Cwalina v Rose [2023] VSC 34

2 In any event, in 2017 at least part of the present proceeding was transferred from this Court to the Family Court and dealt with there between Ms Majak and Mr Rose. Ultimately, Ms Majak seems to have been unsuccessful, including on appeal.

3 At some later time, Ms Majak and Mr Cwalina applied successfully to re-open the counterclaim in the present proceeding. Mr Rose later discontinued his claim against Ms Majak. In more recent times, only Mr Rose and Mr Cwalina have been parties to the proceeding. Mr Cwalina and Ms Majak remain aggrieved about the manner in which that seems to have come about.

4 The substance of the presently relevant events seems to be that at a directions hearing on 12 October 2021, at which Mr Cwalina appeared, Keith JR, among other things[2] -

(a) granted leave to Mr Rose to file and serve an amended counterclaim against Mr Cwalina by 15 November 2021;

(b) ordered that Mr Cwalina file and serve his defence to the amended counterclaim by 13 December 2021;

(c) adjourned the directions hearing to 14 December 2021; and

(d) reserved the costs.

5 At that time, Keith JR noted in other matters that subject to the prospect of an appeal from certain earlier orders (which did not occur), the 'remaining issues' in the proceeding were between Mr Rose and Mr Cwalina.[3]

6 Mr Rose filed and served an amended counterclaim dated 15 November 2021.[4] At the subsequent directions hearing on 14 December 2021, at which Mr Cwalina appeared, Keith JR, among other things[5] -

(a) extended the time for Mr Cwalina to file and serve a defence to 7 January 2022;

(b) adjourned the directions hearing to 1 February 2022; and

(c) reserved the costs.

The remaining proceeding is the counterclaim by Mr Rose against Mr Cwalina. All other proceedings and parts of these proceedings have been finally determined by earlier orders of the Court.[6]

8 On 10 January 2022, the solicitor for Mr Rose emailed Mr Cwalina noting that no defence had been served.[7]

9 The following day, Mr Cwalina attempted to file and serve a document styled as a 'defence to amended counterclaim and counterclaim' on behalf of both himself and Ms Majak, but the filing was rejected by the Prothonotary.

10 In that connection, by email dated 14 January 2022, the Court informed Mr Cwalina relevantly as follows[8] -

Dear Piotr Cwalina

The documents you have submitted for filing have not been accepted for the reasons set out below.

Reviewer Comments:

The Prothonotary has refused to seal the Defence to Amended Counterclaim and Counterclaim pursuant to rule 28A.04(1). The order of Keith JR dated 14 December 2021 gives leave to file a defence to the amended counterclaim but does not explicitly provide leave to file a further cross counterclaim. Nor do the rules prescriptively allow for a defendant to a counterclaim to file a further counterclaim. Rule 10.02(1) allows a defendant who has a claim against the plaintiff to file a counterclaim. It does not allow a defendant by counterclaim to counterclaim against the plaintiff by counterclaim. I note that pursuant to rule 28A.04(5) the court may direct the Prothonotary to seal the document. Please let us know if you wish to make an application to the court pursuant to 28A.04(5).

Please amend your documents as requested by the reviewer, where applicable.

11 Mr Cwalina did not amend his document and made an application seeking review of the decision by a judge.

12 Shortly before the directions hearing scheduled to occur on 1 February 2022, Mr Cwalina emailed the Court and others contending that 'this matter can be determined on [the] papers' and attached a document entitled 'scope of dispute and proposed orders'.[9] Inconsistently with the covering email, the document commenced by saying that 'there can be no resolution by consent in this matter' and thereafter sought to articulate a sequence of reasons for that contention, much of which amounted to taking issue with Mr Rose being able to proceed with his amended counterclaim against Mr Cwalina after Mr Rose's claim against Ms Majak had been discontinued. In that regard, the document stated, among other things[10] -

...

1. The filing of my Defence and Counterclaim ID:232247 was rejected by the Registry.
2. I filed my application seeking a review of decision of the Prothonotary pursuant to Rule 28A.06(3).
3. It is my submission that the filing of the Amended Counterclaim against me, while withdrawing the claim against Ms Majak, and preventing me from filing a counterclaim against Mr Rose, as well as the substantial changes made to the Counterclaim, created [a] substantial risk to a fair trial.
4. It seems that the issue of jurisdiction needs to resolved by the judge who is dealing with my application pursuant to rule 28A.06(3).
5. I maintain that the filing of the Amended Counterclaim, was made irregularly and in [sic] abuse of court process, and such filing should not be allowed, unless the permission for irregular filing is extended to giving me leave to file a Counterclaim and sealing the document ID:232247.

13 At the directions hearing on 1 February 2022, at which Mr Cwalina appeared, Keith JR, relevantly[11] -

(a) extended time for Mr Cwalina to file and serve his defence to the amended counterclaim to 4 February 2022; and

(b) ordered that Mr Cwalina pay Mr Rose's costs of the directions hearing.

