Constantinidis v Tsolakis

Supreme Court of NSW|2013-06-20|Before: Schmidt J

Judgment 1HER HONOUR: There are two notices of motion before the Court. By notice of motion filed 12 December 2012, the defendant seeks an order, firstly that the first amended statement of claim filed 20 September 2012 be struck out pursuant to s 61(3)(b) of the Civil Procedure Act 2005, for failure to comply with the orders made by Schmidt J on 30 August 2012; secondly, an order that the proceedings be dismissed pursuant to s 61(3)(a) of the Civil Procedure Act, for failure to comply with the orders made by Schmidt J on 30 August 2012; thirdly, an order that the first amended statement of claim filed 20 September 2012 be otherwise struck out; and fourthly, an order that the proceedings be otherwise dismissed. 2By notice of motion filed 6 March 2013, the first and second plaintiffs seek, firstly, an order that the notice of orders of Schmidt J published on 30 August 2012, parts one, two, three and four be struck out in their entirety; secondly, an order that the plaintiffs' notice of motion filed 7 February 2012 seeking default judgment be heard; and thirdly, an order for costs against the defendant regarding the wasted time pursuant to the matter of the Limitation Act 1969. 3The first plaintiff is George Constantinidis. The second plaintiff is Gemma Constantinidis. The first and second plaintiffs are husband and wife. The defendant is Vasso Paul Tsolakis, a solicitor. Mr Tsolakis formerly acted as Mr and Mrs Constantinidis' solicitor. Mr Tsolakis relied on the affidavits of his solicitor Toby Colin Blyth dated 3 December 2012 and 13 June 2013. 4On the day of the hearing of the motions, namely 13 June 2012, Mr and Mrs Constantinidis did not appear at Court. They were called outside Court three times shortly after 10.00 am, 11.10 am and again at 2.28 pm. During the morning of the hearing, the defendant's solicitor telephoned Mr Constantinidis and was informed by Mr Constantinidis that he and his wife would not be attending Court on the day of the hearing. I am satisfied that both plaintiffs knew that the motions were listed for hearing on that day and that they both elected not to appear.

Background 5On 2 August 2012, Schmidt J (Constantinidis v Tsolakis [2012] NSWSC 1001) heard the plaintiffs' notice of motion filed December 2011 and the defendants' notice of motion filed February 2012. 6On 30 August 2012, Schmidt J dismissed the plaintiffs' notice of motion and granted them leave to file and serve an amended statement of claim within 21 days of the judgment date, but for the claims advanced in relation to the 2001 transaction, and the plaintiffs were ordered to pay the costs of the defendant's motions as agreed or assessed. 7On 20 September 2012, the first amended statement of claim ("ASC") was filed. It was filed within time.

