Clark v Macourt

Background 3 The respondent to the proposed appeal was the trustee of the applicant's bankrupt estate from the time of his appointment on 2 October 2014 until 18 November 2019, when a different judge of the Court in proceeding VID 991 of 2018 ordered that he cease to be the trustee of the applicant's bankrupt estate: Pekar v Holden (Trustee) (No 3) [2019] FCA 1928. The order removing the respondent as trustee was not opposed, and was in consequence of findings made in earlier reasons that the respondent had repudiated an agreement made between the applicant and the respondent by failing to administer the applicant's bankrupt estate in a timely manner, which repudiation the applicant had accepted: Pekar v Holden (Trustee) [2019] FCA 442; Pekar v Holden (Trustee) (No 2) [2019] FCA 1212. Among other orders, the Court ordered that the respondent forthwith pay to the applicant $180,102.24, being the balance of monies held by the respondent as trustee and which the applicant had paid pursuant to the agreement that had been discharged upon the applicant's acceptance of the respondent's repudiation. However, a claim by the applicant for damages in respect of claimed losses resulting from the respondent's breach of the agreement was rejected by the Court: [2019] FCA 1928 at [11]-[14]. 4 On 1 September 2020, the applicant commenced proceeding VID 614 of 2020 against the respondent and one other person. On 1 December 2020, the proceeding against the second respondent was dismissed, and the applicant was given leave to file and serve an amended originating application. On 8 January 2021, the applicant filed an amended originating application seeking the following relief - 1. Relief in the form of aggravated compensation arising from breach of a contract, and criminal negligence by the respondent in a sum [determined] by [the] Court. 2. Refer the respondent for criminal prosecution for "perjury" and [embezzlement]. 3. An order that the respondent is personally liable for all remuneration and legal cost of the new trustee of the estate and the official trustee for past, present, and future remuneration and legal cost of the new trustee. 5 The applicant filed three affidavits in support of the originating application, including two affidavits described as amended affidavits. The tenor of those affidavits was - (a) to allege financial losses as a result of the respondent's breach of the agreement that was the subject of the reasons and orders in proceeding VID 991 of 2018 to which I referred at [3] above; and (b) to challenge the evidence in an affidavit of the respondent filed in proceeding VID 991 of 2018 that he had paid the sum of $6,000 in discharge of liabilities under costs orders made in the Federal Circuit Court of Australia in favour of the petitioning creditor, Rickards Legal, in the successful application for a sequestration order in respect of the applicant's estate. 6 Rickards Legal is a firm of legal practitioners that previously acted for the applicant, and against whom the applicant has instituted a number of proceedings to which I will refer below. 7 The respondent applied for summary judgment, and for a vexatious proceedings order against the applicant. A hearing of that application took place before the Judge by telephone and by video conference on 18 February 2021. The Judge reserved his decision, and on 26 February 2021 made the orders which the applicant now seeks to appeal. 8 The evidence before the Judge on the hearing of the respondent's application for the vexatious proceedings order and for summary dismissal of the proceeding included evidence that - (a) between 2008 and 2010 the applicant had instituted nine proceedings in different forums, namely the Victorian Civil and Administrative Tribunal (VCAT), the Magistrates' Court of Victoria, and the Supreme Court of Victoria against Gough Partners Pty Ltd, the manager of a residential owners' corporation with which the applicant was in dispute; (b) in one of the VCAT proceedings against Gough Partners Pty Ltd, C10677 of 2009, the applicant had made allegations of fraud, and sought orders that parties be investigated and prosecuted that were specifically and emphatically rejected by the Tribunal as being without foundation, and as having been made for the purpose of causing expense and inconvenience; (c) the applicant's unsuccessful proceedings against Gough Partners Pty Ltd in VCAT, the Magistrates' Court of Victoria, and the Supreme Court of Victoria resulted in several costs orders made against the applicant, including two that were made on an indemnity basis; (d) the applicant engaged Rickards Legal in or about 2010 in relation to a dispute concerning one costs order made against the applicant by the Magistrates' Court of Victoria in favour of Gough Partners Pty Ltd; (e) on 29 July 2011, Rickards Legal issued a tax invoice to the applicant in the sum of $6,302.73 in respect of its work, which became the subject of