called  as  a  witness.    The  Official Assignee fails to see what relevant evidence he might be called to give, even if it were permissible to call him.   This, with respect, simply supports the view that you are unlikely to conduct any claim without engaging in further frivolous acts and processes.

30.The Official Assignee also took into account that you are not the only plaintiff to the action and that the decision did not put an end to the proceeding in any event.

31.For those reasons, and consistent with the Official Assignee’s role as an officer of the Court, it was decided not to assign the proceeding back to you.

(Footnotes omitted)

[17]     The plaintiff submits (in summary):

(a)      The claim is not weak.   It survived a strike-out application.   The defendant in the Proceeding twice offered to settle it for $175,000. The first defendant should not have taken at face value the advice from the lawyers for the second defendant that no further settlement offer would be made.

(b)The first defendant should not have considered the plaintiff’s record in the litigation referred to in the letter.  That is “irrelevant character assassination”.10

(c)      The first defendant’s decision, having regard to all the circumstances, was unreasonable.

[18]     Although  the  plaintiff  did  not  address  each  of  his  grounds  of  review individually, his submissions could be said to amount to overlapping averments that they are made out and, taken overall, demonstrate Wednesbury unreasonableness.

The first defendant’s submissions

[19]     Mr Salmon emphasises the role of the first defendant as Official Assignee to ensure  that  litigation  commenced  by  a  person  subsequently  made  bankrupt  is pursued only if it is proper to do so.   Whether it is proper will depend upon an evaluation of the merits of the claim and the manner in which it is likely to be

advanced:11

In summary, the Official Assignee has an important role to ensure that if, on a reasonable assessment with the benefit of advice, a cause of action which forms part of a bankrupt’s estate is weak or unsupportable, or might be exploited for ulterior purposes, it is not simply handed back to bankrupts on a promise that proceeds (if any) will revert to the estate.   The Official Assignee cannot “traffic” in litigation in this way and indeed will be legitimately criticised by a Court if it does.

[20]     Mr Salmon submits that the process adopted by the first defendant was a proper one.   On the core complaint of the plaintiff that the first defendant should have concluded that the Proceeding had merit, Mr Salmon replies in the context of the second amended statement of claim as follows:

(a)      Alleged error of law:  The merit or otherwise of the Proceeding is not a question of law.   It is a question for the consideration of the first defendant.   His obligation was to carry out that consideration in a proper manner when exercising his discretion under the Act.  The fact that the plaintiff has, on 12 November 2012, provided a barrister’s opinion  to  the  effect  that  there  is  merit  in  the  Proceeding  is  not relevant to this case.  The first defendant’s decision was made more than three years prior.

(b)Alleged breach of natural justice:  The plaintiff’s pleadings attempt to challenge the substantive merits of the first defendant’s decision. That does not go to natural justice.

(c)      Alleged failure to take into account relevant considerations:  The plaintiff’s pleadings go to the substance of the decision of the first defendant, not to the process adopted by the first defendant.  In any event, the factual matters pleaded by the plaintiff were taken into account by the first defendant in the process he adopted.

(d)Alleged   taking  into   account   of  irrelevant   considerations:     No irrelevant matters were taken into account in the process adopted by the first defendant.

(e)      Alleged procedural impropriety:  On this ground of claim, Mr Salmon submits:

37.The [plaintiff] seems to allege that because one of the creditors in the [plaintiff’s] bankrupt estate is a trustee of a family trust linked to the estate being sued in the Proceeding, there is a real possibility of bias on the part of the [first defendant].

38.It is difficult to understand exactly what this claim is meant to mean.  However, it is submitted that it can not succeed in any event.

39.The claim relating to bias is not directed against the individual decision-maker (Mr Viljoen) but rather against the office of the Official Assignee itself. Parliament  has  given  the  Official  Assignee  the power to make decisions such as the Decision – it is not a power from which the Official Assignee as an office could step away from because of alleged bias. Certainly, an individual decision-making officer could be biased and so should not make a decision (for example, if the decision-making officer was the defendant in a proceeding) but the office of the Official Assignee cannot be so biased.

(f)      Alleged mistake of fact:  The matters pleaded in the second amended statement of claim are not properly facts but are the plaintiff’s view as to the matters of merit in the Proceeding.

(g)      Allegation of bad faith: There is nothing to support this claim.

