Farmers Fruit Box & Plastics Pty Ltd v Select Carbon Pty Ltd

Supreme Court of NSW|2021-05-17|Before: Parker J

Judgment

Before the Court are two interlocutory applications by way of notice of motion. The defendants apply to have the Court summarily dismiss the proceedings against them. Alternatively, they ask the Court to strike out the statement of claim and order the plaintiff to provide security for the future conduct of the proceedings.
The plaintiff, Farmers Fruit Box & Packaging Pty Limited ("FFBP"), sues as the purported assignee of Farmers Fruit Box Pty Limited ("FFB"). The claim is for damages for financial loss allegedly suffered by FFB as a result of a contamination incident at factory premises at Fitzgerald Creek in North Queensland. Fitzgerald Creek is a settlement on the Bruce Highway near Innisfail. The third defendant, Daraleigh Pty Limited ("Daraleigh"), is the owner of the premises.
At the time of the incident, FFB had leased part of the premises from Daraleigh for the purpose of its business, which involved the importation and re-sale of packing boxes for bananas. Another part of the premises was used, by the first defendant, the second defendant, or both of them, for the purposes of a different business. This business involved the production of pulverised charcoal known as "black carbon" or "bio-char".
The roles played by the two defendant companies in the occupation of the premises and the conduct of the black carbon business are not clear from the statement of claim, but that is not important for the purposes of the current applications. I will refer to the defendant companies collectively as the "Select Carbon companies".

Representation of FFBP

Mr Jorgensen's submissions on the representation point were not easy to follow. Although he appeared unwilling to acknowledge this, the fact was that Mr Jorgensen had no right to conduct the proceedings on FFBP's behalf. Leave was required.
As I understood him, Mr Jorgensen presented two arguments for why I should grant him leave to represent FFBP in the proceedings. The first was that, so Mr Jorgensen asserted, he had earlier been permitted by Robb J to appear on behalf of FFBP and for me to restrict his ability to do so would be to "interfere" with his Honour's order. Secondly, Mr Jorgensen asserted that difficulties associated with the COVID-19 emergency made it desirable to grant the leave.
Mr Jorgensen's first point was not supported by the record. Robb J did informally permit Mr Jorgensen to represent the company in the course of the argument on 17 July. But his Honour did not give Mr Jorgensen any wider permission to act for FFBP in the proceedings. FFBP was represented by Swaab at each of the ensuing hearings before Robb J, and then before the Chief Judge on 13 April this year. There was no justification for saying that upon Swaab's withdrawal Mr Jorgensen had some sort of revived right to conduct the proceedings.
Mr Jorgensen's submissions on the second point tended to treat the rule that a company must conduct proceedings by a solicitor (except in circumstances provided for in UCPR, r 7.1(3)) as an unimportant technicality. But that, with respect, was quite misconceived.
