James v Phillips

The Litigation History

1. The defendants in these proceedings have now moved for summary dismissal. They are justified in doing so. Quite apart from the lack of merit of the plaintiffs' claim, the history of the litigation is shameful. The blame must substantially attach to the plaintiffs and their legal advisors. It all started with the death of the mother of the plaintiffs and the first defendant. She left an estate valued at approximately $1.5 million. One property said to be worth about $702,000 was given to one of the plaintiffs. Another property said to be worth about $695,000 was given to the other plaintiff. The modest residue was left to the first defendant. He brought a Family Provision claim, which was heard over three days before Stevenson J.
2. Stevenson J gave two judgments, one of which related to costs. The Court of Appeal then heard an appeal and also gave two judgments, one of which related to costs. The first defendant's solicitor client costs of the first instance hearing and the appeal are said to have been approximately $191,000. The Court of Appeal gave him an award of $100,000. It ordered the plaintiffs to pay the first defendant's costs in the Court of Appeal and before Stevenson J. The plaintiffs disputed the amount of costs and required that they be assessed. A determination following a contested assessment was made on 24 September 2015. The final amount was $161,133.43.
3. The plaintiffs did not pay the assessed costs. An enforcement warrant was issued by the District Court of Queensland at Maroochydore in about mid-2016. It was followed by a bankruptcy notice, which was issued to the plaintiffs in September 2016. No doubt reflexively, the plaintiffs then commenced these proceedings - within weeks of the issue of the bankruptcy notice. They went further. On 22 September 2016 they sought an interlocutory injunction in this Court to restrain enforcement of the costs order. Hallen J dismissed the application with costs, making the following observation, among others: Importantly, it would appear that the basis of any application to set aside the judgment is an allegation of perjury by at least the first defendant. As has been noted in the annotations to UCPR r 36.15, a mere allegation of perjury by a witness will not, except in exceptional circumstances, satisfy the requirement that the successful party was implicated in fraudulent conduct: Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 538. Mr Bates of counsel, who appeared for the plaintiffs on the application, did not seek to rely on, in any way, or even refer to, any of the judgments of Stevenson J, or the Court of Appeal, upon which the costs judgment was based. It follows that there is no evidence of how any information relating to such conduct would have affected the judgment.
4. The plaintiffs then went to the Federal Circuit Court. They apparently sought ex parte relief in relation to the bankruptcy notice. In December they applied again to this Court, filing a wide-ranging notice of motion which came before the Chief Judge in Equity. Consent orders were agreed, which held the status quo pending this hearing.
5. In addition to these matters, the plaintiffs complained to the Legal Services Commissioner about the conduct of the first defendant's solicitor. That claim was dismissed in December 2016. Finally and sadly, a day or two before the hearing, the first defendant died without ever having received the sum of $161,133.43 owed to him for his costs in the litigation in which he had been successful. I made an order at the hearing that his son, Zachary Phillips, be appointed to represent his estate for the purpose of the proceedings.

Amended Statement of Claim

1. I should start with the amended statement of claim. I am afraid to say that from the point of view of grammar, syntax, logic and style, it is a gallimaufry, a hotchpotch and a jumble. It does not briefly, explicitly and concisely state the material allegations of fact on which the causes of action depend. It is a long-winded mixture of allegations of fact and law, including multiple and repetitive allegations; a miscellany of confused claims and causes of action that fail to distinguish between evidence and particulars. The various claims are probably intended to mean the same thing but the drafter has liberally sprinkled the pleading with many different labels and names. They include 'fraud', 'dishonesty', 'conspiracy', 'perversion of the course of justice', 'misleading the Court' and 'perjury'. There may be more. They all come down to five particulars buried deep in the pleading. The pleaded case displays all of those excesses of enthusiasm of which Courts are invariably wary, and from which defendants are entitled to be protected. If the only issue were the form of the statement of claim, I would strike it out simply because it is a linguistic mish-mash and embarrassing. But the defendants are entitled to more substantive relief.