[21]     On the plaintiff’s second main concern, that the first defendant wrongly took into  account  “irrelevant  character  assassination”,  Mr Salmon  submits  that  the conduct of the plaintiff was a relevant factor having regard to the obligation of the first defendant not to traffic in vexatious or frivolous litigation and to his obligations to the Court as an officer of the Court.

[22]     As  to  the  new  pleading  of  Wednesbury  unreasonableness,  Mr Salmon’s submission is that the threshold is very high and that here the decision of the first defendant, taken after due consideration and in conformity with professional advice, gets nowhere near that threshold.

Discussion

[23]     Since judicial review is about process, I will first identify the process adopted by the first defendant and discuss relevant legal principles.  I will then consider the plaintiff’s pleaded grounds of review against the process and the principles.  I will conclude with an examination of the Wednesbury unreasonableness claim.

The process

[24]     The process  adopted by the first  defendant  is set  out  in the affidavit  of Christoffel Johannes Viljoen sworn on 20 December 2010.12   Mr Viljoen is a Deputy Assignee.  He was put in charge of the plaintiff’s file shortly after his bankruptcy. At the outset of his bankruptcy, the plaintiff advised the first defendant that he was

involved  in  five  active  Court  cases.    He  gave  details  of  these  Court  cases  to

12     Bundle of key documents for hearing dated 12 February 2013, tab 8.

Mr Viljoen in a written document provided in the course of a meeting between the two on 14 November 2008.13

[25]     The first defendant took the view that for each of the five cases he must decide  to  either  continue  the  proceeding,  permit  the  plaintiff  to  pursue  the proceeding in his own name, or discontinue the proceeding.

[26]     The steps the first defendant took to decide these issues for the Proceeding are detailed by Mr Viljoen as follows:

17.In this instance, whilst the decision to proceed with litigation and/or assign back litigation is a discretionary one, as provided by s 84(3) of the 1967 Act, Ms Seaman and I were (and therefore the Assignee was) at all times aware of the importance of considering a range of factors.  In this instance, following the receipt of detailed guidance and advice from Simpson Grierson, the Assignee was particularly conscious of:

(a)       The need to  evaluate  both  the strength  of the  claim and likely result.   Ultimately, the Assignee was aware that it needed to make an informed evaluation as to the merits and likely  result  of  a  proceeding  with  a  view  to  assessing whether continuing the bankrupt’s proceeding is in the best interests of the estate and creditors.

(b)       The need to also consider the public interest.  The Assignee was aware that the Courts have recognised it as a creature of statute, and therefore, a guardian of public interest.   In particular, the courts have recognised that the Assignee must not permit nor encourage a bankrupt to pursue vexatious or frivolous claims.

18.In this instance, the Assignee took the following steps in relation to its decision-making on the Fardell Proceedings:

(a)       There was an initial face-to-face meeting with Mr Siemer where he had the opportunity to outline his position on the claims that were afoot, to include the Fardell Proceedings. This is the meeting of 14 November 2008, which I referred to above.

(b)       Mr Siemer was asked to provide all documents that he held that were relevant to the claims he had disclosed to the Assignee, to include the Fardell proceedings.

(c)       The  Assignee  asked  Simpson  Grierson  to  review  this material and provide their advice on the merits and likely result of the claim. Advice was also sought in relation to the

13     Ibid, Annex A to Mr Viljoen’s affidavit dated 20 December 2010.

exercise of the Assignee’s discretion.   I am told that that advice is privileged and need not be disclosed.  Suffice it to say that expert legal advice was sought and obtained.

(d)       There was a further interview with Mr Siemer.   This took place on 7 May 2009.   I attended that meeting along with Two representatives from Simpson Grierson.

(e)       The Assignee made inquiry, through Simpson Grierson, in respect of a key fact that Mr Siemer insisted was a clear indicator on the strength of his case; that is, a prior without prejudice   settlement   offer   that   he   had   received   from Mr Fardell.    This  was  mentioned  in  his  case  summary (exhibit “A”).  I will come to this in more detail later.

[27]     In a second affidavit sworn on 11 November 2011,14  Mr Viljoen exhibited a transcript of the meeting of 7 May 2009 and a copy of subsequent legal advice from Simpson Grierson. The former shows a careful review with the plaintiff of the issues in the Proceeding. The latter, dated 19 August 2009, begins:

You have asked us to review the proceeding commenced by Mr Siemer against Mr Fardell in the High Court at Auckland (Siemer v Fardell : CIV-

2003-404-5782).  In particular, you have asked:

(a)       whether the proceeding vests in the Official Assignee (OA);

(b)      If so, whether the OA should continue proceeding in Mr Siemer’s

name pursuant to s 42 of the Insolvency Act 1967 (Act); and

(c)       If not, whether the OA should assign the proceeding to Mr Siemer, or decide that the proceeding should not be pursued by either the OA or Mr Siemer personally.