The rule imposes an important practical restriction on the conduct of legal proceedings on behalf of a company. It means that (unlike the conduct of proceedings by an individual litigant in person) such proceedings must be conducted by someone whose conduct of the proceedings is the subject of ethical obligations owed to the Court. One such obligation is to conduct the proceedings in accordance with the overriding objectives established by the Civil Procedure Act 2005 (NSW), s 56. Another is not to take points unless satisfied, in good faith, that such points are properly arguable: see Legal Profession Uniform Law Application Act 2014 (NSW), sch 2 - cl 4(1).
Incorporation confers legal privileges (most obviously, limited liability) and there can be no objection from those who choose to conduct business through corporate entities if those privileges are accompanied by associated costs. Although UCPR, r 7.1(2) now allows for representation by a director in some circumstances, the basic rule remains and it supports important public interests in the administration of justice: see, generally, Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd [2013] NSWSC 36 at [90]-[94] and the cases there cited.
No doubt there is a cost involved, but the alternative, as the course of these proceedings has shown, may be to impose additional costs on opposing litigants and cause delay in the dispatch of business to the disadvantage of all litigants in the Court. Irresponsible conduct of a company's proceedings by an unqualified person may also lead to costs being awarded against the company, contrary to its own interests.
The COVID-19 emergency has restricted movement but it did not prevent Mr Jorgensen from retaining the services of Mr Stewart, and then of Swaab. I see no reason why it would have interfered with his ability to retain another firm to represent FFBP.
Mr Jorgensen asserted that he was unable to afford legal representation for FFBP. The evidence does not actually establish that he lacks the means to pay for FFBP to be represented in these applications. In any event impecuniosity, even if established, cannot force the court to dispense with the rule.
It is obvious that impecuniosity would not be a reason to dispense with the rule if in fact the company's position is so lacking in merit that no lawyer could properly act for it. That would nullify the rule in the very type of case where it should apply. What, then, of a case where the court cannot tell whether or not the company's position is hopeless? It would obviously be unworkable for the court to conduct some sort of preliminary enquiry into whether the company had an arguable case. The court would inevitably be drawn into advising, and assisting, the company in the conduct of the matter. That is the very thing the court cannot do in litigation between represented and unrepresented parties: see Rajski v Scitec Corporation Pty Ltd [1986] NSWCA 1 at 27.
In this regard it is relevant to note that FFBP's claim is an ordinary claim for common law damages for negligence (or trespass or nuisance) and breach of contract. FFBP could claim up to $750,000 in the District Court (or up to $100,000 in the Local Court) where the representation rules are less stringent than they are in this Court. But Mr Jorgensen does not want to limit FFBP's claim in this way. He says the damages run into the millions because of the alleged consequential destruction of the banana box business.
In these circumstances, I thought that there was no good reason to allow Mr Jorgensen to represent FFBP in the proceedings. But I indicated to Mr Jorgensen, purely as a matter of expediency, that I would hear him. I made it clear to Mr Jorgensen that this indulgence would not apply at any later stage of the proceedings.