Particularisation of Fraud

1. There are four major grounds for dismissing the claim. The first is that the allegations of fraud are not properly or fairly particularised. As Kirby P said in Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 538: 'Particulars of the claimed fraud must be exactly given'. The most offensive paragraphs are paragraphs 7-14 inclusive of the amended statement of claim. Paragraph 7 appears to run over six pages of the pleading. It contains particulars followed by what appear to be particulars of the particulars. Perhaps they are particulars of a separate single particular. Apart from being dense and repetitive, the lengthy diatribe in paragraph 7 seems to get down to the core proposition that the first defendant received oral legal advice from the second defendant that he was eligible to bring a Family Provision claim on or about 7 May 2010 or 27 July 2010 or 21 September 2010. This narrow foundation depends on an entirely speculative hypothesis. On the basis of it, the drafter alleges that the first defendant embarked on a forensic litigation strategy, the making of statements that were known to be untrue and false representations.
2. The five particulars that appear to be the foundation of paragraph 7, consist of a meeting between the first defendant and the second defendant on 7 May 2010; another meeting on 27 July 2010; another on 21 September 2010; and then somewhat opaquely, the wording of letters written by the second defendant to the plaintiffs' solicitor on 29 October 2010 and 27 July 2011. There was absolutely nothing in those letters from which any adverse inference can be drawn reasonably. The meetings between the first and second defendants occurred, but no evidence was put before me from which it can be reasonably inferred that at those meetings, legal advice was given to the first defendant as alleged. Among other things, as far as the supposedly critical 7 May meeting is concerned, the unchallengeable fact seems to be that it was not until 10 June 2010 that the first defendant even knew of the contents of his mother's will.
3. I should refer briefly to several more paragraphs in the pleading. Paragraph 8 is unparticularised but introduces notions not previously referred to, namely 'perversion of the course of justice' and 'miscarriage of justice'. The former is a criminal offence. Paragraph 9 mixes several allegations. It commences by alleging that Stevenson J and the Court of Appeal were misled and goes on to refer, for what it is worth, to the first defendant's 'secret intention to bring a Family Provision claim'. Paragraph 10, also unparticularised, introduces the notion of a joint conspiracy between the first and second defendants and makes further reference to the first defendant allegedly perverting the course of justice. Paragraphs 11, 12 and 13, each of which is unduly long, seem to be directed at the issue of materiality and causation. They contain allegations that Stevenson J would have made a different costs order and that the Court of Appeal would have exercised the discretion in s 87 of the Succession Act differently from the way in which it did. The allegations in those three paragraphs include multiple submissions that involve a hypothesis as to what might have happened in different circumstances. This is no way to plead and particularise serious allegations of fraud and dishonesty. It is not fair to the defendants.

Claim Against Second Defendant

1. The second ground relied upon is that the claim against the second defendant, by itself, is not properly pleaded. The claim against her seeks, among other things, a personal costs order against a solicitor who was not a party to the original proceedings. In the circumstances, the second defendant is entitled to have full and fair particulars of the claim, just as she would be entitled in disciplinary proceedings: see Lemoto v Able Technical Pty Limited (2005) 63 NSWLR 300 per McColl JA at 92 and 146. What is troubling is that the complaint lodged by the plaintiffs with the Legal Services Commissioner has been heard and determined in favour of the second defendant. The amended statement of claim, which was filed in October 2016, still proceeds on the basis that the investigation is current. I will return later to the significance of the findings of the Legal Services Commissioner.

Suspicion & Speculation

1. The third ground for dismissing the claim is that it is founded on suspicion of fraud but it is a suspicion based on zeal rather than reality. It overlooks, among other things, the finding to which I have already referred, that the defendant did not know the contents of the will until 10 June 2010. Mere suspicion of fraud is, of course, insufficient. The material relied upon must be of a nature and quality such that 'it is reasonably probable that the action will succeed': Wentworth v Rogers (No 5) at 539.
2. The material on which the pleading is based, including the material put before me today, does not provide a proper, sound or realistic basis to make the allegations of fraud, much less to prove them. The first defendant's evidence before Stevenson J was that he did not receive legal advice about his right to make a Family Provision claim until his appointment with the second defendant on 29 October 2010. On that day, tellingly, the second defendant wrote for the first time to the executors noting that the first defendant intended to make a claim for provision out of his mother's estate. The plaintiffs contend that that evidence must be false, simply because he saw the second defendant on 7 May. There is no direct evidence about what was discussed at that conference, but as I have mentioned already, he did not even know of the content of his mother's will at that time.
3. The plaintiffs' allegations of fraud, including the allegations of conspiracy and perverting the course of justice, rely on the Court drawing an inference that contrary to the first defendant's sworn evidence, he did receive legal advice. The plaintiffs were not there. They can offer no useful evidence. The few contemporaneous documents do not support them. And the first defendant is now dead and cannot give evidence. Given the standard of proof explained in Briginshaw v Briginshaw (1938) 60 CLR 336, it is an exercise in over-imagination to think that a Court would draw the inference which is the foundation for the plaintiffs' claim.
4. The speculative nature of the plaintiffs' case concerned the Legal Services Commissioner. In a carefully reasoned decision, he drew attention to the absence of direct evidence 'as opposed to inexact proofs, indefinite testimony or indirect inferences'. He said that the plaintiffs' submissions: Were they to be accepted, would require me to draw several indirect inferences contrary to the standard of proof set out in Briginshaw. The only direct evidence of what occurred during that conference is the account provided by Ms Zlateveska and her file notes.
5. The Commissioner continued: According to the 29 October 2010 file notes that is the first time 'FPA' is mentioned. There was nothing in the 7 May 2010 file notes that indicates an intention to challenge the will or make a Family Provision claim. This is significant evidence to support Ms Zlateveska's version of events noting that your clients were not present at any time during either conference.
6. The Commissioner then added: On that basis and on the only evidence available regarding what was discussed in both conferences, I accept Ms Zlateveska's version of events, which is consistent with the submission that, as at 7 May 2010, Mr Phillips had not seen the will and had no known basis on which to challenge its contents. A Family Provision claim would therefore not have been relevant at that stage.