a dispute between the applicant and Rickards Legal; (f) between October 2011 and August 2014, the applicant initiated eight proceedings against Rickards Legal or its members in different forums, namely the Supreme Court of Victoria, the Magistrates' Court of Victoria, and VCAT, making extreme claims, including unsupported allegations of fraud, which proceedings were summarily dismissed, or struck out, or otherwise determined adversely to the applicant; (g) Rickards Legal petitioned for the applicant's bankruptcy, and on 2 October 2014 a sequestration order was made by a Registrar of the Federal Circuit Court of Australia; (h) subsequent to the sequestration order, the applicant initiated a number of proceedings in the Federal Circuit Court of Australia directed to having the sequestration order annulled or set aside, including by reference to allegations of fraud, and by seeking to re-litigate the applicant's liability for the fees of Rickards Legal, as originally invoiced; (i) several costs orders had been made against the applicant in favour of Rickards Legal in various proceedings, including on an indemnity basis, and none of the orders made in fixed amounts had been satisfied by the applicant; (j) on 7 June 2017, the Federal Circuit Court of Australia made a vexatious proceedings order against the applicant, in a proceeding between the applicant and Rickards Legal, declaring the applicant to be a vexatious litigant, and prohibiting him from commencing proceedings in that Court, other than proceedings under the Family Law Act 1975 (Cth); (k) in proceeding VID 991 of 2018, in which the final orders of 18 November 2019 to which I referred at [3] were made, the applicant had been represented by counsel in the later stages, who made submissions on behalf of the applicant in support of claims for damages for breach of contract which, as I mentioned earlier, were rejected by the Court; (l) on 30 March 2020, the applicant served upon the respondent a complaint filed in a proceeding in the Magistrates' Court of Victoria against the respondent as defendant seeking compensation in the sum of $25,000, which complaint the applicant later withdrew, but only after the respondent had filed a notice of defence and had applied to have the proceeding struck out; (m) on 29 June 2020, the applicant instituted a further proceeding in the Magistrates' Court of Victoria against the respondent as defendant, alleging that the respondent had "embezzled" monies in the sum of $6,000, which proceeding the applicant subsequently advised he had withdrawn, but only after the respondent had filed a notice of defence; and (n) contrary to the applicant's claims, the respondent had paid the total sum of $6,000 to Rickards Legal on account of its priority claim for its costs as petitioning creditor in the applicant's bankruptcy proceeding pursuant to orders of the Federal Circuit Court in the fixed sums of $1,000 and $5,000, and Rickards Legal had acknowledged in writing receipt of that sum. 9 The Judge's reasons for making the vexatious proceedings order against the applicant and the order dismissing the applicant's proceeding are published: Pekar v Holden [2021] FCA 141. In summary, the Judge held by reference to the evidence adduced by the respondent, to which I referred at [8] above, that the applicant had frequently commenced vexatious proceedings in Australian courts and tribunals over the last 13 years, referring at [18] to the re-litigation of grievances as a feature of the applicant's conduct. The Judge expressed agreement with the conclusions of the judge of the Federal Circuit Court who had likewise made a vexatious proceedings order against the applicant: Pekar v Rickards Legal (No 3) [2017] FCCA 1196 at [14]-[18]. 10 In addition, the Judge held that the proceeding before his Honour was vexatious, because it lacked merit. It lacked merit because the applicant's extravagant and unsupported claims of perjury and embezzlement, which the Judge described as absurd, lacked a proper basis and were met by the direct evidence of the respondent that he had paid the sum of $6,000 to Rickards Legal, which was corroborated by business records and by an unchallenged acknowledgement in writing by Rickards Legal that it had received that sum. As to the claimed losses arising from breach of contract, the Judge held that these claims were precluded by reference to the principles essayed in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; 147 CLR 589, which was referred to in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; 256 CLR 507 at [22] (French CJ, Bell, Gageler and Keane JJ). The preclusion arose because the losses that the applicant claimed had either already been claimed without success in proceeding VID 991 of 2018, or they were losses which the applicant could and should have claimed in that proceeding. The Judge concluded that the applicant had no reasonable prospect of successfully prosecuting the proceeding.