[28]     Simpson Grierson’s opinion occupied 17 pages.  In summary, the advice on the first two issues was:

(a)       That the Proceeding vests in the first defendant; and

(b)That the first defendant should not continue with the Proceeding on behalf of Mr Siemer.

[29]     Given the issues I have to determine, I do not need to examine the reasons for the advice that the first defendant not continue with the Proceeding – but I note that

the focus was on the merits.

14     Ibid, tab 10.

[30]     Simpson Grierson did not address the third issue (whether the Proceeding should be assigned to the plaintiff) in its summary of advice.  However, under the heading “Should  the OA assign  the claim  to  the bankrupt?”,  Simpson Grierson reviewed the law on the obligations of the first defendant as an officer of the Court dealing with a vexatious or frivolous claim by a bankrupt.15     Simpson Grierson examined the law with reference to the history of the Proceeding.  It concluded its advice as follows:

We  have  already set  out the  inherent  difficulties  with the  claim against Mr Fardell’s estate and the inadequate way in which it has been prepared and prosecuted by Mr Siemer to date.   For these reasons the OA might not consider it is appropriate to assign the claim back to Mr Siemer.

[31]     The first defendant’s reasons for not assigning the Proceeding, given to the plaintiff in its letter of 4 March 2012, are based clearly on the Simpson Grierson advice.

Principles

[32]     The obligations of the first defendant must be seen in the context of the powers and duties conferred on him by the Act.  Relevantly:

Thefirst defendant is an officer of the Court.16    This means that he must perform his functions consistent with his duty to uphold the due processes of

the Court in the administration of justice.

The proceeding vested in the first defendant upon the bankruptcy of the

plaintiff.  It was in the first defendant’s discretion to continue it or not.17

The first defendant must use his own discretion in the management of the

plaintiff’s estate, subject to the provisions of the Act.18

15     Ibid, pp475-477 paras 53-58.

16     Insolvency Act 1967, s 15(3).

17     Ibid, ss 42 and 71(b).

18     Ibid, s 84(3).

[33]     In Callis v Pardington19 the Court of Appeal, on an appeal under s 86 of the Act, had to consider whether the Official Assignee had acted unreasonably in assigning to the appellant various rights of action relating to a commercial situation from which the appellant had emerged bankrupt.  In the High Court, Barker J had found that the Official Assignee’s decision, made without any consultation with the receivers, his own records or his own solicitor, was one which must be considered unreasonable in the circumstances. The Court of Appeal agreed:20

We accept that there will be cases where the Official Assignee may properly decide that he should not pursue a disputed claim because the likely cost is disproportionate to the possibility of benefit to creditors.  In such a case, it may be proper for the Official Assignee to assign the cause of action to a party willing to take the risk at that party’s own expense while undertaking to account for part of the proceeds if successful.   We do not see how the Official Assignee can properly make such decisions without first evaluating both the strength of the claim and its likely result.  That evaluation must be undertaken with such advice as the Official Assignee requires, and incurring such expense as the Official Assignee feels justified.  The Court is not going to reverse the decision merely because it disagrees with it.  A decision made without any attempt at evaluation and without advice, however, is likely to be unreasonable.  We think counsel was right to exclude the assignment of frivolous and vexatious causes of action, even where there is no cost to the Assignee or the estate, and where there is a theoretical possibility of ultimate gain.  Frivolous and vexatious proceedings are an abuse of the process of the Court, and it is no part of the proper carrying out of an Assignee’s or liquidator’s functions, as officers of the Court, to traffic in such proceedings.

[34]     A later decision of the Court of Appeal, also on a s 86 appeal by a party aggrieved by a decision of the Official Assignee to grant a bankrupt’s request to pursue a claim, considered the obligations of the Official Assignee when faced with such a request.21   The facts in this case led to the inference that the Official Assignee, under circumstances of urgency, had simply disclaimed his interest in the proceeding without further analysis.   Two of the criticisms of this procedure by the Court of Appeal were:22

[35]      There was no attempt to evaluate the merits of the cause of action and so to consider whether the institution of proceedings would be frivolous and vexatious and, if not, whether the Official Assignee should offer to assign the cause of action in return for a stipulated sum or a share of the proceeds.