The Court reiterates that the only remaining proceeding in this matter is the counterclaim brought by Mr Rose as against Mr Cwalina. All other proceedings and parts of these proceedings have been finally determined by earlier orders of the Court.[12]

15 In respect of the application seeking review of the decision of the Prothonotary, by email dated 2 February 2022 the Court informed Mr Cwalina, relevantly -

The decision of the Prothonotary to refuse to seal your proposed filing was reviewed in accordance with your request by a judicial officer. The result was that the judicial officer declined to direct the Prothonotary to seal the proposed filing. The document is therefore not accepted for filing.[13]

16 By notice of appeal dated 13 February 2022, Mr Cwalina appealed in respect of the costs order made on 1 February 2022.[14]

17 By summons dated 16 March 2022, Ms Majak sought leave to be joined as a party to the proceeding. That application was heard by Matthews AsJ on 1 April 2022 and, for reasons delivered ex tempore following the hearing, was dismissed with costs.

18 By notice of appeal dated 22 April 2022, Ms Majak appealed in respect of the dismissal of her application to be joined to the proceeding.

19 Both appeals came on for hearing before me on 29 September 2022. Neither appeal was properly prepared. Accordingly, timetables of appropriate orders were made and each appeal was adjourned in order that those steps might be taken.

20 On 1 December 2022, Mr Andrew Barnden was appointed as trustee in bankruptcy of Ms Majak.

21 On 22 December 2022, pursuant to s 60(2) of the Bankruptcy Act 1966 (Cth), Mr Barnden elected in writing to discontinue Ms Majak's appeal.

22 Both appeals came back before me on 3 February 2022 and the issues raised by the election of the trustee in bankruptcy were addressed first.[15] After hearing the submissions of the parties and non-parties, I delivered ex tempore reasons for ordering that Ms Majak's appeal be stayed until further order with costs reserved and liberty to apply.

23 I then heard argument directed to Mr Cwalina's appeal, which is by way of hearing de novo.[16]

24 In his notice of appeal, Mr Cwalina states[17] -

1. The cost order made by the Judicial Registrar was not validly made because:

a) The costs order was made on 1 February 2022 on the basis that the Second Defendant did not file his Defence to Plaintiff's amended counterclaim. Second Defendant filed the Defence together with the Counterclaim on 11 January 2022, but the filing was under a review of the Prothonotary. The filing was rejected on 2 February 2022, because there were no specific directions that the Defendant can file a Counterclaim. > > b) The Registrar refused to refer to matter to the Judge, as required by s 84.03 (1) and (2), when objections were made by the Second Defendant to the appropriateness of orders granted by the Judicial Registrar and failure to deal with his own errors, as follows: > > > (i) Failing to consider the orders sought by the Second Defendant in the directions hearing on 17 August 2021, which exposed the fact that the Plaintiff refused to provide particulars in the early stage of the proceedings, because his claim was made without factual and legal basis, as follows:

On 15 Aug 2021, the Second Defendant sent Minute of Orders to Judicial Registrar Keith, for the hearing of 17 August 2021, seeking the following orders:

1. That Zofia Majak be joined as a Plaintiff with the Second Defendant, pursuant to Reg 6.24 of the Civil Procedure Rules 2005.

2. By 01/09/21, Mr Rose is to file and serve further and better particulars of the following pleadings made in the Counterclaim from 5/04/17:

(1) as to paragraph 64 - "the first defendant has contributed more than the second to the costs and works carried out on the land";

and

(2) as to paragraph 65 - "the first defendant contributed more to repayments of the construction loan with the CBA than the second defendant";

provide a table giving particulars of the contributions and repayments in the form of a sworn Affidavit, as itemised in the Summons for direction in relation to the Notice of Appeal, filed on 18/05/21 as follows:

a) table showing repayments of the loan drawn for the payment of Appellant's share of the land at 1 Geofrey Street, numbered 705931809 and payments of interest rates made by the Appellant in the period from 2006 to 2009;

(3) as to paragraph 66 - "_the first defendant incurred costs in attending the site and organising the completion of the development that were not intend by the second defendan_t" - provide dates when attended the site and works that were organised.

(4) As to paragraph 67 - "the first defendant contributed more time to the project than the second defendant" provide tasks that were undertaken and completed and time spent on these tasks.

(5) As to paragraph 68 - "the first defendant requested the second defendant to join with him in a renting out the townhouses following issue of the occupancy certificate on 23 April 2014" - provide details of any communication or requests in relation to the alleged refusal to 'join in renting out', any proposed lease agreements, also provide details when the landscaping was completed, and the houses were ready to be rented out.

1. By 4:00 p.m. on 15/09/21, the defendants by Counterclaim shall file and serve a defence and Counterclaim against the Counterclaim of the First Defendant.

   (ii) Accepting the application to discontinue the proceeding against the First Defendant to Counterclaim, despite objections made by the First and Second Defendant.

   (iii) Granting leave to the Plaintiff to amend the Counterclaim, to allow him to rewrite his case under the guise of Plaintiffs right to update, which caused prejudice to the Second Defendant, because Counterclaim introduced a new cause of action, which was not available to the Plaintiff at the time of filing the Counterclaim in 2017.

   (iv) Failing to reject the late filing of the Amended Counterclaim of the Plaintiff which caused prejudice to the Second Defendant, because the delays were falsely attributed to the Second Defendant.