Extension of time (and adjournment)

I have already mentioned that Mr Jorgensen made it clear from the outset that he wished to have the proceedings adjourned. In the course of the day, Mr Jorgensen's application became more specific. Mr Jorgensen asserted that as "co-trustee" he had the right to bring the proceedings in his own name, and sought an opportunity to reformulate the statement of claim accordingly.
The December orders made by Robb J had already given Swaab, acting for FFBP on Mr Jorgensen's instructions, ample opportunity to make an application to reconstitute the proceedings in this way. The opportunity had not been taken up. Mr Jorgensen complained about Swaab's conduct. He said they had failed to carry out his instructions. But there was no evidence whatever to support these allegations.
At that point, to have given Mr Jorgensen a fresh opportunity to join or substitute himself as a party (and a consequential adjournment) would have made a mockery of the Court's procedures. Furthermore, I had no confidence that, if I adjourned the applications to allow Mr Jorgensen an opportunity to prepare a fresh statement of claim, anything satisfactory would result. I was not prepared to allow Mr Jorgensen to put off the defendants' applications (including, of course, their applications for security for costs) in this way.

Recusal

The next point raised by Mr Jorgensen was his application to have me recuse myself. By this stage it was well into the afternoon of 26 April. Mr Jorgensen relied on an affidavit he had prepared on Friday, 23 April. The affidavit was signed, but had not been filed. It was originally sent to the defendants' solicitors on 23 April, who then forwarded it to the Court on the morning of 26 April. The affidavit was read, but when I asked Mr Jorgensen whether he had any more evidence he wanted me to take into account on the application, further difficulties ensued.
Mr Jorgensen manifested a determined reluctance to be pinned down. He appeared to experience great difficulty in understanding that it needed to be clear on the record what the factual basis of his recusal application was. What did emerge was that Mr Jorgensen had sent other communications to the Court, and in particular to the Chief Judge, about the issue. It became clear that these should be before the Court for the purposes of the application, but my Associate had not received them.
I asked Mr Jorgensen to re-send all his emails to my Associate (and to the defendants' solicitors). Mr Jorgensen did so, although not without first questioning whether it was actually true that the previous emails had not been received. But even after repeated attempts neither my Associate nor the defendants' solicitors received anything.
By now the remaining hearing time had almost run out. The defendants' solicitors then received Mr Jorgensen's re-sent emails. They tried to forward the emails to my Associate but this did not work. I adjourned the hearing to 12:30pm the following day and made arrangements for hard copies of the emails to be delivered by the defendants' solicitors overnight.
In this way I eventually received copies of Mr Jorgensen's emails. The earliest one was addressed to the Chief Judge on Saturday, 17 April. This was four days after her Honour fixed the defendants' applications before me for hearing and nine days before that hearing was due to take place. Swaab was still on the record as the solicitors for FFBP, although the firm may have foreshadowed its withdrawal to Mr Jorgensen.
This email was, of course, sent without any prior leave from the Court or any prior consent from the defendants. Not only did Mr Jorgensen not seek the defendants' solicitors' consent, he did not even copy them in. The defendants had thus remained completely unaware that the attempted communication had even taken place.
In the email Mr Jorgensen complained that I was unsuitable to hear the case (I will address the substance of the complaints below). He asked her Honour to allocate the case to another judge. It seems however that the email was never received by the Court. Presumably it was blocked by the Court's electronic security and communications systems, and that was why the other emails were not received either.
It is wrong, although unfortunately not infrequent, for unsolicited communications to be sent to the Court. This is wrong even where the party sending the communication copies the opposing party in when sending it. It is wrong because the rule against ex parte communications requires that there should be no communication with the Court without prior leave of the Court or without the other party's prior consent. Copying the opposing party in on a communication which has been sent without prior leave or consent is not sufficient. Even more obviously it is wrong to address private communications to the Court without notifying the other parties at all.
The rule against ex parte communications reflects a fundamental principle of natural justice. For the court to allow a litigant a channel of communication not available to the opposing party results in an appearance of partiality. Such a communication, if intended to influence the Court to take some action in favour of the party making it, can amount to contempt: Re JRL; Ex parte CJL (1986) 161 CLR 342 at 350 per Mason J.
Had the Court received his email of 17 April, Mr Jorgensen would have committed a serious breach of this rule. In fact, of course, he should not have tried to communicate with the Court at all while FFBP still had solicitors on the record.
When it emerged during the hearing that Mr Jorgensen had been sending ex parte communications to the Court (even though I had not at that stage seen the actual emails), I told him that this was unsatisfactory. Mr Jorgensen's riposte was that he was only trying to save me the embarrassment of more widespread disclosure of my supposedly disgraceful conduct. Even if that sentiment had been genuine, it would have been no excuse. Moreover it could not possibly justify keeping the defendants' solicitors in the dark.