The application for leave to institute an appeal 11 The applicant has lodged a draft notice of appeal, together with two affidavits dated 8 March 2021. The draft notice of appeal does not specify any grounds as such, but sets out the orders that the applicant seeks, including that the orders of the Judge be set aside, and that there be leave to appeal to the High Court. 12 One of the applicant's affidavits dated 8 March 2021 is a written submission of six pages plus annexures, and advances claims that relate to the merits of the proposed appeal. In summary, those claims are as follows - (a) there was no evidence to support the Judge's finding that the applicant had frequently commenced vexatious proceedings; (b) it was not open to the Judge on the evidence to find that the respondent had made a $6,000 payment to Rickards Legal, and the applicant persists with his claims that the payment had not been made, and that there was no proof of payment; (c) the Judge erred in finding that the applicant was precluded from claiming "aggravated compensation", in circumstances where events going to that claim occurred after the making of the orders which the Judge found gave rise to the preclusion; (d) there is a generalised claim that in finding that the applicant was not entitled to financial losses related to breach of contract, the Judge incorrectly applied the law; (e) the Judge erred in basing his finding that the applicant had frequently instituted vexatious proceedings upon proceedings that had been instituted more than six years ago, because the applicant claims that the provisions of the "Limitation Act 1958" limits evidence of facts to a period not extending beyond six years; (f) the applicant had succeeded in proceeding VID 991 of 2018, which therefore could not be regarded as vexatious; (g) save for the reasons of the judge of the Federal Circuit Court for making the vexatious proceedings order in that Court against the applicant on 7 June 2017, no other judge has held that the applicant's proceedings were vexatious; (h) the two proceedings in the Magistrates' Court of Victoria that were commenced against the respondent had been withdrawn by the applicant, and it was not clear to the applicant what was vexatious about his actions; and (i) the Judge was in error in referring to the decision of the Federal Circuit Court in Pekar v Rickards Legal (No 3) [2017] FCCA 1196. 13 It appears also that the applicant proposes to raise some new claims that were not the subject of his amended originating application that was before the Judge. First, there appears to be a claim that the applicant is entitled to interest which accumulated on a sum held by the respondent in his capacity as trustee of the bankrupt estate. Second, there appears to be a claim that the $6,000 payment to Rickards Legal was unlawful, in that the payment was not authorised by the Bankruptcy Act. 14 Finally, by his affidavit the applicant claims to be offended by some of the Judge's findings, and refers to some sundry errors which he acknowledges were immaterial to the outcome.

Analysis 15 By reason of s 37AQ(1) of the Act, the applicant cannot institute the proposed appeal without leave of the Court. The Court's power to give leave is fettered by s 37AT(4) of the Act, which provides that the Court "may grant leave only if it is satisfied that the proceeding is not a vexatious proceeding". Furthermore, s 37AS(2) mandates that the Court must make an order dismissing an application for leave to institute a proceeding if the Court considers that the proceeding is a vexatious proceeding. A vexatious proceeding is defined non-exhaustively by s 37AM(1) as including - (a) a proceeding that is an abuse of the process of a court or tribunal; and (b) a proceeding instituted in a court or tribunal to harass or annoy, to cause delay or detriment, or for another wrongful purpose; and (c) a proceeding instituted or pursued in a court or tribunal without reasonable ground; and (d) a proceeding conducted in a court or tribunal in a way so as to harass or annoy, cause delay or detriment, or achieve another wrongful purpose. 16 For the purposes of this application, I have reviewed and considered the affidavits that were filed and which were before the Judge upon the respondent's application. 17 An application under s 37AR of the Act for leave to institute a proceeding must be accompanied by an affidavit which lists, among other things, "all other proceedings the applicant has instituted in any Australian court or tribunal, including proceedings instituted before the commencement of this section": s 37AR(3)(b). The Court may make an order dismissing an application under s 37AR for leave to institute a proceeding if the Court considers the affidavit does not substantially comply with s 37AR(3): s 37AS(1).