25 At the hearing, Mr Cwalina submitted as follows -

... I've filed everything on time and it was, of course, huge misunderstanding about the procedure. As you can see, it involves ... certain issues which ... I regarded at the past to be linked with Ms Majak, and that's what happened, that when I filed the application ... the counterclaim was done with Ms Majak as ... an application done by two parties.

It was disregarded by Registrar Keith and ... he didn't consider the problems which I had with filing the applications ...[18]

26 Mr Cwalina also relied upon his other written material filed in connection with the appeal. I have read that material and the core of Mr Cwalina's relevant complaints are encapsulated above.[19]

27 For his part, counsel for Mr Rose submitted that the costs order had correctly been made because Mr Cwalina had not complied with the order to file a defence and so the hearing on 1 February 2022 was 'in effect a waste of time'.[20]

28 It will be evident from the sequence of events to which I have referred that since at least October 2021 Mr Cwalina and Ms Majak have continued to harbour and advance grievances related to the fact of, and manner by which, Mr Rose's amended counterclaim came to be pursued against Mr Cwalina.[21] That said, no appeal seems to have been commenced in respect of any of the substantive orders sought now to be criticised.

29 In any event, throughout the period, the Court has continued to highlight in other matters that the only parties to the 'remaining proceeding' are Mr Rose and Mr Cwalina. That was made clear repeatedly, including in the orders of 14 December 2021 by which Mr Cwalina was ordered to file and serve his defence by 7 January 2022.

30 Albeit that at the hearing of his appeal, Mr Cwalina repeatedly submitted that he had filed 'everything on time',[22] it will be evident from the sequence of events to which I have referred that he did not. Not only did he not file and serve his defence by 7 January 2022, but the document which he later did seek to file - purported on behalf of himself and Ms Majak - was rejected by the Prothonotary. He seems to have well understood that the document had been 'rejected by the Registry'.[23]

31 When that occurred, however, Mr Cwalina did not amend the document, as requested, in order that it might be received for filing. Instead, he continued to maintain that the document should be received. That may have occurred in his application to have the decision of the Prothonotary reviewed - which later failed; but it plainly occurred in the lead up to the directions hearing on 1 February 2022 in which he, in effect, invited Keith JR to grant him leave 'to file a Counterclaim and sealing the document ID:232247'.[24]

32 In light of the above, I do not accept the submission of Mr Cwalina that there was 'a huge misunderstanding about the procedure'. Indeed, I do not accept that there could reasonably have been any misunderstanding at all: it had repeatedly been made clear what the position was and what Mr Cwalina was required to file. There is no suggestion that he was afforded insufficient time in order to do so.

33 Nonetheless, Mr Cwalina together with Ms Majak seem to have determined to pursue a different course that, unsurprisingly, proved to be unavailing.

34 In the result, the directions hearing on 1 February 2022 was convened, but the occasion was wasted because Keith JR could do no more than further extend time for the filing and service of Mr Cwalina's defence and otherwise 'reiterate' that the parties to the proceeding were only Mr Rose and Ms Cwalina. In that connection, the submission of Mr Rose that the occasion was 'in effect, a waste of time' must be accepted.

35 It follows from the above, in my view, that Mr Cwalina was properly ordered to pay Mr Rose's costs of the directions hearing on 1 February 2022. Considering the matter de novo, I would make the same order.

36 In light of the above, Mr Cwalina's appeal must be dismissed.

37 I will hear the parties concerning a form of order appropriate to dispose of the appeal as well as the issue of costs.

[1] Some of the history relevant to the present proceeding has been outlined by Keogh J in Majak v Rose [2021] VSC 599.

[2] Joint Appeal Book ('JAB') 4-6.

[4] The Court stamp is slightly obscured, but tends to suggest that the amended counterclaim was filed on 25 November 2021.

[8] Supplementary Appeal Book of Mr Cwalina, 91.

[11] JAB 2-3. No transcript of the hearing before Keith JR appeared in the Joint Appeal Book or any of the other material filed in connection with the appeal.

[15] Cf., among other relevant authorities, Bendigo Bank Ltd v Demaria [2001] VSC 218, Owens v Comlaw (No 62) Pty Ltd [2006] VSCA 151; (2006) 201 FLR 275, Garrett v Federal Commissioner of Taxation [2015] FCA 665; (2015) 233 FCR 226 and Nugawela v Deputy Commissioner of Taxation [2018] FCA 1457.

[16] Supreme Court (General Civil Procedure) Rules 2015, r 84.05. See, Bendigo and Adelaide Bank Ltd v Grahame [2020] VSC 86.

[19] I should, perhaps, note that a large part of Mr Cwalina's written material is directed to advancing grievances in respect of developments and orders not the subject of the present notice of appeal: see, for example, JAB 137-162. See also, 'Appellant's summary of arguments' dated 30 October 2022 and 'Appellant's joint response to Rose's outline of submissions' dated 7 November 2022.

[21] Indeed, it will be evident that those grievances continue to be sought to be pursued in the present notice of appeal - relevantly extracted above.