19     Callis v Pardington (1996) 7 NZCLC 261,211 (CA).

20     Ibid, at p261,216.

21     Edmonds Judd v Official Assignee [2000] 2 NZLR 135.

22     Ibid.

...

[38]      Second,  as  emphasised  in  Callis,  it  is  no  part  of  the Assignee's function to traffic in frivolous and vexatious proceedings.   In that regard trafficking must include any act of the Official Assignee which allows the former bankrupt to bring particular proceedings of that kind.

[35]     It follows from those cases that if a person, now bankrupt, wishes to continue a proceeding then the law requires the Official Assignee to investigate the merits of the proceeding to a reasonable extent.  He can then make an informed decision as to whether he should continue the proceeding.  If his decision is that he will not do so, he must decide whether to assign it to the bankrupt.  This last decision should be primarily a commercial one.   If there is a reasonable possibility that such an assignment might generate a return for the estate, that would be a strong reason to make the assignment.    But  other factors  can  come into  play.   A bankruptcy is intended to draw a line across the obligations of both the bankrupt and his creditors. There is an expectation of finality.  If, as with the Edmonds Judd case, the target of a proposed proceeding is someone who would be precluded from claiming a set-off or making a counterclaim because of the bankruptcy, that would be a factor to take into account.

[36]     If the Official Assignee were to conclude that a proceeding is frivolous or vexatious then that should be determinative.  A frivolous proceeding is one which lacks “the seriousness required of matters for the Court’s determination”.23   It is not a proper use of the Court’s process.  A vexatious proceeding is one which has a real element of impropriety.   That element can come from the motive for bringing the proceeding.   For example, revenge or to harass.   It can be associated with the

procedure adopted.  An example would be bringing an ostensibly independent claim when the issues had in substance been determined between the parties in an earlier proceeding.

[37]     As an officer of the Court, the Official Assignee cannot permit to proceed a claim which he has concluded is frivolous or vexatious even if he were to apprehend that to do so might result in a commercial return for the bankrupt’s estate.   For

example, if it were thought that the other party might negotiate a settlement to

23     Deliu v Hong [2011] NZAR 681 (HC) at [22].

mitigate litigation risk or legal costs.  This would be an abuse of the process of the

Court.

The pleaded grounds of review

[38]     Against this background, I turn to the second amended statement of claim.

Error of law

[39]     The first ground of review is that the first defendant’s decision is based upon errors of law.24  The first error was in deciding that the claim lacked merit and had no reasonable chance of success.  The pleading is that the error is demonstrated by an earlier refusal of the Court to dismiss the claim and the opinion of the plaintiff’s lawyer of November 2012 that there is merit in the claim.

[40]     The  first  defendant’s  view  of  the  merits  of  the  Proceeding  was  reached through the process described above.  A strike-out application has a high threshold for success and is not at all the same decision as the one the first defendant had to make.25   Whether or not another lawyer would agree or disagree with the assessment of the Official Assignee is beside the point.  It is irrelevant that in November 2012 the plaintiff obtained an opinion which is contrary to the Simpson Grierson advice

acted on by the first defendant in 2009.  Here, the first defendant complied with his obligation at law to take reasonable steps to examine the merits of the proceeding.  It is not my task to decide whether or not I agree with his conclusions.

[41]     In any event, I agree with Mr Salmon that the merit or otherwise of the

Proceeding is not a question of law.

[42]     The other error of law pleaded is the first defendant’s decision that there were

judicial constraints in respect of his discretion on grounds the claim was vexatious

24     Second amended statement of claim, paras 38.0 – 40.0.

25     At  para  19  of  the  statement of  defence to  the  second  amended statement of  claim  dated

23 January 2013 the first defendant pleads that the second defendant made an application to strike out the proceedings on 27 January 2004 but did not pursue it.

and frivolous.   The claim cannot be vexatious and frivolous because it survived a strike-out application and because there is legal opinion that the claim has merit.

[43] I do not accept this pleading. The first defendant did not find that the claim was vexatious and frivolous. If that were his decision, then the facts that a strike-out application had not been pursued and contrary legal opinion on the merits was obtained subsequently would not undermine it. Any attack on the decision would have to focus on the reasons why it was decided that the claim was frivolous or vexatious in the senses discussed above at [36].