Non-compliance with s 37AR(3) 18 At the outset, I find that the applicant's supporting affidavit dated 8 March 2021 does not substantially comply with the requirements of s 37AR(3)(b) of the Act. The affidavit lists three Federal Circuit Court of Australia proceedings and one Federal Court of Australia proceeding. It refers to some unspecified proceedings in VCAT in 2008 and 2011, and further states that the applicant does not remember instituting any other proceedings, and "cannot be held responsible for events [occurring] 10 - 13 years ago". 19 The applicant has instituted a greater number of proceedings than those listed in the affidavit. The Judge identified 24 proceedings commenced by the applicant since 2011. The earlier decision of the Federal Circuit Court of Australia published 7 June 2017 accepted as accurate a list of some 30 proceedings commenced by the applicant, or his wife in connection with the same subject matter, between 2008 and 2017: Pekar v Rickards Legal (No 3) [2017] FCCA 1196 at [9], [12]. It is clear from the respondent's affidavit evidence that was before the Judge and from the orders of other courts and tribunals that were annexed thereto that the applicant's affidavit does not list all other proceedings which the applicant has instituted, nor does it substantially do so. Substantial compliance with this procedural requirement has previously been recognised by the Court as an important feature of the statutory framework which protects the public from vexatious litigants: Croker, in the matter of Croker [2019] FCA 359 at [12] (Lee J); Gargan, in the matter of Gargan [2018] FCA 871 at [17] (Mortimer J). Independently of the other matters referred to below, I would refuse the applicant's application for leave to institute an appeal on the ground that I am satisfied that the applicant's affidavit does not substantially comply with the requirements of s 37AR(3).

Is the proposed appeal one which is not vexatious? 20 I am not persuaded that there is any merit in the applicant's proposed appeal, and I am therefore not satisfied that the proposed appeal is not a vexatious proceeding. 21 Any appeal to the Full Court would be by way of re-hearing. However, the burden on the applicant would be to demonstrate some material factual, legal, or discretionary error in the making of the orders. The principles essayed in House v The King [1936] HCA 40; 55 CLR 499 would apply to the discretionary decision to make a vexatious proceedings order, and also to the order dismissing the proceeding to the extent that it was based upon the exercise of a discretion after finding that there was no reasonable prospect of the applicant successfully prosecuting the proceeding.

The evidence of frequent commencement of vexatious proceedings 22 I am not persuaded that there is any arguable error in the Judge's finding that the applicant has frequently commenced vexatious proceedings. The applicant's main argument appears to be that the Judge was not entitled to take account of proceedings instituted by him more than six years ago, and therefore there was no evidence to support his Honour's finding that the applicant frequently commenced vexatious proceedings. 23 First, the applicant claims that the Judge erred by considering proceedings that had been instituted more than six years ago due to the operation of the "Limitation Act 1958". The applicant identifies three proceedings commenced within six years, and claims that there is no evidence from those proceedings that the applicant has frequently commenced vexatious proceedings. I take the reference to the "Limitation Act 1958" to be a reference to the Limitation of Actions Act 1958 (Vic). The applicant's reliance on this Act, which is concerned with limitation periods within which proceedings may be commenced where Victorian law applies, is misconceived. Even if it be supposed that the Limitation of Actions Act was picked up in this case by s 79 of the Judiciary Act 1903 (Cth), that Act contains no relevant provision that precludes a court from acting on evidence due to the passage of time. Moreover, the inquiry in which the Judge was engaged was framed by s 37AO(6)(a) of the Federal Court of Australia Act, which expressly authorised the Judge to have regard to proceedings instituted or conducted in any Australian court or tribunal, including before the commencement of that provision which was on 11 June 2013. Even supposing that the applicant has commenced only three proceedings within the last six years, those proceedings were not the only ones to which the Judge could have regard. 