The original statement of claim 8It is necessary to briefly refer to the pleading in the original statement of claim. The contents of this pleading has been helpfully summarised by Schmidt J in her judgment. Those allegations were as follows. 9There was a retainer between the parties for Mr Tsolakis, a solicitor, to act on the purchase of an off the plan residential unit in July 2001; that Landcorp NSW Pty Ltd ("Landcorp") was then the registered proprietor of the property; that they entered the contract for the purchase in September 2001, for a price of $350,000; that the settlement was to complete no later than 30 June 2004; that $180,000 was paid prior to settlement and that the purchase was never completed. 10Between September 2001 and February 2004, they instructed Mr Tsolakis to lodge caveats over the property at Rockdale. A caveat was only lodged in February 2004. It is also pleaded that Mr Tsolakis advised Mr and Mrs Constantinidis that they should obtain secondary security for the money advanced under the contract, a caveat over other property owned by one of the directors of Landcorp being an acceptable form of security. The caveat was lodged in October 2005, but was not an acceptable form of security, for reasons pleaded, which include the failure to obtain the proprietor's consent to lodgement of the caveat. 11In breach of the contract, Landcorp advertised the unit for sale in January 2003 and that between September 2001 and February 2004, Mr Tsolakis was instructed to act for Mr and Mrs Constantinidis on the breach of the contract. 12On 30 June 2004, Landcorp did not complete the contract and was in breach of it. From June 2004 to October 2005, Mr and Mrs Constantinidis instructed Mr Tsolakis to commence proceedings in respect of the breach. Unbeknownst to them, proceedings were not commenced, despite repeated false statements up to May 2005, that they had been commenced and would be shortly heard. 13In April 2004, Landcorp commenced proceedings for removal of the caveat over the Rockdale property; that Mr Tsolakis accepted service of the process, but did not notify Mr and Mrs Constantinidis; and that he represented that he was upholding their interests under the contract, as plaintiffs in proceedings brought against Landcorp and its directors, in relation to the breach of the contract. It is claimed that the representations were false; no proceedings were commenced against Landcorp, but proceedings were commenced against them by Landcorp, in respect of the caveat. 14In October 2004, Mr Tsolakis advised Mr and Mrs Constantinidis to consent to the removal of the caveat, so that Landcorp could register a strata plan, creating legal title, whereupon a new caveat would immediately be lodged; that Mr and Mrs Constantinidis consented; that the caveat was removed; and that Mr Tsolakis represented that a new caveat had been lodged, but that representation was false. 15In August 2005, Mr Tsolakis consented to the discontinuance of Landcorp's proceedings, without notifying Mr and Mrs Constantinidis, or advising them of their rights to bring any cross-claim; that it was in October 2005, that Mr Tsolakis revealed that the proceedings against Landcorp had not been commenced, but would be shortly commenced; and that no such proceedings were ever commenced. 16Mr and Mrs Constantinidis paid Mr Tsolakis some $60,000 as fees in relation to the Landcorp contract, which he represented would be held in trust for use in the Landcorp proceedings; and that no receipts, bills, disbursements or third party payments were ever provided in respect of those moneys. 17I interpose here to say that it is important to appreciate that on 4 October 2005 Mr and Mrs Constantinidis admit that they obtained access to the Court file in proceedings 6931/2004 and discovered for the first time that the defendant had misdescribed the nature of the court proceedings and communicated these facts to the defendant. 18The allegations in the original pleading continue as follows. 19On 5 October 2005, Mr Tsolakis told them that he would cease to act for them and that they should take their complaints to Lawcover. 20Mr Tsolakis refused to produce the written contract to Mr and Mrs Constantinidis after 5 October 2005; and that he had lost or destroyed that contract, causing them to lose remedies which they might otherwise have had against Landcorp, its receivers and liquidators. 21Mr and Mrs Constantinidis also claim that Mr Tsolakis breached the duty of care which he owed them, between July 2001 and 4 October 2005, in various identified ways. The losses which Mr and Mrs Constantinidis claim they suffered, despite taking steps available to them to mitigate their losses, are specified. Damages in a total amount of $33,143,000 were claimed. 22In her judgment Schmidt J at [44] stated: "[44] As I understand the case they seek to advance, that precludes, at least, their pursuit of the claims in relation to Mr Tsolakis' negligence in relation to the original transaction, because those claims accrued before 4 October 2005. There is no claim as to the original transaction, that Mr and Mrs Constantinidis only learned of what Mr Tsolakis had done and failed to do, when Mrs Constantinidis inspected the Court's file in relation to the proceedings brought against them by Landcorp on 4 October 2005. In that event, the claim was statute barred, when the proceedings were commenced on 4 October 2011, the provisions of s 55 of the Limitation Act not being available to be relied on." 23In other words, Mr and Mrs Constantinidis were ordered to replead their case but they had to delete the claims relating to the 2001 transaction. They have not done so.

The first amended statement of claim - the current one 24Counsel for the defendant submitted that comparison of the first amended statement of claim with the statement of claim struck out by Schmidt J, demonstrates almost no change at all much less an adherence to Schmidt J's orders that claims in relation to the 2001 transactions no longer be pleaded. 25Counsel further submitted that the addition of new paragraphs [2], [3] and [4] flies directly in the face of Schmidt J's orders and reasons in that they squarely relate to the 2001 transaction; and the same can be said of the changes made to what is now paragraph 20. In paragraphs [57] and [58] of the amended pleading the plaintiffs continue to propound the 2001 transaction as central to their claim and continue to plead the matter plainly arising out of time and not covered by the potential exception, which Schmidt J allowed, in relation to matters pleaded in paragraph [51] of the amended pleading. 26Having regard to ss 56 to 60 of the Civil Procedure Act 2005, counsel for Mr Tsolakis submitted that the Court should strike out the claim made by the plaintiff and enter judgment for the defendant pursuant to s 61(3)(b) of the Civil Procedure Act or UCPR 13.4. Counsel for Mr Tsolakis also submitted that the plaintiffs were granted an indulgence by Schmidt J and rather than making proper use of that indulgence, they have deliberately ignored her Honour's orders and should not be afforded any further indulgence.