The whole episode, including the debate at the hearing on 26 April, showed Mr Jorgensen in a bad light. It would be surprising if, given Mr Jorgensen's lengthy experience of litigation in this and other matters, he had not previously been told about the rule against ex parte communications. Yet when I told him about the rule he was not apologetic in the slightest. Instead he manifested only frustration that his attempts to communicate with the Court had proved so difficult. He seemed to see it as a failure by the Court to provide a proper service to him as a litigant, rather than for what it was: a wrongful attempt by him to influence the Court's processes in his favour.
Throughout, Mr Jorgensen showed scant consideration for the defendants' rights as parties to the proceedings. He seemed quite unaware of the irony, given his conduct, in his complaining about the supposed bias of the Court. The rule against apparent bias is also a rule based on natural justice, and the two rules are often bracketed together as equally fundamental: Kanda v Government of Malaya [1962] AC 322 at 337.
After the hearing resumed at 12:30 pm on 27 April, debate continued on the recusal application until shortly after 1:00 pm whereupon I adjourned the proceedings to 2:00 pm. Mr Jorgensen did not make contact by telephone at 2:00 pm. My Associate then emailed him indicating that unless I heard from him by 2:30 pm the Court would proceed and deal with the applications in his absence.
Shortly afterwards I received an email sent from an address at the business domain name used by Mr Jorgensen. The email purported to be from Mr Jorgensen's de facto wife, Ms Nguyen, although it appears to have been written for her by someone else. The email stated that Mr Jorgensen had gone to hospital in Bali to have his blood pressure checked and there was some problem which meant he was unable to attend the remainder of the hearing.
None of this constituted evidence in proper form, but the defendants were (understandably) reluctant to ask me to proceed with the hearing. In these circumstances, I considered that I had no alternative but to adjourn the hearing until the next available convenient date, which was Monday, 3 May.
When the hearing resumed on 3 May, Mr Jorgensen did resume contact. I asked him to identify all of the emails and other material upon which he wished to rely in support of his application for me to recuse myself. Again, Mr Jorgensen seemed disinclined to be pinned down. Eventually, all of the relevant emails were identified. I do not need to describe them in any detail for the purposes of this judgment, but I have considered each of them.
Much of the material on which Mr Jorgensen relied contained assertions as to factual matters which were not otherwise established by proper evidence. I made it clear to Mr Jorgensen that I would receive such statements only as evidence of what had been said by him, and not as evidence of the underlying facts.
Mr Jorgensen's submissions were repetitive but diffuse. He focused on two main matters. The first was a previous judgment given by me in proceedings in which he had been involved, although, as I will describe, not as a party or a witness. The second matter was an article published by a newspaper in June last year.
The judgment to which Mr Jorgensen referred was Nguyen v Grancroft Pty Ltd [2020] NSWSC 1644. The proceedings concerned the affairs of a unit trust which, at the relevant time, operated a motel business in Cairns. A company controlled by Mr Jorgensen previously held forty per cent of the units in the trust. That holding was acquired in 1992 by Mr Jorgensen's brother, from whom he is estranged, following the appointment of a receiver to Mr Jorgensen's company.
The acquisition, and other aspects of the governance of the motel trust, had been the subject of numerous previous proceedings. If vexatious litigant applications are included, the case I heard was the eleventh one. Some of those earlier cases had been brought in Federal courts, some in the Supreme Court of Queensland, and some in this Court.
The proceedings before me were brought in the name of Mr Jorgensen's de facto wife, Ms Nguyen, purportedly as assignee. As in the present case, the underlying property interest which formed the basis for the claim (in that case, ownership of the units in the motel trust) had originally been held by a company controlled by Mr Jorgensen as trustee for a trust. The defendant moved to have the proceedings summarily dismissed.
Mr Jorgensen proceeded on the basis that he was entitled to conduct the defence to the application on Ms Nguyen's behalf. I declined to permit this, allowing Mr Jorgensen to participate only as a McKenzie friend.
Ms Nguyen's proceedings duplicated several previous actions which had been brought by other companies controlled by Mr Jorgensen, purportedly as predecessor trustees of the relevant trust. At the time of my judgment, the first of those actions was still pending in the Supreme Court of Queensland, although it had been stayed because of a failure to pay security for costs which had been ordered by the Court. I considered that in the circumstances Ms Nguyen's proceedings constituted an abuse of process and dismissed them. It should be noted that this in no way prevented the claim against Mr Jorgensen's brother being pursued. But it did prevent Mr Jorgensen from evading the security for costs order made in the earlier proceedings.
Clearly Mr Jorgensen has been angered by my decision. He has convinced himself that he has been cheated by his brother of many millions of dollars. He said he and Ms Nguyen are surviving on welfare payments.