24 Second, the applicant claims that a vexatious proceedings order made against him by the Federal Circuit Court of Australia (see, Pekar v Rickards Legal (No 3) [2017] FCCA 1196) was made in a different jurisdiction on a different matter and the reasons for that order could not be relied on in the application before the Judge. The applicant similarly claims that decisions of the Federal Circuit Court of Australia do not create legal precedent, and therefore it was not open to the Judge to refer to the proceedings commenced by the applicant in that Court. These claims are also misconceived. They ignore the entitlement of the Judge to consider proceedings instituted or conducted in any Australian court or tribunal and orders made by any Australian court or tribunal: s 37AO(6)(a) and (b). Moreover, it is clear that the Judge formed his own view about the correct characterisation of the applicant's conduct in commencing various proceedings, and expressed agreement with the conclusions of the Federal Circuit Court judge. 25 The applicant otherwise claimed that in only one of three proceedings that he identified has a judge referred to the applicant as vexatious; that he withdrew two proceedings because he "did not want to get involved in proceeding[s] with an uncertain outcome"; and that the Judge's finding that the respondent in those two proceedings was put to the expense of filing a defence was incorrect because no demand for costs had ever been made by the respondent. It is not apparent from these claims that there was any arguable error by the Judge. To deal with these briefly, whilst a court may have regard to previous proceedings and orders, a court's satisfaction that a litigant has frequently commenced vexatious proceedings does not depend on a collection or compounding of earlier adverse judgments making such findings. In respect of the withdrawn proceedings, the applicant confuses a claim for costs against the applicant with the costs that the respondent would have incurred in preparing defences. It is clear that any respondent who has prepared and filed a defence in a proceeding, even if costs are not sought, will likely have expended some costs in doing so. 26 For completeness, upon my own review of the evidence that was before the Judge, I do not consider that there would be reasonable prospects of successfully challenging on appeal the correctness of his Honour's conclusion that the applicant has frequently instituted vexatious proceedings. The Judge specifically addressed the decision in the applicant's favour in proceeding VID 991 of 2018, and took it into account in his Honour's evaluation of the total picture that was painted by the evidence. The unsuccessful proceedings instituted by the applicant over the course of many years against Gough Partners Pty Ltd, Rickards Legal and its members, and the respondent, are linked, and have as their genesis the applicant's complaints commencing in 2008 about the conduct of the manager of an owners' corporation. This linkage contributes to the characterisation of the institution of vexatious proceedings by the applicant as being frequent. Over the course of a number of proceedings, the applicant has made unsubstantiated allegations of a serious nature against a number of parties. By the proposed appeal, the applicant seeks to persist in this type of conduct by maintaining unsubstantiated claims of fraud and criminal conduct.

The challenge to the finding that the respondent paid Rickards Legal the sum of $6,000 27 The applicant seeks to challenge the Judge's finding that the respondent made a $6,000 payment to Rickards Legal from the bankrupt estate on the basis that there was insufficient evidence for that finding. More correctly, the applicant in substance would seek to challenge the conclusion that there would be no reasonable prospect of the applicant establishing in the face of direct and documentary evidence that the payment had not been made. That finding was made in response to the applicant's unsubstantiated claims that the respondent had embezzled that amount, and had perjured himself by stating otherwise in a sworn affidavit. The applicant states in his affidavit dated 8 March 2021 that he is "convinced that the $6,000 have not been paid". Even supposing this state of belief is subjectively held by the applicant, it is unsupported by the evidence, and the evidence before the Judge did not reasonably permit a finding that there was any triable issue on this question. 28 Allied to the absence of any proper foundation for the applicant's claim that the payment of $6,000 was not made is the other attempt at litigating that issue, namely one of the two proceedings in the Magistrates' Court of Victoria which the applicant stated that he had "withdrawn". That attempt at litigation is also to be evaluated in the context of the unsupported claims made by the applicant that are clothed in the extravagant language of "embezzlement" and "criminal conduct", which extravagance is often found to be a feature of frivolous, vexatious litigation amounting to an abuse of process.