Causation

1. The fourth ground for dismissing the claim is that no adequate or reasonably likely causal connection has been demonstrated. Proof of perjury alone will not normally be sufficient to warrant setting aside a judgment: Wentworth v Rogers (No 5) at 539. What is required in addition to proof of perjury is that the perjury be material to the court's decision which is sought to be set aside. There is nothing which reasonably suggests that the alleged fraud would have had any effect on the Court of Appeal's decision.
2. There are at least two sound reasons why it is difficult to accept the plaintiffs' contention that the perjury, if established, would have been material to the Court of Appeal's decision. First, the findings of Beazley P make it clear that the Court of Appeal made a notional estate order based on factors unrelated to when the first defendant became aware of his rights to make a Family Provision claim. The decisive factor was that the executor defendants had distributed property to themselves during a period within which a claim for provision could be made. That conduct undid the discretionary factors against the first defendant on which Stevenson J relied in refusing to make a notional estate order. It was the vital consideration that led to the ultimate result in his favour. The first defendant's evidence that he did not receive legal advice about making a Family Provision claim until 29 October 2010 was not material to the determination of the notional estate question. Although Stevenson J had held that the first defendant knew of the importance of obtaining legal advice by about 27 July 2010, there is no basis to conclude that even if he had received legal advice about making a Family Provision claim during the 7 May 2010 conference, it would have made any difference to the outcome.
3. Second, even if the allegedly false evidence might have affected the decision of Stevenson J to make no order as to costs, that is beside the point. Once the Court of Appeal reached the conclusion that the first defendant was entitled to provision out of the estate, costs were likely to follow the event. There is no reason to suppose that the costs order in the Court of Appeal would have been different if the court had made the unlikely finding that the first defendant receive legal advice about a Family Provision claim on 7 May.

Discretion

1. I have of course taken into account the observations of Macfarlan JA in Leerdam v Noori [2009] NSWCA 90 at [75]. I do not think that the plaintiff's claim is reasonably arguable. The lengthy submissions on behalf of the plaintiffs served only to make clear that the claim is obviously untenable and clearly deficient; that it has no reasonable prospect of success; that it is based on speculation and guesswork; that the evidence on which it is predicated could not rise to the level required to prove the causes of action pleaded; and that the logic of causation on which it is hinged is misconceived. It has all of the hallmarks of a claim driven by a conspiracy theory. Like most conspiracy theories, it misstates or omits basic facts. And it is blind to competing reasonable inferences.
2. Finally, I wish to reiterate that counsel have a duty to the court which is additional to their duty to the party whom they represent. This duty is a legal duty, not a rule of practice or etiquette: Thomas & Ors v SMP (International) Pty Ltd & Ors [2010] NSWSC 822. That duty requires counsel and solicitors, where necessary, to restrain the enthusiasms, and sometimes the vindictiveness, of their clients; and to correct the misapprehensions and wrong-headed notions from which they sometimes suffer. The efficient administration of justice depends upon the constant exercise of this duty.

Orders

1. I dismiss the amended statement of claim. I will hear submissions on indemnity costs and the making of a gross fixed sum costs order.

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