One of the prayers for relief in Ms Nguyen's proceedings was an order which would have required the trustee of the motel trust to make an immediate distribution of $25,000 to Mr Jorgensen. This sum was sought so as to allow Mr Jorgensen to provide for the funeral of his daughter, who had died shortly beforehand. Mr Jorgensen professed himself to be particularly outraged by the refusal of that relief.
Mr Jorgensen asserted that my conduct of Ms Nguyen's proceedings portrayed a desire to "cut him off at the knees". He described Ms Nguyen as a "frightened kitten" and accused me as having been heartless and overbearing. What I did not find clear was why Mr Jorgensen was contending that my decision was legally erroneous.
Ms Nguyen was of course entitled to appeal against my orders, although leave might have been required. Apparently no appeal proceedings have been begun. Mr Jorgensen, however, asserted that an appeal (which he termed a "judicial review") was about to be launched and would certainly succeed. It is unnecessary to say anything more about this. Unless the Court of Appeal decides otherwise I can hardly do otherwise than proceed on the basis that my decision was correct.
Mr Jorgensen's other complaint, based on the newspaper article, had nothing to do with any of my judicial decisions. In fact it was published before I heard the application in Ms Nguyen's case. Presumably Mr Jorgensen found the article afterwards when researching me on the internet.
The article in question was said to have been based on information provided to the newspaper by a former tipstaff who worked for me in the first half of 2018. The article centred on unwelcome sexual approaches my former tipstaff said she had received from a senior member of the profession. The thrust of the article was to accuse me of having failed to take appropriate action about the disclosures allegedly made to me (although it did acknowledge that my former tipstaff had not in fact asked me to take any action).
Mr Jorgensen submitted that the article showed that I was unfit to hear FFBP's case. Again, it was not entirely clear why. But the article has obviously confirmed prejudices Mr Jorgensen formed as a result of my earlier decision in Ms Nguyen's case.
The law which fell to be applied on the application is well established. It did not matter whether or not Mr Jorgensen believed that I would be capable of determining the applications in an unbiased manner. The test is an objective one. The question was what a hypothetical reasonable observer would have thought.
Mr Jorgensen expressed his submission in language which was extreme and provocative, perhaps, at times, deliberately so. He went so far as to say, repeatedly, that he despised me. He said that the ill-feeling between us was such that no one could reasonably expect me to put it aside and deal with the case dispassionately.
These submissions attributed to me an emotional reaction to Mr Jorgensen and a concern about the outcome of his litigation which I do not possess. I did not, and do not, feel any personal embarrassment or difficulty in addressing the legal issues presented by the defendants' applications.
So far as the article is concerned, all that was before the Court on this application was the publication itself. Mr Jorgensen acknowledged that he was not in a position to lead evidence to show that what he took from the article was in fact true, although he asserted that it undoubtedly was.
This is not the place for me to comment on the article or the motivations of those responsible for it. But I should make it clear that, in significant respects, the account published in the article does not accord with my recollection of events. Also there are significant contextual omissions. I entirely reject the imputations against me contained in the article.
Anticipating the point that I have made about the lack of evidence, Mr Jorgensen suggested that it did not matter what the article said was true. As I understood it, Mr Jorgensen was suggesting that the mere fact that it had been published by a prominent newspaper was enough. But I cannot accept that a reasonable observer would think it proper to doubt my fitness or impartiality on such a basis.
In applying the disqualification test, it is critical to identify the connection between the judge's supposed interest or partiality and the outcome of the case so far as the objecting litigant is concerned. In the present case I was concerned with interlocutory applications for summary dismissal or strike-out.
In such an application no factual inquiry about the underlying allegations of fact takes place. The outcome of the applications before me would depend on the terms of the statement of claim and, to the extent relevant, on the procedural history as reflected by the record of the Court. The applications did not require any findings about any disputed issues of fact. The facts of the decision in Nguyen v Grancroft (which was itself a summary dismissal application) were irrelevant. So far as the article was concerned, Mr Jorgensen never explained why my reported conduct would cause me to favour the defendants in the present case over the plaintiff.
In JRL (cited at [50] above) Mason J said (161 CLR at 352): There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties. But this does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issues in this way. ... Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.
In my view, there was no substance to the assertion of apprehended bias. The defendants' applications had been allocated to me for determination and I considered that the JRL principle meant that I was obliged to undertake the hearing irrespective of any personal preference on my part. I therefore refused the recusal application.