[44]     However, what the first  defendant did do was  decide that, in effect,  the plaintiff is a vexatious litigant.  At para 26 of his letter to the plaintiff dated 4 March

2010, the first defendant correctly made the point that it would be improper for the first defendant to allow the assignment of claims that are vexatious and frivolous. But he then went on to describe not the claim but the plaintiff.   At para 27 he expressed the concern that the proceeding “will be used by you as a platform to further  your apparent antagonism to the judiciary and legal system”.   This was elaborated on in para 28, in which reference was made to the plaintiff having been “the subject of significant adverse judicial comment”, that he had “been the subject of repeated and regular criticism”, and that he had been imprisoned for contempt of Court.

[45]     At  para  29  of  the  letter  the  first  defendant  referred  to  the  plaintiff’s suggestion that a Judge of this Court would be called as a witness in the Proceeding. Tellingly, he then said:

This, with respect, simply supports the view that you are unlikely to conduct any claim without engaging in further frivolous acts and processes.

[46]     In my view, there is a distinction between a proceeding being frivolous or vexatious and the record of conduct of the person seeking to bring it.  As an officer of  the  Court,  the  first  defendant  has  an  obligation  not  to  allow  a  plainly unmeritorious case to proceed, and certainly not a case which is frivolous or vexatious.  However, it is not part of the first defendant’s role as an officer of the Court to shield the Court from the attentions of an unreasonable litigant by denying

him the chance to advance a case.  Here, the first defendant confused the case with the plaintiff.

[47]     I agree with Mr Salmon’s summary of the role of the Official Assignee.26   If it is a reasonable assessment that a cause of action “might be exploited for ulterior purposes”, and those purposes are improper, then that might well found a conclusion that the case is vexatious.  But in this case there is no evidence of ulterior purposes. The first defendant made his decision not to assign the proceeding to the plaintiff for two reasons: the case lacks merit and the plaintiff would likely conduct it in a manner which would continue to accrue judicial criticism.27   The first reason was in accordance with his legal duty, the second was not.

[48]     In my view, this confusion of case with advocate amounted to an error of law.

Natural justice

[49]     The next ground of review is that the first defendant’s actions were a breach of natural justice.28   The pleading is that natural justice required the first defendant to permit the plaintiff to pursue the claim.   This pleading cannot succeed.   I accept Mr Salmon’s submission that in a case such as this any natural justice obligations on the first defendant were in respect to the making of his decision.  There is no right of natural  justice,  per  se,  that  would  require  the  Official  Assignee  to  assign  a proceeding even if the proceeding were to be seen as having some merit.  Any rights of natural justice lie in the process which the first defendant undertook in reaching

his decision.   In this case, the evidence is that the first defendant consulted the plaintiff on more than one occasion, took legal advice on more than one occasion, directed himself to the criteria which he had to consider and made a decision.  There

was no denial of natural justice.

26 Quoted at [19] above.

27 This is consistent with the advice from Simpson Grierson quoted at [30] above.

28     Second amended statement of claim, paras 41.0 – 40.0 (sic).

Relevant considerations

[50]     The third ground of review is that the first defendant failed to properly take into account relevant considerations in making his decision.29    The considerations pleaded are set out in paras 42.1 – 42.7 of the second amended statement of claim. Setting  aside  the  reference  to  the  legal  opinion  obtained  by  the  plaintiff  dated

12 November 2012,30  I accept Mr Salmon’s submissions that there is no evidence

that the matters were not taken into account:31

The procedural history and claims made by Mr Siemer were taken into account in making the decision.   Some aspects (such as the erasure of documents and the [plaintiff’s] alleged control of the Paragon Board) were explicitly pleaded in the proceeding, others (such as the issue of the retainer) were specifically discussed at the meeting between the [plaintiff], Mr Viljoen and Simpson Grierson and others (such as the offers) were expressly referred to in the reasons given for the decision and Simpson Grierson’s advice to the first [defendant] in making the decision...

The  settlement  offers  were  expressly  considered  and  referred  to  in  the reasons given for the decision; and Simpson Grierson’s advice to the first [defendant] in making the decision.

Irrelevant considerations

[51]     The next ground of review is that the first defendant based his refusal to assign or disclaim on irrelevant considerations.32    This pleading is concerned with the second of the reasons which I have discussed under the heading of error of law. In my view, it was not irrelevant for the first defendant to consider the plaintiff’s conduct of the proceeding prior to his bankruptcy, nor to consider his conduct as a litigant generally.  Those matters could be relevant to whether the proceeding itself was frivolous or vexatious.   They could also be relevant to an assessment of the likelihood of the Proceeding being pursued successfully.  The error I have identified

is that the first defendant conflated the nature of the case and the nature of the

plaintiff.