The conclusion that the applicant was precluded from claiming "aggravated damages" 29 The applicant claims that the Judge erred by holding that, by operation of an Anshun estoppel, the applicant was precluded from claiming "aggravated damages" for breach of contract. The Judge found that the applicant's claim for damages against the respondent for breach of contract was dealt with by the Court in the earlier proceeding, VID 991 of 2018. The same conclusion would apply to the applicant's claim for damages for "criminal negligence". 30 In support of his proposed appeal, the applicant claims that the events which gave rise to his claims in the application before the Judge occurred following the Court's earlier determination of his claim for damages for breach of contract. According to the applicant, those events would not have occurred if the respondent had not breached the contract and this prevents the operation of an Anshun estoppel. The applicant lists several events as supporting his claims for damages. Upon examination, only two events listed are claimed to have occurred after the final orders made on 18 November 2019 in proceeding VID 991 of 2018. First, the applicant points to a statement made by the respondent in an affidavit sworn on 11 February 2021 in support of the respondent's application before the Judge about the effect of the contract between the parties. Second, the applicant notes that the trustee of the applicant's bankrupt estate appointed to replace the respondent has demanded remuneration for their administration of the applicant's estate. He claims that the remuneration would not be sought if the respondent had not breached the contract. 31 In respect of the first event, it is not apparent how the respondent's evidence in the application before the Judge can be regarded as an event which would impugn the Judge's application of the principles of Anshun estoppel or legitimately give rise to an entitlement to "aggravated damages". In respect of the second event, the applicant's proposed claim could not have reasonable prospects of success because it essentially seeks to reopen and re-litigate the question of damage that had been determined in proceeding VID 991 of 2018. 32 Anshun estoppel, issue estoppel, and res judicata are distinct doctrines which, when engaged, preclude the litigation of claims before a court. Relevant to the application of all three doctrines in the present case are two well established principles: damages for breach of contract are assessed at the date of the breach of contract: Clark v Macourt [2013] HCA 56; 253 CLR 1 at [109]-[110] (Keane J); and common law damages are assessed on a "once and forever" basis: Todorovic v Waller [1981] HCA 72; 150 CLR 402 at 412 (Gibbs CJ and Wilson J). As the Judge held at [28]-[29], the applicant's claims for damages for breach of contract were pursued in VID 991 of 2018, and did not succeed: Pekar v Holden (Trustee) (No 3) [2019] FCA 1928 at [14]-[15]. There is no arguable error shown by the applicant in relation to the Judge's conclusion that the applicant's further claims for damages are now precluded.

Sundry issues 33 The applicant's claim that the Judge made some sundry errors, which he acknowledged were immaterial, should also be addressed because my conclusions in relation to them contribute to the proper characterisation of the proposed appeal. The applicant complains that at [28] of the Judge's reasons, his Honour incorrectly stated that the applicant had claimed $12,200.35 in compensation in connection with capital gains tax. That complaint is mistaken. The Judge was referring to the sum claimed in proceeding VID 991 of 2018, which was indeed $12,200.35: Pekar v Holden (Trustee) (No 3) [2019] FCA 1928 at [11]. Second, the applicant's complaint that the Judge at [28] incorrectly identified the applicant to have claimed $4,596.26 in compensation for legal expenses, is similarly mistaken. The Judge was, again, referring to the sum claimed in the earlier proceeding: [2019] FCA 1928 at [11].

Conclusions 34 For the above reasons, I am not satisfied that the proposed appeal is not a vexatious proceeding, and therefore I refuse the applicant's application to institute it. Further, by reason of the absence of merit in the proposed appeal, and the proposed perpetuation of unsubstantiated allegations of a serious nature against the respondent, I am affirmatively satisfied that the proposed appeal is vexatious and I am bound by s 37AS(2) of the Act to dismiss the application. Finally, as I have indicated, I would also dismiss the application pursuant to s 37AS(1) of the Act on the independent ground that the applicant's affidavit in support of his application does not comply substantially with s 37AR(3), in that it fails to list all other proceedings that the applicant has instituted in any Australian court or tribunal. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wheelahan.