Discontinuance

On 30 April, the Friday before the resumed hearing on Monday 3 May, my Associate provided me with an email from Mr Jorgensen attaching a Notice of Discontinuance. The email had been sent overnight and stated (emphasis original): On behalf of the Plaintiff and pursuant to UCPR REG 12.1, the Plaintiff, Farmers Fruit Box & Plastics Pty Ltd ATF the Farmers Fruit Box Unit Trust hereby Discontinues this Proceeding. Given that the Defendants have not yet filed any Defence, then Leave to Discontinue, is not required. "Actus Curiae Neminem Gravabit" = "No party shall suffer due to an act of the Court". This applies here where this Court in replacing Justice Robb, with Parker J, a total stranger to the case, in the middle of case being part heard, prejudiced the Plaintiff greatly. Especially after Parker J had recently dealt my wife and daughter and I, a cruel blow just months earlier in a similar case but for $15M. Now Parker J is rolling up his sleeves for another crack at us. That weird decision is being prepared for a Judicial Review. So the Plaintiff hereby Discontinues this Proceeding forthwith, and will not be attending any more hearings before this Judge Roy Bean, alias, Judge Carl Parker.
The email went on to rehearse Mr Jorgensen's objections to my hearing the application. By way of explanation of the terminology in the last sentence, Judge Roy Bean was, according to Wikipedia, a saloon-keeper and Justice of the Peace in far western Texas in the 1880s and 1890s who billed himself as "the only law west of the Pecos" (the Pecos is a river which rises in New Mexico and flows into the Rio Grande in south-western Texas). It is said that he would impose fines on defendants (often corresponding to the exact amount of money on them) and then keep the proceeds for himself. Why Mr Jorgensen also referred to me as "Carl" Parker when that is not my first name I do not know.
In response, I directed my Associate to reply as follows: It seems that you are incorrect in stating that leave to discontinue is not required because the defendants have not yet filed their defences. Discontinuance of proceedings is governed by Rule 12.1 of the Uniform Civil Procedure Rules. That Rule requires either the consent of all other active parties or the leave of the Court. Furthermore, you have not been granted leave to conduct the proceedings generally on behalf of the plaintiff company. In these circumstances, the purported notice of discontinuance appears to be invalid, and cannot be accepted for filing. The hearing of the applications will proceed on Monday as arranged. If you wish to contend that the purported notice of discontinuance is valid despite the points made above you may do so at Monday's hearing. Finally, I remind you that you should on no account communicate with the Court without prior leave of the Court or prior consent of the other parties.
At the hearing on 3 May Mr Jorgensen professed outrage at this response. He suggested that it underlined my supposedly biased approach. But when I asked him whether he had any submission to make in response to the points in the email about the Court's power to permit him to discontinue the proceedings on the plaintiff's behalf without the consent of the defendants or the prior leave of the Court, he had nothing to say.
The view expressed in my emails was only preliminary. But in the light of Mr Jorgensen's non-response, I see no reason to depart from it. In my view, Mr Jorgensen had no right to discontinue the proceedings in the circumstances and the purported Notice of Discontinuance was invalid and of no effect. I directed the Registry not to accept it for filing.
Somewhat inconsistently with the purported discontinuance, at the hearing on 3 May Mr Jorgensen also produced a revised version of the statement of claim joining himself personally as second plaintiff. I have already explained why I did not consider it appropriate to extend the time allowed by Robb J for this application to be made. In any event, the new version of the statement of claim does not address any of the deficiencies in the existing one. On no view would it have been appropriate to permit an amendment in the form of that document.