Previous proceedings 27It is necessary to briefly refer to previous proceedings. Constantinidis v Kehagiadis (No 2) [2011] NSWSC 1226, is a case where Mr and Mrs Constantinidis brought proceedings against a subsequent solicitor, Ms Kehagiadis. Davies J dismissed the proceedings due to the non compliance by Mr and Mrs Constantinidis with orders that they replead their statement of claim limited to certain matters. While I accept that each case depends upon its facts, the approach that Mr and Mrs Constantinidis took in those proceedings is illuminating. 28In Constantinidis v Kehagiadis (No 2), Davies J, at [14] - [16] stated: "14 Even if the Plaintiffs confined themselves to the causes of action associated the Saglimbeni assault they have not pleaded the matter in the proposed statement of claim as I have set out in my judgment. I have no confidence that, if a further opportunity is given to them to put forward a pleading that complies with my judgment, this would happen in the light of the history of the matter, and particularly in the light of the proposed statement of claim annexed to the present Motion which was proffered in the face of what I said in my judgment. 15 In an earlier judgment of 16 June 2011 I detailed some of the history of earlier forms of pleading put forward to various judges of the Court. The entire history of the matter shows that the Plaintiffs have been given ample opportunity to prepare, and if appropriate, to file a proper Statement of Claim in the matter. In addition to what other judges of the Court have informed the Plaintiffs about the form of their pleading, I have considered 2 forms of the pleading discussed in my earlier judgments. 16 Consideration must be given to the position of the Defendant. On two previous occasions the Defendant has asked that I should dismiss the proceedings. I declined to do so, and have given the Plaintiffs two further opportunities to get their pleadings into order. The pleadings are still not in order despite the guidance given to the Plaintiffs in my last judgment. In the light of the two opportunities I have given, coupled with the advice provided by other Judges of the Court on earlier applications concerning the pleading, and bearing in mind the provisions of s 56 Civil Procedure Act 2005, the only appropriate order to make is that the proceedings should be dismissed." 29I remind myself that generally the function of pleadings is to state, with sufficient clarity, the case that has to be met by the defendant. In this way, pleadings serve to define the issues for decision and ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her: Banque Commerciale SA En Liquidation v Akhill Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286-296 and 302-3. 30I accept that in the current pleading, there may be some matters that are not statute barred, but it is difficult to discern what they are. It may be that they have a claim in negligence against the defendant in relation to the litigation that was commenced in 2005. However, the 2001 facts and pleadings are invariably rolled up into the 2005 cause of action. It is impossible to deliniate them. The plaintiffs in this current pleading have not turned their minds to replead their claim in accordance with Schmidt J's orders. This amended statement of claim should be dismissed. 31That leaves the issue of whether or not the plaintiff should be afforded a further opportunity to replead their statement of claim. In the light of the plaintiffs ignoring the previous orders of Schmidt J, taken together with their attitude displayed in Constantinidis v Kehagiadis (No 2) [2011] NSWSC 1226, I have no confidence that if a further opportunity is given to them to put forward a pleading that complies with Schmidt J's judgment, they would do so. Hence, I decline to grant leave to give the plaintiffs a further opportunity to replead their statement of claim.

The plaintiffs' notice of motion 32I need not say much about the plaintiffs' notice of motion filed 6 March 2013, other than this Court has no power to order that the earlier orders made by Schmidt J on 30 August 2012 be struck out in their entirety. 33There are no reasons advanced as to why an application for default judgment should be granted in circumstances where the plaintiffs have not pleaded their statement of claim properly. Nor is it clear why an order for costs against the defendant regarding the waste of time pursuant to the matter of the Limitation Act should be made, as they were held to be statute barred in relation to the 2001 transaction by Schmidt J. Hence, the plaintiffs' notice of motion filed 6 March 2013 is dismissed. 34Costs are discretionary. Costs usually follow the event. As the proceedings are now at an end, the plaintiffs are to pay the defendant's costs of the proceedings. These costs are to include the defendant's notice of motion filed 12 December 2012.

The Court orders that: (1) The plaintiffs' first amended statement of claim filed 20 September 2012 is dismissed. (2) The plaintiffs' notice of motion filed 6 March 2013 is dismissed. (3) The plaintiffs are to pay the defendant's costs of the proceedings. These costs are to include the defendant's notice of motion filed 12 December 2012.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 June 2013

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