29     Ibid, para 42.0.

30     It is not relevant because it post-dates the decision.

31     Submissions for the first respondent dated 15 February 2013, at para 33.

32     Second amended statement of claim, para 43.0 – 52.0.

[52]     For the sake of completeness, I note that at para 49 it is pleaded that the first defendant was factually incorrect to take into account the fact that the plaintiff was not the only plaintiff to the action and that the decision not to assign did not put an end to the proceeding.  However, that was the situation at the time the decision was made.

Bias

[53]     At para 54.0 of the second amended statement of claim, the plaintiff pleads procedural impropriety based on bias.   I accept the submission of Mr Salmon that this pleading is misconceived.  There can be no real possibility of bias in the office of the first defendant as Official Assignee.

Mistake

[54]     The next ground of review pleaded is mistake of fact.33   This pleading attacks the decision of the first defendant on the merits rather than on the process which he followed.   It does not add anything to the case as already discussed and it cannot succeed as a standalone claim.

Bad faith

[55]     The penultimate ground of review is that the first defendant and his counsel acted in bad faith.  The plaintiff had sought to cross-examine Mr Viljoen in order to establish the particulars of bad faith set out in the pleading.  Permission was refused by Toogood J in his judgment of 8 February 2013.

[56]     Having read the affidavits filed in this case, I can see nothing that would support a finding of bad faith.  I can see nothing that would give credence to any of

the particulars pleaded.

33     Ibid, paras 55.0 – 58.0.

Unreasonableness

[57]     Finally, I have to consider the ground of Wednesbury unreasonableness.

[58]     In the plaintiff’s written submissions and in his oral submissions, he focused almost entirely on this claim.  However, he was unable to cross the high threshold for Wednesbury unreasonableness.

[59]     The plaintiff iterated and reiterated the merits of the Proceeding as he sees them.  However, in a judicial review application it is not for me to decide whether or not the first defendant should have come to a different view about assigning the case to the plaintiff.   I would be justified in intervening only if I were to find that no reasonable person exercising the statutory powers and duties of the first defendant as Official Assignee could reasonably have reached the decision that he did.   On the process adopted by the first defendant, I cannot conclude that he came to a decision which no reasonable person in his position could reasonably have reached.

[60]     In the round, where a person has suffered loss in a legal dispute having acted on the advice of counsel, it is possible that an action might lie for negligence.  It is possible where there is a demonstrated relationship between the legal advisor and another interested party that a claim for breach of fiduciary duty might succeed.  It is possible that an offer of settlement once withdrawn might be made again under the pressure of litigation notwithstanding current denials of such an event.  It is possible, where quantum claimed is said not to have sufficient underpinning, that such underpinning might be found. All of these are possibilities.  But in a situation where the first defendant appreciated his responsibilities, afforded the plaintiff full opportunity to express his views on the merits, took considered legal advice and then acted on it, there is no room for Wednesbury unreasonableness.

Decision

[61]     I find that in making his decision not to assign the Proceeding to the plaintiff the first defendant made an error of law.  The error was the significance he attached to the plaintiff’s record as a litigant.  The first defendant did not have a duty as an

officer of the Court to prevent the plaintiff from further burdening the Court with his methods of conducting litigation.34    The first defendant’s duty was to examine the merits of the Proceeding and to make a decision in accordance with that examination and with the wider functions of an Official Assignee.

[62]     None of the other grounds of review are made out.

[63]     I have given some thought to whether I should exercise my discretion not to

grant the plaintiff a remedy.  It is clear from the first defendant’s letter of 4 March

2010 that the main reason for his decision was his view of the merits of the case. However,  I cannot  say  whether  the  first  defendant  would  have  made  the  same decision  if  he  had  put  aside  the  plaintiff’s  record  as  a  litigator,  or  if  he  had considered it only in the context of evaluating the nature of the Proceeding.

[64]     Accordingly, I grant the application for review. The first defendant’s decision not to assign the Proceeding to the plaintiff is quashed.  I direct the first defendant to reconsider his decision in the light of this judgment.

[65]     The plaintiff is entitled to costs, although as a self-represented litigant these will be limited to out of pocket expenses.  Any memorandum is to be filed within two weeks of the date of this judgment.  The other parties have a further two weeks

to respond.

Brewer J

34     The Court has ample power to protect its process.  Rule 15.1 of the High Court Rules is explicit in this regard, and the inherent jurisdiction remains.