Application for summary dismissal and strike out

After I had ruled against his application for me to recuse myself and made it clear that I would not permit Mr Jorgensen to discontinue the proceedings, I offered Mr Jorgensen the opportunity to make submissions on the defendants' applications. Mr Jorgensen did not take this offer up. Instead he withdrew in protest at my supposed bias. The hearing then continued with FFBP unrepresented.
Counsel for the defendants challenged two aspects of the way in which the current version of the statement of claim is pleaded. The first challenge focused on the fact that FFBP purports to sue as assignee of FFB. The second challenge focused on the way in which the claims for breach of duty (or breach of contract, in the case of the third defendant) were pleaded.
Most of the allegations in the statement of claim ignore the fact that the cause of action being sued upon is that of FFB. Thus, for instance, the statement of claim pleads that the negotiations which preceded entry into the lease took place with, and duties of care were owed to, the plaintiff (that is, FFBP) rather than FFB. The only reference to assignment is paragraph 8 of the statement of claim which pleads that the lease was entered into with "the plaintiffs' previous trustee and assignor".
In some circumstances, it is possible for a beneficiary of a trust who wishes to have the trustee enforce a cause of action against a third party to obtain orders from the Court requiring the trustee to bring those proceedings. Or the Court can authorise the beneficiary to bring the proceedings in the name of the trust, with the recalcitrant trustee joined as a defendant. But that is not the way in which these proceedings are framed.
I understand that FFB has been deregistered and thus no longer has any corporate existence. FFBP's claims are premised on the proposition that there has been a valid assignment at law of FFB's cause of action to FFBP.
In these circumstances, it is an essential element of FFBP's claim to establish that there was a valid assignment of the cause of action from FFB to FFBP before the institution of the proceedings. Where, as it seems, the contention is that the assignment took place by way of written agreement between the parties, then the fact of that agreement, and its effect, should be pleaded as material facts. I therefore accept the submission by counsel for the defendants that the statement of claim is defective for that reason alone.
I turn now to the second challenge which concerns the adequacy of the pleaded case of breach. FFBP's case is relevantly pleaded as follows: 17. The third defendant failed to advise the plaintiff of the risk or take action to avoid the risk to the plaintiff's business. 18. On or about 4 February 2017 machinery other like within the operation and control of the first and second defendant malfunctioned ("the Malfunction"). 19. The result of the malfunction was the spewing of black carbon powder throughout the entire Premises.
As against the Select Carbon companies, this pleading is manifestly defective. The only fact pleaded is that there was a malfunction which caused contamination of black carbon. There is no allegation that the discharge resulted from any negligence in the operation of the machinery; so far as the statement of claim is concerned that could have happened entirely without fault on their part. In effect, the pleading treats liability in negligence as strict, whereas it is lack of reasonable care which gives rise to the tort.
The problem is slightly different so far as Daraleigh, the lessor, is concerned. Paragraph 17 assumes the existence of a duty on its part to take reasonable care to prevent the Select Carbon companies from causing damage to their co-lessee, FFB. Whether such a duty of care would arise independently of the lease could be controversial; on any view it would be necessary to plead in more detail what the lessor allegedly knew about the risks associated with the Select Carbon companies' operations, and the means of control, if any, the lessor had over those operations. Again, these are material facts which are absent from the statement of claim.
For completeness, I point out that there is no properly pleaded basis for the claim for damages against Daraleigh for breach of the lease. Any such claim would depend, in some way, on the terms of the lease. The statement of claim does plead that Daraleigh covenanted not to derogate from its grant, but it is not easy to see how the activity of another tenant could be seen as a derogation from the grant by Daraleigh. Certainly that is not what is pleaded by way of breach.
For these reasons, it was clear that the Court should at least strike out the statement of claim against both Daraleigh and the Select Carbon companies. But in his written submissions, counsel for the defendants argued that the Court should take the further step of dismissing the proceedings summarily. This was because, so counsel contended, the deed of assignment on which the plaintiff apparently relied amounted to the purported assignment of a bare cause of action, either in tort or in contract, which is invalid: see J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths) at [6-470].
I saw the force of this argument so far as it rested on the terms of the deed of assignment. However, counsel had to concede that the assignment would probably be saved if it was coupled with an assignment of the business or assets of the business (perhaps the damaged stock). Counsel pointed out that no such assets were assigned under the deed of assignment, but accepted that an assignment might have been made separately. Thus, I did not think it would be right to dismiss the claim summarily at this stage; it was possible that the claim could be repleaded so as to avoid the point about assignment of a bare cause of action.
Furthermore, as I have already noted, it might be possible to reconstitute the proceedings in equity. That would involve the re-registration of FFB, either as a plaintiff or as an additional defendant, but that would not be impossible.
For these reasons, I considered that the appropriate course was to strike out the statement of claim but not to dismiss the proceedings summarily at this stage. Instead, I considered that I should make directions for FFBP to replead in proper form, should it be able to identify facts that would enable it to do so.
Counsel for the applicants accepted that, on my conclusions, the proper course was to afford FFBP a further opportunity to replead its case. But counsel submitted that if that was to happen, it should only be undertaken by a solicitor or someone else properly authorised under the Rules to act for FFBP. The proceedings should thus be stayed until FFBP was properly represented. For reasons already given, I consider that this submission is well founded.

Costs

The defendants have succeeded on their application and costs should follow the event (apart from costs thrown away by reason of the adjournment in 2020, which have already been the subject of an agreed order). But counsel foreshadowed that the defendants might apply in addition for an order for payment of a lump sum on account of costs, of the type I have made in some earlier cases (see for example Rhino Rack Australia Pty Ltd v Hub Computing Services Pty Ltd [2021] NSWSC 231). In order that all outstanding matters should be finally dealt with, and that Mr Jorgensen should have an opportunity of considering any such application and responding to it, I therefore adjourned the proceedings until 17 May and made directions for the filing and service of evidence and submissions.
The upshot was an application made on behalf of Daraleigh for an order of payment on account of the lump sum of $35,000. This application was supported by an affidavit from Julian McGrath, the solicitor with carriage of Daraleigh's defence annexing the bills rendered to Daraleigh in the course of the application and setting out the basis on which the amount claimed was calculated. The Select Carbon companies did not make an application for payment of a lump sum on account of the costs order in their favour.
Mr Jorgensen did not file any evidence or submissions in response to Daraleigh's lump sum costs application. Shortly before the hearing was due to resume on the afternoon of Monday 17 May, however, my Associate received from Mr Jorgensen an email attaching an unfiled Summons for judicial review which, among other things, challenged my decision not to recuse myself. Soon afterwards this was followed by an email which referred to submissions and an affidavit having been sent over the weekend. Finally, six minutes before the hearing was due to begin, Mr Jorgensen sent an email which indicated that he would not be participating owing to the fact that I would be conducting the hearing.
My Associate had not received the emails and affidavit which Mr Jorgensen referred to, no doubt for the same reason as earlier emails from Mr Jorgensen had not been received. Eventually, I obtained hard copies of the affidavit and covering emails from the solicitors for the defendants.
It hardly needs to be pointed out that in sending this material Mr Jorgensen was once again breaching the rule against ex parte communications. By this stage he had been told of the rule so frequently and so explicitly that there can be no doubt that he was simply defying the rule.
Although I consider I would have been justified in refusing to have regard to his communications at all, given the circumstances, in fact I went through the material which he provided. It is unnecessary to summarise it for the purpose of this judgment. In my view it did not add in any substantial way to the points which I have already addressed.
The defects in the present statement of claim are considerable and will require, if they are to be properly addressed, a reconsideration of essential elements of FFBP's claim. In particular, it may emerge that there is no viable claim against Daraleigh at all even if the assignment point can be overcome. In effect, the outcome of the applications is that if the proceedings are to continue there must be a fundamental re-engineering of FFBP's claim. Moreover, the application itself has been inordinately and unjustifiably protracted as a result of Mr Jorgensen's conduct on behalf of FFBP.
In these circumstances, the Court would in my opinion be justified in making an order that the costs be assessable forthwith. But an interlocutory assessment would be a distraction, resulting in further delay and cost; and the separate assessment of the defendants' costs of the application may ultimately prove to be unnecessary. In these circumstances I consider that an order for payment on account is preferable. As I pointed out in the earlier decisions to which I have referred, because the amount to be paid will not represent a final determination of the costs liability, the broadest of brushes can be used.
On Mr McGrath's evidence, Daraleigh's solicitor's costs of the motion have been $43,500. Counsel's fees have been shared between Daraleigh and the Select Carbon companies; Daraleigh's share is $5,500.
Daraleigh's total costs of the application have accordingly been $49,000. Mr McGrath has estimated the costs thrown away (which were the subject of an order of $3,000) as $4,600. He has then applied a further twenty per cent discount to reach the figure of $35,000.
Mr McGrath's figure of $35,000 is a reasonable one on the evidence. Nevertheless I propose to discount the figure somewhat further to reflect the various uncertainties and estimates involved in the figure. In the exercise of my judgment I fix the figure to be paid on account of Daraleigh's costs as $30,000.

Orders

The orders of the Court on the application by the Select Carbon companies (by way of notice of motion filed 11 October 2019 and amended notice of motion filed 10 June 2020) are: 1. Order that the statement of claim be struck out as against the first and second defendants. 2. Grant leave to the plaintiff to apply to re-plead. 3. Order that the plaintiff pay the first and second defendants' costs of the motion, apart from the costs the subject of the order of Robb J dated 17 February 2021. 4. Order that the plaintiff's claims against the first and second defendants, including any application to re-plead, be stayed until the proceedings are brought into compliance with rule 7.1 of the Uniform Civil Procedure Rules.
The orders of the Court in Daraleigh's application (by way of notice of motion filed 27 February 2020) are: 1. Order that the statement of claim be struck out as against the third defendant. 2. Grant leave to the plaintiff to apply to re-plead. 3. Order that the plaintiff pay the third defendant's costs of the motion, apart from the costs the subject of the order of Robb J dated 17 February 2021. 4. Order that the plaintiff pay to the third defendant the sum of $30,000 on account of the costs liability under order (3). 5. Order that the plaintiff's claims against the third defendant, including any application to re-plead, be stayed until: 1. the proceedings are brought into compliance with rule 7.1 of the Uniform Civil Procedure Rules; and 2. the sum referred to in order (4) is paid.

Amendments 21 May 2021 - Amend minor typographical errors at [3], [40], [86], [105] 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: 21 May 2021

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